Commons Sitting of 15 November 1989

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS

    PRIVATE BILLS [Lords] (SUSPENSION)
    Motion made,
    That so much of the Lords Messages [2nd November, 7th November and 8th November] as relates to the River Tees Barrage and Crossing Bill [Lords], the Happisburgh Lighthouse Bill [Lords], the Great Yarmouth Port Authority Bill [Lords], the Southampton Rapid Transit Bill [Lords], the Heathrow Express Railway Bill [Lords], the London Local Authorities (No. 2) Bill [Lords] and the Greater Manchester (Light Rapid Transit System) Bill [Lords] be now considered.
    That this House doth concur with the Lords in their Resolution.—[The Chairman of Ways and Means.]
    Hon. Members: Object.
    To be considered on Monday 20 November.

    PENZANCE ALBERT PIER EXTENSION BILL
    Motion made,
    That so much of the Lords Message [2nd November] as relates to the Penzance Albert Pier Extension Bill be now considered.
    That the Promoters of the Penzance Albert Pier Extension Bill shall have leave to suspend proceedings thereon in order to proceed with the Bill in the next Session of Parliament, provided that the Agents for the Bill give notice to the Clerks in the Private Bill Office of their intention to suspend further proceedings not later than the day before the close of the present Session and that all fees due on the Bill up to that date be paid;
    That on the fifth day on which the House sits in the next Session the Bill shall be presented to the House;
    That there shall be deposited with the Bill a declaration signed by the Agents for the Bill, stating that the Bill is the same, in every respect, as the Bill at the last stage of its proceedings in this House in the present Session;
    That the Bill shall be laid upon the Table of the House by one of the Clerks in the Private Bill Office on the next meeting of the House after the day on which the Bill has been presented and, when so laid, shall be read the first, second and third time and shall be recorded in the Journal of this House as having been so read;
    That no further Fees shall be charged in respect of any proceedings on the Bill in respect of which Fees have already been incurred during the present Session;
    That these Orders be Standing Orders of the House.—[The Chairman of Ways and Means.]
    Hon. Members: Object.
    To be considered on Monday 20 November.

    BRITISH RAILWAYS (PENALTY FARES) BILL [Lords]
    Ordered,
    That Standing Order 205 (Notice of third reading) be suspended in respect of the British Railways (Penalty Fares) Bill [Lords] and that the Bill be now read the third time—[The First Deputy Chairman of Ways and Means.]
    Read the Third time, and passed, with amendments.

Oral Answer to Question
  SCOTLAND

    Electricity Generation
    Mr. Eadie: To ask the Secretary of State for Scotland what plans he has for meeting the heads of the electricity generating boards in Scotland to discuss future electricity generation.
    The Secretary of State for Scotland (Mr. Malcolm Rifkind): I meet the chairmen of the Scottish electricity boards from time to time to discuss a wide range of issues affecting the industry, including future electricity generation.
    Mr. Eadie: With regard to the discussions that the Secretary of State has had, or will have, does not his conscience trouble him? Is he not fully responsible for the destruction of the Scottish coal industry, in the stupid belief that nuclear energy is cheaper than coal?
    Mr. Rifkind: I remind the hon. Gentleman as kindly as I can that the Labour Government of which he was such a distinguished member took the initial decision to build Torness nuclear power station and continued with the Hunterston power stations. As the hon. Gentleman was an energy Minister in that Government, I think that he had better look to his own record before he seeks to criticise others.
    Mr. Allan Stewart: My right hon. and learned Friend will be aware that the heads of the generating boards are anxious that the Scottish flotation should go ahead as fast as possible—either before or certainly at the head of the list of English flotations. Can my right hon. and learned Friend say anything about the timing, particularly as export opportunities have been increased by recent announcements?
    Mr. Rifkind: My hon. Friend is correct that the export opportunities have improved. That will also benefit the coal industry, to which the hon. Member for Midlothian (Mr. Eadie) referred. The consequences of the announcement that I made last week will be in one respect easier to implement in Scotland than south of the border. We had already decided to put nuclear power stations into a freestanding Scottish nuclear company. That makes the organisational changes easier to apply to the new arrangements.
    Mrs. Ray Michie: In view of the uncertainty in the electricity industry following the shambles last week and the unknown increase in nuclear costs, how does the Secretary of State intend to protect the small electricity producers which at present sell their product to the North of Scotland Hydro-Electric Board? The payment to them has already been reduced by 7 per cent. since 1986.
    Mr. Rifkind: The precise arrangements between the North of Scotland Hydro-Electric Board and small producers in the Highlands and Islands is a matter for the contractual relations between the board and the companies in question. Nothing that was announced last week will change that. I very much hope that the small, independent producers will continue to play what will

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    inevitably be a modest part, because of surplus capacity in Scotland, but nevertheless an important part in electricity generation during the next few years.
    Sir Peter Emery: As part of my right hon. and learned Friend's negotiations could affect the whole of the British Isles, can he assure the House that in view of its great importance to the nation, the distinguished research work on fast breeders carried out at Dounreay will be encouraged to continue?
    Mr. Rifkind: Dounreay and its activities are a matter for my right hon. Friend the Secretary of State for Energy. However, I know that those who work at Dounreay and the Department of Energy are interested in a diversification of the research work carried out there. I very much hope that that will prove to be possible. As for the economic implications of the decision on Dounreay, I think that announcements to be made later today will outline useful opportunities for the Highlands and Islands Development Board to diversify economic opportunities in the north of Scotland.
    Mr. Dewar: I certainly do not wish to dwell on the shambles that has been created in the Scottish electricity industry in recent weeks by a Government who seem to equate disorganised retreat with a planned policy. Let me invite the Secretary of State to look to the future. Has he seen the article by Patrick Donovan in The Guardian today which suggests that Ministers are still hoping to offset nuclear liabilities against the private sector and that the Scottish companies have been asked to agree higher than expected terms for the purchase of nuclear power? Is there any truth in that, and will the Secretary of State confirm what I think was said by the Minister of State on television last week: that there will be continuity of pricing and no attempt to save the Treasury's embarrassment at the expense of the consumer?
    Mr. Rifkind: As a central part of my comments last week, I said that there would be no adverse implications for tariffs as a result of last week's announcement. I add that tariff continuity, which is the principle that we have enunciated, is of great importance to us. As nuclear represents a higher proportion of the industry in Scotland compared with the industry in England and Wales, there are implications for what would be the rate of return on nuclear investment. We have explained to the nuclear company, the South of Scotland electricity board and the hydro board the basic principle that should be accommodated to ensure that tariff implications for the general public are no different from what they would have been had the whole industry been privatised.

    Hospital Laboratory Services
    Mr. Watson: To ask the Secretary of State for Scotland what discussions he has had, or intends to have, with the medical profession in Scotland relating to the proposed privatisation of hospital laboratory services.
    The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Forsyth): I am not aware of any proposals to privatise hospital laboratory services. Boards are reviewing the way in which services are provided and giving consideration to the scope for putting out certain elements to competitive tender.
    Mr. Watson: Is it not ironic that today Opposition Members should feel it necessary to seek reassurance from the Minister on such a basic health matter as consultation with doctors? On this day in 1922 a general election was held at which for the first time we returned a large number of Labour Members, including the "Red Clydesiders". A major plank of that election manifesto was free and comprehensive health care for all. Yet 67 years later the Minister is determined to deny just that. Will he at least guarantee that in future, before introducing any further so-called health reforms, he will listen to and take account of the views of the medical profession in Scotland?
    Mr. Forsyth: The irony is that we should receive advice from the Labour party on the National Health Service. The Labour party in government cut spending on the Health Service and cut nurses' pay. As a result of competitive tendering, about £53 million has become available to the Health Service in Scotland. The Opposition opposed that, but it is equivalent to—[Interruption.] Hon. Gentlemen do not like to hear the truth about the Health Service. The savings from competitive tendering to date in Scotland are equivalent to something like 18,000 additional hip replacements. I certainly give my backing to the management in the Health Service as they continue to get the best deal for patients.
    Mr. Favell: Can my hon. Friend explain why the Scots are so opposed to value for money in the National Health Service? As a Yorkshireman—like the Scots, we have a reputation for being careful—I am astonished that the Scots should be so canny about their private affairs yet are prepared to pay through the nose for their public services.
    Mr. Forsyth: With all due respect to my hon. Friend, he must not make the mistake of confusing the Scots with the Labour party and Labour Members. It is certainly true that Labour Members of Parliament have opposed competitive tendering in the Health Service and value for money. That is because they speak for the public sector trade unions, while we speak for the patients.
    Mr. Sillars: The hon. Member for Stockport (Mr. Favell) should not confuse the Scottish people with the Minister either. Is the hon. Gentleman aware of the moves made by Greater Glasgow health board? Will he talk to the health board and explain that it is unacceptable for patients to have their medical needs set against the need for profit of a private company, particularly in the important diagnostic services?
    Mr. Forsyth: The Greater Glasgow health board needs no advice from me on putting the interests of patients first. Services will be put out to competitive tender to improve their quality and to obtain value for money. The hon. Gentleman should not prejudge this matter. By organising laboratory services differently, a faster service offering better results more quickly for patients may be achieved. I should have thought that the hon. Gentleman would give management of the Greater Glasgow health board his backing for seeking to ensure the best interests of patients.
    Mr. Worthington: Recently, Opposition Members had the advantage of visiting the Greater Glasgow health board, where we saw a most demoralised collection not of public sector unions but of consultants. They had discovered that their services had been advertised in an obscure European Community journal. Does the Minister

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    agree that that is a damaging way to run the Health Service? Will he acknowledge that pathology, clinical, research and teaching services are an integral part of the Health Service? To encourage his appointed puppets on the Greater Glasgow health board to split up services so that they can make nice little earners is no way to run the National Health Service. Will he condemn that, as did the Prime Minister when she said that there was no intention to privatise the Health Service?
    Mr. Forsyth: The journal which the hon. Gentleman described as obscure was the "European Journal". The advertisement was not for contracts with the Greater Glasgow health board but asked for expressions of interest in the provision——
    Mr. Worthington: It invited tenders.
    Mr. Forsyth: If the hon. Gentleman knows the answers to the questions, I am surprised that he bothers to ask them. The advertisement was placed in the journal to establish whether firms with the necessary expertise and ability might be able to assist Greater Glasgow health board to offer the best possible service to patients. Once again, an Opposition Front Bench spokesman makes it perfectly clear that he puts the interests of the public sector unions and the briefings that he receives from particular interests in the Health Service above the interests of patients.
    Mr. John Marshall: Does my hon. Friend agree that it is high time that Labour Members stopped inventing scares that merely cause concern to the elderly and the ill and recognised that a record number of patients are being treated by a record number of doctors and nurses? The Health Service can look forward to more good news later this afternoon.
    Mr. Forsyth: I agree with my hon. Friend. The building programme of the Health Service in Scotland is the biggest in its history. In Scotland a major new hospital extension has been built every two months since the Government took office. More patients are being treated and a wider range of services is being offered, which is due in part to the success of general management. Unfortunately, the Labour party seems to oppose every innovation. it opposed competitive tendering but supported those who went on strike, thereby leading to patients having their operations cancelled. Patients will benefit from the courage and determination of the management of the Health Service, who receive no support from the Labour party.
    Mr. Speaker: I think that I am at fault for allowing this question to go wide. I thought that I heard the Minister say that there was no intention to privatise hospital laboratory services. May we now please stick more closely to the questions on the Order Paper?

    Council of Fisheries Ministers
    Mr. Wallace: To ask the Secretary of State for Scotland whether he intends to attend personally the next European Council of Fisheries Ministers.
    Mr. Rifkind: Scottish Office Ministers attend Fisheries Councils whenever possible, and in all cases where matters
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    of direct importance to Scotland are being discussed. I hope to attend the Fisheries Council meeting scheduled for December.
    Mr. Wallace: I congratulate the Secretary of State on what I think will be his debut at a Fisheries Council meeting. Will the meeting discuss the steps that the British Government and other Community nations are taking to reach the targets set under the multi-annual guidance programme? Before the right hon. and learned Gentleman goes to that meeting, will he persuade his colleagues in the Ministry of Agriculture, Fisheries and Food and the Treasury to show more willingness to implement a decommissioning programme? Many people in the industry believe that such a programme is necessary if the industry is to be managed properly so that it can face the present great crisis.
    Mr. Rifkind: As yet, we cannot be certain about the details of the December meeting, although it is likely that total allowable catches will be discussed.
    There are different views and great uncertainty about the principle of a decommissioning scheme. There was a decommissioning scheme in the past which was severely criticised by the Public Accounts Committee and the National Audit Office. We must take that into account before concluding whether another such scheme would be appropriate.
    Mr. Younger: I welcome my right hon. and learned Friend's intention to be present at these meetings when required. Can he assure the House that he will be in the closest possible contact with the Scottish fishing industry during the negotiations? I ask him not to hesitate to make it clear that, although times may be difficult, the position would be incomparably worse if stocks were to be overfished, making them of no use in the future.
    Mr. Rifkind: I welcome my right hon. Friend back to our deliberations on these occasions. We value highly our close liaison with the Scottish Fishermen's Federation and other fishing organisations. I met leaders of the fishing industry on Monday and my noble Friend the Minister of State had a further meeting with its representatives yesterday. There is general agreement that those who have the long-term interests of the industry at heart must take account of the best evidence that we have on fishing stocks. Clearly, it would be against the interests of the communities that depend on fishing if stocks were overfished, thereby denying a future to one of Scotland's important industries.
    Mr. Robert Hughes: Is the Secretary of State aware that the sudden closure last week of the North sea haddock fishery left the Aberdeen Fish Producers Organisation with 600 tonnes of haddock for the remainder of the year? This will deprive fish producers of their catch and of about £1 million in revenue. Is the right hon. and learned Gentleman aware that there appear to be proposals on the table for a further cut of haddock quotas of 30 per cent. compared with last year, and for another severe cut in cod quotas? This leaves the management of North sea fishing in an absolute shambles. Does the right hon. and learned Gentleman agree that we need a sensible, rational, planned system of fisheries management if fishing communities throughout the country, especially in the north-east of Scotland, are not to face total ruin?
    Mr. Rifkind: The fish processors' organisations have made it especially clear to the Government and to the wider community that they strongly believe in the need to conserve fishing stocks because overfishing would not be in the interests of their industry. The Scottish Fishermen's Federation has made some sensible and attractive proposals on possible improvements to conservation measures. The Government believe that the federation is reacting constructively and helpfully. We intend to build on its proposals with regard to the possible introduction of new conservation requirements. We have recently published a consultative document on licence aggregation to help to deal with the problem of capacity. That, too, will be a useful contribution to making progress.
    Sir Michael Shaw: Is my right hon. and learned Friend aware of the strong feeling among English fishermen, especially on the Yorkshire and north-east coast, that there has been serious overfishing of haddock stocks in Scotland and that, because of a lack of control over Scottish fishing, my fishermen are being denied their rightful quota, on which they depend at this time of year? Will my right hon. and learned Friend make the Fisheries Council aware that next year we expect to have a compensatory increase in our quota and we expect measures to be taken to ensure that overfishing in Scotland does not continue?
    Mr. Rifkind: My hon. Friend will appreciate that at present there is neither a Scottish nor a Yorkshire quota for haddock. It is for the producer organisations to try to ensure, in the administration of the scheme, the best use of the available quotas. There has been some controversy not simply between Yorkshire and Scotland, but within Scotland on whether certain stocks have been overfished by some producer organisations to the disadvantage of others. That suggests that better administration of the scheme by the producer organisations may be appropriate.
    Mr. Wilson: The Secretary of State will want to reconsider, in the light of advice, his statement, that there is no Scottish haddock quota. We noted in the press this morning a report that the "Buchan bulldog" is to return as a member of the A-team of the Parliamentary Under-Secretary of State, the hon. Member for Stirling (Mr. Forsyth), to revive the fortunes of the Scottish Conservative party. For starters, the "Buchan bulldog" should get his teeth into the Secretary of State and force him to do something for the Scottish fishing industry. Does the Secretary of State accept that there is a huge credibility gap between scientists and Scottish fishermen in the assessment of stocks, especially haddock, and will he tell us how much independent judgment is exercised by scientific advisers in Scotland?
    Mr. Rifkind: Scottish fishermen will note the hon. Gentleman's frivolous approach to their present difficulties. The Commission and the Department of Agriculture and Fisheries for Scotland both receive scientific advice. It is in the interests of the fishing industry that, if the advice coincides, our attitude towards quotas is based on it. Our attitude cannot be based on aspirations or on a desire to maximise fishing irrespective of the implications for the long-term health of fish stocks. That might bring some short-term relief, but it would bring long-term criticism, and Her Majesty's Government would not wish to follow that course.

    GPs' Contracts
    Mr. Norman Hogg: To ask the Secretary of State for Scotland what discussions he has had with the medical profession on general practitioners' contracts; and if he will make a statement.
    Mr. Michael Forsyth: I met the Scottish general medical services committee twice earlier this year and on 16 March I wrote to all general practitioners in Scotland seeking their views on the terms of a new contract. My right hon. and learned Friend and I met representatives of the medical profession on 12 April when I wrote again to all GPs with proposals for changes to the contract in Scotland. My right hon. and learned Friend was also represented at about 100 hours of meetings with the profession's national negotiators which resulted in agreement being reached on 4 May.
    Mr. Hogg: Apart from the Minister's well-publicised clones in Chester street, who agrees with the Government's proposals? Would it not be a good idea for the Minister to take the advice of the Secretary of State, as advanced at the Tory party conference, and listen to what the patients and doctors have to say? None of them consents to what he proposes.
    Mr. Forsyth: May I say in the nicest way possible to the hon. Gentleman that had he listened to my answer, he would have heard me say that agreement was reached on 4 May. He asked who agreed to the proposals. The answer is the negotiators on behalf of the doctors who recommended the proposals to their members.
    Sir Hector Monro: In view of the misinformation put out by the medical profession to patients and our constituents, will my hon. Friend publish a document showing the undoubted gains to patient care from the medical contract and the gains to the medical profession in financial resources?
    Mr. Forsyth: I shall consider my hon. Friend's suggestion carefully. It is important that good information about the contract is available and he is right to point to one of the unfortunate aspects of the dialogue. There have been many misleading claims about the Government's proposals for the Health Service which have frightened people and caused needless anxiety, especially among the elderly. I welcome the fact that the British Medical Association has now acknowledged that its assertions about indicative budgets for drugs, for example, which it claimed would result in drugs not being available to patients, were not correct and that patients will be able to obtain the services that they require. The new contract will ensure that doctors who turn up in the middle of the night, who are available to their patients and who provide a broad range of services are properly rewarded, and that must be a great step forward.
    Mr. Ernie Ross: If anyone is being misleading, it is the Minister, who has suggested that the contract was agreed by the doctors. The agreement was between the Minister and his officials, and the negotiators. The contract was rejected by the doctors and by the overwhelming majority of the patient population in Scotland. If the Minister has come here to mislead the House, he should try it on some other group, because we have discussed the Scottish

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    doctors' approach with them and they are 100 per cent. opposed to the contract. The Minister would do well to correct his statements to the House.
    Mr. Forsyth: I certainly said nothing in any way misleading. I know that the hon. Gentleman, with his association with the trade union movement, will take a particular view of the difficulties that are caused when those negotiating on behalf of a group find the ground cut from under their feet because their members refuse to back a package freely negotiated between the parties.

    Patients
    Mr. Jack: To ask the Secretary of State for Scotland what has been the percentage increase in out-patient attendance in day cases and in-patients treated in the Scottish Health Service since 1979.
    Mr. Michael Forsyth: Between March 1979 and March 1989 there was an increase of 608,717, or 11·7 per cent. in out-patient attendances, an increase of 95,699 or 119.2 per cent. in day cases and an increase of 144,531, or 19·6 per cent. in in-patient discharges.
    Mr. Jack: May I, through my hon. Friend, congratulate those involved in the provisions of health care in Scotland on those remarkable figures? May I ask my hon. Friend—on the other side of the medical balance sheet—whether he is undertaking any programmes to improve health education and preventive measures in Scotland to help to contain the need for further resources?
    Mr. Forsyth: I can reassure my hon. Friend. Our future priorities for the Health Service include an emphasis on preventive medicine and the new GPs' contract is intended to reward GPs who place more emphasis on preventive medicine. My hon. Friend is right to point out how remarkable those figures are. They show a Health Service that has never been better funded or treated more patients. That is the result of the Government's investment in the Health Service, which stands in stark contrast to the record of the previous Labour Government. In every year in which the Government have been in office, Health Service funding has increased. In recent times, only under the last Labour Government have cuts been made.
    Dr. Godman: We have been discussing the proposed changes in the provision of health care. Is the Minister aware that each and every one of the consultants at Inverclyde royal hospital voted against that hospital's opting out? Will he assure me that that balance of view against will mark the end of his proposal for the opting out of that hospital?
    Mr. Forsyth: I have no proposal for the opting out of any hospital. Self-governing hospitals will remain part of the National Health Service. Self-governing status will be available on a voluntary basis to hospitals that wish to benefit from it. I should have thought that consultants and other professionals—and, indeed, Members of Parliament —would wish to wait for a proposal and then examine that proposal carefully to see whether it was in the interests of patients and the community as a whole. That is the basis on which proposals for self-governing status will be evaluated in future. It will be entirely a matter for the hospitals, including Inverclyde royal hospital, to decide
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    whether they will benefit from decisions being taken at local level rather than above their heads at health board level or by my Department.

    Migration
    Mr. Harry Greenway: To ask the Secretary of State for Scotland how many people migrated from Scotland (a) to England, (b) to other parts of the United Kingdom and (c) to other parts of the world in the past 20 years; and if he will make a statement.
    The Minister of State, Scottish Office (Mr. Ian Lang): Over the last 20 years, estimated net migration from Scotland has totalled 146,000 to the rest of the United Kingdom and 181,000 to other parts of the world.
    Mr. Greenway: Can my hon. Friend confirm that those figures show that far fewer Scots are emigrating under this Conservative Government than under previous Labour Governments—[Interruption.]
    Mr. Speaker: Order.
    Mr. Greenway: —presumably because the Scottish economy is now stronger than it has ever been? Will my hon. Friend explain the Scottish saying that when a Scot emigrates to another land, both countries benefit?
    Mr. Lang: My hon. Friend puts his point well. I believe that it was an Englishman who said that for centuries Scots have travelled the world keeping the Sabbath and everything else that they could lay their hands on. Scotland has benefited from the fact that many Scots have found themselves important positions south of the border, for example as chairmen of companies such as ICI and Shell. The Cabinet benefits from the presence of a Scottish Lord Chancellor and a Scottish Minister responsible for information. I am sure that Scotland and the United Kingdom are the better for their presence.
    Mr. Canavan: Do the migration statistics include the hon. Member for Southend, East (Mr. Taylor) whose reported advice to Scottish Tory Members is, "If you're looking to the future lads, you'd better follow my example and migrate to a safe Tory seat in the deep south"?
    Mr. Lang: Southend, East has never been better represented than it is now and Scotland still benefits from the knowledge and experience of my hon. Friend the Member for Southend, East (Mr. Taylor).
    Mr. Andy Stewart: Historically Scots have always left home to conquer, and most succeed—for example. my right hon. Friend the Secretary of State for Education and Science and former Chief Secretary to the Treasury. On the other hand there is a very tiny minority who do not succeed. A constituent of mine who found the going tough, went back home to Scotland and he is now the hon. Member for Clydesdale (Mr. Hood). Does my hon. Friend agree that if Socialism spreads south of the border, we will witness emigration on a scale seen in East Germany today?
    Mr. Lang: My hon. Friend is absolutely right. Under Labour Governments in the 1960s and 1970s overseas emigration reached about 150,000. In the past five years overseas emigration has been running at about one third of that level. Clearly, fleeing from Socialism occurred under Labour Governments before, just as it is happening now in eastern Europe.
    Mr. Malcolm Bruce: Does the Minister accept that the harsh reality is that the population of Scotland is falling and that our brightest and best continue to leave? Even in an area like my constituency where the population is growing, matters are not helped by companies like BP which promise to bring jobs to Scotland and then make 900 people redundant.
    Mr. Lang: The hon. Gentleman is wrong about BP. It employs more people in Scotland now than at the time of the Britoil takeover. The hon. Gentleman may also like to know that all the regions of Scotland with the exception of Strathclyde and, to a very small degree, Lothian and Tayside, have had population gains. With regard to emigration within the United Kingdom, the recent figures suggest that there is at present a flow back to Scotland.

    Council House Sales
    Mr. Knox: To ask the Secretary of State for Scotland how many council houses have been sold to sitting tenants in Scotland since May 1979.
    The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): Since April 1979, nearly 164,000 public sector houses in Scotland have been sold to sitting tenants. Included in that figure are over 117,000 sales by local authorities.
    Mr. Knox: Can my hon. Friend say what percentage of the council house stock in Scotland has been sold to sitting tenants and how that compares with the percentage in England? If the former is still lower than the latter, what is my hon. Friend doing to increase sales in Scotland?
    Lord James Douglas-Hamilton: First, I can say that the figure is 16·5 per cent. in Scotland and 21·2 per cent. in England. Since my hon. Friend last asked this question, the gap has been closed by 0·1 per cent. I am sure that that percentage will increase. It is very important that public sector sales released more than £1,600 million for other public sector housing in Scotland.
    Mr. Ron Brown: Is it not immoral for construction companies in Edinburgh to try to bribe councillor Tom Darby when that councillor has proved his innocence? Is it not wrong that the hon. Gentleman's Government should bribe Barratts to the tune of over £300,000 to develop a site at west Pilton in my constituency? That sum of money has been kept secret—the Government will not divulge it, but we know it. Why do the Government reek of double standards? The Minister should explain that because many people want an answer.
    Lord James Douglas-Hamilton: I think that the hon. Gentleman is trying to ask whether the SDA has made a grant for building renovation in his constituency. I strongly support the SDA's efforts to bring about urban renewal in Scotland, because they have benefited not only the hon. Gentleman's constituents but my own.
    Mr. Andrew Welsh: Does the Minister agree that council house purchases can turn into a financial nightmare because of the Government's policy of high mortgage interest rates and because some house construction is fundamentally flawed, such as occurred with the Whitson-Fairhurst houses, even when bought in good faith? The Minister is aware of my constituents who are caught in a financial no-man's-land between Dundee
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    district council and the Government who are unwilling to rectify past mistakes. When will the Minister sort out that matter?
    Lord James Douglas-Hamilton: A number of houses have been designated as defective. When people bought public sector houses without the knowledge that they were defective, the Government were duty-bound to be of assistance. The hon. Gentleman's constituents are in a different category, but I will look into the specific case that he mentioned.
    Mr. Allan Stewart: Does my hon. Friend the Minister condemn the disgraceful action by Glasgow district council in attempting to deny tenants their statutory rights to buy? Is that not a frightening omen of what might happen under a Labour Government?
    Lord James Douglas-Hamilton: Yes. I agree entirely with my hon. Friend. More than 14,000 tenants have been encouraged to sign forms stating that they will not exercise the right to buy unless they drop the discount if their houses are improved. The case against the district council has been won, and there the matter rests.

    Elderly People (NHS Services)
    Mr. McAvoy: To ask the Secretary of State for Scotland if he will allocate to health boards, the resources required to ensure that services for the elderly can be provided entirely within the National Health Service.
    Mr. Michael Forsyth: No. The effect of such a proposal would be to end the very valuable role played by voluntary agencies, such as Age Concern Scotland and Scottish Action on Dementia, in the provision of services to the elderly.
    Mr. McAvoy: Does the Minister recall his answer at the last Scottish Question Time, when he said that the Glasgow health board had sufficient capital? How does he square that with the health board's statement that its lack of capital forced it not to build a geriatric hospital at Rutherglen? Does he concede that his policy of starving health boards of capital is tantamount to blackmail and forces boards throughout Scotland to bring in private companies which are interested only in profit and not the care of the elderly?
    Mr. Forsyth: The hon. Gentleman must be aware that we have a record level of capital spending in the Health Service in Scotland. This year it was £148 million. When the hon. Gentleman's Government were in office, they cut the capital building programme. The Greater Glasgow health board is inviting private sector companies to build facilities for the elderly, one of them in the hon. Gentleman's constituency, which will provide unrivalled standards of care for the elderly. As a result, the board will be able to use its capital budget to carry out further improvements in the Health Service. It recently announced its proposals for consultation, which offer Glasgow the prospect of hospitals that are able to provide the standards of the next century. I should have thought that the hon. Gentleman would welcome that. He has often asked for provision to be made for the elderly in his constituency. That provision is now being made. He should look at the

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    example of Takare—there are examples in England—and see for himself the standards of service which are being provided.
    Mr. Rathbone: I understand my hon. Friend's answer about the elderly, but will he ensure that sufficient services are provided for the treatment of drug misusers so that they can all be treated within the National Health Service?
    Mr. Forsyth: I can certainly reassure my hon. Friend. I am a member of the joint ministerial group that co-ordinates activities in this matter. We have substantially increased expenditure on services for drug abusers and that is very much connected with the fight against the AIDS problem in Scotland, for which we have doubled resources in the past year.
    Mr. Dewar: If the Minister answers his case for short-term savings on the capital budget by using firms such as Takare, does he not run the risk of significant increases in revenue expenditure in the longer term, and has that been assessed? Does the Minister accept that there is justified anxiety about geriatric care becoming a profit opportunity in the private sector? In case the Minister gives the stock answer and accuses me of merely reflecting the views of the board's employees—the auxiliaries, nurses and doctors—will he test the opinion of patients, and if appropriate, their families on this issue and the proposal that firms such as Takare should be introduced in a way that will be seen as a move towards privatisation? Will he take account of the trenchant advice offered by his special campaign adviser in Scotland, the hon. Member for Southend, East (Mr. Taylor), who told the press recently that the White Paper on the Health Service was doing a great deal of damage and, unless major concessions were given, should be abandoned?
    Mr. Forsyth: I think that the hon. Gentleman is aware that his account of what my hon. Friend said is not an accurate reflection of what he actually said—[Interruption.]
    Mr. Speaker: Order.
    Mr. Forsyth: In respect of the substance of his question, the hon. Gentleman will also know that the Takare proposals provide an opportunity for elderly people, who are perhaps currently using hospital accommodation which is expensive and not suited to their needs, to be looked after in purpose-built facilities of the highest standard. That will result in a revenue saving for the Greater Glasgow health board. There are many examples of elderly people being kept in acute hospitals—where they block beds—at great expense in conditions such as we do not want to see in the Health Service. The hon. Member for Glasgow, Garscadden (Mr. Dewar) might like to join me in visiting the Takare facilities in the south and judging for himself the standard of care provided.
    Mr. Teddy Taylor: May I draw to my hon. Friend's attention the view of many of us that the great unhappiness and distress caused to the elderly and disabled community is due to the shameful misinterpretation of our Health Service proposals? The Minister should concentrate on getting across the facts contained in the proposals. Would he appeal to the Labour party, irrespective of its views on political issues, not to use propaganda to cause misery and unhappiness to sick people?
    Mr. Forsyth: I am grateful to my hon. Friend for explaining the position and I agree that the Health Service and health care in our country is so important that it should not be the political football which the Labour party has made it. It is because the Labour party has no positive proposals for the improvement of the Health Service in this country that it has had to resort to misrepresenting our proposals in the way outlined by my hon. Friend.
    Mr. Kirkwood: Does the Minister agree that one of the best ways of delivering care to the elderly in future will be by developing a proper system of community care? Does he agree that it is absolutely scandalous that his English counterpart, the Secretary of State for Health, is publishing the White Paper about community care in England tomorrow when no hon. Member will be able to cross-examine him? What steps is he taking to make available to the House his views about the future of community care in Scotland and what resources is he prepared to put behind the provision of those services?
    Mr. Forsyth: The hon. Gentleman will know that we have placed considerable emphasis on community care. He will see from the SHARPEN proposals, which were published some time ago, the priority which we give to care for the elderly. The White Paper will be published following a consultation period after our response to the Griffiths report. We certainly intend to take a flexible approach, and it is important that resources are transferred to local authorities to ensure that they play the key role—which they will have in the future—in ensuring proper care in the community.

    Defence Industry Employees
    Mr. Brazier: To ask the Secretary of State for Scotland what is the number of employees employed in the defence industry or defence-related industries in Scotland.
    Mr. Lang: The Ministry of Defence estimates that in 1986–87, the latest period for which estimates are available, some 17,000 people in Scotland were directly employed with contractors supplying equipment to the Ministry of Defence.
    Mr. Brazier: Can my hon. Friend confirm that the high level of involvement that he has mentioned, together with the disproportionately high contribution that Scottish people have made to the armed forces over the generations, confirms the strong commitment of Scottish people towards the defence of these islands and belies the pacifist attitude of many Opposition Members?
    Mr. Lang: I am happy to confirm that. Indeed, 10 per cent. of United Kingdom defence industry employment is to be found in Scotland, which is higher than our share of the population. Scotland has always made a major contribution to the defence of the United Kingdom.
    Mr. Dunnachie: Does the Minister know that the engineering plant at Shank and Barchead has been threatened with closure and that that closure poses a threat to the defence of the British nation because it is the only engineering plant in Britain that produces a specialist valve for the Royal Navy? Will the Minister use his good offices to ensure that the closure does not take place, thus safeguarding the nation?
    Mr. Lang: Commercial decisions of that sort are essentially for the management of the company, but I feel sure that if the valve is as special as the hon. Gentleman has suggested, a way will be found to ensure that it continues to be available to the Ministry of Defence.
    Mr. Steel: Will the Minister have a word with his right hon. Friend the Secretary of State for Defence and ensure that an early and favourable decision is made about the award of the radar system for the European fighter aircraft to Ferranti Systems in Edinburgh?
    Mr. Lang: The right hon. Gentleman will know that that is not exclusively a matter for the United Kingdom Government; it requires agreement among the partners in the EFA project. Certainly Ferranti remains in contention, but the matter has yet to be decided.

    Scottish Police Federation
    Mr. Shersby: To ask the Secretary of State for Scotland when he last met the chairman of the Scottish Police Federation.
    Lord James Douglas-Hamilton: My right hon. and learned Friend last met the then chairman at the federation's annual conference in April 1988.
    Mr. Shersby: When my hon. Friend next meets the chairman, will he assure him that the negotiations that are currently taking place in the police arbitration tribunal will be completed before there is any question of reaching a decision or issuing draft regulations on rent allowances?
    Lord James Douglas-Hamilton: We shall certainly go ahead with the negotiations as quickly as possible. An important point for my hon. Friend and for the police officers concerned is that the level of rent allowances for the police will be restored to them and backdated by regulations from 1 April this year. Those regulations will be brought forward as quickly as possible which, I believe, is exactly what the police want.
    Mr. Home Robertson: Will the Minister also discuss the case for a fair comparison of the remunerations of all the emergency services, including the ambulance service?
    Lord James Douglas-Hamilton: I have no responsibility for the ambulance service, but I have the utmost admiration for the emergency services with which I have had to work.
    Sir Hector Monro: Will my hon. Friend take the opportunity when he next meets the chairman of congratulating the chief constable of Dumfries and Galloway and all his police officers, and other Scottish police officers, on their outstanding work in the Lockerbie air disaster investigation? Will he associate himself with the remarks of the Lord Advocate that media speculation is singularly unhelpful in concluding an investigation and does nothing to alleviate the feelings of relatives?
    Lord James Douglas-Hamilton: Yes, I agree entirely with my hon. Friend on both counts. The police have been extremely painstaking in the investigation and nothing should be said or done to impede that in any respect.

    Ferranti
    Mr. Strang: To ask the Secretary of State for Scotland whether he has had any discussion with Ferranti's Scottish group about the necessary financial reconstruction of the company following the acquisition of ISL in the United States of America and its implications for the future of the Scottish economy; and if he will make a statement.
    Mr. Rifkind: Scottish Office officials are keeping in close touch with senior company management and with other interested Government Departments, and are keeping me very much informed about developments. The Government share the general concern about the future of operations in Scotland and elsewhere, and are taking a great interest in the company's efforts to resolve its present difficulties.
    Mr. Strang: Is the Secretary of State aware that the more we learn about the prospective partners or purchasers to whom the Ferranti board is talking, the more worried we become about the thousands of Ferranti jobs in Scotland? Is acquisition by a company such as Singapore Technology seriously being considered? Does the Secretary of State accept that direct equity participation by Thomson CSF could be especially damaging to the highly successful Edinburgh-based operation? Finally, will the Secretary of State make it clear in Cabinet that the final financial settlement must be one that will allow Ferranti to make its substantial contribution to the Scottish economy?
    Mr. Rifkind: As the hon. Gentleman knows, a significant number of companies have expressed an interest in a relationship with Ferranti, but it is primarily a matter for the company itself which, of course, is a private sector company. The extent to which there may be a Government interest either in the defence implications or the competition implications of any proposal will fall to be considered only when a particular proposal is put forward for either a merger or an acquisition of Ferranti.
    Mr. Darling: Is the Secretary of State aware that a growing number of people in Edinburgh are getting the distinct impression that the Scottish Office is acting like a disinterested spectator of Ferranti's future? Is he aware that the company's future, in defence and as a major component of the electronics industry, is too important to leave to the vagaries of the market place? Should not the Secretary of State and his colleagues in the Department of Trade and Industry take an active interest in the future of the company and start fighting to get the radar contract? Otherwise we will lose a major chunk of our electronics industry in Edinburgh and in Scotland. Is it not time that the Secretary of State did something about that?
    Mr. Rifkind: If the hon. Gentleman really had the interests of the company at heart, he would know that little can do more damage to the interests of the company and to confidence in it than the belief that the Government have had to intervene or should intervene to resolve matters. The company has made it clear that it is not seeking intervention from the Government and it believes that it must be permitted to determine its own future within the normal constraints. If the hon. Gentleman does not believe that, it shows how out of touch he is with the industrial world in which we live.
    Mr. Hayward: Does my right hon. and learned Friend find it amazing that Opposition Members stand up and plead on behalf of factories in their constituencies, when the Labour party has voted for a reduction in defence expenditure of as much as one third which would put at risk 7,000 jobs in Scotland alone?
    Mr. Rifkind: Those who work in defence industries in Scotland, or in the United Kingdom as a whole, have never been in any doubt about the disastrous implications for their employment of the Labour party coming to office with its old policies, its new policies or any future shred of policy it may care to put before them.

    Local Government Finance
    Mr. Douglas: To ask the Secretary of State for Scotland if he will make a statement on the consequences for local authority manpower and expenditure of the recently announced changes in poll tax payments and exemptions.
    Lord James Douglas-Hamilton: The manpower and expenditure consequences of all but one of the amendments to the community charge legislation included in the Local Government and Housing Bill are expected to be minor. The one exception is the transitional relief scheme. The Government have already undertaken to reimburse reasonable administrative costs incurred by local authorities.
    Mr. Douglas: Does the Minister have the figures which would show the massive increase in the cost of collecting the poll tax, compared with the rating system, and the massive increase in personnel involved? Will he take time to read yesterday's excellent editorial in The Scotsman, which said that no matter what the Government try to do with the tax, it is becoming a shambles and ought to be completely removed from the statute book?
    Lord James Douglas-Hamilton: Of course the collection of the community charge will be more expensive because it applies to more people. Before the hon. Member criticises that form of taxation he should remember what his own environment spokesman had to say. He said:
    "The two tax idea had a great deal of merit but when it was approved by the Home Policy Committee I took a lead in expressing concern about the difficulty of selling two taxes".
    The hon. Member should also make representations to his own Front Bench.
    Sir Nicholas Fairbairn: Does my hon. Friend think that if the hon. Member for Dunfermline, West (Mr. Douglas) is worried about an increase in expenditure on the collection of the tax falling on those who have to pay it, he should obey the law and pay his own?
    Lord James Douglas-Hamilton: Yes, I would say to my hon. and learned Friend that those who refuse to pay community charge when they are well able to do so are sponging of the rest of the community.
    Mr. Maxton: Is the Minister yet able to tell us what the recalculated allocation to Glasgow district council will be? Does it not illustrate the obscurity of the poll tax system
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    that on 1 April there will be a massive increase in the poll tax for my deprived constituency in Castlemilk, while the wealthy citizens of Eastwood, Bearsden and Milngavie may have a cut in their poll tax? Is it not quite absurd, in the year when Glasgow is the city of culture, representing the United Kingdom throughout the world, that the Secretary of State is cutting the amount of money which he will give it?
    Lord James Douglas-Hamilton: I am glad to say that this is being sorted out as a matter of urgency. The revised distribution proposals will be issued to COSLA and to local authorities within the next few days. I must make it clear that the figures issued in the statement earlier this week were provisional and that the grant is not payable until next April. Therefore, things will be sorted out quickly.

    A9
    Sir Russell Johnston: To ask the Secretary of State for Scotland what improvements he proposes for the A9 between Perth and Inverness.
    Lord James Douglas-Hamilton: The A9 has been fully reconstructed between Perth and Inverness to the great benefit of the economy of Inverness and the surrounding areas. I hope to make a statement on an agreed package of further improvements in the near future.
    Sir Russell Johnston: Is the Minister aware that the recent spate of accidents on the A9 has caused a great deal of concern? Part of the cause of those accidents must be the road's design—alternate dual and single carriageway, long slow curves where overtaking is difficult and many crossing points. I look forward to hearing the statement that the Minister has promised us.
    Lord James Douglas-Hamilton: We have consulted the hon. Gentleman's chief constable and his regional council and we shall introduce a package of accident remedial measures that could involve signposting, markings on the road and improving its surface in various parts. In the past few weeks I have travelled up and down the A9 to his constituency and, overall, it is an extremely good road. Certain parts of it, however, need urgent attention and that will be put in hand.

    Oral Questions
    Mr. Speaker: I have a short statement to make about the operation of the 4 o'clock shuffle, which determines the order of oral questions due for answer two weeks ahead.
    With effect from the start of next Session the shuffle will be done by computer, instead of manually as at present. [HON. MEMBERS: "Hear, hear."] Order. I have inspected the new system and I am fully satisfied that it is more efficient than the present arrangements, and, more importantly, equally fair.
    If any hon. Member wishes to see the new system in operation, the Table Office will be glad to arrange this.

Autumn Statement
3.31 pm
The Chancellor of the Exchequer (Mr. John Major): With permission, Mr. Speaker, I should like to make a statement.
Cabinet agreed the Government's expenditure plans this morning. I am now able to inform the House of the public expenditure outturn for this year; the plans for the next three years; proposals for national insurance contributions in 1990–91; and the forecast of economic prospects for 1990 required by the Industry Act 1975.
The main public expenditure figures, together with the full text of the economic forecast, will be available from the Vote Office as soon as I sit down. The printed Autumn Statement will be published next Wednesday.
Tight control of public expenditure remains a central element of the Government's economic strategy. In the past seven years this has led to a sharp fall in the ratio of public spending, excluding privatisation proceeds, to national income. This fall has made it possible to improve dramatically the Government's finances while still making substantial reductions in tax rates. The ratio of public spending to gross domestic product was nearly 47 per cent. in 1982–83. In the current year, it is likely to be 38·75 per cent., significantly below the level expected at the time of the last Autumn Statement. For the next two years the plans I am announcing today show ratios of 39 and 38·75 per cent. Those are unchanged from the ratios published in last year's Autumn Statement, and permit a cash increase in general Government expenditure in 1990–91 of around £5·5 billion. By 1992–93 the ratio is expected to fall further to its lowest level since the mid-1960s.
For the current year, the outturn of expenditure is expected to be about £168 billion—£1 billion higher than the original planning total. This partly reflects a lower level of privatisation proceeds, but its principal cause is massive overspending by local authorities on both current and capital account. As the House knows, new arrangements for the finance and control of local authority expenditure in England and Wales are being introduced on 1 April 1990. This year's outturn shows how necessary those new measures are. Central Government spending remains firmly under control.
The plans for the next three years have been set on the new definition of the planning total which the Government announced in July last year and which was welcomed by the Treasury and Civil Service Select Committee. This includes central Government support for local authorities, but excludes their self-financed expenditure. The composition of general Government expenditure remains unchanged.
For 1990–91, the new planning total has been set at £179 billion and, in the following two years, at £192 billion and £203 billion respectively. Within that, the estimates of privatisation proceeds are unchanged, at £5 billion a year. There are also substantial reserves, rising from £3 billion in 1990–91 to £6 billion and £9 billion in the following two years.
The new plans also show continued real growth in spending on the Government's priorities. Thus, between this year and next, spending on the National Health Service in the United Kingdom will rise by £2,400 million. Taking account of income generation and cost savings, that is equivalent to a £2,600 million increase in resources,
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or 5·5 per cent. in real terms. These plans will finance the improvements in the management of the service outlined in the National Health Service review. They provide more than £200 million extra for hospital building and other capital expenditure next year; and they will finance continuing growth in services for patients. They are the clearest possible evidence of the Government's practical commitment to improving the care available in the National Health Service.
There will be substantial increases also for investment in transport. Spending on national roads is planned to double between 1988–89 and 1992–93. Extra financing of £400 million to £500 million a year is being made available for the railways and London Regional Transport, including upgrading the services on Network SouthEast and the London Underground, to relieve congestion and improve safety, and for rail services for the Channel tunnel. In total we have added £1·8 billion to the planned spending on transport in the next two years.
The plans provide an extra £250 million over the next two years for a new initiative to tackle homelessness, to be announced today by my right hon. Friend the Secretary of State for the Environment. Central Government support for the provision of new homes by housing associations will more than double from £800 million in 1989–90 to £1,700 million in 1992–93.
My right hon. Friend the Secretary of State for Social Security has already announced real increases in benefits which will help 1·5 million families and 500,000 long-term sick and disabled people.
There will be a further increase of over £500 million in the total resources available for higher education in 1990–91 compared with this year. It will provide for the continuing growth in the number of students, which has risen by 30 per cent. since 1979, and is now at a record level and it will cover the cost of the Government's proposals on top-up loans. There is provision for more environmental research, including the new climate change centre and the doubling of our contribution to the United Nations environmental programme.
About £1·5 billion has been added to planned capital spending by central Government and public corporations in 1990–91. That represents a real increase of around 10 per cent. compared with 1989–90.
Mr. Eric S. Heller: On a point of order, Mr. Speaker, I have been a Member for a long time, but I wish to know whether I am allowed to ask the Chancellor of the Exchequer a question. He is making a long statement. Am I allowed to ask a question and, if not, when can I ask him a question?
Mr. Speaker: Surely the hon. Member does not need to pose that question. If I call him later, he can ask the Chancellor a question then.
Mr. Major: The new plans include the money central Government provide to support local authority spending. The Government's proposals for aggregate external finance in 1990–91 were announced to the House in July. Measures have also been announced which will ease the transition from rates to community charge. The cost to the taxpayer of these measures will be nearly £700 million in 1990–91, with further substantial sums in each of the following two years.

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Capital grants and credit approvals will provide central Government support for local authority capital expenditure under the new arrangements. The new plans provide support for a sustained programme of school and college building and modernisation, for local authorities to contribute to the homelessness package, for transport projects, as well as capital spending on other local services, including local roads and environmental improvement.
As in the past, these improvements have been possible only through a rigorous selection of priorities, substantial gains in value for money, and a very welcome reduction in the burden of debt interest. They have been found within an affordable level of total public spending. Overall public spending excluding privatisation proceeds is expected to grow on average by 1·75 per cent. a year in real terms throughout the period between 1988–89 and 1992–93. This was the rate of growth projected in last year's Autumn Statement and we have stuck to it. Over the 1970s, a decade of high borrowing and high inflation, as well as high public spending, it grew not by 1·75 per cent. a year but by 3 per cent. a year.
The Government's new plans demonstrate their continuing commitment to two vital principles: first, to maintain firm control over total spending; and secondly, to increase efficiency in order to provide more resources where they are most needed. I should like to congratulate my right hon. Friend the Chief Secretary on his skilful and successful conduct of the public spending round.
I turn next to national insurance contributions. As the House knows, we have now implemented the reform of employee contributions announced by my right hon. Friend the member for Blaby (Mr. Lawson) in the Budget. From last month, two of the three step increases in contribution rates have been abolished. This means that employees who get pay increases taking them just above these steps can no longer lose more in higher contributions than they gain in extra pay. And the initial step at earnings of £43 a week, where people first enter the contribution system, has been more than halved. These measures have reduced contributions by up to £3 a week for nearly 19 million employees and are of particular help to many employees on modest incomes; they have also removed some important disincentives.
The usual autumn review of contributions has been conducted in the light of advice from the Government Actuary on the prospective income and expenditure of the national insurance fund, and taking account of the statement on benefits made in October by my right hon. Friend the Secretary of State for Social Security.
Next year, the initial class 1 contribution rate payable on earnings up to the lower earnings limit will remain at only 2 per cent. This means that a payment of only 92p a week will buy entitlement to the basic pension and other contributory benefits for those who earn just enough to pay contributions. On additional earnings, up to the upper earnings limit, the rate will remain unchanged at 9 per cent. For employers, the main rate will also be unchanged at 10·45 per cent.
The lower earnings limit will be increased to £46 a week, in line with the single person's pension, and the upper earnings limit will be raised to £350 a week. For employers, the upper limits for the three reduced bands will be increased broadly in line with prices.
I am also publishing today the economic forecast required by the Industry Act 1975.
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It is clear beyond doubt that the economy has greatly strengthened over the last decade. We have experienced eight years of strong and sustained growth with inflation at moderate levels. This has brought an increase in employment of about 2·75 million since March 1983 and a sustained rise in living standards.
However, it is also clear that in the last two years, 1987 and 1988, demand, and with it output, rose at a rate which exceeded expectations and could not be sustained. That became apparent in increased inflationary pressures and the growth of the current account deficit.
These pressures had to be reduced and monetary policy was tightened accordingly. The effects of this tightening are already apparent in recent retail sales figures, and the turnaround in the housing market.
The Government's fiscal position is also very strong. I now expect this year's fiscal surplus to be about £12·5 billion, equivalent to 2·5 per cent. of GDP. That represents a very tight fiscal stance by any standards.
Both tax yield and expenditure are higher than forecast at Budget time, but lower proceeds from privatisation and the very high take-up of personal pensions mean that the public sector debt repayment will be slightly below the Budget projections.
Looking at the wider economy, as always, a great deal inevitably depends on the actions of companies and individuals. So there is bound to be uncertainty about the speed with which the economy will adjust to the present tight stance of policy. Our forecast is that growth in domestic demand will be a little over 3·5 per cent. in the current year—a sharp, but inevitable, slowdown from over 7 per cent. recorded in 1988.
Non-oil GDP is expected to grow by 3 per cent. this year. GDP growth as a whole for the current year looks like turning out at 2 per cent., a little below the forecast published at Budget time. This results from lower than expected North sea oil production, which is taking longer than expected to recover from the several serious accidents of the past two years.
Business investment is likely to increase by 9·25 per cent. this year, giving a total of over 40 per cent. in the three years to 1989. This is the largest-ever rise in business investment over a three-year period and is two and a half times as fast as the growth of personal consumption over the same period. This has inevitably contributed to strong import growth and a higher current account deficit in the short run. Notwithstanding this unwelcome effect, the resulting increase in productive capacity will help to sustain the growth of output and in due course bring the deficit down.
Looking ahead to 1990, our tight fiscal and monetary policy will have an increasing impact both on household spending and on company spending, which typically reacts later than the personal sector. Investment should continue to grow, but it will do so more slowly.
The slowdown in the economy means that GDP is forecast to increase by only 1·25 per cent. in 1990. This will bring the average growth in the four years to 1990 to 3 per cent. a year.
As domestic demand slows, import growth should moderate. At the same time, the strong rise in exports, which has been one of the most welcome developments in 1989, is forecast to continue. Non-oil visible exports are expected to rise by over 11 per cent. this year, the highest rate since 1973, and we expect a further substantial

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increase next year. As a result, we now forecast that the current account deficit will fall from some £20 billion in the current year to about £15 billion in 1990
We will also see a further reduction in inflation. The headline measure of retail price inflation has already peaked at over 8 per cent. in May and June this year, and has since come down a little. Following the recent rise in mortgage rates, it will remain high for some months, but our forecast is for it to fall to 5·75 per cent. by the fourth quarter of 1990, and I expect to see it fall still further after that.
Our main priority must be to bring inflation decisively down, and keep it down. To achieve this, the economy must slow down for a while. This does mean that 1990 may not be an easy year, but the economy enters the 1990s in incomparably better shape than it entered the 1980s. The supply side reforms of the last decade have left business and industry better able to handle both the short-term difficulties before us and the longer-term opportunities to come. I have no doubt that we must stick to the policies that have turned the economy around, and that we are determined to do.
Mr. Anthony Beaumont-Dark: On a point of order, Mr. Speaker. It directly involves the statement.
Mr. Speaker: If it directly involves the statement, it cannot be a matter for me.
Mr. Beaumont-Dark rose——
Mr. Speaker: No. I will not hear the hon. Gentleman now.
Mr. Beaumont-Dark rose——
Mr. Speaker: Sit down, please. The hon. Gentleman must contain himself. He knows perfectly well——
Mr. Beaumont-Dark rose——
Mr. Speaker: No. Sit down, please. If the hon. Gentleman catches my eye, he will be able to ask a question on the statement.
Mr. Beaumont-Dark: When will you hear it?
Mr. Speaker: When question time arises after the Front Bench spokesmen.
Mr. Beaumont-Dark: It is about this matter.
Mr. Speaker: Order. I will not hear it now.
Mr. John Smith: As the Chancellor of the Exchequer recognised in his concluding remarks, this is the last formal economic statement to the House in the 1980s—the decade of Conservative Government. Is not the bogus economic miracle that has been boasted about on so many previous occasions revealed as a hollow sham by the admission that the Chancellor was forced to make that in 1989 we have, at £20 billion, the largest balance of payments deficit in British economic history?
The steady deterioration in Britain's balance of trade has been matched by appalling Government complacency, perhaps best exemplified by the Prime Minister, who said of the first month in which a deficit of over £1 billion was announced—January 1988:
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"we believe that last month's trade figures were a freak."—[Official Report, 8 March 1988; Vol. 129, c. 184.]
The average for every single month has been substantially over £1 billion—£1·3 billion to be precise. So does a freak become the norm, just as, I suppose, a blip in inflation keeps blipping relentlessly on? With that appalling record in mind, let us examine what we were told in the Autumn Statement of November 1988. The balance of payments forecast was £14·5 billion. Sadly the outcome today is much worse, although the Chancellor had the sauce to present it as if it were a fall.
To arrive at the erroneous prediction, the Government had to argue that the growth in exports would substantially exceed the growth in imports—once again they were wrong. Imports have increased by 9·25 per cent., not 4·5 per cent. as forecast. Far from falling behind exports, imports are, sadly, continuing to race ahead. The theory was that, as interest rates bit into domestic demand, industry would effortlessly switch to export markets and thereby output and investment would not decline. Clearly, that has not happened. Our trading performance has continued to deteriorate. In the last quarter for which we have figures—quarter three of this year—we are further into the red than ever before.
No one doubts that high interest rates are hurting, but clearly they are not working. Was that not the message of the Confederation of British Industry's latest industrial trends survey which warned that nearly one manufacturer in three is expecting to reduce investment in plant and machinery in the next 12 months? It said that the level of orders and the growth in exports have begun to decline and the growth in output has come to a standstill. Is that not the non-complacement and accurate autumn statement on British business?
Is it not abundantly clear that the balance of payments deficit is Britain's gravest economic problem? Why is that not recognised by the Government? Why can they not, even now, comprehend that our deficit is not some temporary mismatch of supply and demand, which matters little if it can be readily financed? Is not the truth that there is a fundamental structural weakness in British industry which has worsened sharply in the decade during which the Government have turned their back on it? Just as investment in manufacturing industry—which is different from business investment, the only investment figure that the Government quote—is clambering back to just a few points above 1979 levels, up go interest rates to slam the process into reverse. Are we not back to the familiar characteristics of Tory economic mismanagement: stop, go and stop again?
Does the Chancellor appreciate that in figures released this very day manufacturing output in 1989 has not increased at all, although the Organisation for Economic Co-operation and Development expects world trade in manufactured goods to rise by 8 per cent. this year? The House and, no doubt, the Select Committee will look with care at the public expenditure figures that the Chancellor announced. They are detailed in the tables that accompany the Autumn Statement. However, I draw attention to what I believe to be a crucial fact about public expenditure.
The real estimate of general Government expenditure in 1989–90—table Al—is calculated at £1874 billion. According to the Government's own table, that is only £1·7 billion up on the previous year. That is an increase of less than 1 per cent.—lower than in 1985, 1986 and 1987. No amount of guileful presentation can hide that fact.

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General Government expenditure has efectively been at a standstill in real terms during the last five years. No wonder that our public services, right across the range, are hardly being sustained, let alone achieving improved standards. No wonder that there is massive skepticism—[Interruption.] I shall deal with hospitals in a moment. [Interruption.]
Mr. Speaker: Order. I ask hon. Members not to shout from a sedentary position. The Chancellor of the Exchequer was heard in silence. I ask the House also to listen in silence to the right hon. and learned Member for Monklands, East (Mr. Smith).
Mr. Smith: I do not doubt that the reiteration of these facts causes pain to Conservative Members. They must console themselves with the thought that it is the price of being Conservatives in modern Britain. It is when we know the truth about the present and the past that we are sceptical about the future.
I turn to the National Health Service, about which claims are made by the Chancellor of the Exchequer. He says that there is to be an increase in resources amounting to £2·6 billion—£2·4 billion, plus cost savings of £200 million. Is it not correct that, of this amount, £1·2 billion will be accounted for by the general Government deflator. that £500 million will be accounted for by the additional National Health Service deflator, that £200 million is accounted for by supposed savings, not yet achieved, that £250 million is the cost of the National Health Service review and that about £500 million may be available for increased patient care? I should like the Chancellor to go through each of those points and tell me whether they are correct. People are familiar with claims being made about additional resources having been made available to the National Health Service, although it seems to them to be declining every time they need to make use of it.
I should also like to ask the Chancellor about his homelessness package of £250 million to be spent over two years. Is it not correct that that is likely to provide about 5,000, or perhaps at a stretch 10,000, new homes? Is that an adequate response when we know that there are 100,000 extra homeless persons each year—that is, people accepted on to local authority housing lists?
On education, may we have an assurance from the Chancellor of the Exchequer that education expenditure this year will he sufficient for him to come to the House next year and say that no children are being sent home from school because there are no teachers to teach them?
The Autumn Statement shows that, compared with last year's forecast, output is down, the balance of payments is worse and inflation is up. What is worse, for the year to come, output will fall from 2 per cent. to a meagre 1·4 per cent.—one of the lowest predicted rates since the last recession and in marked contrast to our competitors. But, in spite of the slowdown, according to the Government's predictions, the balance of payments deficit will remain in double figures—still the worst performance among the major industrial countries—and inflation will remain high, well above the level in other major industrial countries. The price may well be paid by those who become unemployed as a result.
I fear that this is yet another revelation of the extent to which our economy is being mismanaged, whoever is the nominal Chancellor of the Exchequer.
Mr. Beaumont-Dark: On a point of order, Mr. Speaker.
Mr. Speaker: If the hon. Gentleman is seeking to ask a question——
Mr. Beaumont-Dark: I am raising a point of order. Until you have heard it, Sir, how can you rule me out of order?
Mr. Speaker: When an hon. Gentleman raises a point of order, he should not say he wants to ask a question about the statement. By definition, that is patently not a matter of order. I shall take the hon. Gentleman's point of order.
Mr. Beaumont-Dark: We are all meant to be hon. Members of the House; some are more honourable than others. On such an important statement, Front-Bench spokesmen have the statement an hour before, and other hon. Members have it a quarter of an hour before. As we are all elected Members, on such a statement why should some of us be trusted and some not? Why cannot we all have the statement at the same time? Why are they to be trusted more than us?
Mr. Speaker: I am sorry that the hon. Gentleman feels that he is in the latter category. It has always been a convention that Front-Bench spokesmen have received the statement in advance and Back Benchers do not have that privilege. I wish that they did.
Mr. Major: The right hon. and learned Member for Monklands, East (Mr. Smith) raised a whole series of points and I shall deal with them. I must say that he has a considerable capacity for gloom, and I really wish that he would not paint down the performance of British industry. In his gloomy package in which he sought to paint down British interests, he overlooked entirely that growth is continuing, investment is continuing, inflation is falling and the trade gap is narrowing. Apparently all those points escaped the right hon. and learned Gentleman.
In regard to the detailed points that he raised about whether or not there is a standstill in public services, I draw his attention to the increase in capital expenditure on public services of £1·5 billion next year on roads, housing, education, health, rail and the urban development corporations. I remind him that, under the last Labour Government, capital spending fell and it has risen very dramatically under this Government.
In regard to the National Health Service, of course the factors that the right hon. and learned Gentleman mentioned are incorporated in any increase in public expenditure, notwithstanding that there is an increase in real terms of 5·5 per cent. The right hon. and learned Gentleman cannot stomach the fact that on revenue and capital year after year we increase the resources available to the National Health Service.
Next year, there should be a substantial correction to the balance of payments of over 1·25 per cent. of GDP, which is one of the largest corrections ever. I should have thought that the right hon. and learned Member for Monklands, East would have welcomed that.
The right hon. and learned Gentleman was wrong about exports, which are continuing to grow. Our forecast is that exports and manufacturing output will continue to grow next year.
Interest rates, contrary to the right hon. and learned Gentleman's suggestion, are working. There has been a slowing down in activity, which is necessary to bring down

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inflation. Monetary policy is playing a key role in that slowing down, and will continue to do so in the forthcoming months.
Manufacturing investment has been speeding ahead successfully. It rose by nearly 11 per cent. in 1988, and, although final figures for 1989 are not available, yet again it showed considerable and strong growth.
We expect the homelessness package to provide at least 15,000 new lettings. My right hon. Friend the Secretary of State for the Environment will give full details of the package later this afternoon.
As I said earlier, there will be a substantial real increase in resources for higher education, which will assist the education process all the way down.
Mr. Terence L. Higgins: Does my right hon. Friend agree that in any Autumn Statement it is important to combine prudence with the right sense of priorities? Is he aware that it is important that he has achieved the same ratio of public expenditure to national income as was predicted last year for the period that we are about to enter? Does he accept that increased expenditure on the National Health Service is much to be welcomed? Does he agree that he has selected the right combination to manage the economy since a tough monetary policy is being backed up by a massive surplus and a tight fiscal policy?
Mr. Major: I entirely agree with my right hon. Friend. If one is to maintain a prudent budget, the importance of declining public expenditure as a share of national income is self-evident. In this year's public spending round, we have sustained precisely the ratios forecast in last year's Autumn Statement. For the new year three of the forecast, the ratio will fall yet again. We have certainly met my right hon. Friend's strictures on that point. In my judgment, the majority of people in Britain and in the National Health Service will give the increases a warmer welcome than the right hon. and learned Member for Monklands, East. My right hon. Friend was entirely right to draw attention to the twin capacity of monetary policy and fiscal policy to bear down on inflation. I give him a clear undertaking that we shall continue to use both.
Mr. A. J. Beith: Does the Chancellor recognise that his attempts to pull rabbits out of hats will not fool those who must consider the figures in detail or those who must use them to try to hold together declining public services? Does he recall last year's promised increase of 4·5 per cent. for the Health Service, which turned out to be 1·5 per cent. and was insufficient to cover extra inflation in the Health Service or the range of demands on it?
Does the Chancellor accept that the figures that he quoted for transport will not build the two lines through central London for which the previous Secretary of State for Transport argued and will not fund the high-speed rail links that the north and Scotland need to the Channel tunnel? How many houses will be built as a result of the package that he announced today?
What has happened to the medium-term financial strategy, which was always quoted in previous statements? Does the Chancellor now accept his predecessor's view that some stronger external discipline, such as full membership of the European monetary system or an independent central bank, is needed?
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How does the Chancellor expect industry to expand on present interest rates? As his predecessor's forecast of the trade deficit was so wildly inaccurate, does he expect us to believe the forecast of £15 billion? Does he realise that he is presiding over an economy that is on the edge of recession and therefore needs prudent public expenditure, or does he still hold out to Conservative Members the hope of tax cuts in his first Budget?
Mr. Major: There were so many inaccuracies in the hon. Gentleman's introduction that I can scarcely list them all. We are certainly not in a position of recession. We are forecasting further growth, although slower than before. The slowdown in growth is necessary if we are to bring down inflation and ensure that there is a return to the steady and sustained growth that we have had for the past eight years. We are not prepared to let inflation get out of hand. Although that means slower growth next year, it is necessary for that to happen before we return to the levels of growth that we have seen in the past two or three years.
The hon. Gentleman's suggestion that there is a standstill in public services is a parody of my statement today which provides an extra £350 million in capital for roads, £190 million for housing, £100 million for education, £120 million in capital for health, £250 million for urban development corporations and £195 million for rail services. Clearly, the hon. Gentleman did not hear me mention that the homelessness package will provide an extra 15,000 homes and that my right hon. Friend the Secretary of State for the Environment will make a further statement about the details later today.
On transport, the increase in capital over the next two years is £1·8 billion, which, even in the hon. Gentleman's wildest imagination, cannot possibly be a standstill.
Sir William Clark: Does my right hon. Friend agree that his reaffirmation of his tight fiscal and monetary policy will be widely welcomed not only in the House but in the City? Does he agree that this year's public expenditure and next year's are the same proportion of GDP, which means that we are on target? For too long, the Opposition, and often the media, have been talking down sterling and our economic performance. They never once give any credit for our achievements. It was interesting to watch the reception that the Opposition gave to my right hon. Friend's statement. They were glum. If the Autumn Statement had been a bad statement, they would have been jumping with glee, as everyone knows. Let us not for one moment put off our strict monetary and fiscal controls until we have conquered inflation. There is no question but that the whole country will be grateful for that.
Mr. Major: I give my hon. Friend a categorical assurance that the reduction of inflation remains the Government's central and main priority, and that will continue. My hon. Friend is entirely right about public expenditure. We have maintained the target which we set ourselves on the ratio of expenditure to national income. That, too, is important as part of the counter-inflation policy. The reception that the Opposition gave the Autumn Statement speaks for itself. For them, bad news is often good news, and their glumness is self-evident.
There will be real improvements in services. They are eminently affordable because of the growth and improvement in the economy in recent years.
Mr. Robert Sheldon: Is the Chancellor aware that the most serious point in this serious economic statement is that the balance of payments is expected to be £20 billion this year and £15 billion next year, which is higher than the estimate in last year's Autumn Statement? Is the right hon. Gentleman aware that, to sustain this, he will have to attract money from overseas at high interest rates, thereby damaging manufacturing industry? Will he ensure that some assistance is given to manufacturing industry, possibly by increasing investment allowances?
Mr. Major: I do not underestimate the difficulties of the trade gap. The most serious problem that we face is undoubtedly inflation, and it will remain inflation. The right hon. Gentleman will have noticed the dramatic reduction in the trade gap, which we forecast, of well over 1·25 per cent. of GDP—one of the largest reductions year on year that we have seen.
Mr. David Howell: My right hon. Friend has public finances under excellent control. His calm presentation is in pleasant contrast to the gabbled pronouncements of the right hon. and learned Member for Monklands, East (Mr. Smith). I realise that the other half of his Budget, on revenue, will not be formulated until February or March. However, when he comes to formulate the tax side of his Budget, will he bear in mind that a large surplus is not necessarily an undisguised blessing and that he should be thinking about a balanced Budget? Will he reject the advice of some Opposition Members and others who argue—for their own sake, I suspect—that there should be substantial tax increases to create a large surplus in the Budget when a balanced Budget would be the most necessary and desirable?
Mr. Major: I am grateful to my right hon. Friend for his opening remarks and also for the first budgetary representation I have received. As my right hon. Friend will know, our policy has been for a balanced Budget in the medium term, although, in the short term, we need to retain a strong fiscal position.
Mr. Peter Shore: In spite of the Chancellor's comment about the reduction in the trade gap this coming year, is it not clear that the additional deficit of some £15 billion will result, together with the deficit over the past three years, in a cumulative current account deficit of £50 billion, equal to one half of the total net assets earned by this country over the centuries in its dealings with other nations? Is that not evidence of a serious loss of competitiveness in British industry and British trade? What proposals does he have for dealing with that loss of competitiveness and what are his assumptions about the exchange rate in the coming year?
Mr. Major: The right hon. Gentleman defines the wrong cause when he refers to the size of the trade gap. The substantial problem is the level of demand, rather than the extent of competitiveness. The fact that British industry is competitive at the present levels of exchange rate is more than evidenced by the tremendous growth of exports in the past year, which most certainly would not have occurred if that were not true. If the right hon. Gentleman cares to look up the figures. he will see that the growth in our exports far exceeds the growth in the level of world trade. Like the right hon. Gentleman, I am keen
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to see the deficit reduced, although I draw to his attention the fact that we have perhaps the second largest net overseas investments in the world.
Mr. James Kilfedder: Can the Chancellor of the Exchequer assure us that ample funds will be provided for the security forces and the Royal Ulster Constabulary in Northern Ireland in the fight against terrorism, as such terrorism must be extirpated regardless of the financial cost?
Mr. Major: I am grateful to the hon. Gentleman for making that point. We all have great admiration for the work of the security forces in Northern Ireland, and they will continue to receive our full support.
Mr. William Ross: I understood the Chancellor to say that there would be an increase in expenditure from £168 billion to £203 billion over a relatively short period. If the Government really have the defeat of inflation as their first priority, will the increase be met out of taxation or by a decrease in the sums available for the repayment of the national debt? If the second option is chosen, how will he prevent inflation in future years, when those huge sums seep into the general economy?
Mr. Major: The hon. Gentleman may have misheard the figures. The increase in expenditure on the general Government expenditure measure next year will be £5·5 billion, and he will observe that we have a strong fiscal surplus.
Mr. Neil Hamilton: Is my right hon. Friend aware that Conservative Members view with equanimity his statement that 1990 will not be an easy year because the corollary is that 1991 and 1992 will be very difficult years for the Opposition?
May I welcome the fact that reports in the newspapers about the Autumn Statement are belied by what my right hon. Friend has said in the House this afternoon? Matters are by no means as gloomy as some representatives of the media would have us believe. However, does he agree that the Government should continue to reduce the proportion of GNP that public expenditure takes? It is only by doing that that the supply side reforms which have done so much to produce high growth over the past 10 years can be continued.
Mr. Major: My hon. Friend is entirely right that it remains our medium-term objective to reduce public expenditure as a proportion of national income. My hon. Friend can be utterly sure that we are determined to get inflation down further, and that will be a significant part of our economic policy for the future.
My hon. Friend referred to matters trailed in the newspapers. The situation is by no means as gloomy as some of them portray. Growth will continue. There is no recession. Investment will continue. Inflation will fall and the trade gap, too, will fall.
Mr. Heifer: Is not the right hon. Gentleman speaking with two voices? On the one hand, he tells his hon. Friends that he is doing his best to cut public expenditure, while on the other hand he has made a mini U-turn by deciding to listen to some of his Back Benchers and the Opposition Front-Bench spokesmen and proposing to increase public expenditure in certain directions.

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Would it not be better if, in increasing public expenditure on housing—which I fully support—the right hon. Gentleman agreed that the only bodies that can deal with homelessness are the local authorities, and that they ought to be given greater help in doing so? Should not the money be directed to local authorities—and increased—to help those in local authorities to deal with homelessness, the greatest scandal that the Government face?
Mr. Major: The hon. Gentleman does me an injustice by suggesting that what I say to Opposition Members differs from what I say to my hon. Friends. But I am bound to say, "If you can't ride two horses, perhaps you ought not to be in the circus." Our policy is to cut public expenditure proportionately to national income, and that certainly leaves the opportunity for public expenditure increases on priority programmes. That has been our policy—and has been carried out as our policy—for a considerable number of years.
The hon. Gentleman asked about homelessness. I am very pleased at the package that my right hon. Friend the Secretary of State will be announcing this afternoon. Local authorities have a role, but not, I think, the only role, and the direction in which the resources are to go is the best direction that will produce the best result for the homeless.
Mr. Ian Stewart: Does my right hon. Friend agree that it would not have been possible to allocate considerable extra resources to priority areas of expenditure, and at the same time to exercise general constraint over total public expenditure, had it not been for the saving of debt interest, which is the direct result of responsible budgets over many years? Will he not hesitate —in support of tight monetary policy—to introduce an austere Budget in the spring if necessary, recollecting that tight monetary policy is most effective in bringing down inflation when it is coupled with tight fiscal policy?
Mr. Major: I shall introduce next spring the Budget that I think is right for the country in the circumstances that prevail then. My hon. Friend is entirely right about debt interest. There is a saving between this year and next year of £2 billion in debt interest because of the prudent and successful manner in which the economy has been run in recent years. That means that this taxpaying generation will be the first for 200 years to pass a smaller level of debt on to the next generation.
Mr. Jack Ashley: Is the Chancellor aware that, although the House is properly and understandably divided on macro-economic issues, we are almost completely united in wanting the Treasury to provide full and immediate compensation to haemophiliacs affected by the AIDS virus. As a former Minister with responsibility for the disabled he must understand that, and as Chancellor of the Exchequer he is in a powerful position to do something about it. Will he help please?
Mr. Major: The whole House knows the sincerity with which the right hon. Gentleman speaks on these matters. However, this is a matter for my right hon. and learned Friend the Secretary of State for Health. The Government made £10 million available to the Macfarlane Trust last year and the Department of Health has always made it
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clear that if representations were made that further contributions were necessary, it would be prepared to consider them.
Mr. John Townend: May I congratulate my right hon. Friend on keeping a firm control on public spending this year despite all the pressures. I am sure that his statement will reinforce the Government's policy to bring inflation down and will be welcomed in the City. What is the level of the contingency reserve for next year? Is he satisfied that it will be adequate as it has been overspent by £1 billion this year? Will he consider returning to the practice of looking at broad money when fixing monetary policy?
Mr. Major: I entirely agree with my hon. Friend that the control of public expenditure is vital, and we will maintain that control in future. I have set a figure of £3 billion for the reserve for the first year of the account, £6 billion for the second and £9 billion for the third. That is smaller than in the past because some local authority expenditure will no longer come out of the reserve as it is now dealt with outside the planning total, but within general Government expenditure. The overspending of the reserve this year was overwhelmingly due to an overspend by local authorities on current and capital accounts of £2·75 billion and a shortfall in privatisation receipts of £0·75 billion.
Mr. Giles Radice: Does the Chancellor accept that the only way in which the deficit can be reduced to £15 billion as forecast is either by recession or depreciation—or both?
Mr. Major: No. We have neither, and the hon. Gentleman is entirely wrong.
Mrs. Edwina Currie: Is my right hon. Friend aware that during his excellent statement the faces of the Opposition Members slowly became glummer and glummer? The extra £2·6 billion for the National Health Service must mean that spending on health in this country will be at record levels. Is it not time that we took the Opposition's claim that we are out to destroy the NHS, wrapped it in £2·6 billion and stuffed it down their unwilling throats?
Mr. Major: I have less forceful tendencies than my hon. Friend. However, I certainly accept the thrust of her points. It is perfectly clear that good news is bad news for the Opposition. Their expressions showed that only too clearly today.
Mr. Jim Sillars: Will the Chancellor confirm that his forecast of an increase in gross domestic product of 1·25 per cent. next year is based on a number of assumptions, perhaps the most crucial being the level of sterling which the Treasury document refers to as remaining near or close to present levels? Will he allow the market to determine that, or will he try to buck the market, as did his predecessor? Has that fatal issue at the heart of the Government yet been reconciled?
Mr. Major: General Government expenditure is expressed in cash and the figure that I gave for it was £5·5 billion. I said earlier that our exports had done extremely well, notwithstanding the level of the exchange rate in recent months. I believe that a firm exchange rate is an important component of our anti-inflation policy.
Mr. Nicholas Budgen: Is it not significant that in his main statement my right hon. Friend said nothing about the exchange rate? Is it not ironic that during this last year, while the Government have been proudly proclaiming that the pound will not fall, it has in fact fallen by 10 per cent. against the deutschmark? Is it not possible that the Government are moving towards being able to proclaim publicly that it is not possible for them or any Government to decide the external value of the pound?
Mr. Major: As my hon. Friend will know, the exchange rate is not mentioned as a matter of course in the Autumn Statement year upon year. The present exchange value of sterling is almost precisely the same as it was two years ago.
Mr. Brian Sedgemore: Does the Chancellor of the Exchequer understand the concept of the warranted rate of economic growth? If he does, can he explain why it is so much lower in 1989 than it was in 1979? Will the deliberations of the Select Committee on the Treasury and Civil Service on the Autumn Statement be helped or hindered by the appearance before it of the former Chancellor of the Exchequer and the former chief economic adviser to the Prime Minister?
Mr. Major: The hon. Gentleman's latter point is most certainly not a matter for me. I certainly look forward to making an appearance before the Treasury and Civil Service Committee and all the delights that that usually provides. The hon. Gentleman will be well aware of the economic growth in recent years, and we have forecast further growth next year.
Mr. Timothy Raison: Is my right hon. Friend aware that there will be a warm welcome for two increases in real terms which he did not mention this afternoon—those for the arts and for overseas aid?
Mr. Major: My right hon. Friend is entirely correct. There has been a significant increase both for the arts and for overseas aid in the plans announced today.
Mr. Ted Rowlands: One of the right hon. Gentleman's first observations when he became Chancellor was that if it is not hurting it is not working. How many more people will not be working as a result of the estimated decline in growth from 3·5 per cent. to 1·5 per cent?
Mr. Major: The crucial factor in how many people will be in work will be the level of wage settlements that are decided upon in the months to come.
Mr. Phillip Oppenheim: Bearing in mind Opposition Member's correctly placed emphasis on manufacturing industry, will my right hon. Friend remind them that manufacturing output actually fell under the previous Labour Government, whereas it has risen substantially, especially in recent years, under this Government? Will he comment on the balancing item, which shows that our balance of payments deficit is not nearly as bad as the figures indicate?
Mr. Major: My hon. Friend is certainly correct about the statistical difficulties of the balance of payments, although it is difficult to draw conclusions as to the precise extent to which the balance of payments deficit is
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overestimated. That it is overestimated is certain, but I suspect that most of the balancing item relates to capital rather than current, so I would not care to give an estimate of the extent to which it is inaccurate.
Mr. Peter L Pike: The Chancellor talks of reducing the trade deficit from £20 billion to £15 billion as though it would be an achievement. Does he recognise that investment in a key manufacturing region such as the north-west is 36 per cent. less in real terms than it was in 1979? Does he recognise also that he will do more to improve that great deficit if the Government do two things —first, take a positive approach to manufacturing industry and, secondly, take a positive approach to the regions, which would also be in the best interests of the nation as a whole?
Mr. Major: The regions have been doing extremely well over the past few years. The hon. Gentleman should bear in mind that the tremendous growth in investment is certainly welcome in terms of improved productive capacity in this country, but, in the short term, it is widening and not narrowing the trade deficit. In the medium term, it will undoubtedly narrow the trade deficit, and we welcome it from that point of view. The hon. Gentleman is entirely wrong to say that manufacturing investment has been falling. It has been rising, and rising substantially.
Mr. Patrick Cormack: Is my right hon. Friend aware that the genuine and general welcome to the increased expenditure for the National Health Service will grow throughout the country if he heeds the plea that has already been made this afternoon on behalf of haemophiliac AIDS victims? Will he please talk to our right hon. and learned Friend the Secretary of State for Health and urge him to devote a significant proportion of that money to providing adequate compensation and not merely welfare payments to those people?
Mr. Major: I do not think that I have anything to add to my answer to the right hon. Member for Stoke-on-Trent, South (Mr. Ashley). We all share the sympathy and concern that has been mentioned, and no doubt my right hon. and learned Friend will approach me if he thinks that it is necessary to do so.
Mr. Dennis Skinner: Is the Chancellor of the Exchequer aware that, 10 years ago, one of his predecessors said that the Tory Government were inviting the British people to ride in a solid gold Cadillac called monetarism? The right hon. Gentleman has had to attend the House today with another vehicle, a junk bond economy vehicle. The economy is now being put into reverse. He is asking the British working classes to tighten their belts to save the economy. Instead he should take back the £26·2 billion which, cumulatively, has gone into the pockets of the wealthiest 1 per cent. of the population. If he wants another £1·3 billion, why does he not stop water privatisation? There is some money there which he could transfer to the Health Service.
Mr. Major: As the hon Gentleman may have heard mentioned a few moments ago, we have just transferred a substantial amount of money—£2·6 billion—to the National Health Service, which is a substantial increase in real terms. If the hon. Gentleman wants to remind people

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about 1979, I can remind him about the substantial reduction in capital expenditure on the National Health Service which occurred in the period up to 1979.
Mr. Donald Thompson: Does not my right hon. Friend agree that there is no part of the economy or services which, between now and 1979, could be compared to the advantage of the Opposition? That is why the Opposition select various overseas examples from countries which often have worse underlying economies than ours.
Mr. Major: My hon. Friend is entirely right. The Opposition are specialists in fantasy figures.
Mr. D. N. Campbell-Savours: With the announcement in the past few hours that there was a 1·1 per cent. reduction in manufacturing output in September, and with the problem of an unclosable trade gap, why do the figures—published by the Government and just made available in the Vote Office—show a steady reduction in support for trade and industry over the next three years? Surely that is exactly where the money should go, and yet, in all the projections, the budget allocations and the planning totals are down for subsequent years.
Mr. Major: The hon. Gentleman is entirely wrong. Industry does not want handouts; it wants the right economic tax structure and bases, which is what it has. The output figure to which he referred is a one month's figure and is known to be an erratic indicator. Output has not fallen during the past three months
Mr. John Butterfill: Does my right hon. Friend accept that, at a time of economic restraint, most people are glad that he has been able to concentrate on investment for the future and provision for the sick and needy? Does he share my concern that the Labour party did not welcome the huge investment in housing but instead requested that it should be given to the municipal authorities? Does he share my suspicion that the Labour party wishes to recreate the feudalism of the massive municipal council estates? Has the Labour party perhaps learnt that those who we have set free through the right to buy are no longer voting Labour?
Mr. Major: My hon. Friend is right about that and he is also entirely right to draw attention to the 10 per cent. real increase in capital investment in the public sector for the forthcoming year.
Mr. Jim Cousins: Does the Chancellor accept that his statement today showed a cut in spending on science compared to last year's plans and no real growth for next year? What would he say to the scientific community, whose hopes of sustained investment in Britain's long-term economic future will have been dashed?
Mr. Major: I do not accept what the hon. Gentleman says because he is wrong. There is to be an 8 per cent. increase in science expenditure in the coming year which is on top of a 24 per cent. increase—I take that figure from memory—last year.
Mr. Ian Taylor: Will my right hon. Friend accept congratulations on the public sector surplus of £12
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billion for the forthcoming year, which shows that the tight fiscal stance, alongside the high cost of money, is bearing down on the inflation rate? Will he note the welcome given to the targeted increases in public expenditure, particularly in areas which will affect the supply side of the economy, such as transport? Will he confirm that these increases in public expenditure are not inflationary, particularly when the cost-benefit analysis shows that their benefit to the economy will be greater than their cost?
Mr. Major: My hon. Friend is entirely correct. The increases are affordable and targeted on priority areas. My hon. Friend slightly underestimated the public sector debt repayment figure, which is £12·5 billion.
Mr. David Winnick: In view of what he said last year, it is perfectly understandable that the Chancellor's predecessor has not turned up today.
Does the right hon. Gentleman accept that today's statement will mean continued misery for millions of people who are repaying mortgages and who will continue to face high interest payments? Does not the Chancellor recognise—with his background, perhaps he should—that there are so many people who could never afford a mortgage, the homeless and the near-homeless, who are desperately in need of rented accommodation, whose problems will certainly not be resolved in any way by the small amount of rented accommodation that the Chancellor has predicted will be available. Do the Chancellor and the Prime Minister understand the problem? Will they be visiting homeless people and those in bed-and-breakfast accommodation this coming Christmas?
Mr. Major: It was precisely because of concern about people in difficult circumstances that the targeted increases in the new homelessness package were brought about. They should be a significant help. I entirely understand the difficulty that high mortgage rates are creating for many people. However, if it is necessary to bring down inflation and to use monetary policy to do so, we must do that. If inflation gets out of hand, everybody will be hurt—home owners and non-home owners alike.
Mr. Teddy Taylor: I congratulate my right hon. Friend the Chancellor on his sound and sensible address, but will he tell me whether he is concerned or worried about the alarming increase shown in table 11 of Britain's net contribution to the EEC, which has increased from £1 billion in the last financial year to £2,000,030,000, which is £3 per week for each British family? Will he carry on the excellent work of the Prime Minister in seeking to reduce that crazy high figure that is costing every family in Britain far too much?
Mr. Major: I certainly noticed the figure to which my hon. Friend refers, but he will know that it is substantially less than it was before its renegotiation by my right hon. Friend the Prime Minister.
Mr. Teddy Taylor: It is the highest ever.
Mr. Major: For the future, I know that my hon. Friend will join me in saying that there are still substantial amendments to be made to the common agricultural policy.
Mr. Stuart Bell: Will the Chancellor of the Exchequer note that his predecessor regularly came to the Dispatch Box at the time of the Autumn Statement to tell us that he was wrong about inflation, wrong about the money supply, wrong about the trade deficit and wrong about the state of the economy? Is it not a fact that those wrong forecasts in the past have now led the Chancellor of the Exchequer to come to the House today to say that 1990 will not be an easy year? Will he confirm that, with inflation touching 6 per cent. in a year's time, with growth rates at 1·25 per cent. next year, and with the balance of payments moving from £20 billion to £15 billion, the British public will think that these last 10 wasted Tory years are the years that the locusts have eaten?
Mr. Major: The hon. Gentleman is wholly wrong. If he looks at the record of my right hon. Friend the Member for Blaby (Mr. Lawson), he will see, first, the most remarkable supply-side changes in the economy to have been delivered at any stage this century and, secondly, a far higher living standard across every range of income in this country than existed a few years ago. That is a record of which my right hon. Friend the Member for Blaby can be justly proud.
Mr. Robert Adley: Is my right hon. Friend aware that those of us who remember the record of the Labour Government from 1974 to 1979 are little short of amazed at the effrontery of the right hon. and learned Member for Monklands, East (Mr. Smith)? Would it not be useful, as we are looking back to 1979, to look back a little further, and to recognise that the events that we are now seeing in East Germany are at last releasing the people of the countries of eastern Europe from the miseries of the Weimar Republic, where all this trouble started, when there was a Government who could not control inflation? Is that not something that the British people should ponder?
Mr. Major: It is entirely true that, when people in eastern Europe are given a choice between Socialism and free markets, they choose free markets. It would be deeply embarrassing for the Opposition if I were to remind them of the period leading up to 1979 and of the significant cuts that they made in public investment; but if I am tempted, I am prepared to do so.
Mr. John P. Smith: I was interested to hear the right hon. Gentleman say in the Autumn Statement that there will be an increase in benefits and that about 1·5 million families will get help. Can he tell me whether my constituents, Mrs. Hewson and her son, will benefit from that? That lady came to my surgery in tears the other week to explain that she receives an income of only £58 per week to keep herself and her son. She has been burgled and food taken from her pantry. She went to the Department of Social Security and got a loan that she cannot afford to pay back. I have just been told on the telephone that her benefit has now been stopped entirely. Will that lady benefit from the statement?
Mr. Major: It is impossible for me to comment on the particular circumstances of Mrs. Hewson, but I am sure that if she is in difficulties her local branch of the Department of Social Security will do everything that it can to help her.
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The hon. Gentleman may know that, as I said in my statement, 500,000 long-term sick and disabled people will gain from the disability package; 200,000 people deferring pensions will now be able to draw whatever earnings they have, following the abolition of the earnings rule, and 2·25 million poorer pensioners will gain from the October income support and housing benefit increases.
Several Hon. Members rose——
Mr. Speaker: Order as the House knows, there is an important debate after this in which a great many hon. Members wish to participate. I shall call six more Back-Bench Members from both sides of the House, and I am afraid that we must then move on. I shall certainly bear in mind those hon. Members whom I have not been able to call when we come to debate this matter in the Queen's Speech.
Mr. Nigel Forman: Is it not clear that my right hon. Friend's combination of a well-judged fiscal and monetary policy will be successful in bringing down not only the rate of inflation as measured by the RPI, with all its deficiencies, but also the rate of asset inflation, which has been such a powerful engine of the excessive domestic demand that our policies are now deisgned to curb?
Mr. Major: I entirely agree with my hon. Friend. There is absolutely no doubt that the growth in asset inflation, especially in housing, has added to the extent of the credit boom and the consequent problem with inflation. My hon. Friend is quite correct.
Ms. Hilary Armstrong: Is it any wonder that Opposition Members are concerned about the implications of the Autumn Statement when we know that the money allowed to local authorities for the education of 92 per cent. of the nation's children will not rise next year even in line with inflation; and that at the moment schools are having to implement the new national curriculum, with all its additional resource implications, and to face new testing procedures, again with additional resource implications, and that there are severe teacher shortages up and down the land? What hope, what help, has the Chancellor offered to teachers and to children today?
Mr. Major: As it happens, a considerable amount of help, with a 10 per cent. real increase in education and science provision in the next year; a large increase in support for students and for the fabric and equipment in our schools and colleges. Capital spending per schoolchild is up 8 per cent. in real terms over recent years and local authority capital spending on education is up 25 per cent. in real terms, with three quarters of that money provided by central Government. That is the help that the hon. Lady has overlooked.
Mr. Charles Wardle: Is not my right hon. Friend's determination to control inflation the best possible news for this country? However, will not his projection of a £15 billion trade deficit depend to some extent on the strengthening of the surplus on invisibles? Will he tell the House the basis on which he calculates that improvement?
Mr. Major: During the past year invisibles have been depressed, largely because of a net outflow of interest payments on the invisible account, which is reducing the

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net figure substantially. We think that that will improve significantly in the next year. My hon. Friend is entirely right in intimating that control of inflation must have primacy.
Mr. Bob Cryer: In view of the help that the right hon. Gentleman claims has been given to education, will he tell me why, in Tory-controlled Bradford, there are still 500 rotting temporary classrooms and why children in my constituency have to be bussed from three temporary classrooms, which are now long overdue for repair, to another school where the classrooms are wind and watertight? Is he saying in the Autumn Statement that there will be an injection of money into our education system so that the crumbling schools of Victorian Bradford, which have expanding school rolls, will be able to provide permanent extensions so that the temporary shanty town can be removed?
Mr. Major: The problem arises because Bradford has not been Tory for long enough.
Mr. David Madel: My right hon. Friend has announced welcome increases in spending on public services. Does he agree with me that that will go a long way towards ensuring that the rate of unemployment continues on a downward trend in the next financial year?
Mr. Major: Unemployment has fallen dramatically, but it is even more relevant that there are 2,750,000 more people in employment than in 1983. The future level of employment will depend on the future of wage settlements.
Mr. Toby Jessel: Is my right hon. Friend aware that the 11 per cent. increase in expenditure on the arts is warmly welcomed, as a flourishing arts sector draws visitors to Britain whose spending helps the balance of payments? It must be right to build on our strengths, and to give the lie to any suggestion that the Conservative party does not care about the arts.
Mr. Major: My hon. Friend will also be pleased to hear that the arts programme is a three-year programme, which will provide a firm basis for forward planning by subsidised bodies. It allows for real growth of 7 per cent. next year and a further 2 per cent. the year after.
Mr. Ron Brown: On a point of order, Mr. Speaker. Is it a breach of privilege for a Member of the House to be blackmailed by a known criminal—Dermot Redmond, of 21 Charles road, St. Leonard's-on-Sea, Sussex? Is it in order for that to happen, bearing in mind that he is using information stolen from the House by a former employee? Can the right hon. Gentleman give me some help and advice because, take it from me, other hon. Members could find themselves in the same position?
Mr. Speaker: I hope that no hon. Member is being blackmailed. If the hon. Gentleman is alleging a breach of privilege, it is best that he writes to me in the usual way, and I will carefully examine the matter.
Several Hon. Members rose——
Mr. Speaker: I am sorry that I am not able to call the hon. Members who are rising to ask a question on the statement, but I will bear them in mind in the future.
Mr. Ian Bruce: On a point of order, Mr. Speaker.
Mr. Speaker: As long as it is not a continuation of the previous point of order.
Mr. Bruce: Conservative Members have noted that, during questions on a statement, as long as Opposition Members rise in their places, questions continue.
Mr. Speaker: Order. That is a scandalous allegation for the hon. Member to make against the Chair. I hope that he will not continue with that line.

Vehicle Emissions (Reduction)
4.52 pm
Mr. Keith Mans: I beg to move,
That leave be given to bring in a Bill to encourage the fitting of catalytic converters to all new motor cars.
Just over a year ago I introduced a Bill, under the same procedure, to encourage the use of unleaded petrol. At the time, sales of unleaded petrol were less than 2 per cent. of sales and fewer than 1,500 filling stations sold unleaded petrol. Now, sales account for over 30 per cent., and over 80 per cent. of garages stock unleaded brands.
My intention was to speed up the transfer towards the use of unleaded petrol, and to cut the amount of lead in the atmosphere—that amount is now well below what it was a year ago.
My Bill is designed to reduce other emissions from vehicles. Apart from lead, car exhaust emissions contain carbon monoxide, hydrocarbons and nitrogen oxide, which are associated with photochemical smog, acid rain and health risks, such as respiratory problems.
The latest European Community directive on small-car emissions means that all new cars will have to be fitted with a catalytic converter by 1 December 1992, and new models will have to be fitted with one five months prior to that date. Directives on larger cars are likely to repeat the small-car emissions standards and time scales.
I should like those standards to be applied sooner in Britain. We should not wait until the last minute to make those changes. My Bill provides that all new models would have to be fitted with a catalytic converter by 1 July 1990, and all new cars the following year.
To help the move towards cleaner car exhaust emissions, the Bill provides for tax incentives for car manufacturers and car owners to fit catalysts.
A reduction in new car tax, equivalent to 80 per cent. of the extra cost of fitting a catalyst, would apply to all new cars where work was carried out by the manufacturer. For owners of cars that can be fitted with a catalyst, a refund of the annual vehicle licence fee would meet most of the extra cost.
The catalyst is a relatively inexpensive item, which costs between £50 and £100 for most family cars. In addition, a stainless steel exhaust, and in most cases, fuel injection equipment has to be fitted. The total cost for most cars works out at under £400. Fuel injection equipment results in greater engine efficiency, which usually cancels out any loss of economy from the catalyst. A stainless steel exhaust gives savings in exhaust replacement costs over the lifetime of the motor car, and second-hand cars with catalysts normally command higher prices.
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It has been suggested that fitting a catalyst will increase carbon dioxide emissions. That has to be balanced against the reduction in carbon monoxide and nitrogen oxide emissions, which are both greenhouse gases. Carbon monoxide has a greater effect on global warming than carbon dioxide.
The final part of the Bill calls for the adoption of strict limits on emissions from diesel engined vehicles. Diesel engines do not require lead additives in their fuel and their emissions are generally less polluting than petrol engines, but they produce higher levels of particulates, mainly hydrocarbons, which cause an unpleasant smell and considerable soiling in built-up areas. Of greater importance is the reduction, which they cause, in visibility and the formation of photochemical smog. Recent studies have shown that the fumes are likely to be carcinogenic, as well as causing respiratory problems in some individuals.
The European Community has not tackled the problem of diesel engines effectively. European emissions standards for diesel engine vehicles are well below those proposed in the United States of America. The Bill would set limits for emissions from diesel-engined vehicles, in line with the standards the United States Government are bringing into force in 1991 and 1994. They would cover all diesel-engined vehicles and would lead to improvements in engine design, better fuel quality, a reduction in the sulphur content of the fuel, and the eventual fitting of improved catalytic traps.
Cleaner car exhaust emissions result in a cleaner and healthier environment. The Government are rightly committed to such an environment. We must not delay reducing emissions from petrol-engined vehicles and we must bring standards up to those in Germany and the United States of America.
We are in a strong position to give a lead to the European Community by tackling the problem of emissions from diesel-engined vehicles now. Let us reinforce our commitment to the environment by doing so.
Question put and agreed to.
Bill ordered to be brought in by Mr. Keith Mans, Mr. Andrew Mitchell, Mr. Simon Burns, Mr. Ian Taylor, Mr. Jacques Arnold, Mr. Anthony Coombs, Mr. James Cran, Mr. Julian Brazier, Miss Ann Widdecombe and Mr. Steve Norris.

Vehicle Emissions (Reduction)
  VEHICLE EMISSIONS (REDUCTION)
  Mr. Keith Mans accordingly presented a Bill to encourage the fitting of catalytic converters to all new motor cars: And the same was read the First time; and ordered to be read a Second time upon Thursday 16 November and to be printed.—[Bill 221.]

European Community (Developments)
4.59 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Francis Maude): I beg to move,
That this House takes note of the White Paper, Developments in the European Community January-June 1989 (Cm. 801).
Once every six months the House has an opportunity for a wide-ranging debate on developments in the European Community. The document before us is the White Paper covering events during the Spanish Presidency in the first six months of this year.
Customarily, the House has used this occasion not just to discuss the achievements of the past, although they are considerable, but to look at the possibilities and prospects for the future. For that reason, the timing of the debate is spectacularly good. It would, of course, be unnatural in the course of it to say nothing about the past weeks' events on the Community's frontier.
Last week, in East Germany, we saw successively the resignation of the Politburo, the appointment of successors, the opening of its borders, and a commitment to political reform. There are times when we feel a sudden seismic movement in history, when almost the only certainty is that things can never again be the same. Last Thursday and Friday was such a time.
I arrived in Bonn late on Thursday night for routine discussions on Community matters with my German colleagues. I felt that I had been privileged to share those moving and momentous hours with my German colleagues. They know that we share their exhilaration at those dramatic changes, at this further proof that, as the Prime Minister said at the Guildhall on Monday,
"when people are free to choose, they choose freedom".
Of course my German colleagues and I talked about the dramas of the night. But although their hearts and minds must have been in Berlin, I was profoundly impressed that their response was to turn back to the more prosaic Community matters which I had gone there to discuss. That was perhaps symbolic of our joint commitment to the Community; to our common conviction that the Community can rise to tomorrow's challenges only if it is united in its determination to make the Community succeed. One of those challenges will undoubtedly be the developments in East Germany. Community Heads of Government will have the chance to reflect on this at their meeting this Saturday.
It must be clear to all that the issue for the time being is not reunification, but reform. It must be clear that our common objective must be the establishment of a genuine democracy, with free elections. It is a hazardous process; and we must not risk its failure.
The Community must show that it is ready to extend the hand of friendship to the emerging democracies. My right hon. Friend the Prime Minister foreshadowed that in her speech at Bruges last year, when she urged the Community never to forget those east of the iron curtain, cut off by it from their roots in European culture, freedom and identity.
If the iron curtain is indeed coming down, we in the west need to be imaginative and responsible in reacting to the new opportunities created for those behind it. We must be imaginative and responsible with cool heads and warm hearts, for we need to be alive to new risks, as well as new opportunities, for eastern Europe.
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We must ensure that we in the west hold firm to the policies and principles that have served us so well for so long. The Community must rise to this historic challenge. I have no doubt that it will, but in the same way that reform in East Germany, Poland and Hungary, will only endure if built soundly and steadily, we must ensure that the development of the Community, for development there will be, is both robust and measured. That overriding need is independent of developments in eastern Europe.
The later stages of the prescription for economic and monetary union set out in the Delors report do not cease to be bureaucratic and centralised simply because the Berlin wall has been breached.
It has been said, and said rightly, that the European Community has been a beacon to peoples living under tyranny behind the iron curtain. What they have seen is a Community founded on freedom and building in prosperity. If that beacon is to shine as brightly in the future, we must resolve in unity to build surely and soundly.
The White Paper reviews Community developments in the first six months of this year. It covers a wide range of activity, from the environment to trade policy, from the greenhouse effect to the GATT. It also covers the Community's relations with other European countries, and while eastern Europe justifiably holds our attention, let us not forget the six members of the European Free Trade Association.
I am sure that the House would want to pay tribute to the Spanish Presidency's achievements on the single market: 68 measures removing barriers to trade in the Community were agreed or adopted in the first half of the year. That is the best record of any presidency. Now more than half of the 1985 Commission White Paper measures have been agreed—an average of a measure every 10 days. As is now widely recognised throughout the Community, our role in those deliberations was central and influential.
The thrust of the single market is now liberal and deregulatory. Because we have argued our case reasonably and persuasively, and because it is a good case, we have won the arguments.
For almost two years, I attended the Internal Market Council, conducting negotiations for 1992. During that time I voted against a single market on only one occasion. That was not because progress was too fast, but because it was too slow. I am concerned that progress should be sustained. We earnestly hope that by the turn of the year, the French presidency will have achieved, as did the Spanish, a record number of agreements. We shall work hard to assist them.
In June the European Council in madrid revised the single market priorities to reflect progress that had already been made. The new priorities included financial services, technical standards, transport and public purchasing. I think it lamentable that some of those priorities are moving so slowly.
It is a commonplace that travellers in the Community pay extortionate fares to subsidise national air carriers who are protected from competition. The European Commission has a proposal to reform this. I hope that all 12 member states will give that proposal the same robust support that we do.
We must end the absurdity whereby empty lorries cross frontiers every day because protectionist regulations

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prevent them from picking up return loads. Again, the Commission has proposals for reform. We hope that they will advance swiftly.
Telecommunications are among the most protected industries in the Community. It has been estimated that of £50 billion spent yearly on telecommunications in the Community, no less than £4 billion could be saved if there were liberalisation. The European Commission wants this; we want this; but some of our partners are blocking it.
There has been good progress on frontiers. Many of the problems to which we pointed at the outset have now been widely understood, and solutions are being sought.
Sir Russell Johnston: For some time the Minister has been telling us how robust, vigorous and marvellous the Government are and I concede that that is so in the free market area that he has described. There is a social area as well, however, where the Government have been extremely curmudgeonly, one example being their recent failure to agree the markings on cigarette packets. In due course I hope that the hon. Gentleman will discuss those things.
Mr. Maude: I shall certainly come to those matters and I am sure that I shall deal with them to the hon. Gentleman's complete satisfaction.
I recollect that at the start of the discussions on frontiers it was suggested that because we identified problems in the proposals we were somehow being negative or obstructive. The reality, of course, is precisely the reverse. We all want it to be easier to cross frontiers. I am confident that that can be achieved. But no one would thank us if the price for that was a reduction in effective action against terrorism, drugs and crime.
Unless problems are identified realistically and early, it is quite impossible to devise solutions in good time. We are centrally involved in the search for such solutions, and I am confident that they can be found. So throughout the single market programme, it is we who want progress, it is we who want liberalisation, it is we who want integration. It can be seen that the Commission, in its admirable drive for progress, has no stauncher ally than us.
Increasingly alarming has been the growing gap between agreement and implementation, between rhetoric and action. The Commission has properly taken that seriously. The figures show that our record is exemplary. The Commission will have our full-hearted support in requiring other member states to meet their obligations.
Mr. William Cash: Has my hon. Friend seen the report in the Financial Times a few days ago which completely misinterpreted the Commission's document on implementation to suggest that we were in breach on many occasions? That simply was not the case. Does he agree that the Financial Times should rectify that?
Mr. Maude: That should first be rectified by the Commission. When the figures and the report were published in the summer, I wrote immediately to the Commissioner responsible to point out that the figures on our record were wildly wrong. It is generally understood that our record is exemplary.
Dame Elaine Kellett-Bowman: Is my hon. Friend aware that that attitude has been displayed not only in the top brass? When I had the honour to serve on a Committee of the European Parliament, some of our colleagues from other countries could not understand why
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we persisted in dotting the i's and crossing the t's. We did it because we knew that we should implement the measures under discussion so we had to get them right. Others took them more lightheartedly because they had no intention of implementing them.
Mr. Maude: My hon. Friend makes an excellent point. She is absolutely right. We take a literal view of our obligations, which means that before we sign up to a dossier or proposal we want to make sure that it will work satisfactorily in practice. As a result, we sometimes take longer than other countries to approve proposals. It is easy for people to sign up to something if they have no intention of implementing it.
I have a theory that the strength of a Government's commitment to the Community can be judged in inverse proportion to the grandiloquence of its rhetoric. There can be no two-speed Europe, with some countries matching their deeds to their words, but with others lagging far behind. That is something with which the House has always concerned itself. The interventions of my hon. Friends bear that out.
Mr. Gareth Wardell: Does the Minister agree that the Department of the Environment's interpretation of the 1976 bathing water directive defined bathing beaches in such a way that no beach in the Principality of Wales could be considered a bathing beach? The United Kingdom was not in compliance with the directive. Is the Minister proud of that?
Mr. Maude: The hon. Gentleman raises a fascinating point. I cannot give him a detailed answer off the top of my head. Our record on cleanliness of beaches is extremely good, as is our record on water quality and the cleanliness of our rivers. We have nothing to be ashamed of.
Mr. Wardell: Will the Minister confirm that the figures produced by the water authority in north-east England showed that Seaton Carew centre had 3 million E. coli per millilitre of water? Is that the type of standard of which he is proud?
Mr. Maude: The hon. Gentleman leads me onto matters on which he appears to have detailed knowledge. I should want to scrutinise his suggestions carefully and subject them to proper analysis to see whether they are borne out by the facts. I am confident that our record on the matter is good and that we have no reason to be ashamed of it.
The process of scrutiny is better developed in the House than almost anywhere else in the Community. It is a process to which the Government are wholeheartedly committed. The Procedure Committee, and the Scrutiny Committee under the chairmanship of the hon. Member for Newham, South (Mr. Spearing), have studied its future development. We shall study with care and sympathy the Procedure Committee's forthcoming report.
Two weeks ago as part of the process of scrutiny, the House debated economic and monetary union. Our policy is based on what was agreed unanimously at the Madrid council. It is essential that the Community should adhere to those conclusions. One conclusion was that the Delors report was no more than a basis for further work, and that no intergovernmental conference to consider further changes beyond the first stage should be held without full and adequate preparation. In our debate earlier this month, it emerged with remarkable clarity that there was

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no support in the House for stages 2 and 3 of the Delors report. That has been noted elsewhere in the Community. Indeed, it accords with a growing concern elsewhere in the Community.
Mr. Tony Marlow: In view of the overwhelming events of the past week and the impact that they are bound to have on the Federal Republic of Germany, has my hon. Friend had any feedback from the Germans that their view on stages 2 and 3 of the Delors report may be significantly different in a few weeks' time?
Mr. Maude: The Government of the Federal Republic have no clear view on the timing of the next stages. A lively debate is in progress within that Government and in public about what the next step should be and I shall deal with that in due course.
We strongly support the commitment to stage 1 of Delors and we strongly support further steps to be made beyond that. But we should be clear that stage 1 will result in far-reaching changes to the economy of Europe. We hope that it can be completed quickly. We shall certainly not hold it back. The right time for an intergovernmental conference to consider treaty changes is when there is a clear view emerging on what treaty changes are needed.
Mr. Giles Radice: Do not the Government have the problem that no one is listening to them, first, because we are not a member of the exchange rate mechanism so we have not completed stage 1 and, secondly, because their plan for competing currencies does not find favour in Europe. The Government are not in a position to influence other Governments?
Mr. Maude: The hon. Gentleman has observed these matters for so long that he has perhaps lost touch with what is happening. Other Governments are certainly listening to us and we have discussed in detail and depth our paper and approach to the Community. As people study our approach and as our arguments are understood, we make headway. The fact that we have not yet joined the exchange rate mechanism makes no difference.
Mrs. Teresa Gorman: Is my hon. Friend aware that the president of the Bundesbank has already welcomed our initiative on competing currencies and agrees with much of what we have to say?
Mr. Maude: He went further. He gave a warm endorsement to our approach. That is to be welcomed. There is huge scope within the existing treaty for rapid and dramatic changes. Until we have begun to exhaust those possibilities, further changes would be recklessly premature. Our own paper, published two weeks ago, set out an alternative approach; as my hon. Friend says, it was warmly endorsed by the president of the Bundesbank, and has attracted growing interest and support elsewhere. It will take progress substantially beyond that set out in stage 1 of Delors, and would, we argue, achieve the objectives of economic and monetary union. It need not be a slow process. We hope it could advance swiftly, but we must take the right decisions.
Economic and monetary union cannot be just a slogan: it would have to be made a practical reality, and we believe that our approach leads to that. Of course this will be discussed at the Strasbourg European Council, where
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there may also be discussion of the social dimension, with which my hon. Friend the Minister of State, Department of Employment will deal at greater length when he winds up the debate.
We support the unanimous conclusion of the Madrid Council that the Community's top social priority should be job creation. We do not believe that the present draft of the social charter would achieve that. I stress that this is not only a United Kingdom view; both UNICE, the Europewide employers' organisation, and the European round table have given robust support to our views.
UNICE has said:
"The charter should give more recognition to the vital need for Europe to remain competitive in a global and open trading system, since that is the only way to guarantee the creation of wealth and of jobs".
The Madrid Council also said that the principle of subsidiarity should apply—that what can be done at national level should be done there, not at Community level. It is not enough to pay lip service to that principle; the substance of the text must reflect it——
Mr. George Robertson: That is what the charter says.
Mr. Maude: It may say it, but it does not do it. We should not just utter the word "subsidiarity" and assume that that is all that needs to be done. We must make sure that the proposals, directives and regulations emerging from the Community reflect the principle in practice, and that is what we shall seek to do.
Mr. Robertson: When the first draft of the charter came out, the Prime Minister said that it was Marxist in origin. We have now gone through several drafts watering down the original. Would the Minister say that the current draft is still of Marxist origin?
Mr. Maude: It is not a text that we could sign—it is wholly unacceptable. If implemented in a programme of proposals from the Commission it would put people out of work. The hon. Gentleman may want that, but we do not.
Mr. Marlow: Whether the charter is Marxist or not is irrelevant at this stage, but if it were passed would it not give more power to central bureaucratic institutions?
Mr. Maude: If, as we expect, a programme of action from the Commission leading to legislative proposals followed behind it, there would certainly be legislation at Community level which could more properly be dealt with at national level.
Mr. Hugh Dykes: I am grateful to my hon. Friend, because he has been giving way a great deal —[Interruption] My hon. Friend the Member for Northampton, North (Mr. Marlow) says that I should not intervene, but he has already done so several times.
As, on all the evidence, the premier capitalist economy of Europe—West Germany—is wildly more successful than any other economy, including that of the United Kingdom, and seems happy with the social charter, why are we so panic-stricken about it?
Mr. Maude: Perhaps unknowingly my hon. Friend has put his finger on the point. West Germany has a high level of protection and regulation, so it may not be averse to less prosperous parts of the Community having to shoulder the same amount of regulation, thereby removing the competitive advantage that they may have. We are

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concerned that less prosperous parts of the Community might be denied the advantages of the lower costs which might improve their economic standing. That is reflected in our view and in that expressed by UNICE and the European round table.
Mr. Dykes: These matters must be of great concern to all hon. Members. Are we living in the real world or are we indulging in the rhetoric that my hon. Friend has denounced? If Germany is protectionist, bureaucratic, subsidised and inefficient, can we have a bit of that here? How come it is so prosperous?
Mr. Maude: I did not say that Germany was inefficient; I said that employers and industrialists there work with a high level of regulation to which they have become accustomed and with which they can cope. But if anyone seriously thinks that the economy of Portugal will be helped by having German levels of regulation imposed on it from Brussels, he is wrong——
Mr. Robertson: Why do they support the social charter?
Mr. Maude: The Portuguese are becoming extremely anxious about what is contained in that programme and in the action programme following it up. The hon. Member for Hamilton (Mr. Robertson) should take the trouble —he has not done so—to talk to his Socialist colleagues in Portugal, whereupon he will find that their view is very different from his. They take seriously the process of job creation and the need to protect jobs—clearly, the hon. Gentleman does not.
Mrs. Gorman: Is it not true that the productivity of German workers in much higher than that of those in this country? For example, Ford workers in Germany are 50 per cent. more productive than Ford workers here, and because of that the Germans can carry such an enormous burden of social legislation as is incorporated in the charter.
Mr. Maude: Each country and economy in Europe has developed a system of social legislation appropriate to itself. There is no reason to suppose that uniform social regulations imposed from Brussels will help anyone. The Germans may have come to live satisfactorily with their system. It works there, hut that does not mean that it would work here or in Portugal or Greece. We shall strongly resist its imposition here.
In our determination to carry forward the process of internal integration of the Community, it is essential, perhaps especially at the moment, to keep our eyes on the Community's relations with those beyond its frontiers. We are very clear that Europe after 1992 must not be closed, or be seen to be closed, to the world outside.
We have argued long and hard, and with formidable success, against fortress Europe. It is essential that the Community gives full effect to the principles of liberal trade beyond its frontiers that it has now firmly espoused. In particular, we are very glad that real discussions are now taking place with the member countries of the European Free Trade Association.
The Commission is due to report to the Council later this month, and there will be an EC-EFTA ministerial meeting on 19 December, which could well open the way for detailed negotiations during 1990. The prospect of a wider single market of all 18 countries is a stimulating one. Of course, the negotiations will raise difficult issues, but
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difficult issues can be resolved with good will and determination. We firmly believe that a greatly enhanced EC-EFTA relationship is both in our interest and in the interest of the Community. This is a cause which we have promoted, and we wish it well.
I started by talking a little of events in eastern Europe. The present tide of events has been long awaited and fervently hoped for, and it is essential that we do all in our power to sustain the process of change. At all levels, I believe, the response has been generous and imaginative.
For ourselves, we have set up know-how funds for both Poland and for Hungary. These will be worth significant sums, focused on specific projects crucial to successful reform. They range from programmes on parliamentary democracy to agricultural reform. We are now looking at ways of increasing our support.
At Community level, the response has also been excellent. Apart from immediate food aid in Poland, worth £70 million, longer-term support is being provided by a substantial package of trade liberalisation measures. This means an end to all discriminatory quantitative restrictions on Polish and Hungarian imports from the beginning of next year. Providing a market for competitive goods is the best stimulus to economic reform.
In addition, the Council has approved a package worth about £200 million next year covering support for agricultural reform, environmental measures and management training in both Hungary and Poland. That signals that we stand four square with the peoples of eastern Europe in their determination to achieve reform that endures.
People of my generation in eastern Europe have never known freedom or tasted the prosperity that for us is routine. Now at long last across Europe tyranny is retreating and a new freedom is dawning. Those who have known only the cold repression of totalitarian regimes will need our help. We must not fail them.
5.29 pm
Mr. George Robertson: Precious few people around last Wednesday, when this subject was slated for discussion, could have imagined what the succeeding seven days would produce. As the Minister has rightly said, these seven days have seen a political earthquake in Europe, and its tremors will inevitably dominate the European Community, the wider continent and our future in a way undreamed of last week. In this debate we may be considering events and a White Paper that cover the first half of 1989, but these events include the germs of the situation that we see in graphic form today.
How western Europe rises to the remarkable new challenges in the next few months, which will determine what continent we shall inhabit for generations to come, is of crucial importance. This week, when we talk about Europe we no longer speak about western Europe. The whole focus has shifted and when Community leaders meet this Saturday and again in three weeks' time, they will no longer simply be involved in the internal affairs of the 12 European Community nations. They have to be conscious of, and concerned with, those other members of a European family who want to rejoin and to act with us, and who will sorely need us as well.
We must share the emotion and the sheer joy that was written all over the faces in Berlin last weekend, of a people free at last for the first time since 1933—free from tyranny,

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fear and oppression. We must ensure that, never again, will they disappear behind walls, fences or barriers. Nobody who ever saw that Berlin wall, with the death strips, the shrapnel guns, the dogs, the watch towers and the floodlights could have been unaffected watching the pictures of last weekend, as the obscenity that was the boundary between East and West finally broke under the pressure of the people. Last week was a turning point in all our lives.
What is now in question is nothing less than the whole architecture of Europe and, along with that, understandable uncertainties and concerns. Undeniably, we have a once-in-a-lifetime opportunity to help, or hinder, the evolution of a stable new European order. That task will demand genuine vision and imagination and the ambition to seize the moment, like the leap of imagination that produced the Marshall plan that helped post-war Europe to recover its democratic vitality or the Bretton Woods settlement, which saved the world's economic system.
What concerns us in this debate is what role Britain will play in this historic process. The first guiding principle must be that Europe will not encourage or reinforce the drive to democracy in Europe by looking constantly inwards at itself. This is precisely the time to look at what sort of European framework will be relevant, in two, five, 10 or 20 years' time, and to start along the road towards it.
In saying that, we do not in any way accept the Prime Minister's idea of some dead stop in the pace of European co-operation, to have a leisurely look around. Nor do we accept that our only role in helping the eastern European states is, at variable speeds, to complete a political and economic union, the nature of which is still not agreed or even designed. Instead, we say that we must seriously and urgently look at the breathtaking opportunity before us to embrace a truly wider Community and take the necessary steps while the opportunity is still with us.
Some will say that this is what the Prime Minister was referring to when she spoke in the House yesterday about her dream of a democratic Europe stretching to the Chinese border, but is that the case? As she talked about this greater, wider Europe, this week she sent a Minister to Brussels to block cancer warnings on cigarette packets. As she defends national sovereignty in economic and monetary decisions, her Chancellor had just 25 minutes of British sovereignty between the Bundesbank's decision to raise interest rates and our requirement to follow it.
On Monday night, as she said at the Lord Mayor's banquet:
"We must stretch out the hand of co-operation and develop new forms of association with the emerging democracies of eastern Europe",
her Government had given no welcome even to the application already on the table, from Austria. As she underlines the truth that only economic success will guarantee the existence of pluralistic democracies emerging in eastern Europe, the British funds to Poland and Hungary amount to a meagre £25 million to each country, spread over five crucial and decisive years. What a contrast with the £450 million-worth of aid voted by the American Congress to Poland last night.
Mr. Ian Taylor: Does the hon. Gentleman recall that at the Paris summit, the British Prime Minister took
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the initiative, which was agreed to by others at the summit, that the European Commission should co-ordinate aid programmes to, initially, Poland and Hungary? Was this not a fine British initiative, as a result of which the Commission is co-ordinating aid from 24 different nations?
Mr. Robertson: That was a commendable initiative and the Commission is to be congratulated on the efficiency with which it is carrying out its task. Sometimes the Government, who spend much of their time and energy attacking the Commission, forget that the Commission can act. It is using principally Japanese funds to disperse food aid to Poland. I am referring here to bilateral aid. The Minister did not mention £5 million—the small change of a Government Department—being given over five years as bilateral aid to reconstruct the economies of Poland and Hungary and to underpin the democratic system.
Mr. Maude: The hon. Gentleman should know, and if he does not know, then he should find out, that the know-how fund is not there to reconstruct economies. It is there to provide know-how in a whole range of sectors such as developing elections and political democracy, and banking.
Mr. Robertson: Of course it cannot reconstruct an economy, but what are the Government giving to reconstruct the Polish economy? I know how much the know-how fund is giving, and I also know what it is being given for. I have been asked by the Minister of State, Foreign and Commonwealth Office to be a member of the advisory board on the Polish know-how fund, which meets tomorrow. I am also aware of the limitations of £5 million, given the nature of the Polish crisis and how much needs to be done. The American Congress had the generosity to recognise that, with the amount that it voted last night. I hope that we shall hear no more triumph from the Government over the tiny amount of money being given to Poland.
As the Prime Minister draws grand designs on the map and in the air, her approach to European co-operation in reality is nit-picking, carping and mean-spirited. We are repeatedly marginalised and ignored. The veto on the social charter, which has already been watered down and weakened in key areas in the attempt to get consensus in Europe—a consensus that embraces all the countries that the Minister this evening arrogantly said that he is defending—will leave Britain isolated, and exposed, yet again, as a spoiler in the Strasbourg summit in December. It is again stark evidence of the denial to the British people of the reasonable employment standards that they might expect from the completion of the single market.
Mr. Marlow: I agree very much with the imaginative first part of the hon. Gentleman's speech about the changes in Europe—the whole of Europe rather than parts of Europe. Why is it that the social charter is necessary?
Mr. Robertson: The hon. Gentleman has rocked me by saying that he agrees with the first part of my speech. I must now ask myself what was wrong with it. The social charter is necessary. If we are to have an internal market affecting the interest of employers and of capital, then it is eminently reasonable—all our colleagues in Europe agree, whether they are Left-wing or Right-wing—that the level playingfield must include some justice for those who are

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employed. That is why the charter was instituted and why 11 out of the 12 countries in the Community agree with it and none of them agrees with us.
The Minister of State, Department of Employment (Mr. Tim Eggar): Do the hon. Gentleman and his party support everything in the current draft of the social charter?
Mr. Robertson: No. We think it is too weak. We think that the partners in Europe have weakened it too much in a vain attempt to get the negative and reactionary elements of the Government to climb on board in what they believe to be in the general interests of completing the internal market.
Mr. Dykes: Does the hon. Gentleman further agree that the social charter provisions, in whatever language, are an equal component in the preamble of the Single European Act just as the internal market is? They are not inferior to the single market.
Mr. Robertson: I agree totally. The Prime Minister accepted the Single European Act with all the commitments in the preamble, just as she accepted the Stuttgart declaration, which made many of the same points. The social charter is a direct and logical lineage with those commitments.
Sir Anthony Meyer: Will the hon. Gentleman give way?
Mr. Robertson: We believe that the hon. Gentleman is a stalking horse and a candidate for the leadership of the Conservative party, so how can I not give way to him?
Sir Anthony Meyer: Could we not have a serious point? By stripping away what he sees as objections to the Prime Minister's attitude in these matters, the hon. Gentleman is hinting at his party's policy. When he was speaking positively on what his party's policy would be, he stopped short of saying how far he and his party were prepared to go in accepting a limitation on the right of Britain, or any other country, to exercise their veto on decisions which he would maintain—and I would agree—are in the interests of the Community.
Mr. Robertson: The hon. Gentleman and I have attended many of these debates before. I am sorry if he regards my comments on his candidature against the Prime Minister as anything other than serious. We have made our position clear. We would use the veto constructively and our intention would be to establish a consensus in Europe. The Government's problem is that they are not interested in consensus even when other Governments are willing—as they have shown under the social charter negotiations—to make substantial concessions towards them. I thought that the hon. Member for Clwyd, North-West (Sir A. Meyer) and I stood side by side on that. Presumably that would be one of his central planks if—in the unlikely event—he was to be the challenger to the Prime Ministership. He may persuade her to convince him not to stand. She may change her mind.
As the Prime Minister sends this week's Chancellor of the Exchequer to Brussels to sell the hand-made competing currency idea cobbled together quickly by the last Chancellor, the Chancellor knows that his idea can work —if it works at all—only to the advantage of the strongest currency in the Community—the deutschmark. It will work only if we are full members of the exchange rate
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mechanism. The Prime Minister cannot swallow that idea despite the commitments she and her Ministers have solemnly and regularly given on that subject.
The Prime Minister's baggage that she will transport to France this weekend will include the same old-fashioned, out-moded prejudices that will not let her escape from the cold war time warp that she inhabits. That blend of nostalgia for the special relationship with Ronald Reagan, combined with a little England nationalism, is as useful as the abacus in a computer world. The Prime Minister remains the high priestess of Balkanisation.
In June, at the Royal Institute of International Affairs, I described the position then as the "bonfire of the certainties". Perhaps now the bonfire is bordering on a forest fire. Like a few other politicians, the Prime Minister looks on transfixed as the old, comfortable post-war structures lie in the rubble of the Berlin wall. She, and they, seem bewildered, almost like the guards on the Berlin wall, to be without the enemy they have planned and plotted about for 40 years. Well, those relics had better wake up soon, read the papers and the speeches and follow the street politics——
Mr. Nicholas Winterton: Who wrote it?
Mr. Robertson: It is obvious that the hon. Member for Macclesfield (Mr. Winterton), who has come in late as usual is making a characteristic contribution to a serious subject. If he and the Prime Minister were to look at the politics of the streets in eastern Europe, even they would have to come to terms with the realities. If they delay in doing so, they may give birth to the very forces about which they so solemnly warn us.
There is however a positive agenda for the European Community. On security, we must reassure the Soviet Union, whose leader President Gorbachev has been the visionary driving force behind the dash for democracy. The absurd and incredible attempt to claim credit for the collapse of Communism by the disciples of Thatcherism is as unhelpful as it is shamelessly dishonest.
The Warsaw pact and NATO must get together quickly to start work on a new order in Europe and the world with much lower levels of troops and weapons to reflect the new circumstances. Modernisation of short-range nuclear forces is now a military irrelevance and a political impossiblity.
On economics, there must be a major western European aid programme to the new democracies, linked to reconstruction and the development of pluralist structures. however, that will require resources and someone willing to pay for them. Trade access will also be an essential requirement if the economies of those countries are to perform and deliver the prosperity which alone will protect democracy. If that means new imports from the Eastern bloc—for example of food and textiles—who will pay for the effect on our industries? I am sure that the Minister will agree that those issues are not academic but issues that the whole Community will have to face and may start facing this weekend.
On the political front, Britain and the Community must —as I said before—examine the way in which a framework can be created to include the non-European Community nations. At this point we have to ask precisely what the Prime Minister meant on Monday night at the Lord Mayor's banquet when she talked about the new forms of association. In the treaty of Rome there is a precise

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definition of associate status within the Community. Her amazing linkage with Turkey, which has apparently frightened the living daylights out of the Foreign Office, gives a new meaning to the suggestion that she made on Monday night. Is she advocating associate status for the eastern European nations in accordance with the treaty of Rome?
Mr. Maude: Is the hon. Gentleman aware that Turkey has an association agreement with the Community already?
Mr. Robertson: Of course I am. That is not the question. The question is whether the Prime Minister is proposing for the eastern European countries exactly the same association agreement that is enjoyed by Turkey. It was the Prime Minister who raised the comparison with Turkey in the answers she gave at Prime Minister's Question Time yesterday. Instead of asking me questions it would be helpful if the Minister could answer the question. Is that what she means? I will gladly give way to the Minister. Does he not know? Was it just a clever phrase dreamt up for the Mansion house speech and then the error compounded by a loose phrase thrown away at Prime Minister's Question Time yesterday? The Minister's silence tends to suggest that my analysis is probably true. It would be interesting to know whether the Foreign Office agrees with the new policy. Will it apply to the GDR, Hungary and Poland? And what about the others?
Mr. Maude: The hon. Gentleman dignified his remarks with the title "analysis". He does himself something more than justice. My right hon. Friend the Prime Minister was referring to new forms of association. That goes on all the time. There are co-operation agreements with a number of countries outside the Community. There is an association agreement with Turkey. I said that we are considering a new form of association with the EFTA countries. There is nothing sinister about that. The Community ought to be looking at new forms of association and it is doing so all the time.
Mr. Robertson: We say that the link with Turkey at Prime Minister's Question Time yesterday was a loose expression and meaningless in that context. Turkey's relationship with the Community is rooted in treaty law. It is not some form of convenient, new association, although the link was designed to gain applause on Monday night at the Mansion house. We have to go beyond loose phraseology and provide real help so that the economies of these countries can be rebuilt. We have already started, in a limited way, to give real help in building parliamentary and party institutions in those countries. We have acquired unique expertise. The work that has already been done this year by the Great Britain-East Europe centre and other organisations in bringing Polish, Hungarian and other parliamentarians to this country has already produced enormous dividends.
Why do we not also ensure that English language teaching is at the heart of our help for these countries? Financial help has been ruled out, but it would be one of the simplest ways to help and extend our future influence.
We must also keep in perspective obsessive speculation about a united Germany. Such an eventuality would require four-power agreement. It would also require an
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implicit acceptance of the GDR's Communist party propaganda: that an independent GDR's only raison d'etre is its ideological identity. If the East German people eventually make the choice for reunification—and they have been denied any choice of any kind for 56 years—then so be it. They will have to do so, conscious of the wider implications at the time.
We might do better to consider the economic power of such a Germany rather than its potential military might, which is largely mythical. Beware the second Japan, not the fourth Reich. On this issue the Prime Minister would be wise to read the advice of Sir Nicholas Henderson, a very distinguished diplomat, a former ambassador to Washington and an adviser to the Prime Minister. In yesterday's Evening Standard he said:
"Those who insist on emphasising the nation state should not be entitled to complain if one of the most powerful nation states were to act increasingly according to its own national interests."
Perhaps one consequence of the present gale force change in our continent is that in place of the German question will appear the British question.
On the western fringes of a Europe that is looking east for security and trade and represented by a divided Government who abroad leave us out of the mainstream, marginalised and for ever tilting at windmills as they become increasingly beleaguered at home, what influence can we positively have on the recarving of a new European identity? The hard fact is that we need a new Government who will have the vision that the new world demands and that the British people expect.
5.53 pm
Mr. David Howell: The hon. Member for Hamilton (Mr. Robertson) began his speech with some good points, but I hope that he will not mind if I say that the centre of his speech seems to have been invaded by a word processor. He will have to accept that my mind was not captured by every nuance and phrase in his speech. Nevertheless, he agreed with my hon. Friend the Minister of State that we are holding the debate in the shadow of momentous events. We can see their origin long before the White Paper period that we are examining—the first six months of this year. They lie in the amazing process of liberalisation throughout central and eastern Europe. My hon. Friend the Minister of State was right when he said that fundamental questions had been raised and that we must re-examine where we stand and the way in which we want the European Community and the rest of Europe to develop.
We have now enjoyed the longest period of peace in European history since the very concept of Europe was invented. We have had peace for 44 years. On this side of what was the iron curtain, now crumbling, there are parliamentary democracies of one sort or another. Western Europe is engaged in building the largest single market in the entire planet. It is a massive creation, involving herculean work and effort. In itself that is enough to occupy business men, diplomats, politicians and law makers for a long time ahead. That is the position now, and a very incredible one it is. The question is, where do we go from here?
There are three points of view about the next moves in the European Community. Some of those points were referred to by the Minister of State in his very lucid opening speech. The first—what might be described as the

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Delors-Mitterrand camp—argues for acceleration now of the process of European integration. Members of that camp say that history must be speeded up. It is essential, they argue, that European union should be moved forward in double quick time so as to lock in West Germany. That argument was used long before the dancing on the wall and its tearing down at the weekend. That would prevent the Federal Republic of Germany—the most powerful European economy, even as it stands—from being attracted towards its cousins in East Germany and towards eastern Europe generally, where historically many of its interests lie.
To that end we are told that we must move on beyond the single market—never mind that we have not yet achieved it—to the creation of an integrated monetary union with centralised institutions, including the establishment of a central bank. We are also told that there must be an intergovernmental conference that ought to turn its mind not merely towards the creation of these new institutions but towards the creation of new treaties and, in turn, further new institutions to control and balance the new institutions that are already proposed. That must be done, we are told, in the name of an advance towards the kind of federal Europe which, it is said, the founders of Europe had in mind. I am not sure whether, if one examined the sayings of Jean Monnet and others, that is what they had in mind, but that is what is now proposed. That is one point of view. I shall return in a few moments to its validity and worth because we ought to examine it with great care and reservation.
The second point of view which could be adopted—some of my hon. Friends may well take it in view of what has been going on in the Community during the last six months—relates to the word "Resist" that is stamped on the bottom of ministerial briefs when awkward amendments are being pressed. The Minister, it is said, would be well advised to resist. We are left on our own. We have to grow our own wings and devise our own devices about how to resist and about how to say no in a way that does not leave us looking too exhausted and isolated. Certain hon. Members may be inclined to adopt that point of view and to dig in and resist.
The third point of view is the one that I sense, from what my hon. Friend the Minister of State has said, the Government are moving towards: a recognition that the process of creating a European union of great power, strength and influence is irreversible—to use President Bush's word about what is happening in eastern Europe in another context—and that we in this island, a powerful, central and historic part of Europe, must work towards shaping and building that union with all the common sense, practicality, energy and genius that we have used down the centuries in the same cause.
We need to shape our endeavours and to decide that we are moving towards and wish to build a European union shaped in our way and our style. That is very much better than digging in and saying that we are against all forms of monetary and political union. That was a stance of weakness whereby events were bound to bypass us, and were beginning to do so. I am glad that there has been a clear change of emphasis.
Mr. Nigel Spearing: Does the right hon. Gentleman agree that his third option could include a pan-European approach? In the new, totally different circumstances, the emerging democracies of eastern
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Europe may wish to adopt a different characteristic of private and public endeavour which is not possible in Britain or in the European Community. Is it not possible in future to widen that option to create a pan-European association of states, if not a union, which would incorporate the emerging democracies which the arrangement of the treaties would not allow at the moment?
Mr. Howell: I shall move on to my own preferred option and suggest to the hon. Gentleman, who follows these matters with vast expertise, how best the emerging free republics of east and central Europe can fit into that scheme. We have to consider that very carefully.
I shall now explain the characteristics that I should like to see in the process of European union to which my right hon. and hon. Friends are turning their energies and efforts most constructively.
First, it should be an evolutionary process. That is reflected in the excellent paper by my right hon. Friend the Chancellor of the Exchequer about the processes of monetary convergence in the European Community, emphasising the common sense and practicality embodied in stage one of the Delors report and avoiding the pyramid building and the creation of institutions, before defining their purpose, in stages two and three. In Britain we do not like, and need not be ashamed of disliking, the creation of institutions before working out their common and comfortable purposes. Stages two and three of the Delors report contain absurdities which common sense and realistic people throughout the community are beginning to recognise.
The same applies to social policy. Like other hon. Members, I see no need for that elaborate piece of rhetoric, the social charter. Although I am often in sympathy with my hon. Friend the Member for Harrow, East (Mr. Dykes) on European matters, it is not correct that the preamble to the Single European Act contains a commitment to the social charter. The hon. Member for Hamilton was also wrong about that. It contains a commitment to the charter of the Council of Europe, a very different document from the extraordinary social charter. If the hon. Member for Hamilton checks the preamble to the Single European Act he will see that.
The social charter arises from a reference by the Commission to a body called the Economic and Social Committee in Brussels. It is a curious body that has existed for a long time. It has its own mini-Parliament in Brussels and is a product of the corporatist thinking of the 1960s. That is why the social charter contains talk about social partners and economies being run solely by employers, trade unions and officials. Rather comically, it completely ignores the fact that nowadays most people are not in trade unions and we have completely new labour market conditions. I understand that in France membership of trade unions is down to 12 per cent. It is somewhat higher here, but it is shrinking. I am not saying that that is a good or a bad thing, but the modern labour market is not suitable for massive trade union organisation, as employment patterns are far more flexible. That is why the social charter is such an absurd and dated document, dripping with the illusions of the 1960s and 1970s which dragged Britain to the brink of bankruptcy, and I want no part of it.
Mr. Robertson: I remind the right hon. Gentleman that the Commission's thinking on the social charter derives

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from the social charter of the Council of Europe. Conservative Members cannot possibly get away with all that abuse of corporatist thinking. If the social charter is corporatist thinking, how is it that the countries that support it most strongly have performance rates so considerably in excess of ours?
Mr. Howell: I do not think that support for it is that strong. It is rather perfunctory and it is beginning to give way under the logic of my right hon. and hon. Friends. The hon. Gentleman must accept that the origins of the document are in the work of the Economic and Social Committee. Mr. Jacques Delors told me that he had made that reference and that is where he said it came from. I must go by his authority on the matter.
Mr. Dykes: I am sure that the British members of the Economic and Social Committee would be interested in my right hon. Friend's comment that that body is corporatist and out of date. It performs a very useful function and I do not think that there is any shame in acknowledging the peace of social partners in a socially harmonious society. Does my right hon. Friend agree that the preamble to the Single European Act—if my memory serves me right as I do not have a copy with me—contains an equal reference to six broad areas of Community objectives in achieving union: economic and monetary union, the internal market—I agree that there is argument about the language used and the meaning of the wording —economic and social cohesion and a number of others that I do not recall at the moment? It is not true that the Single European Act identifies the single European market as a priority area.
Mr. Howell: There is argument about that, and if my hon. Friend checks, he will find that I am right.
As for the members of the Economic and Social Committee, my hon. Friend is quite right that one is bound to offend someone. I have acquaintances and colleagues who have done excellent work for that body in the past. But it is a body built around the concept of social partners, and the information-intensive economies of the 1990s are no longer organised in that way. Without any criticism of the people who work very hard in the Economic and Social Committee, I believe that we should think again about the fundamental ideas behind that structure. That is my first principle.
Secondly, the Europe of the future will have to be firmly rooted in nation states. The nation state remains the fundamental unit of politics. We are involved in a ridiculous debate about whether nation states are part of the Europe of the future. But if there were no nation states and western Europe was one great federal superstate, we would have to reinvent nation states for the sensible management and organisation of a vast continent of varied cultures, legislative and administrative areas and approaches to public affairs. Nations would have to be reinvented as they are extremely well-rooted and effective and are appropriately scaled organisations for managing the 1990s. The idea of federal pyramid building belonged to an age of centralism that has faded away. We have to consider how we can appropriately and usefully decentralise or maintain at a human scale level the
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administration, the law-giving and the conduct of public affairs of different groups of people formed into the ancient nations.
Sir Russell Johnston: Does the right hon. Gentleman think that the United Kingdom is a nation state or a state composed of nations?
Mr. Howell: The hon. Gentleman is tempting me into other areas. For the purpose of my speech, I regard the United Kingdom as an ancient nation state, but I realise that I am treading on great sensitivities for the hon. Member for Glasgow, Govan (Mr. Sillars) who sits behind the hon. Gentleman. Nevertheless, they must admit the validity of what I am saying.
I must tell those who are concerned about the debate in the Community that began six months ago and is still taking place, about whether there is a challenge to the nation state, that that is an absurd worry. The nation state is, and remains, the most fundamental unit. From the idea of ancient nation states, the new Europe of the 1990s will emerge. What will be its structure? Do we have words to describe it yet? Can we describe it only in negative terms by saying that we do not like federalism?
We need not rest on those negative concepts alone. We should quite readily be prepared to embrace the noble, ancient and highly successful concept of a confederation of free states. Some of the most remarkably successful and permanent unions and alliances of states have been confederations in the past. I have no difficulty in foreseeing our Europe develop as a great and permanent union or confederation, as there have been confederations in the past.
I do not want to dispense tedious history lessons, but hon. Members should consider the example of our American friends, who are inclined to ask why we have not yet become a united states of Europe. We have to concede to them, "Your confederacy backed a losing cause and was on the wrong side." However, if one studies its structure, one finds that it was a remarkable institution, as were confederations before it. We should not apologise for saying that this is the vision that we have for the Europe that we are now building.
I am particularly in favour of that because it fulfils other conditions. What we build in Europe should be practical and useful; it should not be developed for reasons of broad theory and generality, which have no solid grounds. That is why I find the concept of subsidiarity valuable. It is a little difficult to understand, it is a political concept and it has no legal definition. If translated rigorously, it is a recipe that says, "Let things be done at nation state level which can most usefully be done at that level, but let things be done collectively that can more effectively, efficiently and necessarily only be done at the supra-national level." Let us stick with the word "subsidiarity", but let us see whether, as Anglo-Saxons, we can invent better words to describe it. One thinks of phrases such as the principle of the "least degree of collectivisation or centralisation necessary". We must apply our minds to show that we can devise a much more effective and well-articulated Europe than the old federal idea.
The Europe that we are constructing must think in terms of openness and expansion—not expansion in the old military sense, but expansion in embracing other republics and nations as they liberalise, become market

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economies and form price structures and therefore become able to enter into the international trading system. That is not yet the case in Poland, although it may become so, or in Hungary and it is certainly not the case in East Germany. In all three countries, there are aspirations that this should become the way of things. Indeed, we may see those aspirations develop in Czechoslovakia at any moment. As they do, collectively in western Europe and through individual programmes—which must be co-ordinated because we do not want confusion or a muddle because everyone has their own bilateral programmes for a particular country—we should develop means of reinforcing the processes by which those countries become market economies.
Those means are not straightforward. It is not a question of rushing with massive official aid to those countries, because there are enormous difficulties in foreseeing how it could be connected with their economies as they currently stand. In all cases, radical currency reform is necessary. We shall have to tune carefully and sensitively our support and aid to ensure that Governments pushing through highly unpopular currency reforms, which will involve falling living standards and social pressures, are given support in the short term, before they get into their medium-term stride and we begin to see the attractions of inward investment, joint ventures and the driving force of wealth creation, which of course comes from the private sector.
Against that background, the processes of reunification between East and West Germany will have to move slowly. Indeed, as some Germans are wisely suggesting, they perhaps should be put aside almost indefinitely. It can be argued that the Federal Republic of Germany has been one of the most highly successful and mature post-war states. It has been enormously prosperous, has had amazingly balanced politics and has commendably sought to fulfil its role in the post-war world despite the enormous difficulties of the past. The current prospects for the Federal Republic must be very good indeed.
It is legitimate to ask why, therefore, some of our West German friends believe that they would be better off if they were to embrace the DDR in a greater Germany. It is not our place to dictate to the Germans whether they should reunify or not, but it should be our aim at least to point out to our German friends that, in terms of their prosperity and freedom, they would probably do far better to think of two republics, both liberalising and developing as market economies with intimate and friendly relations but, nevertheless, remaining as two republics for some time.
Mr. David Madel: Does my right hon. Friend agree that the difficulty is that if the result of free elections is a demand by East Germans for reunification, Britain and any one else should not stand in their way?
Mr. Howell: That is right. It is not our place to stand in the way, but it is at least reasonable for us as friends to point out to two cool and sensible heads—which certainly exist in the Federal Republic and the DDR—that in terms of the broader scene of a free Europe, free states and a free confederation, they may be better off keeping, for the foreseeable future, two separate republics rather than joining as one giant united republic of Germany of 80 million people. As a friend, that is all I suggest we should point out to our German colleagues, but my hon. Friend
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the Member for Bedfordshire, South-West (Mr. Madel) is right to say that we have no right or locus to urge that unity be resisted if that is what free elections, free will and self-determination drive Germany towards. I am saying only that they would be better not to reunify with the East.
I wish to comment on the points made by my hon. Friend the Minister and the hon. Member for Hamilton about how we further help the eastern and central European economies. I do not believe that early on we should rush at those emerging market economies with massive official aid. We must help them through the difficult winter ahead and devise every conceivable detailed means by which they can build market economies, which means assistance with managerial, financial, entrepreneurial, advertising and market skills and using our resources carefully to promote those programmes.
The hon. Member for Hamilton seemed to deride the idea of £25 million at £5 million a year. If he thinks about it, in this context, that is quite a big programme for getting going the first management teams and for helping universities in Poland to begin to send people here to learn management skills. The administration of this programme, which may not sound vast in the language that we use of hundreds of millions of pounds, requires an enormous amount of administration and is a good, sensible and practical start. Nothing would be worse than throwing hundreds of millions of pounds at those countries when the mechanisms by which the money can be usefully spent on creating the sinews of a market economy simply are not present.
My message to my hon. Friend the Minister is that he is right to proceed carefully. He should leave Poland, Hungary—perhaps Czechoslovakia tomorrow and the emerging DDR as it liberalises—in no doubt that we are determined to offer practical help, and in the long term to help them to create the conditions in which private investment can begin to pour into these areas, thereby enabling them to use their skills, upgrade their technical knowledge, build on the vast number of educated people in eastern Europe, with all their wonderful talents and original design skills, thus will we create the great confederation of Europe which will be—I want to try to avoid triumphalism—one of the most powerful, prosperous, free and democratic areas on the planet.
6.19 pm
Mr. Denzil Davies: By their very nature, debates on White Papers tend to be wide ranging. Much of a White Paper is often out of date by the time we can debate it. I shall try to choose my texts from a narrow context and speak about European monetary union, which is mentioned on page 7 of the document, linking it to East-West relations, especially in respect of eastern Europe, which is dealt with briefly on page 27.
I do not think that, even before the events in eastern Europe and the momentous events in East Germany over the past week, there was much support in the House for the Delors plan. The right hon. Member for Guildford (Mr. Howell) has echoed the misgivings about the plan. Stage 1 seems innocuous, but perhaps when one studies it, one sees that it is not quite that innocuous. There is little support in the House for stages 2 and 3. I should have thought that, given the upheavals that have taken place, the best course is to put stages 2 and 3 on the back burner until we have

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worked out a stable basis for the changes that are taking place in eastern Europe—perhaps we should now call it central Europe.
My fundamental objections to stages 2 and 3 of European monetary union are fairly obvious to any hon. Member. The proposals involve handing over control of monetary policy, which means interest rates. They affect the private and public sectors and the Government's ability to fund public expenditure. The proposals involve handing over control of a major part of the economy to a body that is not accountable to anyone. It is not accountable to the House, the British Government—whatever party is in government—the British people or the electorate, whether in Britain or in western Europe.
Power is being handed over to central bankers, whether British, European, or a mixture of both. To paraphrase an expression used a few weeks ago, bankers may advise but Ministers have to decide. That is the basis on which we run our economic policy. Ministers are responsible to the House and the electorate. The idea that central bankers, however good they may be—although their advice is valuable, sometimes it must be turned down—can run huge sections of our economy is anathema to most of us. It is ironic that the EEC calls, quite rightly, for free elections in eastern Europe, yet the European Commission and Mr. Delors want to shift huge sections of economic power towards a body that can operate whether or not there are elections. We are rightly calling for the exercise of democratic control and for freedom in eastern Europe.
The Delors plan is not just about economic and monetary union. It is no secret that the plan was about controlling West Germany. The French, like most people, are worried about the power and strength of the German economy and reunification, which is understandable. The French often come up with clever theories which will not work in practice. The idea is that somehow West Germany can be locked into western Europe by a currency union, so the Germans will not look to the East and will not try to dominate it or produce as they are entitled to do. That is complete nonsense. The deutschmark is a strong currency, but the German economy is strong because the Germans produce goods and their industry is powerful. Whatever kind of union exists in western Europe, that will still happen. West Germany cannot be tied in a straitjacket that constrains and limits its power.
Even before the upheavals of the past few weeks and months in eastern Europe, the West German economy was looking east because of its geographical position, its historical ties and its power. There have been rapid changes, and West Germany will certainly look much more to the east because of the events of the past six months. Whether reunification occurs or not, before long East Germany will virtually cease to exist as an independent economic entity. The "ostmark" cannot compete with the deutschmark—the deutschmark would gobble it up. West Germany will invest considerably in East Germany, Hungary and perhaps Poland, eventually extending its investments to parts of the Soviet Union, especially the Baltic states. There is bound to be not only a western deutschmark zone but an eastern deutschmark zone, stretching from Berlin, through the Ukraine, to the Baltic states.
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Most people do not want that to happen. I mean no disrespect to the West Germans. They work hard, they have a thriving economy, and they make things. I wish that the British economy were more similar to the West German economy in those respects. Those little financial wheezes of Mr. Delors will be swept away by the deutschmark and German economic power. We need not a currency union but a new basic structure in Europe to maintain stability and stop uncertainty. It will not be easy to achieve that.
I have a suggestion, which has been made also by members of the West German Social Democratic party and others. Perhaps the allied powers—the powers of Potsdam, plus perhaps France—should think about getting together and drawing up two treaties, one with each part of Germany. Obviously, before that happens, there must be free elections in the German Democratic Republic. I would not be surprised if those free elections take place fairly quickly, partly because of pressure from the population and partly because it is in the interests of the Socialist Unity party to go to the electorate as quickly as it can before other political parties can organise.
The SUP's roots are deep. The party goes back long before Stalin and Hitler. That is why it is no surprise to me that the East Germans, one after the other, talk about social democracy and Socialism. That is not just the voice of propaganda or because they have been brainwashed over the past 30 or 40 years. We must be aware of the deep traditions—many of them Marxist, but honourable, traditions—in that part of the world. If free elections are held, the allied powers should think about negotiating two treaties—one with East Germany and one with West Germany.
No doubt, the treaties will say many things, but they would have to deal with two points. First, a treaty should legitimise the East German state after free elections, whether the Socialist Unity party or the New Forum wins the elections. I believe that we have not recognised the East German state. The right hon. Member for Guildford (Mr. Howell), who is the Chairman of the Select Committee on Foreign Affairs, will no doubt correct me if I am wrong. I believe that there has been no de jure recognition and that there is still only de facto recognition. However, many countries do not recognise East Germany. There was once no de facto recognition and people from East Germany could not travel to the West because their passports were not recognised. There was then a long period of de facto recognition and I do not know whether it has now become de jure recognition.
Mr. Robertson: It has.
Mr. Davies: That must be enshrined in a treaty with the East German state which will legitimise it, and will legitimise East Berlin as the capital of the East German state.
Secondly, the treaties should finally establish the existing borders in Europe as the borders of the two Germanies in terms of their relationships with their neighbours. That has never been done. The West German Basic Law says clearly, as many hon. Members know well, that legally there is only one Germany. The borders are the borders of 1937 and that was confirmed by a decision of the federal constitutional court some years ago.
Most West Germans do not care about the Basic Law —I imagine that they do not even think about it—but

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Germany's neighbours perhaps do. The Poles are concerned about it and the Soviet Union may be concerned. Let us end the farce and the fiction. Let us enshrine the existing borders of the two Germanies in a treaty made between the allied powers and Germany.
The hon. Member for Bedfordshire, South-West (Mr. Madel) said in an intervention in the speech of the right hon. Member for Guildford that if the Germans voted for unification, they should be allowed to carry it out. I do not agree. The principle of self-determination does not go as far as throwing overboard the Yalta-Potsdam settlement. It cannot go that far for obvious reasons which I thought that all hon. Members would see.
Sir Russell Johnston: That is an incredible statement. The right hon. Gentleman seems to be saying that the Germans do not have the right to decide what they want for themselves. That is a profoundly undemocratic remark.
Mr. Davies: Mr. Gorbachev made it clear the other day that he was happy to see the wall coming down.
Sir Russell Johnston: Mr. Gorbachev!
Mr. Davies: It is all very well for the hon. Gentleman to say that. Mr. Gorbachev is the leader of the geographically largest country in Europe which suffered the loss of almost 20 million people in the last war. Mr. Gorbachev made it clear that the wall should come down and that there should be free elections, even though the Communist party might lose, but that there should be no reunification. Mr. Shevardnadze said the same. Is the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) suggesting that if the East German electorate votes for reunification, we should let it happen despite the problems in central and eastern Europe and the effect it would have on the Poles, who are struggling to reconstruct their economy? That makes no sense.
Mr. Dykes: The right hon. Gentleman said only a few years ago that 25 per cent. of the people of France were in agriculture so I take everything he says with a pinch of salt. Was the implication of his remark about Mr. Gorbachev and Mr. Shevardnadze that reunification was not on the agenda now?
Mr. Davies: It is not on the agenda now, but perhaps the Soviet Union will change its mind in future. However, if the Soviet Union does not change its mind, the idea that the East German people can vote and overthrow the post-war settlement is dangerous.
Mr. Michael Irvine: Does the right hon. Gentleman not see that to deny the German people of East and West the right to unite, if that is their democratic will, would give them a considerable grievance and that grievance would be almost calculated to fan the flames of German nationalism?
Mr. Davies: Is the hon. Gentleman saying that if they vote for reunification, it should happen?
Mr. Irvine: Yes.
Mr. Davies: I disagree. It would be profoundly dangerous and irresponsible if that idea were accepted.
Mr. Jim Sillars: Does the right hon. Gentleman understand the implication of what he is saying? Is he saying that if the peoples of East Germany
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and West Germany have free elections and vote for reunification, not only should it not happen, hut people should act to prevent it from happening? Is he saying that we should stand by and welcome, as he appears to do, intervention by the Soviet Union in that respect? That would be an incredible statement.
Mr. Davies: I am saying that the two treaties with the two Germanies should make it absolutely clear that there would be treaty obligations on both those countries. Treaties have to be observed and I should have thought that most people would wish those treaties to be observed.
We need to legitimise the present situation. Apart from a few Conservative Members, nobody wants German reunification and we should make that clear. We are told that neither West Germany nor East Germany wants reunification. Let us, therefore, legitimise the existing borders of the two Germanies so that they can operate side by side as democratic states. If East Germany wants to apply to join the European Community, that matter can be considered. If it wants associate membership, that, too, can be considered. However, until East Germany is legitimised as a state, such matters cannot be considered at all. Instead of going down the blind alley of currency reform, let us think about a more stable structure in Europe so that Germany's neighbours can be reassured and will not be afraid that at some time in the future, reunification will damage and jeopardise them.
6.35 pm
Mr. William Cash: One of the most significant events that occurred recently when Chancellor Kohl visited the Berlin wall was the hostile reaction he received from the ordinary people of the German Democratic Republic. The boos and catcalls that he received when putting forward his thoughts on reunification spoke volumes for the difficulties that he is about to experience in relation to the rest of Europe when he goes to the meeting on Saturday, and when he attends the summit on 8 December.
That reception may have come as a surprise in the light of the West German Basic Law, to which the right hon. Member for Llanelli (Mr. Davies) has just referred. The reason he received that reaction was that the people were calling not for reunification, but for democracy. They have sought freedom of choice and they will exercise that freedom of choice in their own way. I have watched most of the television programmes over the past few days and it has become increasingly clear not only that they insist on exercising that freedom of choice, but that the mayor of West Berlin, Mr. Momper, is clear that it would be extremely difficult for Berlin—or, as we discovered, Bremen, and many of the other cities in West Germany —to absorb reunification if it was followed or preceded by a mass exodus of people. However much the West German economy may wish to absorb the cheap labour and skills of the people of East Germany, the facilities are not there.
When we go to the Strasbourg summit, there will be a difficulty. On one hand, there is the expression of self-determination which we should like to see carried through in free elections, but on the other hand, Chancellor Kohl in his repetition of the call for reunification combined with a united states of Europe is in a directly contradictory position. To call for a United States of Europe with its federal connotations would be effectively to deny self-determination to the countries that

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already have established democracies. That is a contradiction of the concept of self-determination and a dilemma for the German people.
I dealt with some aspects of federalism in my speech on 18 May, and I need not go into that again now, except to refer to the problems that we face because of the immense speed with which we are being pressed towards federalism —by President Mitterrand on 17 October and by M. Delors on 12 October, for example—and the increasing pressure that is being placed on us in the run-up to the December summit. They seem to be ignoring the fact that many of the European electorates—and indeed, national Parliaments—have not been fully informed or asked whether they want a federal system or not. More effort should be made not only to inform the electorate in this country but to allow and encourage electorates in other European countries to form a measured opinion.
Mr. Tim Janman: Does my hon. Friend agree that one of the main reasons why the French are keen to proceed extremely quickly to some form of European unification—to a federal Europe—is that they fear the power of Germany and the reunification of Germany? One way of preventing their fears from becoming reality is, they believe, to lock West Germany into a federal Europe as fast as possible—with all the loss of sovereignty that that would entail for Germany, as for Britain.
Mr. Cash: My hon. Friend has anticipated my argument. I had intended to conclude my point by referring to Disraeli's famous expression, "Trust the people." It is essential that the views of the people should be properly canvassed before a step of such immense importance is taken.
My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) and others argue that we should follow the policy advanced by Konrad Adenauer, who said that the way to preserve stability in Europe and to solve the German question would be to bind Germany into a federal Europe. Such sentiments have been endorsed by Sir Leon Brittan and others, who exhort us to a central bank and a single currency, which, in my view, amount to the same thing. Others press us to accept stages 2 and 3 of Delors and others a lesser plan.
My right hon. Friend the Member for Guildford suggested a form of confederation. Whichever plan is adopted, it will contain the ingredients of political unity. In fairness to my right hon. Friend the Member for Guildford, I think that he came pretty close to suggesting that he could envisage such a form of government. The difficulty is that if we adopt such a policy, we shall effectively be locking ourselves into a legal order. I voted for the Single European Act, and I repeat that I would do so again. We may have decided to accept majority voting but that does not necessarily imply an automatic progression towards a federal—or confederal—system. If we espouse such a policy we shall lock ourselves into the DNA of the European Community and will not then be able to escape.
An economic difficulty arises. People say that we must bind ourselves and West Germany into a federal system to prevent the domination by Germany of the rest of Europe. But by entrenching that same economic strength within a
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federal Europe, we shall achieve the same result without securing the balance of power that would result were we to proceed with the voluntary agreement of nation states. That represents a vital difference. Moreover, such a move excludes the possibility of the wider liberalised Europe at which we are also aiming in what my right hon. Friend the Member for Guildford referred to as "the evolutionary approach". I prefer to refer to "organic growth" because that implies the sentiments that lay at the heart of the thinking of Edmund Burke and others like him when these matters were last being considered several centuries ago.
It seems to me that we are being accused of breaking rules, when, as my hon. Friend the Minister pointed out, we have been exceptionally good at complying with the rules of the Community. We are also being accused—this is the ultimate irony—of not complying with rules that have not yet been created. There is no definition of economic and monetary union and the concept of federal Europe has been no more than outlined in stages 2 and 3 of Delors. It is not part of a treaty that we have signed. It is not part of any structure to which we have an obligation to subscribe. It is not an inevitable progression from what has gone before. If we accepted that concept, we could say goodbye to Westminster and, in any real sense, to our forms of government. That is what worries me.
My right hon. Friend the Member for Guildford referred in his interesting speech to the notion of subsidiarity. It is a matter of fact and of law that in the context of a federal system the distribution and allocation of functions at the macro level, including economic and monetary union, and the paraphernalia that goes with it —the binding rules, the determination of budget deficit, the penalties that would be imposed and the methods by which to impose them—would leave institutions at the lower level, including the United Kingdom Parliament with next to nothing.
I understood from the debate last Thursday that the House as a whole rejected stages 2 and 3 of Delors. If we reject them, we cannot follow a route that implies a degree of federalism and is implied in the notion of confederation, in the legal sense, to which my right hon. Friend the Member for Guildford referred.
I remain deeply concerned about the question of the dominant position of Germany within Europe. I regard the German people as friends and colleagues. It is nevertheless essential that we ask them to consider the path that they are constructing by the reassertiveness of their policies—shown, for example, in the speech of Mr. Genscher on 7 May, in subsequent speeches by Chancellor Kohl and in particular by the paper that was recently produced by Mr. Prill and Mr. Mertes, which suggests the path forward that Germany should take within Europe. That paper suggests a series of options that are highly dangerous in terms of the tensions that could develop if the German economy and the German political system became over-dominant rather than merely pre-eminent within the European Community.
A great deal is at stake. We must understand the position taken by France in relation to Germany in the light of the fact that 20 per cent. of French imports and exports are dependent on the German economy. Furthermore, the French have effectively surrendered to the deutschmark. That is the crucial point. We are determined to maintain our independence and ensure that we do not surrender to the deutschmark.

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The West German economy has been reconstructed since 1945. We have reconstructed only since 1979 and the implications were not seen until 1984 or 1985. We need time and space. With or without reunification the Germans should be thinking hard about the necessity of maintaining the democracy that is intherent in our Parliament and to ensure that we maintain our independence. A member of the French National Assembly told me in the House only last week that the rest of Europe looks to Westminster for democracy. We forget that at our peril.
We have fought for several decades to preserve our democracy. It is important that we sustain it into the future. We face a crucial decision which we will have to take sooner than we would like. We must take it some time in the next 18 months and it will have to be faced on 8 December. My right hon. Friend the Prime Minister has staked out the case for Britain which has been endorsed by the United Kingdom Parliament. We will not be rushed into federalism. That would involve serious dangers for us, for Europe as a whole and also for the democracy of people in western Europe and in eastern Europe. We must not let those people down.
6.52 pm
Sir Russell Johnston: I want to refer to several of the points made by the hon. Member for Stafford (Mr. Cash). I found the whole slant of his observations negative, depressing and old-fashioned. Nothing makes me more weary than to be told how much better we are than everyone else and how everyone else looks up to us. Sadly, I am afraid that that is a profound illusion.
The House of Commons is a very funny place. Last weekend saw the most glorious and marvellous affirmation of freedom since before the iron curtain dropped. There was so much joy along the Berlin wall and there was that fantastic street party on the Kurfurstendam. In the fact of all that, how do we react? There is little excitement. I hear that we must proceed slowly and have time and space. We must be very careful. Indeed, the right hon. Member for Guildford (Mr. Howell), the Chairman of the Select Committee on Foreign Affairs, said, "We must look with great care"; he then paused and said, "and reservation." That means that he is against it.
Mr. David Howell: That really is an out-of-context reinterpretation of my remarks. If the hon. Gentleman checks Hansard, he will find that I was referring to the emotion that is being generated for the early reunification of the two Germanies. That is where I said that care is needed. I was only echoing the common-sense views expressed by many West Germans, East Germans and people in the other capitals of Europe.
Sir Russell Johnston: I was not quoting the right hon. Gentleman out of context. I know that he believes that his view is common sense. He also believes that his opinion was cool and sensible. There is no doubt that these incredible events have dominated the debate, and I want to spend some time referring to them.
The hon. Member for Stafford referred to the speeches made by Hans-Dietrich Genscher and Chancellor Kohl. I found it a great comfort that Hans-Dietrich Genscher, the Liberal Foreign Minister of the Federal Republic of Germany, while welcoming the changes in the DDR,
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stressed that the Federal Republic of Germany remained committed to working towards European union. I was also very pleased that Chancellor Kohl said something very similar in Poland. He said that Germany unification, far from being incompatible with increasing the pace of European unification—to which several hon. Members who have spoken today are opposed—was necessary to its peaceful achievement. I agree with that.
We do not know how long the process will take. No one expected what has happened to happen with such speed. Any relationship which will evolve between the two German states must be firmly rooted in the context of European union. Tim Garton-Ash, the political editor of the Spectator, wrote last week:
"If Europe is just a single market, then a Germany of 80 million people, with a GNP twice that of Britain, will dominate it. If Europe is also a single polity, it will not."
That is right on the mark. The hon. Member for Hamilton (Mr. Robertson), quoted from an article by Sir Nicholas Henderson in the Evening Standard last night. Sir Nicholas Henderson's article deserves to be quoted a little more extensively than the hon. Member for Hamilton quoted it because Sir Nicholas refers to points about which hon. Members have expressed concern. As everyone has said, Sir Nicholas is a most experienced diplomat and a very wise man—and there are not many people about whom it may reasonably be said that they are wise. Sir Nicholas stated:
"Whatever form unification takes"—
notice that he accepts that it will happen—
"Bonn will surely want the newly-added territory to be fully incorporated into the European Community. This could cause difficulties for Austria, which is already in the waiting room of the Community"—
I doubt whether that is very serious; I do not believe that the DDR can join before then—
"as well as other European countries. But the real problem that could arise would be over the size and weight of an enlarged Germany in the European Community.
A policy of promoting the concept of Europe on the basis of separate states rather than a closer union involving a greater sharing of decision-making would be likely to aggravate this problem."
We know exactly what he means by that. He is talking about the Prime Minister's view.
Mr. Cash: The hon. Gentleman has touched directly on the central theme of my speech. If one were to construct a paper constitution with the power and degree of the Germany economy on the scale that the hon. Gentleman has just described, does he believe that that would soon lead to that paper being discarded in favour of real political and economic power because those who pay the piper call the tune?
Sir Russell Johnston: No, I do not think that, and nor does Sir Nicholas Henderson. Sadly, the hon. Gentleman does not seem to accept a view within the Community that the evolution of a Community based on standards and policies is not related to national attitudes which are more and more out of date.
Sir Nicholas went on to state:
"It will surely be desirable for such a Germany to share as closely as possible in decision-making with its Community partners. Those who insist on emphasising the nation state should not be entitled to complain if one of the most powerful nation states were to act increasingly according to its own national interests."
Contrary to what the hon. Member for Stafford said, I do not agree that that will happen if the Federal Republic

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is integrated. I do not quote opinions out of suspicion or fear of Germany. Many hon. Members have such fears. Democracy is firmly rooted in the Federal Republic. Contrary also to what the hon. Member for Stafford said, I believe it is now a more democratic country than Britain and its society is more open and less repressive and intolerant. Historical national suspicions linger darkly among us. I do not believe that the idealistic approach —I supposed I could be accused of being idealistic—to the development of a federal state in Europe will come about unless Europe includes a fair balance between historical states. One is seeking not to contain Germany but to recognise that if Britain, France or Germany were dominant, it would not be good for the whole. The Delors argument is for our benefit as well as his.
Mr. Janman: I have been listening with fascination to the hon. Gentleman's speech. In essence, is he saying that outside the federal Europe, in a framework which will continue as it is now, the German people are inherently superior to the other peoples of western Europe? Is he saying that a country with even 80 million people will automatically economically out-perform three nation states, including Italy, of 60 million people? Surely the hon. Gentleman's attitude is defeatist. We should be looking to Britain as a nation state and as an economy being able to compete with a country which, pre-unification, had only a few million people and, with unification, is only a quarter or third larger.
Sir Russell Johnston: I do not regard the Germans as inherently superior any more than I regard us as inherently superior. The simple argument is about the political necessity of creating the European Community out of states which are of roughly equivalent size, and therefore which can——
Mr. Janman rose——
Sir Russell Johnston: I will not give way. Many hon. Members wish to speak. I am all in favour of giving way, but that is my answer. Despite the fact that the Prime Minister would probably agree with the hon. Gentleman, some powerful voices in the Cabinet do not, and they are increasingly expressing their view.
What is happening in eastern Europe is encouraging and exciting. We will not respond effectively if we stumble on our road to reconciliation. We must provide an opportunity for them to relate to something coherent. Therefore, the road ahead must be to accept that we are to be part of a supranational group which will be federal in some way. Within that group, we will not get everything our own way, but we will get a lot more than we would if we were outside it or if we spoil other countries' efforts to achieve it. We will be able to contribute to change.
The two great parties of this country are divided on this issue. I do not say that happily or even critically: it is a fact. There is a fear of commitment, almost like a child's fear of the dark. Supranational power is suspected as though it were a plot to undermine our standards. There was more than a hint of that in the speech by the hon. Member for Stafford. There is a fear that the fellows across the Channel will undermine our standards and impose unacceptable things on us in some way or another. The Chairman of the Select Committee on Foreign Affairs is a languorous chap
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—decent, but very laid back. He was certainly very laid back today. He gave the impression of the superior Anglo-Saxon who thinks that all those fussy continentals are liable to be strange and misleading, and talked of Delors and Mitterrand as though they were a couple of recalcitrant political schoolboys. That is absurd.
Mr. Cash rose——
Sir Russell Johnston: I will give way to the hon. Gentleman in a moment. [Interruption.] I apologise to the hon. Member for Northampton, North (Mr. Marlow), who seldom intervenes in hon. Members' speeches!
Late on Monday night—not many hon. Members were present—we debated a Commission proposal for a European environmental agency which would try to get common statistical bases for evaluating pollution. It could become more than that. It was a short debate, but it epitomised certain attitudes. The Government were unwilling to accept that even the collection of information about pollution should be other than voluntary. That is rather like saying that criminals should normally voluntarily report their misdemeanours to the local police station. The Labour spokesman spoke vigorously in favour of a British environmental agency which must be independent of Government. When I asked him how, if one accepts that, one can logically reject a European agency independent of countries—I can see no contradiction—he was silent.
One cannot reject it in logic, nor should one fight against an agency which, within the framework of the Commission, the Council and Parliament, would develop and regulate a policy. That is not bureaucracy; it is protecting our environment together. The Prime Minister conjures up a wholly false picture of the Commission seeking to devise a negative plethora of regulations, whereas, by contrast, she and her Government seek to release enterprise and create jobs. One wonders how the Left of the Labour party, which always regarded the Common Market as a capitalist plot, now views this matter.
The social charter is not negative. It is a search for a sensible balance between the release of private initiative and the protection of public well-being. Anybody who objects to the social charter should read John Kenneth Galbraith. I am ashamed that we should be isolated in that search. That is one of the things which the Liberal Democrats would say in the European Parliament if our distorted electoral system did not prevent us from going there.
The reason we do not enter the exchange rate mechanism is not because there is no right time, as we are always being told, but because there is a gut refusal to face up to the fact that the only way forward for us is to accept that our future is within a supranational Europe and to do our best to make it work. There is no difference of view between those on the two Front Benches about whether to join the EMS, which is both a matter of practical value and symbolic importance.
I shall briefly mention the developments in eastern Europe. I have been wanting to say the following for some time and I now have the opportunity: there is one present Member and one former Member of this House whom I would like to be here now. The present Member is the hon. Member for Oldham, Central and Royton (Mr. Lamond), whom I have heard on my car radio in the deep watches of

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the night telling me on DDR radio about the excellence of the Honecker regime. He could come along and admit that he was utterly wrong. The other chap is a former Member of Parliament, Mr. Robert Maxwell, who once called Mr. Honecker "the father of the nation". He might use the Daily Mirror to say much the same thing. Those people defended the indefensible when it was easy to do so. If Egon Krenz can admit fault, they should also.
What happened in Berlin last weekend was wonderful. However, the problem of shifting economies with subsidised, state-imposed pricing towards liberal, economic systems against a background of economic confusion is enormously difficult. For example, one third of the DDR budget—as I found when I was there last April—goes towards maintaining food and rent prices based on 1949 prices and transport prices based on pre-war prices, not to mention a series of other impossible arrangements. That means that it will be difficult to transfer from that position, which applies to all Eastern bloc countries. The transition must be managed gradually and we must help.
I was sorry that the Minister who introduced this debate said nothing specific on this matter. Perhaps the Minister who winds up will do better. At the summit in Paris this weekend the Community should try to put together a package of credit, and technological and managerial assistance, to help with proposals related to joint ventures and food assistance—particularly to Poland —which they can put to Presidents Bush and Gorbachev when they meet early next year.
It is too soon to talk of associate status for eastern European countries within the European Community, but I hope that the Government are alive to the useful role that the Council of Europe can play in providing a bridge between East and West for information and contact.
I could speak at much greater length and I apologise to Conservative Members; perhaps I have been a bit self-indulgent because there are not many Members present.
I shall conclude by making two points. First, the huge changes in the East which we so enormously welcome will not be confirmed and advanced by the European Community hesitating to seek to weld itself closer together. That suggestion, which was contained in the Prime Minister's Mansion house speech, was wrong. Secondly, we in Britain must finally face up to the fact that our future lies not in clinging to illusory sovereignty, but in committing ourselves wholeheartedly to work with other countries of similar sizes and shared cultures and experiences in the European Community, which will be some kind of federal solution. Let us stop pretending that we can do everything ourselves and are cleverer than everyone else. The future lies in working with others in Europe.
7.13 pm
Mr. Michael Lord: There can be no doubt that recent events in eastern Europe will dramatically change the lives, not only of the people living in the countries directly involved, but, to a considerable extent, the rest of us who live in Europe and even beyond. While I am delighted at the prospect of freedom and democracy spreading eastwards. I urge the greatest possible caution in the period ahead which could well usher in a time of great instability.
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I shall briefly consider what is happening and point to an existing stable framework which might be used to enable the changes taking place to proceed in the safest and most orderly way. As a member of the Council of Europe and the Western European Union, I believe that these two organisations are uniquely placed to play a key role in the changing pattern of Europe. I shall explain why later. However, before doing so I shall consider three aspects of the changes now occurring: why they are happening, what uncertainties they will usher in and how we should react.
The first question we must ask is not why the East German people have streamed through the Berlin wall or why democracy is being returned to Poland and Hungary, but why the authorities have allowed it to happen instead of rolling out the tanks, Chinese fashion, as they might have done years ago to quell what was happening. All this must have been sanctioned by Moscow, and again we must ask why.
The high level of military spending in Russia may well place an intolerable burden on its ramshackle economy. There is no doubt that its power is being eroded and its involvement with Afghanistan showed it the folly of following military excursions, and also cost a great deal. There may now exist in Russia a general and genuine desire to live in peace and harmony with the rest of the world. That may be true but, if so, we must again ask why tanks, aircraft and submarines are still being built at a steady and alarming rate.
The Soviet Union's intentions may be totally benign. It is quite reasonable to suppose that it is now prepared to try democracy and capitalism, but the result of the recent actions has been to introduce into Europe the greatest note of uncertainty for 40 years. More potential damage has been done to the western Alliance and NATO by the knocking down of the Berlin wall than Russia's massive armaments programme ever achieved. If the intention was to create uncertainty and a weakening of its opposition, these recent changes could be the most effective offensive Russia has so far launched, without the need so much as to lift a rifle.
As a result of these actions, uncertainty abounds for many good reasons. We do not know the reasoning behind these changes at the highest level. The outcome of the move towards democracy and freedom in the East is still unknown. We do not know why President Gorbachev surfaced in the Soviet Union, what support he currently enjoys and, more important, how long he will remain in office. The role of the European Community in all this is uncertain. There is a very real possibility of the unification of Germany. Most important of all, there is the effect of all this on the Warsaw Pact, NATO and our indispensable American allies.
Tonight is not the time to go into detailed debates about exactly what will happen over the weeks and months ahead. The right hon. Member for Llanelli (Mr. Davies) talked about what hon. Members from both sides of the House wanted to see in Germany. It is not a matter of what any of us want, but of what will happen. If, as many people believe and expect, Germany is reunified—perhaps sooner rather than later—it will clearly be important for that country to be stitched comfortably and happily into the fabric of Europe.
In the midst of all this uncertainty, how should the United Kingdom respond? Our response should take advantage of all that is happening in order to improve the

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freedom, democracy, safety and stability of Europe as a whole, without in the slightest way reducing—except by negotiation and verification—the West's defensive position and watchfulness. What is necessary is a framework, flexible enough to allow beneficial changes to take place but firm enough to provide the stability needed in times of change and perhaps also able to act as a benchmark against which to measure change and judge exactly what adaptations to the existing framework, which has kept the peace for 40 years, are most likely to lead to a more co-operative and secure Europe. I believe that in conjunction with other organisations the Council of Europe and the Western European Union have key roles to play in these matters.
The Council of Europe, uniquely, embraces every democracy in Europe and in a unique breakthrough earlier this year granted Russia, Hungary, Poland and Yugoslavia guest status. Those countries now join us at our parliamentary assemblies in Strasbourg and no longer simply observe our proceedings but, in fact, participate in our debates in the Assembly and will increasingly be involved in all aspects of the Council of Europe's work. The House will, I am sure, recall that it was to the Council of Europe that President Gorbachev chose to come earlier this year to make his historic speech about our "common European home".
So, a working forum already exists which will enable discussions to take place between East and West on all these issues in the widest possible European context—a forum in which, as West Germany is already a member, the future of East Germany could most naturally be debated.
The other organisation that surely has a crucial part to play is the Western European Union, which is currently being enlarged to embrace Spain and Portugal and which has in recent years been reactivated and is playing an ever-increasing part in European defence.
It has been suggested that as West Germany is already part of the European Community, East Germany can simply join as well. It is, however, a common market, not a defensive organisation, and while this move may be helpful in many ways, it is clearly not a complete or even adequate answer. The Western European Union, however, which has both West Germany and France as members, and which is entirely concerned with defence, is the obvious organisation to discuss the future position of eastern Germany in military terms.
The fact that the USSR is now able to enter into debates at the Council of Europe must be a help in the whole process, and it is for these reasons that I believe that both the Council of Europe and the Western European Union have vital parts to play in these rapidly changing times.
May I just enter a note of caution on placing too much emphasis on the personality and motives of any particular leader or trying to wish ourselves into a happier, freer Europe, which may still be quite a long way away? In matters of defence, the heart must never be allowed to rule the head. I have already said that none of us knows exactly what reasons lie behind the present situation and it would, in my view, be fatal to build, shape, or even alter, however slightly, our defence policy on the basis of what we guess may or may not be in the minds of other nations' leaders —in Russia or elsewhere. It is rather like expecting the
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Politburo to agree to disband the Warsaw pact simply because they have come to a unanimous conclusion that our Prime Minister is "a good egg". Our defensive disposition must be totally unchanged by recent events until we see how matters develop. Provided our guard is kept firmly up, we have everything to gain and nothing to lose.
Finally, while the full effects of recent events are unfolding and to ensure that constructive dialogue continues, I very much hope that both the Council of Europe and the Western European Union will be given the maximum encouragement by all Governments concerned to play their part.
7.22 pm
Mr. Gareth Wardell: I am pleased to have an opportunity to speak on developments in the European Community between January and June this year when a total of 410 European documents were deposited in Parliament. It is important to take part in this debate for no less a reason than that many of my constituents seem to believe that 1992 is to be the celebration year of the discovery of America by Christopher Columbus and do not seem to realise that 1992 has some important implications for the European scene.
It is tempting to explore the many subjects referred to in the documents, many of which are extremely important, such as the reference to the change in the blood alcohol level that will be brought forward in new directives on the breathalyser test. That is an important matter because in this country we still have the spectre of as many as 1,000 drivers a year being involved in fatal accidents while in excess of the legal alcohol limit. The document refers also to the problem of water pollution that is caused by nitrates and to the difficulty of harmonising tyre depth treads, on which we were unique in opposing the European Commission's proposals. There is also the matter of the lorry weight derogations.
When one reads these documents, it is important to do so carefully to find out what the Government are saying about what is happening. A classic example is the position regarding heavy lorries. Paragraph 1.16 on page 6 points out:
"the United Kingdom's existing derogation from the Community weights and dimensions for 5 and 6 axled vehicles should continue until 31 December 1998."
Paragraph 7.13 on page 20 states:
"derogations … should end on 31 December 1998."
Those two paragraphs say exactly the same thing. The second paragraph clearly points to the fact that by the end of December 1998 there will be 44-tonne lorries on British roads and, by then, the weight maximum will probably be 50 tonnes. Without careful reading, it is difficult to deduce what the Government are allowed to derogate and what they are not. One must read such documents closely.
Mr. John Marshall: Does the hon. Gentleman accept that the derogation won by my right hon. Friend the former Secretary of State for Transport was substantially better than that originally proposed by the European Commission and that he should be talking about 40-tonne lorries, not 44-tonne lorries?
Mr. Wardell: Yes, I accept that the former Secretary of State for Transport won that derogation, but I should have preferred him to do better and to ensure that such lorries will not be allowed on Britain's roads until the

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bridges in this country can accommodate the loads that those lorries will impose on them. I am extremely concerned that we ensure that when that derogation becomes invalid or is completed at the end of 1998, resources should be made available to ensure that that will not pose a major threat to our existing infrastructure.
I listened carefully to the Minister and to what he said about how well we are performing relative to other European Community countries in our compliance with various directives and regulations. In the intervention that he kindly allowed me to make, I referred to environmental pollution and pointed out that the way in which the Department of the Environment deliberately avoided implementing the bathing water directive of 1976 was something of which the Government should be ashamed.
The Government defined a "bathing beach" by the numbers of people using the beaches, in such a way that not one single beach in Wales could be classified as a bathing beach. The Government then said that that directive therefore did not apply to any beach in the Principality. That has meant that raw sewage is still poured into the sea from about 120 short sea outfalls. We need to accept that such things are happening. It is a pity that the Department of the Environment was not big enough—I do not mean in size, but in its moral attitude and stance—to admit that that was a deliberate way to avoid and evade that important directive.
I am concerned about the way in which the House deals with European legislation. The Select Committee on European Legislation said in its report that an inquiry is taking place into the way that legislation arises. Paragraph 15.4 of the Select Committee report states:
"In two cases the Council adopted a common position on a proposal before the debate recommended by the Select Committee could be arranged."
A Minister may go to the Council of Ministers and make a decision, but there is not enough time for the House to debate the issue. I find it completely unacceptable that the House is denied the opportunity to debate matters of concern
I hesitate to say this as I may be incorrect, but I imagine that very few right hon. and hon. Members know that every hon. Member is automatically a member of the Standing Committee on European Community Documents and has the right to attend its meetings. That ignorance is a great shame, because, although hon. Members cannot vote, it would be an interesting spectacle to see most of us turning up to one of the debates and to discover what contribution we could make.
It is a great disadvantage to the people of Wales that no Welsh Office Minister, including the Secretary of State, has ever been to a meeting of the Council of Ministers. I find it incredible that the way countries vote in the Council of Ministers is not recorded. It is high time that the way in which Ministers vote is made known, so that we understand the exact position of each country.
I can think of two examples which illustrate the inadequacy of current procedures, and both involve industries which are important to the United Kingdom —steel and aluminium. The beverage container directive of some years ago would have dealt a major blow to the only three plants in Britain that manufactured tin plate which were located in south Wales. Sadly, their number has now declined to two—in Trostre and in Ebbw Vale. They would have been decimated if the directive had been implemented in its original form. However, the director of
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British Steel's tin plate division telephoned me a few days before the Standing Committee met. He knew nothing about the directive that was being considered in the House, and he had no opportunity to discuss it with right hon. and hon. Members.
The second example is this year's hazardous waste directive, which proposes a bizarre definition of waste. For example, material which is a by-product from nickel or aluminium plants is regarded as waste, when it is a valuable commodity elsewhere in the industry. The Aluminium Federation did not know that that important draft directive was being considered in the House.
I hope that there will be major reforms in the way in which directives are dealt with following the Select Committee on European Legislation's report and recommendations. Some 410 documents have been deposited in the House. Few of them have seen the light of day for detailed consideration and that worries me greatly.
I find it infuriating to witness the Prime Minister remaining obdurate in her isolation against the proposed social charter for human rights. The Prime Minister said at the Madrid summit on 27 June this year:
"The Council's conclusions on this subject recognise that the highest priority is to create the conditions for more jobs. The Government do not believe that the Community's proposed social charter would help to achieve this aim. Indeed, we believe that imposing extra burdens on industry would make the Community less competitive."
That seems like a voice from the past—more in line with the Ottoman empire in decline. It is the voice of a state in disarray. That is an anachronistic and moribund view. It offers us the bizarre spectacle of Britain as the poor man of Europe, deeply worried that Greece, Portugal and Spain are keen to implement the social charter to ensure that the increased competition generated by the single market does not drag down wages and working conditions to the lowest common denominator.
I do not go along with the Prime Minister's philosophy. I would rather take a different view—that of the report drawn up on behalf of the EC Committee on Social Affairs and Employment on the social dimension of the internal market, on 23 February this year, which shows why we need the social charter. It says:
"The completion of the internal market should not be used, therefore, to undermine established social standards in the Member States by reference to job losses as a result of excessive wage levels by comparison with those in Member States. The social framework of the internal market should not be left to market decisions, but must be regulated at Community level. In the field of the health and safety of workers in particular it is essential that national provisions should be harmonized. Product-related provisions must therefore be harmonized at the highest possible level to ensure that a worker is not at greater risk merely because he is operating a machine for which the safety standard differs from that operated by his colleague. Within workplaces, non-product-related labour protection can be regulated on the basis of the highest possible minimum standards. Countries with higher levels of labour protection should not be allowed to reduce them."
I apologise for the length of that quotation, but it makes my point.
The social charter offers the citizens of post-1992 Europe the prospect of social improvements, especially in living and working conditions, social protection, education and training.
When the summit meeting of the European Council takes place on 8 and 9 December, Opposition Members will hope that there is a unanimous decision to adopt the

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charter. There is no longer any merit in striving for political machismo by flexing one's muscles in a minority of one.
7.38 pm
Mr. Hugh Dykes: The hon. Member for Gower (Mr. Wardell) referred to the Select Committee on Procedure and to an examination of the scrutiny procedures of the House. I agreed with many of the points he made, but as a member of the Select Committee on European Legislation, I should emphasise that paragraph 15(2) on page 33 of the White Paper states:
"the Lord President said that the European Legislation Committee did a very good job and he did not see any need to make many changes to the basic system, but thought that the way European legislation was handled in the House could be improved".
Recently there have been a couple of press leaks which suggest that, in about three weeks, the Select Committee on Procedure will produce what appear to be extremely interesting and admirable suggestions. As a member of the EC Scrutiny Committee—perhaps I can engage the support of my hon. Friend the Member for Northampton, North (Mr. Marlow)—I hope that those suggestions will not fundamentally change the way in which that Committee functions.
Mr. William Powell: Will my hon. Friend give way?
Mr. Dykes: I shall give way in a moment, but I am rather worried about the time available for remaining speeches.
The European Legislation Committee acts as a sifting mechanism. I do not say that to defend, in any way, a vested interest—far from it. The sifting and advisory directional functions of that Committee—it could suggest to other Select Committees that they might consider investigating a particular area—represents a welcome matrix. I shall give way to my hon. Friend without, I hope, incurring your displeasure, Madam Deputy Speaker.
Mr. William Powell: As a member of the Select Committee on Procedure I can tell my hon. Friend that he is not likely to be disappointed.
Mr. Dykes: I am grateful. That is a vindication of the thing of which all hon. Members should be proud—the fact that we have the strongest scrutiny procedures of the member states. The Minister said that earlier. That scrutiny is a good and a bad thing. It is good because it shows, once again, that the House is addicted to careful and meticulous scrutiny of national governmental and Community decisions. We notice, however, that an enormous quantity of national public spending goes through here late at night and is voted upon without many people paying much attention. We cannot, however, do everything perfectly.
The bad effect of such scrutiny is that it engenders over-preoccupation and anxiety. The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) was right when he said there was an anxiety about leaping into the dark. Although we joined the Community in 1973, it is still seen by some as a perilous and dangerous institution. The reaction provoked by such scrutiny may be, "You be careful what those foreigners are up to, George, or we will
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really be in trouble." I use the name George in the symbolic sense and I am not referring to any particular Minister or Opposition spokesman. We should get away from such an attitude.
Without sounding oppressive to my colleagues, I must say that we have had a series of fantasy speeches today about the realities of the Community. It is rather disturbing that many of those speeches were made by my hon. Friends rather than Opposition Members. A fantasy feeling abounded about the attitude of the Germans. The German dream of reunification is perhaps the most powerful cement that binds those two nations. It is absurd to believe that we or any other European country could say, "We know that, after the war, we said that you should be united and that it was terrible to have a divided Germany, but we were, in fact, only pretending." Imagine suggesting to the Germans that we have our old ideal blueprint for them and then accusing them of being aggressive and militaristic should they refuse to accept it. That is totally absurd.
The Germans also suffered enormously during the second world war—6·5 million of its people were killed. The nation suffered at the hands of the Nazi terror gang that seized power without any parliamentary majority in 1933. Unlike after the end of the first world war, however, the Germans, especially in the western part, were treated well in 1945. The story of the eastern part was a sad one, but the treatment meted out to those Germans by the Soviets later improved somewhat. After the second world war, however, the West Germans were brought into the comity of nations and they were not excluded as in 1918. No revanchism has arisen and we all view with admiration the firmly anchored tradition of moderate politics and moderate economics in the Federal Republic.
The process of reunification is a complicated matter. I believe that whatever form it may take, however, it will happen faster rather than slower than expected. The East Germans are motivated by two principal aspirations. One is reunification, but, at the moment, the main one is the search for freedom, participation in Government and exercising their choice. Unlike some of my hon. Friends, I do not believe that East Germans are on the verge of embracing Horatio Alger-type capitalism. I would be delighted if that were so, because, as a Conservative, I believe that free enterprise is the best means of economic organisation.
I believe that the East Germans are still addicted to their Socialist form of society, but that they want social democracy and freedom of choice within that framework. Perhaps a small minority will become addicted to the capitalist system later on. If the vast proportion of the new, greater united Germany remains relatively heavily collectivistic but socially democratic, and West Germany remains a much more mixed capitalist system—we are told that that system operates a high degree of regulation and is inefficient in some respects, but for all that it is an amazing economic miracle—those differences will gradually fade away. The similarities between the systems will then begin to emerge.
Why cannot such changes take place within the context of the European Community? It is manifestly ridiculous for people now to suggest that because of the interesting, fascinating and heart-warming upsurges in eastern European countries and in East Germany with the breaching of the wall, that means that there should be an end to any programme of integration and European

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union. It would be absurd to suggest that the Community should pause for several decades to wait for the complicated east European geo-political processes to be worked out into a final result. Nothing could be further from the truth.
The 11 member states—perhaps I should say 10, as Greece remains an awkward member of the Community—are committed, enthusiastic perpetrators and exponents of increasing and developing European integration and union, including monetary union. Once again the danger is that the United Kingdom remains on the sidelines of that process looking unenthusiastic, curmudgeonly and churlish. That does not serve the interests of our people. The Government show enormous enthusiasm, however, for particular areas of Community policy—the internal market is one good example. On 4 May I asked the then Paymaster General, now Secretary of State for Northern Ireland:
"Will my right hon. Friend respond positively to the idea of contracts being gradually and increasingly in ecus as well as in national currencies?"
My right hon. Friend replied:
"The British Government in their separate actions have shown an enthusiasm for such ecu transactions and have regarded them as a much more sensible and practical way forward."—[Official Report, 4 May 1989; Vol. 152, c. 440]
That is a good example of our enthusiasm for developing European instruments of one kind or another. We make the mistake, once again, however, of not approaching all developments with common enthusiasm. I do not suggest that the Government should agree every jot and tittle and every proposal in a rigid framework. We should try, however, to emulate the enthusiasm of the newest member state, Spain. That country is obviously enthusiastic because of the benefits that will come to Spain as a result of its membership, but its enthusiasm for the Community is genuine. We should share the interests and enthusiasms of the other member states for developing all the aspects of integration mentioned in the Single European Act. My right hon. Friend the Member for Guildford (Mr. Howell)—he is not present at the moment —persists in arguing that other proposals for European union, apart from the internal market, are not mentioned in the Act, but that is not so.
We have nothing to lose from our enthusiasm and everything to gain. The fantasy that we should hold on to our national sovereignty, like some old-fashioned concept which overrides all other considerations, is manifestly absurd. Why are we not worried about the seeming loss of sovereignty in NATO? In NATO it is almost possible—I say "almost" to exaggerate the point—for an American Commander-in-Chief to order this country to war. Our sovereignty is subsumed in NATO in terms of voting and collective decisions. We should consider the European Community in the same light as NATO.
In the process of obfuscation and myopia, which continues to represent our rather silly, old-fashioned attitude towards the European Community, we misrepresent—sometimes, unfortunately, in a rather offensive manner—the proposals of Mr. Delors. We misrepresent the remit given to him by the Council of Ministers in respect of European monetary union and regarding the other proposals he makes as a senior member of the European Commission. The Delors blueprint was a blueprint only because the Council of Ministers and the central bankers committee specifically requested that
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blueprint. That does not mean that it is rigidly couched and cannot be negotiated on in terms of the stages not yet agreed.
The Madrid meeting agreed to stage 1 only. I believe that there is plenty of room for compromise, flexibility, agreement and give and take in the later stages. Notwithstanding the polite response of the Bundesbank president—his response may have been dictated by devious reasons as he is a devious as well as an extremely witty gentleman—we are making a mistake by, once again, being the odd man out. We have said that we have our own rather special esoteric "free-market forces in competing currencies" document and that is what should be accepted. We are continually selective, to the irritation of our European partners, and that is a grave mistake.
There is misunderstanding not only of Delors's aspirations as president of the Commission, but about the form that the Community will probably take in future. It will not be some rigid, bureaucratic, centralised body directed by a Brussels bureaucracy which is a single governmental entity. The accidental modern American definition of federal government as a single government entity is a historic aberration. Federalism did not originally mean that. It meant what nationalists in Britain presumably aspire to—a federation of powerful component elements with a weak central authority embracing the whole federation which carries out only the functions common to all the components, as agreed by the components.
Perhaps that is not possible now because of centrifugal forces within a country and between member states in a cohesive grouping, such as the European Community. No one in the Community has suggested that Europe should have one Government. A federal system would be a co-operative structure based on majority voting and the Single European Act with each sovereign Government willingly pooling its sovereignty and agreeing to the necessary treaty changes arising therefrom.
Mr. Janman: I am interested in my hon. Friend's definition of federalism and his reference to the United States. Does he agree that the Delors report in its present form, which proposes a single currency in Europe and a central bank, would make national decisions on monetary, budgetary and fiscal policy meaningless? That is centralisation, as opposed to the federalism of the United States where individual states have federal power over their budgets.
Mr. Dykes: My hon. Friend will forgive me if I do not go into detail. Delors and his colleagues were asked to produce a tightly drawn-up blueprint and that has been done. It does not mean that matters will not be negotiated and then changed. I do not want us to reject those proposals.
Sir Russell Johnston: Does the hon. Gentleman also reject the idea that there will be some sort of European Government one day? I trust not.
Mr. Dykes: I would not necessarily reject that. Although I am regarded as a Eurofanatic—whatever that may be—I do not see a federal Europe as a single governmental entity. We are developing a unique new mechanism which will be the pattern for the future. That is historically exciting. The future is unascertainable even

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to the sage Members of the Social and Liberal Democrats. None of us can tell the future. There will not be a menace to this country.
If we had the economic authority and success of some other member nations, people in Brussels would not laugh when we said, "We have lessons, strictures and advice on economics and politics to hand out to you. Please listen to us because we know better." It is absurd for us to do that until we have a more successful economy. Sadly, despite well-meaning propaganda, which I use in my speeches outside the House, we have not had a supply-side miracle yet, although I hope that we shall have one soon.
I hope that we shall not be too selective and say, "the internal market is wonderful. With free enterprise, it is easy to achieve. How dare other member states be so slow?", but in other areas say, "No that is dangerous, we must not do that. We must go slowly and not make haste."
On 12 July I asked my right hon. Friend the then Minister of State, Foreign and Commonwealth Office:
"There is a certain amount of puzzlement in Athens because, when it comes to social charter provisions, the differences between countries and traditions are too great to make any similarity possible whereas in respect of the internal market, for ecomomic and financial reasons, it is possible for us to achieve total harmony within a few years. Why is there a difference in the British Government's attitude to those two aspects?"
She answered:
"As my right hon. and learned Friend said earlier, the difference is that we believe that the social dimension should help to improve economic performance across Europe. It is clear that the Council of Europe social charter, which provided a framework, was a very good text, but it did not extend to deciding at European level those matters that we properly believe should be decided by each nation state. We know that liberalisation and deregulation are the only way to achieve economic growth and a reduction in unemployment. We believe that we should be entitled, in accordance with the Commission's principle of subsidiarity to decide which way the country goes."—[Official Report, 12 July 1989; Vol. 156, c. 966.]
In Brussels that is seen as a glaring contradiction of our attitude to the internal market. It is a pity that such glaring contradictions persist in our attitude to Europe.
7.54 pm
Mr. Jim Sillars: The hon. Member for Suffolk, Central (Mr. Lord), speaking as a representative of the Western European Union, asked about the motivation behind changes in the Soviet Union and other parts of eastern Europe. It may be instructive to ponder the words of the Italian leader of the Communist party, Antonio Gramsci, who accurately defined a crisis as something that happens when the old order is dying but the new order has not yet been born.
When we witness, particularly in the Soviet Union and elsewhere, the collapse of an ideology, we should bear in mind that the Marxist ideology is a secular religion, if that is not a contradiction. Marxists believed that Marxism and Leninism provided a scientific methodology according to which they could understand the history of the world and, more importantly, its future. They carried that certainty with them from the October revolution of 1917 until the times of Leonid Brezhnev. Since then, we have witnessed in the Communist parties of the Soviet Union and its satellites the collapse of that so-called scientific certainty. We have seen ideological collapse and intellectual
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bankruptcy. Once Communist parties reached the stage of ceasing to believe in the inner core of what motivated them, change was bound to arise.
What changes are we likely to see in east and west Europe as a result of recent events? I do not speak simply as a partisan who dislikes the Prime Minister's ideology when I say that I was disappointed by her speech at the Mansion house. However, she was right when she said that recent changes in eastern Europe represent danger. Everyone accepts that at times one has to be cautious. The one concept that did not come through in her speech was an understanding of the opportunities now opening up in both east and west Europe for a permanent settlement of the post-1945 situation, which many people thought was permanent, but proved to be impermanent. I was struck by the Prime Minister's attitude. She seemed to regard events, particularly in East Germany, as a chance to launch a tactical attack against those arguing for greater integration and unity. She seemed to present the usual Downing street tunnel vision precisely when a wider understanding was needed from the head of the British Government.
As someone who wishes Scotland to be separate from the British state and separately represented in the European Community, I am frustrated that folk like me will be represented at the Paris summit by the lady in Downing street who does not reflect majority Scottish opinion about developments in eastern Europe.
Recent events in eastern Europe were a shock to the regimes in power there. It seems to have been quite a shock to folk in the west, too. I was entertained on Sunday by an article by Bruce Anderson in The Sunday Telegraph in which he said that some people may be nostalgic for the stability of the cold war. Such nostalgia has been displayed in the debate tonight and in several public statements by individuals from various interest groups. I was surprised that people were taken aback when German reunification came back on to the agenda. From the moment when change began in the Soviet Union, I thought that the reunification of Germany was bound to re-emerge as the cardinal political dispute in Europe.
I welcome the reunification of Germany. There can be no permanent settlement of post-war Europe or any serious development of unity within the European Community without that reunification. It is central and it must be dealt with. Like my hon. Friend the Member for Inverness, Nairn and Lochaber (Sir R. Johnston)—I hope that he does not mind me calling him that—I was disturbed by the note of apprehension in a number of speeches today about a reunified Germany. It is not justified.
The people of West Germany have a history which everyone knows, but they have had decades of democratic development; their democratic roots have grown deep in their political culture. They have prosecuted their Nazi war criminals and made atonement for what was done between 1939 and 1945. There must come a time when we stop telling 19 and 20-year-old West and East Germans that they are guilty of what their grandfathers did. They have a good record of the development of democracy.
The green movement is a good example of this. It originated in Germany and it could have sprung only from a society that is concerned about the whole of humanity —the global village.
Since 1945, the people of East Germany have been subjected to Stalinist propaganda—a superior type of malign propaganda—yet at the end of it they are as thirled

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to the idea of freedom and democracy as anyone else. They managed to withstand that sort of assault on their intellects, which says a great deal for their quality and worth.
We should approach German people as we would any others. We all have things in the history of our countries of which to be ashamed, and people should be examined in terms of what they have done recently and of their potential for a constructive contribution in the years that lie ahead.
We must accommodate the reunification of Germany. I do not suggest that that will be easy or that other states will have no opinions about it. We are involved in the geopolitics of western Europe and of the Soviet Union and the United States. We all recognise—some of us emphasise it more than others—that the Soviet Union is paranoid about the necessity of some buffer between it and what it reckons to be a potential Western enemy. We may deplore that historical fact and say that it is unjustified, but it is a geopolitical fact of life, and the Soviet Union's point of view will be important.
However, the fundamental right of the people of Germany to be reunified must be recognised, and all the pieces on the political chessboard must be moved to accommodate it.
Mr. Lord: The hon. Gentleman mentioned regimes disintegrating. My point was that, if that is happening, it is within the power of some of those regimes to make sure that they do not disintegrate. They have done so in the past; this time for some reason, they are choosing not to.
My other point was about the great dangers in the changeover period. I am as keen to welcome it as anyone, but does the hon. Gentleman accept that now that people are talking about the reunification of Germany, the implications of that for the Warsaw pact and NATO and defence generally—I am not talking about the Common Market—are enormous? I am worried about the instability and the problems that we face in getting it right.
Mr. Sillars: The hon. Gentleman sounds as though he ghosted the article in the Yorkshire Post which was written by the right hon. Member for Manchester, Gorton (Mr. Kaufman), who managed to get through the entire article about problems in the East without ever mentioning the European Community.
I can understand people's anxiety about NATO and the Warsaw pact. and I do not suggest for a moment that they should voluntarily dissolve themselves tomorrow morning. They are part of the geopolitical chessboard about which I was talking earlier. Of course the interests of the core group in each of these alliances must be taken into account, but I am coming to some practical suggestions on how we can constructively seize the opportunity to tackle the problem.
One of the biggest factors in the continuing instability is the economic crisis in the eastern zone; another is the political problem that Mr. Gorbachev faces. It is strangely paradoxical that Gorbachev is much more popular outside the Soviet Union than inside it. Cries of "Gorby, Gorby" are heard on the streets of West Germany, but not in Moscow or Kiev and certainly not in the Baltic states. Unless we assist the Gorbachev faction—he represents an important school of thought inside the Soviet Communist party—to remain in the ascendancy, problems in the Soviet Union can spill over and create further instability.
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We should be concerned about underpinning the Gorbachev faction and about how to remove some of the instability. My party has written to the Foreign Secretary about this.
We do not suggest starting at the highest political point of discussion. There are three major trading groups in Europe—the COMECON countries, the European Community and the EFTA countries. The European Community is the most cohesive group—a voluntary political and economic partnership which has existed for some time and shown the capacity to expand and absorb new members. It has an agreement about the coordination of foreign policy and we are approaching the single European market. It also has a monetary system from which but a few recalcitrant people dissent. The EC is the biggest, most powerful group in terms of economic power. We suggest that it takes the initiative and calls a major conference of these three trading groups so that the whole of Europe can sit down together, analyse and agree on the problems and then begin to solve them, to create better trade between West and East by studying and understanding each other's systems.
There will need to be more investment in the East by the West. Because of the system on the other side of the former iron curtain, that will have to be done through institutional methods, not the methods of the Western liberal democracies. We shall need to consider how we can transfer technology from the West to the East to raise the competence of its economies, and to consider how we can help train the East's manpower—senior and middle management—to cope with the trading opportunities that should flow from better relations between West and East. This conference and decisions on trading would be a mechanism of practical co-operation with beneficial results for the economies of eastern Europe. If we can start to raise the standard of living of these folk, we shall remove a great deal of the tension and instability.
The Scottish National party's final point concerns what will happen at the summit between Presidents Bush and Gorbachev, which has been described by Gennady Gerasimov as "from Yalta to Malta". There is a big difference between Yalta and Malta: there were more than two people at Yalta, but there will be only two at Malta. As a European, I object to this sort of summit taking place with us excluded from it. I read that President Mitterrand was hoping that this week's Paris summit would make representations to President Bush to the effect that he would talk on our behalf when he met Gorbachev, but that is unacceptable in principle and in practice and it is not sensible from the point of view of the development of Europe.
The Soviet Union and the United States of America remain nuclear super-powers, but their recent history shows that they are no longer political super-powers. The European Community, along with other peoples in Europe, should be saying to those at that summit, "You may meet on this occasion on your own, but on future occasions, particularly if there are substantive matters concerning the development of unity within Europe, we shall invite you to our summit." That rather alters the basis on which the power equation is established.
We have been disturbed by the negative tone and approach from the British Government. It looks as though history is about to repeat itself. The Government have missed nearly every European bus, and it looks as if they are going to miss this one.
8.10 pm
Mr. John Marshall: We welcome and note the commitment of the hon. Member for Hamilton (Mr. Robertson) to Europe, but he said that this is a Government without a vision on Europe. It is pretty rum for any speaker from the Labour party to complain about the Government's vision on Europe. During the six months covered by the report, the British Labour group in the European Parliament was led by a committed opponent of the European Community and British membership of it. During the past five years, two former leaders of the British Labour group in the European Parliament were thrown out because they dared to support the principle of British membership. The British Labour party in Strasbourg did not show much European vision.
As to the British Labour party in the House of Commons and Britain, its policy veers from bitter opposition to the Community to lukewarm support for it. It has more often shown downright hostility, and when it has not shown that, it has indulged in niggling criticism. The Labour party has no grounds for boasting of its vision on Europe. On the other hand, all the major developments in the European Community over the past 10 years have been the result of actions taken by the Government. The campaign for fairness in the European budget was essentially a British campaign, as was the pressure to secure changes in the common agricultural policy. The whole 1992 programme, which will bring so many benefits to everyone, was essentially a British campaign.
While others have been willing to make fiery speeches and indulge in European rhetoric about the ideals of the internal market, they have at the same time been willing to impose restrictions and to indulge in chauvinism. We do not need to be lectured on our commitment to Europe or our commitment to freedom by the French and Italians, who still impose exchange controls, or by the Germans, who are quite happy to indulge in a less than free market in financial services. No one can criticise the Conservative party for a lack of vision on Europe, because the British Government have been both practical and visionary in their approach to this issue.
Sometimes, our debates about Europe are dominated by whether Britain should remain in the Community. I am sure that my hon. Friend the Member for Thurrock (Mr. Janman), if he catches your eye, Madam Deputy Speaker, will yet again raise that issue. However, we should recognise where the tide of history is. It is clear that the destiny of the United Kingdom is increasingly involved with that of our European partners. We have to recognise that Europe takes 50 per cent. of our exports and provides the basis of our defence. Those who seek to deny that our future is in the European Community are seeking, Canute-like, to stop the tide of history.
During the six months covered by this report, the chief issues were the future of the European monetary system, 1992 and the social charter. A number of outside commentators speak as if entry into the exchange rate mechanism would act as a panacea for the British economy, remove uncertainty over currency movements and, somehow or other, lead to faster growth and lower inflation. However, if we look at the way that the British economy compares with those of other countries in the ERM, we see that our inflation rate has been lower than
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some and that our growth rate is higher than that of West Germany and other members. Those who argue that there should be early British membership of the exchange rate mechanism may be guilty of committing the same mistake that we committed in 1925, when we joined the gold standard at the wrong rate of exchange. If we were to join the ERM at current deutschmark-sterling parity, we would be doing a gross disservice to British exporters and those who are competing with continental manufacturers in the British market.
Those who argue that we should join the ERM now ignore the fact that when the French and the Italians remove their exchange control restrictions, the ERM will be a highly volatile organisation. It is surely better for us to join after all that volatility and change have taken place rather than get on, helter-skelter, just before it may, if not get out of control, have a rocky ride. Some say that we should join the ERM not for economic but for political reasons, but we do not need to join the ERM to prove ourselves to be a good European power. We have shown over the past 10 years that we have a strong commitment to the European Community and it is not necessary to join that talisman to demonstrate that commitment yet again.
The social charter poses a great threat not only to the United Kingdom but to other countries in the European Community. We have to recognise that within Europe there are wide variations in living standards, productivity and efficiency in industry. If we seek, through the social charter, to impose standardised obligations throughout the Community, the chief victims of those standardised obligations will be those who live in the poorest parts of the Community.
It is wonderful to stand up and say that we are all for the social charter, but we should ask ourselves what it will do to employment in the Community. Will it encourage the creation of more jobs? I doubt it. What will it do to internationally mobile investment? We in the United Kingdom are pleased by the large number of American and Japanese companies that come to invest here. Will the social charter encourage one internationally mobile company to come to the European Community? Of course it will not. It will act as a deterrent to future investment, restrict economic growth and therefore reduce job opportunities.
The policies of Jacques Delors—remembering what happened in Northern Ireland we might almost call them de Lorean dreams as they would be even more expensive than that venture—must be put on hold because of what is happening in the East. It is not sufficient to say to the people of Hungary, Poland, Czechoslovakia and East Germany that we are willing to consider their countries joining the Community in association. After all, when Spain, Portugal and Greece threw off the yoke of dictatorship in the 1970s, we welcomed their applications to join. We must look forward to a Community that includes Eastern European countries now within the Warsaw pact. Were we to do that, we would do a major deal for peace in the whole of Europe and for future prosperity. If we proceed quickly with the Delors proposals it would do nothing to encourage those countries to join the Community and it may discourage them. If we look to the future, there is great merit in saying that we should put all these proposals on hold for at least 12 months to see what is going to happen elsewhere in the world.

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I will now turn to the attitude of Europe to the rest of the world post-1992. It is fashionable to make wonderful, visionary speeches—that is what the Opposition would call them—about the attitude of Europe to the Third world and other countries and to say that the European Community will not indulge in the fortress-Europe policies that we all condemn. However, so far fortress-Europe is winning. The common agricultural policy is based upon the concept of Community preference, which says that if we can grow it in Europe, we should buy it from the European grower and not import it unless it is unavoidable. The EEC sugar regime is based upon the concept of dumping sugar on the Third-world market, pauperising the Third-world growers and then taking a little sugar back and saying that we are being good. That policy has pauperised many Third world economies.
The essence of the broadcasting directive, which is referred to in the document we are debating, is to restrict the amount of television that is produced by non-Community producers. Surely that should be left to the viewer to decide. Some time ago, when there was a difficulty in the Community's photocopier industry, it was solved by putting tariffs on Japanese imports. Again, the Community was saying that it would restrict competition in the Community market in order to restrict one Community producer and make it more difficult for people to import into the Community. The Community does not have a good record in respect of fortress Europe.
When the Minister replies to the debate, I hope that he will emphasise the British Government's commitment to that philosophy. Unfortunately, it is not a philosophy that is always shared by the Commission in Brussels, nor by the President of the Commission, who, as a good Socialist does not think too much of the consumer but is more concerned with the producer.
8.21 pm
Mr. William Powell: The hon. Member for Gower (Mr. Wardell) and my hon. Friend the Minister reminded us that the subject for debate is developments in the European Community until 30 June this year. However, since then we have been overwhelmed by events that have made the real topic of discussion almost irrelevant to our proceedings.
Whatever the reason in the past for having twice-yearly debates reflecting upon developments that had finished, some time ago, I hope that this will be the last such debate that occurs in the House. I hope that in future we shall move to a system—the Select Committee on Procedure may have something to say on this in its soon-to-bepublished report—of twice-yearly debates taking place just before the European summit meetings so that hon. Members have an opportunity of looking forward to what those summit meetings might achieve rather than looking back upon events which may be in the dim and distant past.
The Select Committee on Procedure—of which I am a member—will shortly publish a major report which I commend to all hon. Members. It will produce at least some ways in which we can considerably improve the handling of European debates and legislation in the House. Those hon. Members who have referred to the inadequacies of the present procedures are absolutely
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right. The report will be a solid document and I hope that hon. Members will look at the evidence as well as the conclusions.
During his speech so many hours ago, my hon. Friend the Minister referred to the French presidency. I do not wish to be critical of France; far from it. Many of my hon. Friends know that I am an enthusiastic Francophile. I am used to negotiating with the French as my wife is French and it is something that I have to do every day. It is much easier than many hon. Members realise.
However, it has to be said that so far the French presidency has been disappointing. My hon. Friend the Minister referred to the success of the Spanish presidency in advancing the single market. That same praise could have been extended to the German presidency just over a year ago. However, the current presidency is not making a great deal of progress. The French still have time to redeem the position and I hope that they will. However, I fear that their single-minded determination to advance the Delors proposals has blinded them to the necessity of proceeding with the 1992 programme as quickly as possible.
I speak as one who has taken an interest in the reform of copyright law in the House. I regret the fact that progress is not being made in establishing the common copyright law for which we had hoped under the French presidency as fast as looked to be possible when the Spanish handed over the chairmanship of the Council of Ministers.
The French appear to want us to join the exchange rate mechanism and appear to he surprised that we are not keen to be involved in that evolving new Community institution. When they express those thoughts, they do so in a rather resentful and critical way rather than in a way that woos us and tries to spell out how advantageous it would be to us if we were in the exchange rate mechanism. It has to be said that that is different from the traditional analysis of the way in which the French character operates when it is trying to get people onto its side. I hope that my remarks about the French presidency will be picked up by them and that they will try to redeem what is proving to be —this is not just my view—a rather disappointing presidency.
I want now to deal with checkpoint Charlie in the American sector of Berlin. Many hon. Members have visited checkpoint Charlie, some on a number of occasions. One of the places most worth visiting there is the museum standing close by. Some museums may be magnificent but essentially dead places recalling the past. There is nothing rich and magnificent about the museum at checkpoint Charlie. However, although it commemorates the dead, it lives; it lives with fire—for freedom. At that museum is celebrated—I use that word deliberately—the 175 people murdered so that they could be free. They were murdered at the Berlin wall. I am amazed that so far during the discussion and with so much public comment made because of the exhilarating events in the past week, we have not taken the time to recall those who gave their lives, not only that they should be free but that others should be free as well. In the past week we have seen the realisation of a dream for which people gave their lives, not just in Berlin but along the length and breadth of the iron curtain from Stettin to Trieste.
The other matter which is not commemorated but appears in the museum is the graphic map of the environs of the city of Berlin—east and west—and around it the

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disposition of Soviet armed forces. There are 380,000 men and many thousands of tanks and they are the best forces that the Soviet Union is able to deploy. The events of the past week have certainly made that level of deployment no longer necessary. One message which we should send from the House tonight to the President of the United States and the President of the Soviet Union when they meet in a week or two in Malta, is that all Europe will be expecting an agreement from them to lower the threshold of conventional weapons in both the East and the West.
President Bush has already made some notable proposals. Negotiations about them are taking place in Vienna. The very least that should come out of that meeting of the two presidents in the Mediterranean is a reduction in the enormous level of conventional armed forces in both East Germany and West Germany. As Mr. Gorbachev has always been prepared to accept what are called asymmetrical reductions, the size of the Soviet conventional forces is no longer appropriate to the political circumstances in East Germany, the Soviet sector of Germany.
A number of hon. Members have referred to what may or may not happen in eastern Europe in the coming weeks, months and years. The assumption is that these countries are moving towards democracy. May I stress with every sinew in my body that I hope that they are moving towards democracy. At this stage, however, we should make no assumptions. Eastern Europe is an economic disaster area. The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) referred to the state of the East German economy, with subsidies holding food and house prices down to 1949 levels and further subsidies holding transport prices down to pre-war levels. The right hon. Member for Llanelli (Mr. Davies) referred to the fact that the ostmark would be no longer a sustainable currency. However, what has happened in eastern Europe for a whole generation amounts to no more than a suspension of the laws of arithmetic. Prices have been held down to levels that no longer reflect economic reality.
The changes that are most likely to come about in eastern Europe are surely these: prices will rise, and they are likely to rise faster than wages and salaries. If they do not, it is extremely likely that the countries of eastern Europe will make no economic progress. If prices rise sharply but wages and salaries do not rise so fast, that will be a recipe for considerable social conflict.
Inflation and social conflict are the most likely outcome of economic developments in eastern Europe during the next few years. Democracy may emerge out of that. Let us all hope so. However, dictatorship of one sort or another is another possible outcome. It would be a very bleak outcome indeed for eastern Europe. We in the West must do all that we can to ensure that that is not the final outcome. It cannot all be done within the space of a week, by means of an instant reaction to these exhilarating events. The West will have to provide capital, education, accountants, managers—just about everything. I have had the opportunity to visit three of those countries during the last few months. Anyone else who has been there, too, will know just how deficient they are in all the elementary things that are needed to sustain economic life. We must
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all hope that the most optimistic scenario is the one that eventually emerges, but there is a real danger that that may not happen.
The events of the last week cannot now be reversed without shattering consequences for the whole of the continent of Europe. It is still possible that the Red Army could seek to impose law and order in eastern Europe, but if it did it would shatter everything. Eastern Europe would be unable to make the economic advances that it seeks to make. The West has a most profound interest in ensuring that that is not the outcome of future Soviet policy. If, however, the East German regime were to bring down the iron curtain again, the pressure to leave East Germany would be even greater and a gasket would blow. Without question, there would be fighting in the streets in East Germany.
We face very difficult, very testing times. We must hope for the best and most optimistic outcome, but we must be prepared to accept that that may not be the final outcome.
8.35 pm
Mr. Tony Marlow: My hon. Friend the Member for Corby (Mr. Powell) is right to be cautious, but he is probably even more right to be hopeful.
On 27 April I asked my right hon. Friend the Prime Minister the following question:
"If my right hon. Friend were the Chancellor of the West German Republic, would her main priority not be the unification of Germany and further traditional moves towards involvement with eastern Europe? What does this mean not only for NATO, but for the European Community?"—[Official Report, 27 April 1989; Vol. 151, c. 1088.]
My right hon. Friend, quite naturally in those circumstances, was unable to answer the question. I raise it now, six or seven months later, just to point out that there are some who are less fanatic and less myopic in our views about Europe and who have seen, early, the strategic direction in which European developments are likely to take place.
Since January to June this year, the political earth's crust of our continent has been convulsed. The future political geology of Europe is as yet unknown, but one thing is certain: that the landscape has changed out of all recognition. Like the rise and fall of the Roman empire, the EEC—from January to June of this year—is history and it is scarcely more relevant than the Roman empire as a means of seeking the future well-being of Europe. Obviously it would be rash to rule out a takeover by the marshals in Moscow. As my hon. Friend has just said, we must fully maintain our defence posture until we can safely negotiate lower levels of defence and new treaties. However, we must make plans for the development of what Mikhail Gorbachev rightly calls the European home under the more likely conditions of military detente.
During the last fortnight the people of East Germany have diverted the mainstream of the European river into a more exciting, a more positive and a very different course. If I may caution the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), anyone who relies on the old maps and charts is inviting the political equivalent of a disaster of titanic proportions.
Much is unpredicatable, but there are some certainties and they should be defined. First, there will be a united Germany—whether a federal Germany or a confederation it is too early to say. The extent of that united Germany is unknown. It is too early to define. Its role is too early to

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define. Its relationship with Austria and the other eastern European countries is also too early to define. One thing, however, is certain: that there will be a larger and more powerful German entity. The fourth Reich—if I can simmer down those who get excited by the words—means commonwealth. The fourth Reich of the tabloids is at hand.
Secondly. the defence structures of Europe are bound to change radically. We are not yet in a position to predict the German position in that defence structure, but what we can say now is that Germany herself will make that decision.
Thirdly, the nature of the European Community is about to change radically. It was conceived as an economic and political grouping within western Europe, with its own internal balance of power. Of the 12 nations, four are roughly of the same size, population and importance. However, the new Europe, covering the whole continent, will be a Europe in which one country is more equal and predominant than any of the others.
The old blueprints of the clerks of the European Commission are about as relevant to the future of Europe as bows and arrows are to the future of warfare. The countries of eastern Europe will develop their own democracies, and naturally, at the same time they will be concerned to redevelop and rediscover their own identities. My right hon. Friend the Prime Minister is quite right. After two generations of totalitarian submergence they will not substitute the central control of Moscow with that of Brussels. Having taken power from their gaolers it is hardly likely that the people of Dresden will hastily hand it back to the beampters of the Berlaymont.
The feeling persists among a shrinking minority of antediluvian federalist dinosaurs who pay court to the ideas of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) that nothing has happened and that the world is the same—still flat. Their champion is President Mitterrand of France who naively believes that locking the Federal Republic into an ever-tightening EEC will somehow prevent the unification of Germany, and if not, will ensure that what takes place is acceptable to Mr. Delors. They would have slightly less chance of success imprisoning a mature eagle in a soggy cardboard box.
Sir Russell Johnston: Will the hon. Gentleman give way?
Mr. Marlow: I am sorry but other hon. Members wish to speak.
Sir Russell Johnston: Palaeolithic poppycock.
Mr. Marlow: The hon. Gentleman said, "Palaeolithic poppycock." I reject that totally.
Germany will unite and it will be unified in a manner which is suited and satisfactory to the Germans—not to France and still less to Brussels. As Germany unites, it will progressively develop its penumbra of political and economic power into eastern Europe. As the Gulliver of German manufacturing industry ruptures the Lilliputian constraints of French policy, France may discover—I hope not too late—the traditional attractions of the balance of power—the economic balance of power rather than the military balance of power. Perhaps when the French discover that, they will discover that the country they need most is not Germany but the United Kingdom.
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Hopefully, their short-term manic obsession with a federal Europe will not lead them to blow up too many bridges which should be maintained against future needs.
Germany, while pursuing the rhetoric of stability and status quo, will quite naturally seek to advance her own interests. She will talk of Delors, but does anyone really believe that she will put European unity ahead of Germany? Would we do that in those circumstances? Given the strategic strength of the German position and the German economy, the only way in which the cup of success can be dashed from her lips would be through the spread of alarm. So it is not surprising that every statement from the Federal Republic will be designed to lessen that alarm. Even so, the reality of German interests will be the driving force of German policy.
The Germans have a massive prize within their grasp—the economic domination of Europe, the rebuilding of German pride and prestige and the final absolution from the guilt of 1939–45. How will that be achieved? Massive aid will pour into Prussia, Saxony and the rest of central Europe, financing the purchase of West German capital goods, technology, equipment and investment. East European industries will develop rapidly further in the interests of the countries involved and increasing still further the dominance of German manufacturing and the German economy within Europe.
Naturally, the cornucopia of aid to the East will drain the reservoir of German financial generosity available to the Common Market and at the same time German interest in and commitment to the ever-burgeoning social pressures and financial extravagances of the EEC will decline.
Whatever Germany says, she will be slow on Delors and monetary union. Whatever Germany says, she will be resentful of the power-centralising ambition of Brussels bureaucracy. Whatever Germany says, she will be impatient with the unnecessary development of yesterday's European institutions.
The future is exciting but uncertain. At this stage, all we can do is seek objectives, not set out detailed policies. I am amazed and not a little disturbed to read that this weekend the Commission had a brainstorming session on how to bring the rest of Europe under its control. This is a matter for elected Governments not clerks, for democracy and not for bureaucracy. I understand that the Commission may feel that its vested interests are threatened and I rejoice in that. Never again should so much power—including the power to initiate policies—be passed to bureaucrats.
The new Europe will be a democratic Europe, not a bureaucratic Europe. There will be a new Europe without barriers to trade but a Europe of nations, each country with its own identity, its own democratic institutions and its own economic and social priorities. It will be a Europe to which all nations from the Atlantic to the Urals are welcome. Federal Europe is dead. Long live Europe.
8.45 pm
Mr. Christopher Gill: When my hon. Friend the Minister opened the debate he pointed out that such occasions were used to examine the possibilities and the prospects for the future in Europe, and many right hon. and hon. Members have used the debate to talk about the future—quite naturally, because of the exciting times in which we live.

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The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) expressed some concern that there had not been much excitement and enthusiasm in the House this evening. I am most enthusiastic about the events that are unfolding in Europe. We cannot fail to ignore the fact that so many people in eastern Europe are rejecting totalitarianism. We have to ensure that we make it easy for eastern Europe to form closer and firmer links with the European Community. As my hon. Friend the Minister pointed out, we must extend the hand of friendship. We must not in any way make it difficult for those people; we must make it easier for them. We have to remove the obstacles of centralism and interventionism, and just about every hon. Member knows what I mean, because as a nation we have foundered on those rocks in terms of our wholehearted commitment to Europe.
Hon. Members have referred to the obstacles presented by Delors stages 2 and 3, but there is a more urgent need than ever before to stake out the common ground, not as Socialists, Liberals, Democrats or Conservatives but as Britons, Poles, French or Germans working together in a united and peaceful Europe.
Surely we can agree on matters affecting our environment, because so many of those matters transcend frontiers and are pan-European. We can agree on removing barriers, the physical, technical and financial barriers which obstruct the free movement of goods and services in Europe. We can agree on standards—not on prescriptions or recipes but on parameters. We can agree on security. President Gorbachev said that Europe is at the crossroads, and I agree with that. We are faced with a series of choices between a wider or a deeper Europe. I should like to think that we shall choose the wider Europe, capable of accommodating not only the 12 nations of the European Community but the six nations of the European Free Trade Association and the nations of eastern Europe, where the ideologies of the past are being rejected in a dramatic and unprecedented way. We want to create a Europe that, in the words of my hon. Friend the Minister, is "founded on freedom and building on prosperity".
The United Kingdom must weigh up carefully whether it sees Europe as a threat or an opportunity. Do we see it as a threat to our livelihoods because we are reluctant to increase our productivity to the best levels of Europe? Do we fear that we cannot improve our competitiveness so that we are as competitive as any other nation in Europe? Do we fear a threat to our national identity? I suggest that that is doubtful. Paragraph 4.4 of the report shows that we have hung on to our national identity. The fact that we have hung on to the pint, the mile and the acre shows that we are not prepared to submerge our national identity and that we shall continue to fight for it.
Let us consider the opportunities not only of the bigger domestic market but those for London to become the banking and commercial centre of Europe and for the United Kingdom to influence the debate and decisions on the course of European unity and to establish the traditional values that are so readily accepted in Britain of liberty and individual freedom as the central ethos for the European Community.
As my hon. Friend the Member for Hendon, South (Mr. Marshall) said, there are no panaceas for Britain. We must not think that the bigger market will solve problems.
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It will be of benefit to us only if we exploit it. Similarly, the exchange rate mechanism is not a passport to lower interest rates or a guarantee of sound money. None of those things will do for us what we are not prepared to do for ourselves. In that context, to establish sound money, stable exchange rates and lower interest rates, we might as a Government and as a nation look hard at what we could do for ourselves by restoring the independent status of the Bank of England and freeing it from its current political control. There are other and more varied ways in which we can take steps to do for ourselves—things which, I suspect, hon. Members and certain sections of the British public are looking for Europe to do for us, which is totally unrealistic.
In the final analysis, we have a further choice. We have a choice to do so many things sooner rather than later; sooner while the spirit moves throughout Europe; sooner while the portents are good and our neighbours are beckoning for British leadership; and sooner while the opportunity exists as it never existed before. The hon. Member for Hamilton (Mr. Robertson) referred to the opportunity as "breathtaking". Does it not behove us to do those things sooner rather than later? Let it never be said that we did them later because we lacked the confidence, motivation or will to take the opportunity of this floodtide in European history.
8.53 pm
Mr. Michael Irvine: Paragraph 15.3 of the White Paper records that the Select Committee on European Legislation considered 468 European Community documents between January and June 1989. In the event, seven debates covering 12 of those documents took place in Standing Committee and 22 debates covering 40 documents took place on the Floor of the House.
What the White Paper does not say is that the majority of those debates on the Floor took place after 10 pm, that they were poorly attended and that, in many cases, the documents under discussion were made available only a short time before the debate. Furthermore, the House was invariably faced with a fait accompli. All too often we found ourselves doing no more than taking note of what had already been formulated by the European Commission and decided some time beforehand behind closed doors by the Council of Ministers. We were not even rubber-stamping the legislation because it did not need our rubber stamp. It did not matter whether we rubber-stamped it or not because it had already been decided. As a House, we were only taking note.
I would go so far as to say that the ineffective way in which we deal with European Community legislation should be a matter of shame for the House. When we allow European legislation that is of much importance to the citizens of this country to pass into law without proper scrutiny, we are not merely failing to do our job properly but being false to the traditions and obligations of the House.
How can we put this right? First, we can do so by allocating more time to the scrutiny of European Community legislation. Hon. Members should compare the time that we spend scrutinising Community legislation month by month with the time that we spend scrutinising domestic legislation. Earlier this year, I spent 160 hours on the Standing Committee of the Self-Governing Schools etc. (Scotland) Bill.
Mr. Sillars: Serves you right.
Mr. Irvine: I was glad to do so. The Bill was interesting and was of great importance. It deserved much scrutiny, and it got it.
Mr. Sillars: When we Scots depart from here and return north of the border to an independent Scotland within Europe, the hon. Gentleman will have bags of time to consider European legislation.
Mr. Irvine: Quite a few Scots, such as myself, have come south and are doing very well here, thank you.
Leaving aside that interruption of questionable merit, the point remains that, although domestic legislation is important, European Community legislation is just as important, and sometimes more so. Both kinds of legislation need proper scrutiny. At the moment, the balance is wrong. If we are to exert maximum influence over European legislation, we must correct the imbalance.
Mr. Janman: I am genuinely interested in why my hon. Friend thinks that it is worth while spending much more time scrutinising European legislation, given that, because of the Single European Act amendments to the treaty of Rome, if we do not do what we are told, we will be taken to the European Court anyway. Why will spending all this extra time be worth while?
Mr. Irvine: My hon. Friend brings me to the second point which I wish to make about our scrutiny of European legislation. The other great weakness is the point of time at which we consider European legislation. At present, time after time we consider it when everything has already been decided. I hope that we will reform our procedures so as to address European legislation after it has been formulated by the European Commission but before it reaches the Council of Ministers. As my hon. Friend the Member for Thurrock (Mr. Janman) pointed out, that does not mean that we can determine which way the legislation will go, but it will enable us to exert maximum influence.
It is fair to say that we have some influence. I was interested in the point made by my hon. Friend the Minister of State about the effect of last week's debate on European monetary union and the exchange rate mechanism on our partners in the European Community. He said that the strong cross-party feeling expressed in the House against stages 2 and 3 of the Delors proposals had had an impact on our partners' thinking. That powerfully reinforces my point. It shows that, if the House bestirs itself and we make our views known clearly at the right point, we can hope to influence our partners in the European Community and also the Council of Ministers.
Mr. Lord: I am following my hon. Friend's comments carefully. I think that he is saying that it is necessary for the parliamentary cycle in Britain to be fitted in with the European parliamentary cycle on all these issues, so that these debates can take place at the proper time.
Mr. Irvine: Precisely. We must tailor our procedures and practices to give proper scrutiny to European legislation. The present structure of the European legislative process is highly convenient to bureaucrats and is not without its advantages to certain statesmen, but it is profoundly undemocratic. There are dangers here for the European Community. Unless the institutions of the Community and of individual member countries are
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adapted to provide proper scrutiny of Community legislation and proper accountability to Parliament, somewhere along the line there will be trouble for the Community. There will be a reaction by the peoples of member states against the Community's autocratic tendencies.
Parliaments are always inconvenient to bureaucrats, but they are essential to democracy. The House has a particular part to play in developing Community institutions and parliamentary scrutiny. After all, the House of Commons developed the traditions of parliamentary democracy that won control first over the monarch and then over the Executive. We must now bestir ourselves and do the same in a European context. If we do that effectively, we will do a signal service for not only the nation and the House but our partners in the Community.
9.3 pm
Mr. Tim Janman: Earlier in the debate my hon. Friend the Member for Hendon, South (Mr. Marshall) implied that I might seek to raise the issue of whether Britain should be in the European Community. Although I do not wish to raise that issue tonight, I thought that his speech gave a long catalogue of reasons that could put that thought in one's mind. He listed many of the major problems that Britain faces as a result of its being in the European Community and I believe that, unless there is a rather sudden and dramatic sea change in the politics of the Community, this Government—and I suspect any future Government of either political persuasion—will be continually tussling with the European Community over matters that should be purely for the consideration of the national Government, as opposed to being matters that can be interfered with by the European Community as a consequence of the passing of the Single European Act.
I want to mention briefly three major developments in the Community which were documented in the White Paper and to spend far more time on a fourth. The Madrid meeting of the European Council in June and the Delors report on economic and monetary union are important, and I shall come back to them in detail. I want to put on record the other three developments in the White Paper which are of significance.
First, there are the on-going general agreement on tariffs and trade negotiations between the European Community and the United States. I must say to my hon. Friend the Minister that it is important that we continue to exert the maximum pressure possible on the European Commission and the Community through the Council of Ministers not to pursue a protectionist philosophy vis-a-vis our relationship with our great ally the United States. If we pursue such a policy, they will retaliate and we shall strengthen the seeds of protectionism on the other side of the Atlantic as well. We must continue to pursue a free trade approach from the European Community.
Secondly, I note that progress has been made in eliminating trade barriers with the European Free Trade Association countries. In view of the remarks of my hon. Friend the Member for Hendon, South, I cannot resist the temptation to observe that if we continue to be in conflict with the European Community over which issues are sovereign and which are pan-sovereign and if the EFTA nations continue to win an increasingly good relationship with the European Community, we could eventually

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receive most of the trade benefits by being outside the Community, without the constitutional and political hassles that come from being in it.
Thirdly, I agree with my right hon. Friend the Prime Minister that the draft Community charter on fundamental social rights is essentially a Marxist document. It goes completely against the policies and philosophy of the past 10 years in this country, which have resulted in a most dramatic fall in unemployment. We have virtually the lowest unemployment rate in Europe. France, for example, has an unemployment rate twice as great and there is no real sign or hope of that rate coming down.
I want to concentrate on economic and monetary union, and the European exchange rate mechanism. There are two key aspects. The first is the economic aspect, and the second is the more insidious and subversive political aspect. Should we join the exchange rate mechanism now or at a future date? Joining the ERM now would be an unmitigated disaster. It would lock us into a corporatist system of stage managing currencies which would institutionalise our current large trade deficit for the foreseeable future, given the current exchange rates. Interest rates would go up and down like a yo-yo to keep our currency from being revalued and to maintain its staying in the right band. Membership of the ERM would not bring any stability, and if the Confederation of British Industry and other large business interests think that it would, they would receive a rather nasty shock. We would lose our right to decide our domestic monetary policy and inevitably we would effectively lose the right to decide our public spending policies, which are a ramification of the political policies that the Government of the day wish to pursue.
An exchange rate is a value put on a currency vis-a-vis that country's economic and social performance in relation to its peers. The European exchange rate mechanism is corporatist, if not Socialist, as it attempts to prevent the market mechanism from working. I thought that as Conservative Members we believed in markets and the price mechanism. Membership of the European exchange rate mechanism, followed by one currency—the second stage of the Delors report—followed by a central bank could lead to high inflation. The Delors report does not recommend separating the money supply from politicians and does not propose legal sanctions against the proposed central bank should it not maintain its objective of price stability, which the Delors report lays down.
The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) and the right hon. Member for Llanelli (Mr. Davies) mentioned Germany. The reason why Germany has been so successful is that in 1949 it separated monetary policy from the politicians. That has enabled Germany to enjoy 20 years with inflation never going above 5 per cent. The result has been much better labour relations and much reduced strike activity because there have been stable prices and no political meddling or pressure on the money supply. The Delors report failed to propose that we go in that direction. The exchange rate mechanism and stages 2 and 3 of Delors are certainly no guarantee of low inflation.
It would be better to have competing currencies with the exchange rate mechanism being joined by Britain when
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certain conditions are met. Those conditions are equitable inflation throughout Europe, the abolition of exchange controls, the completion of all other aspects of the single market—the free movement of goods and services—the abolition of industrial subsidies across the Community, and the removal of legal requirements in the member nation states that pension funds and insurance companies keep their investment at home.
Finally, let me deal with the political aspects of the exchange rate mechanism and monetary union. Jacques Delors wants economic and monetary union because he wants one currency, one monetary policy, one fiscal and one budgetary policy, one macro-economic policy, one Europe—one federal Europe—with one Government in Brussels. The spirit of the treaty of Rome has been hijacked by a new Napoleon—a dirigiste, corporatist, interventionist Napoleon in the best French tradition.
The spirit of the treaty must be regained before we join the European exchange rate mechanism. We want a free trade Europe, not a protectionist and dirigiste Europe. We want a Europe in which there is free movement of goods and services, not silly harmonisation. We have to reassert, through our Ministers in the Council of Ministers, the view that we want less government in the European Community, not more government. We want a Europe that is not federal or centralist but a Europe based on the fine thoughts of my hon. Friend the Member for Ludlow (Mr. Gill) in which the nation states can make positive contributions towards the creation of the single market while co-operating on issues such as pollution which affect us all.
9.12 pm
Mr. Tony Lloyd: The debate has properly concentrated on the wider European scene—inevitably so, given the events in eastern Europe in recent months and particularly in recent days. I hope that I shall not disappoint hon. Members by moving to matters that may seem more prosaic, but it is important to place on record the importance of the role of the social charter in the development of the European Community.
I was interested to note the arrogance of some Conservative Members, who seem still to believe that under the present Government Britain is widely regarded as being at the centre of the intellectual decision-making process in Europe. They are so out of touch with the reality in western Europe and, to a lesser extent, in eastern Europe that they bring our debates into disrepute.
For a long time, the Prime Minister has been determined to place herself at odds with the rest of the Community. Her concept of any new thinking in the Community is so lacking that she can describe the European social charter as being inspired by the values of Marxism and the class struggle. As the Minister of State moves between the class struggle and the role of newspaper boy, I hope that he will tell us whether he believes that Chancellor Kohl and the other heads of European Governments in the Community are inspired by those values. Is it the Goverment's view and that held by the Foreign Office, that Chancellor Kohl is some kind of crypto-Marxist? Do they believe that the German Democratic Republic is inspired by secret yearnings towards Moscow?
That kind of nonsense from the Prime Minister has left Britain completely isolated, particularly with regard to the

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social charter. There are 11 Governments in the European Community on one side of the equation and only one, inevitably Britain, on the other side.
Historically, the Prime Minister might have looked towards the West Germans for support within the Community. However, the Germans are actively leading a quest for another nine specific areas of concern to be added to the social charter. They want these areas to be brought forward in terms of EC legislation. Those issues include the right of all workers to have four weeks paid holiday and all workers to be allowed paid public holidays and 14 weeks paid maternity leave. They also include free Government job placement services and minimum security protection in the workplace. That agenda is not being set by the Socialists or the Marxists involved in class struggle in western Europe; it is being set by Chancellor Kohl and the Christian Democrat Governments that surround him geographically and politically.
It is little wonder that the Christian Democrats in Europe have lost all confidence in the Prime Minister. It is little wonder that when the Prime Minister agreed that the Conservative group within the European Parliament should snuggle up to the Christian Democrats, having lost all its other supporters, the Christian Democrats said that they were not terribly interested in that proposition because they did not see any great future in it.
Lord Bethell, the MEP for London, North-West, wrote in The Times recently of his great shock when the Christian Democrats decided
"neither to accept us into their group as members, nor even to broaden co-operation with us … Yet they prefer to cold-shoulder us, to kick us when we are down"
That sums up the shock and horror of one Conservative MEP. He gave away the game a little when he said:
"They resent the self-confident vigour with which the Prime Minister, representing a country with decades of mediocre economic performance, chides countries like Germany for corporatism and lack of enterprise."
Mrs. Gorman: Will the hon. Gentleman give way?
Mr. Lloyd: No. I do not have much time left and the hon. Lady has not been here for most of the debate.
Inevitably, the Prime Minister is now almost completely isolated within Europe on so many issues. The Department of Employment has spent months doing little other than issue press releases on the infamies of the social charter. These have stated that the social charter points in the wrong direction, that it could destroy enterprise and that it is out of tune with Community objectives.
Perhaps we should reflect on what the Minister of State has said about the social charter. He waxed eloquent about the damage that it would do to employment within western Europe. It is odd that only Britain feels that employment would be under such tremendous pressure. That view is not held by the Portuguese, the Italians, the Spanish, the Greeks, or the Danes. The Minister of State said:
"The proposed regulation of working hours, weekend working and shift work would destroy the flexibility which businesses, particularly small businesses, need in order to be competitive and take advantage of the opportunities opened up by 1992."
The Minister obviously had in mind certain classifications of small businesses when he made that point. He went on to say:
"Why should Brussels, for example, make it impossible for youngsters under 16 to do paper rounds?"
The Minister has demonstrated his grasp of the fundamentals of the British economy and of small firms.
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The threat from Brussels is that, once and for all, the newspaper rounds of Britain will be abolished and cast into the dustbin of history. That comment is extremely silly. Clearly, had the Minister and his right hon. Friend the Prime Minister been prepared to take part in dialogue and in the process of developing a consensus approach to the social charter, the idea that the newspaper rounds of Britain have been threatened would have been as ludicrous to those in Brussels as it is to the Opposition. That is an example of the Government's reluctance to take part in a dialogue. That is why the rest of Europe and the Opposition are totally mystified by the Government's position.
Mr. Marlow: Will the hon. Gentleman give way?
Mr. Lloyd: I will not give way, as time is extremely short.
The social charter is accepted by virtually all informed bodies within the European Community.
Mr. Marlow: The Opposition may take a different view on the content of the social charter from the Government. They are entitled to do that. One of the things that we are concerned about on this side is that a social charter, whatever its status appears to be, will actually give more power to European institutions—the European Court and the Brussels Commission—to initiate policies in areas where they cannot currently initiate policies. Does that not worry the hon. Gentleman as well?
Mr. Lloyd: If the hon. Gentleman will bear with me, I will refer to that point when I discuss the Single European Act and the role of majority and unanimous voting [Interruption.] The answer is simple. The Minister may find it difficult to understand, but the hon. Member for Northampton, North (Mr. Marlow) will probably be able to keep up with me.
The social charter is well accepted throughout Europe. The Minister gave the game away when he had to pray in aid the European Round Table as one of only two bodies which feel even remotely akin to the British Government on this issue. The British Government accepted that there is a role for social legislation when they signed the treaty for the Single European Act. The preamble to the Single European Act states:
"Determined to work together to promote democracy on the basis of the fundamental rights recognised in the constitutions and laws of the Member States, in the Convention for the Protection of Human Rights and Fundamental Freedoms, and the European social charter, notably freedom, equality and social justice."
Social justice was accepted as central to the Single European Act. Social justice can occur only if, along with the single European market, we are prepared to put forward serious proposals to allow for the development of an even playing field in social matters.
Mrs. Gorman: Will the hon. Gentleman give way?
Mr. Lloyd: I will not give way. The hon. Lady must recognise that I do not have time to do so.
Mrs. Gorman: The hon. Gentleman is a chauvinist. He allowed my hon. Friend the Member for Northampton, North (Mr. Marlow) to intervene and refused me twice.
Mr. Lloyd: I have been accused of many things, but chauvinism is not one of them.

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The Government are prepared to accept their own social charter. The Secretary of State for Employment is on record as saying that the Government want a social charter. The Secretary of State's social charter apparently accepts that the Government are committed to making progress in employee involvement, but his involvement is the narrowest possible. He claims some great move forward through share ownership by the population. The Secretary of State for Employment said:
"Let me take one example. The British Government is fully committed to making progress on employee involvement. But we believe there is no more effective way of involving employees in the running of their company than for those employees to own shares in their company."
That may be an arguable point, but the number of share owners in this country is slightly lower than the number of people who by any definition are in low-paid work. If the Secretary of State is saying that share ownership is open to the many millions of people whom the Government have cast into low pay, he sadly fails to understand the mechanics of our economy and our society.
It is precisely for this reason that the European Community is right to put forward proposals for a social charter which includes provisions for employment and pay. Britain has a horrendous record on pay. We know that, since the abolition of the wages councils' protection of young people, the number of young people paid less than the former wage councils rate is as high as 75 per cent. of the young work force, and the percentage has increased during the past 12 months. When the Government claim that young peoples' earnings have not plummeted but continued to rise, that claim is at odds with the evidence. The number of people on low pay in this country has increased from 38 per cent. to 47 per cent. Of the work force during the past 10 years, so it is no surprise when a demand comes for some form of minimum wage protection.
The Government claim that Germans can afford to suffer some over-regulation in their economy because of its strength. One aspect of the social charter relates specifically to the importance of training in the economies of Britain and Germany. Any comparison between the British economy and, not just the German economy, but other western European economies, shows that the British economy continues to lag behind. When the Secretary of State and the Minister tell the House that we have a credible record on training, that view is not shared, not only by those on YTS and ET schemes, but by many in industry who reject those schemes and compare the position in Britain with that in the Federal Republic of Germany, where spending on training every year is three times that in Britain. That is why there is a demand from many quarters in Britain for a social charter to guarantee adequate and proper training throughout the working life of those involved, particularly throughout the nonworking life of those whom the Government still maintain in unemployment.
The social charter inevitably brings forward the debate into which the hon. Member for Northampton, North invited me a few moments ago. It involves a question which I want to pose to the Minister. We have heard many times that it is the Government's intention to take this matter to the European Court if necessary. The social
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charter contains a number of issues which would not go to the European Court because, under the Single European Act, they can be decided by a simple qualified majority.
I should be pleased if the Minister would comment on these issues, including health and safety legislation which, under the treaty, falls outside the unanimous decision system. There are other issues such as information, consultation and participation which, if the Commission decides to move in a certain direction, could well be put through under the qualified majority voting system. It is important for the Minister to tell the House whether the Government intend to press strongly for those to be decided unanimously and how they intend to insist on that.
In answer to the hon. Member for Northampton, North, the important point is a simple one. The Opposition have always made it clear that we do not want an extension of qualified majority voting. We have made it clear that we believe that the way forward lies in consensus. I shall remind the hon. Gentleman of one central point. As things stand, there is an 11:1 majority in favour of the implementation of the social charter. Eleven states within the European Community are prepared to search for that consensus. The one state which stands alone is the one represented by the Minister.
If a Labour Government were in power in Britain the voting would be unanimous. A Labour Government would search for the sort of consensus to allow us to make progress on the issues worrying the hon. Member for Northampton, North and Opposition Members. That search for consensus is lacking under this Government, but would be available to us, even at the level of looking after newspaper boys. More importantly—this is the thrust of the hon. Gentleman's point—it would be available to us when we come to the concept of subsidiarity. At that point, it would be up to the British Government to negotiate with our Community partners.
We should be clear about this because the Minister of State himself referred to the level of control of the social charter. The reality is that, of itself, the social charter implements nothing. Nothing will come into practice automatically. Every provision will have to be turned into some form of action under the action programme and directives from the Commission. At every stage a Government in Britain who are prepared to co-operate with our Community partners, prepared to look for consensus and to accept the need for a social charter to provide workers as well as employers with a level playing field, would allow consensus to emerge——
Mr. Marlow rose——
Mr. Lloyd: The hon. Gentleman will have to forgive me I cannot give way because of the shortage of time.
Mr. Janman rose——
Mr. Lloyd: The hon. Gentleman will have to accept that I do not have the time.
Mr. Janman rose——
Mr. Speaker: Order.
Mr. Lloyd: A Labour Government committed to that kind of co-operation in Europe would be in a position to ensure a role for Britain in that debate; indeed, that debate could lead to a conclusion that was to the benefit of the United Kingdom.
Mr. Marlow rose——
Mr. Janman rose——
Mr. Lloyd: I give way to the hon. Member for Northampton, North.
Mrs. Gorman: That is very nice.
Mr. Marlow: The hon. Gentleman has said that if the social charter were passed through, a Labour Government would argue and negotiate for subsidiarity under that social charter. The hon. Gentleman seems to be saying that he therefore believes that if the social charter were agreed, it would pass power to other European institutions. That point should be noted by the House.
Mr. Lloyd: The hon. Gentleman has failed to understand what the social charter is. Of itself, the social charter passes no powers to any other European body. It is a declaration of intent——
Mr. Marlow: The hon. Gentleman must be wet behind the ears.
Mr. Lloyd: Well, the hon. Gentleman may think that I am wet, but he will have to accept that even the Government are arguing that the time to prevent action is under the action programme. As I understand it, that is why the action programme was today delayed in Brussels and has not moved further on. That is the time at which the proper interests of Britain must be protected as far as the provisions directly affect our citizens. That is the time when a Labour Government, involved in those negotiations, would be in a position to obtain the maximum benefit for the United Kingdom.
Mr. Maude: That would be signing a blank cheque.
Mr. Lloyd: The Minister says that that would be signing a blank cheque. His point allows me to return to the question that I posed to his colleague the Minister of State at the Department of Employment. Will the Minister of State tell us whether any blank cheques have already been signed under the Single European Act? Will the hon. Gentleman make it clear from the Dispatch Box tonight whether he and his colleagues take the view that no part of the social charter can be forced on this country under the qualified majority voting system of the Single European Act?
If the Minister of State ducks that question, it will not be the Opposition, but the Government, who are accepting that they have already signed a blank cheque. The Minister of State at the Foreign Office may feel that blank cheques are a prerogative of the Opposition, but we want to know —and the nation is entitled to know—whether those blank cheques have already been signed. The signing of a blank cheque may well have taken place when we concurred with the Single European Act, but their continuation and the guarantee that they could be cashed for any amount took place when this Government made a decision—when the Secretary of State and the Prime Minister made a decision —that they would take no role whatsover in trying to reach a consensus with other Governments in the European Community. That is what makes Britain's position now so stupid and so out of step with everybody else.
It is important that the Minister of State addresses that question. I ask him again, will he answer specifically whether any areas of the social charter will be brought into
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operation under the qualified majority voting system? That is not a trivial point; it is an important point to which he should respond.
I finish by saying that the mood within the rest of the European Community is clear. It has been summarised already. Under their presidency of the European Council, the French have attempted to make a compromise available to the British Government. However, each time the French have done so, the British Government have rejected the approach. Each time there has been an amendment to the social charter—because there have been amendments and I was sorry to see them emerge—the British Government have spurned those approaches. At every stage, the British Government have made it clear that they want little or nothing to do with the social charter.
Mr. Jean Pierre Cot, the leader of the Socialist group in the European Parliament, spoke for the majority in that Parliament when he said:
"We want 11 signatures on the proposal we have rather than 12 on something that is watered down."
I must make it clear that that is the Opposition's view.
9.35 pm
The Minister of State, Department of Employment (Mr. Tim Eggar): We have had a good debate, which has spread across a broad canvas, as we would have expected after the events of last weekend.
I have taken careful note of the remarks made by right hon. and hon. Members on both sides of the House about the need to consider the scrutiny procedures.
I listened carefully to the speech of my hon. Friend the Member for Corby (Mr. Powell), and I know that my right hon. and learned Friend the Lord President of the Council is in touch with the Scrutiny and Procedure Select Committees about improving arrangements.
Scrutiny is important in the House. My hon. Friend the Minister of State, Foreign and Commonwealth Office, and other right hon. and hon. Friends who have been in Europe recently, have explained to their EC colleagues that, for example, in the debate on the European monetary union, there was no dissent in the House about the view which the Government put forward in that debate, when they expressed considerable concern about stages 2 and 3 of the Delors plan. We want that kind of scrutiny and it is the kind that carries weight in the European Community.
There are few of us who did not associate the division of Europe with the epic photograph of an East German border guard jumping over the wire as the wall was built up, some 20 years ago. That was the image which many of us had of a divided Europe.
The image that will remain with many of us of a Europe which is changing dramatically is that of youngsters on top of the Berlin wall and of the people flooding through the gaps in the wall. I shall also remember the interviews with young East Germans, who had been to the West for the first time, and were deliberately returning to their country. They were saying publicly that they had the chance of freedom and that they were positive that they would be able to enjoy it in the future. Therefore, they were returning to East Germany to make a success of their country within the new horizons that had opened up. The events of the weekend were truly dramatic and the images are strong.
Right hon. and hon. Members on both sides of the House have talked about the reunification of Germany.

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What is at issue is the right of the people of the German Democratic Republic to choose their future, democratically and in freedom. East Germans are calling for reform and not reunification. What they will ultimately choose we cannot foretell, but surely the first objective must be the pursuit of real self-determination, followed by the building up of democracy.
Chancellor Kohl has stressed the need to remain level-headed and to maintain a sense of perspective. It has long been the aim of successive British Governments and of the Governments of other Western countries to achieve a reunified Germany based on a liberal democracy, linked to the Western community. That has been our objective and it remains our objective.
There has been much discussion about the future relationship between the European Community and eastern European countries. The way in which we respond to individual eastern European countries will depend on their circumstances, and, crucially, on the extent to which they have carried out economic and political reforms. My right hon. Friend the Prime Minister has emphasised that we must give every possible encouragement to that reform and to the emergence of democracy.
We must look imaginatively at ways in which to develop new forms of association with eastern European countries. Hon. Members have already mentioned a number of existing models of association such as the association agreements with Cyprus and Turkey that confer particular benefits of trade access and financial support. We also have the model of EFTA, which provides free trade access for manufactured goods. None of those existing models is tailor-made to meet the challenges posed by the eastern European countries, but we must work to extract the relevant elements of the existing forms of association and we must build on them to fashion an adequate response.
The Community must support those in eastern Europe who have striven for democracy and reform. I am absolutely confident that the Community will respond to that challenge. Certainly that is the message that my right hon. Friend the Prime Minister will take to the meeting of Heads of Government in Paris next Saturday.
Mr. Cash: I endorse what my right hon. Friend the Prime Minister has said about a united states of Europe, which is in line with everything she has said about the issue in the past few years. My hon. Friend referred to what Chancellor Kohl said about a united states of Europe. Does he agree it is possible to equate the united states of Europe with the idea of self-determination for the people of Eastern and Western Germany?
Mr. Eggar: My hon. Friend tempts me down a number of avenues and I am not entirely sure which one he would like me to follow. I have listened to the debate tonight and it is clear that there are a number of different possibilities. We are living in a time of tremendous change and opportunity. We should not spend too much time speculating, but we should look imaginatively and constructively at those opportunities when they emerge. I am sure that we shall see many important moves in the coming months.
Mr. Robertson rose——
Mr. Eggar: No, I shall not give way.
It is not for the Community to shape events in eastern Europe, but the strength of the Community will help us to support and to encourage eastern European countries through critical times. Before we get too mesmerised by the debate about the future structure and development of Europe we would do well to remember for a moment the external economic challenges that face western Europe. If we are to assist in the development of eastern Europe, we must first ensure that we are equipped to compete worldwide.
We must remember that the current Community unemployment rate still stands at more than 9 per cent. compared to the United States unemployment rate of 5·3 per cent. We must consider relative economic growth records. Since 1985 the Pacific basin economy has grown by 20 per cent. whereas that of the Community has grown by 12 per cent. only.
The challenge will not get any easier. Between now and 2010 the population of the Third world will grow 45 per cent., that of the United States will grow by 17 per cent., that of Japan will grow by 8 per cent., but the European Community population will grow by a mere 2 per cent. The prospects for the 1990s are that the Community will be faced with a static labour market and will be competing against the low-cost, labour-intensive economies of the far east and elsewhere. That is the scale of the challenge facing us in the 1990s and such is the record that we have achieved in the past four years. When we talk about assistance for eastern Europe let us recognise the scale of the challenge that we have already faced in the Community.
As my hon. Friend the Minister of State, Foreign and Commonwealth Office has said, we want a prosperous and thriving Community, which, through deregulation and increased competitiveness, creates jobs and reduces unemployment. That is the Community we have already begun to build, a Community in which Britain is so often helping to set the agenda.
All members of the Community are committed to the single market. But as my hon. Friend the Member for Hendon, South (Mr. Marshall) said, Britain is forcing the pace. We have opened up our markets in banking, insurance, and telecommunications. The depth of our commitment to Europe and to the people of Europe is clear from the way in which we have played a leading role on adoption of single market measures. We have no intention of dragging our feet on those vital issues. Efficient and expanding firms create jobs and prosperity.
Successful enterprise provides improvements in living standards, working conditions and social protection in every country. That is the message at the heart of the social dimension of the single market, and the message that the people of eastern Europe have heard and responded to dramatically. The single market means giving the wealth creators of Europe the chance to create wealth for the people of Europe. Yet some people present the single market as a charter for business, not for people. That is not our view or that of any Community country. All 12 member states share the objective of improving people's living and working conditions through the completion of the single market. They all want to see the market work, because that is the best way to ensure that the people of Europe benefit from improved standards of living and wider choice.

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Britain strongly supports Community action to recognise each other's product standards, to remove outdated regulations which restrict the ability of firms to establish themselves in new markets and, importantly, to enable individuals to take advantage of the new opportunities that the single market will offer.
The Community has agreed on how we see Europe developing and that the way forward is not through imposed harmonisation, but through cross-fertilisation of ideas, approaches and experiences. In other words, we share a vision of diversity within a framework of common goals. We should remember that vision when we consider the proposed social charter.
I stress to Opposition Members that we have never said that we could not accept a charter. We have said categorically that we cannot accept the charter in the form proposed by the Commission. The present draft charter ignores the unanimous agreement of the Madrid summit that any action in the social area should take account of differences in member states' national practices and traditions. In trying to impose uniform arrangements, it ignores member states social systems, developed over the years to suit their own circumstances. We do not want to impose our systems on other member states and we do not see why other member states' systems should be imposed on us, particularly in the light of the Madrid conclusions. We believe that by increasing regulations, the charter will raise costs and lead directly to job losses.
To answer the hon. Member for Stretford (Mr. Lloyd), we welcome parts of the draft social charter and support them as a statement of agreed objectives and a commitment to further progress. Those include measures to promote freedom of movement, commitment to the principle of equal opportunities and treatment for all, further progress on health and safety at work and measures to assist the integration into working life of people with disabilities. We have always made it clear that we have no difficulty with those aspects of the social charter. But taken as a whole, and even with the changes that have been made during discussions, the charter remains a deeply flawed document. It seeks to impose harmonisation where diversity is critical to the success of Europe.
What does the charter mean for British people? Ms. Papandreou said in London that she
"cannot believe that people would choose part-time work."
In other words she does not think that there is any value in part-time work. She is wrong—6 million people in this country choose to work part-time because they want to, not because they have to. The hon. Member for Stretford shakes his head, but that is the view of his party, although he may not recognise it. The Labour party's policy review claims:
"rigid work patterns … deny people choice and opportunity"
Amen to that.
Does the Labour party believe it helpful to deny older children opportunities of Saturday jobs or work experience at school? Does it believe that a 17-year-old who wants to put in a few hours' overtime should be banned from doing so, or that an adult worker who wants to work and save for a family holiday should be limited to a few hours' overtime each week, whatever the wishes of his employer? Is that what the Labour party supports? It is what the social charter means——
Mr. Tony Lloyd: Where does it say that?
Mr. Eggar: The hon. Members for Hamilton (Mr. Robertson) and for Stretford both said that they were not happy with the social charter because it did not go far enough. How many more restrictions do they want to put on the people of this country? How many more jobs do they want to be lost?
The social charter seeks to impose a legally binding minimum wage, which I am sure Opposition Members will welcome. They have said publicly that they want such a wage set at 50 per cent. of male median earnings. Like the Commission, the Opposition have not estimated what the effect of a minimum wage at that level would be. We have done a little work; we have analysed the economic impact of the minimum wage proposed by the Opposition. It would lead to the loss of about 750,000 jobs. The Commission and the Opposition support that proposal, but they should reconsider their support for it.
The draft social charter seeks to ban the closed shop. We would welcome the intention behind that, but we do not think that the Commission should have a role in deciding Britain's industrial relations legislation. The article of the social charter would be wholly incompatible with the closed shop legislation of the last Labour Government. I remind the House that that legislation resulted in hundreds of people being sacked from their jobs without a penny of compensation merely because they refused to be dragooned into joining a trade union.
I trust that the hon. Member for Stretford will make it clear where his party stands on the closed shop. He says that he supports the social charter, so he supports an end to the closed shop. In that case, why has he not supported my colleagues taking the Employment Bill through the House? Can the Opposition give a categorical assurance that if we brought legislation forward to deal with a pre-entry closed shop they would support it? What do the Opposition believe? Do they believe in the social charter, or in the policy on the closed shop that they have pursued ever since the disgraceful days of the mid-1970s?
Other articles in the charter would mean the virtual end of legitimate limitations on strikes and would go further to protect the rights of strikers than the Labour party has ever gone when in Government. For example, secret ballots before strikes, which the Labour party now claims to support, curbs on secondary action and limits on picketing would all have to be abandoned under the social charter. If we agreed to the draft of the social charter, almost all the trade union reforms that we have implemented since 1979, and which have been widely supported by the people, would be overturned.
There is a case for a discussion about the form of employment law that we want. The right place to have that discussion is across the Floor of the House. It should not be imposed by some entity in Brussels.
Let us take another subject—employee involvement. The charter presents us with a choice between the German, the French or the Dutch models. We have a different approach. For us, successful employee involvement is best developed on the basis of voluntary agreement.
Mr. Tony Lloyd: Is that approach better?
Mr. Eggar: I wish the hon. Gentleman would think before he interrupts. The three models offered by the social charter would be as unacceptable to the Labour party as

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they are to the Government. The hon. Gentleman's previous boss, the hon. Member for Oldham, West (Mr. Meacher), made that quite clear when he wrote in Tribune:
"a top priority must be … that worker representatives … can choose whichever option for power-sharing they believe will assist them to control their working environment".
There is no scope within the social charter for "choosing whichever option". The only choice is between the German, French or Dutch models. That part of the social charter is no more acceptable to the Labour party than it is to the Conservative party.
I notice that Labour Members are keeping very quiet. I put a serious question to them. What will the Labour party choose? Will it choose to create jobs or will it choose the social charter, which will destroy jobs? Will it choose to support its own stated approach to industrial relations or will it choose the social charter? Will it choose to support flexible forms of employee involvement or the social charter? Will it choose to support the Labour party's policy review, or the social charter?
The Government are quite clear about our objectives. We have made our view on the social charter clear from the beginning, but the Opposition spokesmen have said that they are not in favour of the social charter only because it does not go far enough. They have not bothered to look at what the social charter includes and how that relates to their policy.
Mr. Lloyd: I have here a copy of the social charter. Can the Minister show me those parts of it that justify anything that he has said in the past 10 minutes?
Mr. Eggar: The hon. Gentleman simply has not read it.
Mr. Lloyd: Show me where they are.
Mr. Eggar: The hon. Gentleman has not denied that my interpretation of the social charter is correct. I have been prepared to give way to him so that he can deny that there is a distinct difference between what he says that he will support in the social charter and the policies that his party espouses in practice.
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The Community has agreed on our priority—it is the creation of jobs for the people of Europe. The social charter will not create jobs. It will destroy them.
Question put and agreed to.
Resolved,
That this House takes note of the White Paper, Developments in the European Community January–June 1989 (Cm. 801).

STATUTORY INSTRUMENTS, & c

  NORTHERN IRELAND
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments &c.)
  That the draft Youth Service (Northern Ireland) Order 1989, which was laid before this House on 25th July, be approved.—[Mr. Sackville.]
  Question agreed to.

  INDUSTRIAL ORGANISATION AND DEVELOPMENT
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments &c.)
  That the draft Apple and Pear Development Council (Dissolution) Order 1989, which was laid before this House on 17th October, be approved.—[Mr. Sackville.]
  Question agreed to.

  INDUSTRIAL ORGANISATION AND DEVELOPMENT
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments &c.)
  That the draft Apple and Pear Research Council Order 1989, which was laid before this House on 17th October, be approved.—[Mr. Sackville.]
  Question agreed to.

  INDUSTRIAL TRAINING
  Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments &c.)
  That the draft Industrial Training Levy (Hotel and Catering) Order 1989, which was laid before this House on 18th October, be approved.—[Mr. Sackville.]
  Question agreed to.

  Mrs. Patricia Mary Moore
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sackville.]
  10 pm
  Mr. Richard Holt: In some ways it is apposite that I should have the last Adjournment debate in the current Session, although the case of the late Mrs. Moore goes back much further than that.
  Mr. Leslie Moore and his son came to see me in my surgery four years ago, in January 1986. His wife had been assessed by the medical appeals tribunal as being 35 per cent. disabled. Her claims for allowances were thus disallowed, except on that basis. Mrs. Moore appealed against that assessment. Her appeal was lodged on 24 September 1986. She was not examined until 8 July 1986 and she died on 6 December 1986. Mrs. Moore died before her appeal against the tribunal's decision could be heard. Perhaps everybody thought that the case would die with Mrs. Moore, but they reckoned without Mr. Moore who was not prepared to allow that to happen. He felt, in honour of his wife and son, that an injustice had been done and he wanted the case to be pursued. He came to see me to ensure that it was pursued.
  We appealed in January 1987. Somehow, that appeal was mislaid in the works. In April 1987 Mr. Moore attended a hearing in Newcastle. After he had attended that hearing, lo and behold, his wife's medical condition was determined to be 80 per cent. disabled, but not all the way back to July when she was examined—only from 1 September.
  My right hon. Friend the Minister of State will recall that at that time I wrote and asked who picked on 1 September—why not 2 September or 30 August? How could they know, on a hypothetical date after someone had died, that the disability had changed from 35 per cent. to 80 per cent.? That was the wisdom of the medical practitioners who conducted the hearing and reached these decisions.
  Mr. Moore was still not satisfied. Nor was I. Therefore we pursued the matter still further. We have now reached the stage where Mr. Moore has been granted 80 per cent. for the period when Mrs. Moore was alive, but only after 1 September 1986.
  I reckoned that the tribunal's decision was complacent and arrogant. I wrote accordingly to my right hon. Friend. He replied saying that we could appeal further. He said that it was not a DSS matter but a matter for the medical appeal tribunal. Imagine how Mr. Moore felt as a recently widowed gentleman with a young son in a depressed area in the north-east of England. He could not understand why he was being shoved from pillar to post, and as the person who was supposed to be helping and guiding him, I must confess that I was just as dizzy.But we were told that the MAT was administered by the office of the president of the social security and medical appeals tribunal. So I wrote to my right hon. Friend on 1 June 1987, asking him to look into the case on our behalf.
  One year later on 8 June 1988, I again wrote to my right hon. Friend reminding him that 12 months earlier he had written to Mr. Justice Byrt QC, the president of the tribunal, placing the case before him. But the Minister's reply on 30 June said that there was no trace of Mr.
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  Moore's claim for attendance allowances. He promised to follow up the president's office to determine what investigations had been made.
  On 18 July we sent to the Department details of Mrs. Moore's claim for the attendance allowance which had come to the surface. On 5 September 1988, all that long time later, Mr. Justice Byrt replied that on the balance of probabilities Mrs. Moore might have been severely disabled, and on the evidence that was available she would have a right of appeal to a social security commissioner.
  We thought that we were getting somewhere. But there was only one small snag. The social security commissioner, in his infinite wisdom, decided not to grant my constituent right of appeal.
  In September 1988, having received that decision, we had to ask to have it set aside. In January 1989 we received a letter from the secretary of the office of the president. The papers had been sent to his office on 28 September 1988 but extensive inquiries in Leeds and Newcastle revealed no trace of Mr. Moore's set-aside application, the implication being that it had been lost in the post. It was bad enough to lose the appeal without the information being lost in the post, but we resurrected it, got it back to the surface and pursued it further. We sent photocopies of all the information to those who had lost it.
  In February 1989, I received a letter from Mr. Moore saying that he still had not heard, so on 2 March I wrote again to my right hon. Friend the Secretary of State asking him to bring pressure to bear on that bureaucratic quango which appears to be responsible to nobody and able to do or not to do whatever it wishes. My right hon. Friend replied immediately saying that tribunals were independent and it would he wrong for him as a Minister to seek to bring pressure to bear on them because he could be criticised for so doing.
  On 29 March 1989 we knew that we had been refused and the only course of action was to apply to the social security commissioner for leave to appeal, and that had to be done within 42 days. We checked it at our office at the House of Commons because we were no longer satisfied with the competence of the people who were charged with that responsibility. We were told that it had been dealt with expeditiously. That was on 12 April.
  On 16 August Mr. Moore again telephoned me to say that he had heard nothing and I again contacted my right hon. Friend's office to ask whether anything could be done to bring some compensation, or at least some consolation to my constituent in respect of his late wife who had been dead for some considerable time, yet as far as he was concerned, the case was still alive.
  On 8 August, Mr. Moore was told that the case would be heard in four weeks and that Judge Bromley would decide it, but on 6 November—a little more than four weeks later—Mr. Moore again rang my office to say that nothing had been heard.
  At that stage, I took advantage of an hon. Member's right to initiate an Adjournment debate on the subject. Lo and behold, the day after your Office, Mr. Speaker, informed me that I had succeeded in obtaining an Adjournment debate, my constituent received a reply saying that he had been given leave to appeal. Was that not miraculous? We still have not an affirmative judgment in our favour, although the amount of money involved is very small. However, it involves a big point of principle.
  I am raising this matter tonight because my constituent cannot be the only person who has been treated in this

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  abominable way by those charged with the responsibility of ensuring that tribunals and justice are dealt with expeditiously and that no one is kept hanging around.
  I received a further letter today, which I shall read so that it is on the record. It comes from a high source. It says:
  "I write to apologise to you directly"—
  the letter is to my constituent, but this is my copy—
  "for the very regrettable delay at the Office of the Social Security Commissioners in dealing with your application for leave to appeal to a Social Security Commissioner. Let me explain how the delay came about.
  OSSC received your application for leave initially in February 1989, but I understand they were obliged to ask you for a copy of the decision of the lower tribunal"—
  That is the letter that was lost by somebody else
  "after which they returned the application for leave to lower tribunal on 15 March 1989 because it could be dealt with by the lower tribunal's Chairman within the 3-month time limit allowed for applications for leave to appeal. The Chairman of the lower tribunal refused your application for leave on 21 March, after which the papers returned to OSSC. In April, OSSC requested all the necessary background papers from DSS and the local tribunal's office in Redcar. All the papers were received at OSSC on 10 May, but at this point things went wrong".
  This is on 10 May 1989, but I have been pursuing the matter since 1986.
  "What should have happened is that OSSC staff should have made up a complete file and put it, with your application, to a Commissioner for a decision. Unfortunately, instead OSSC clerical staff misfiled the papers, putting them away in a registry where files are held pending the receipt of further papers which are expected from the DSS or the lower tribunal.
  The error was only discovered on 10 November, when my Department and OSSC first became aware of your case as a result of the intervention of your Member of Parliament, Mr. Holt, who will raise the matter at an Adjournment Debate on 15 November. As soon as OSSC realised their error, they constructed a case file and put it before a Commissioner, who considered your application for leave to appeal and granted it. I am advised that notification of that decision was sent to you on 10 November by first class post. Thus, the way is now open to you to proceed with the appeal in the usual way.
  I very much regret the anxiety and distress that this long and unnecessary delay must have caused you—all the more so, because it concerns an appeal on behalf of your late wife. Unfortunately, mistakes of this sort do sometimes occur and I know that the staff at OSSC are very sorry for what went wrong. The work very hard and appreciate the importance of their work to appellants and their families. On their behalf, I apologise to you again most sincerely and I trust the appeal will now proceed smoothly.
  I should add that I am most grateful to your Member of Parliament for bringing the matter to our attention so that it could be sorted out quickly. Therefore, I am sending him a copy of this letter."
  That was signed by Lord Mackay of Clashfern.
  We cannot have a more fulsome apology from a more senior person in Government. Is it not disgraceful that I have had to raise this matter on the Adjournment after all this time and that the medical evidence which is the subject of this appeal to some extent cannot be verified in any way? Doctors have to say whether another doctor has made a mistake. Doctors do not do that—doctors never make mistakes. The report of 8 August 1986 stated that the chest condition would deteriorate at some future date. The doctor was right. Six or seven weeks later, after the fourth course of chemotherapy, my constituent—who was still assessed as only 35 per cent. disabled—died.
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  I hope that there will be three happy postscripts to this saga. I shall be able to remove this file from my live files. Mr. Moore will be given that small sum of money covering that period during his wife's severe illness, and he will be able to put his file away. With your leave, Mr. Speaker, we will wish Mr. Moore well, because he remarried last weekend. We want to put this matter behind us and wish him well for the future. I realise that my right hon. Friend the Minister cannot answer all my points because the matter is sub judice. This use of bureaucracy to befuddle people must not happen again. Most people would have dropped the case by now. Mr. Moore deserves justice. I hope that he will receive it.
  10.16 pm
  The Minister for Social Security (Mr. Nicholas Scott): My hon. the Member for Langbaurgh (Mr. Holt) has recounted what all those listening will recognise as a sad and, in many ways, very unsatisfactory story. That it started four years ago and is still unresolved is distressing for Mr. Moore, who is the person most directly concerned.
  Looking at the matter from my point of view, independent of the social security commissioners' office, I like to think that, although this may not be the only case that has gone so badly wrong, it would be exceptional for any case to go quite as wrong at this one has. I hope that my hon. Friend will recognise that the letter that he has received from the Lord Chancellor will be regarded, in the administration of these matters, as something that Lord Chancellors rarely have to produce even for such distinguished Back Benchers as my hon. Friend. Lessons will be learned throughout the organisation about the importance of delivering a more effective service than was delivered in this case.
  I reiterate the gratitude that the Lord Chancellor expressed in his letter, when he said that he was grateful to my hon. Friend for bringing the matter to his attention so that it could be sorted out quickly. It is in my interests and the Government's interests that those who are entitled to benefits get them and that if matters are to be settled independently of Ministers—as they must be when medical conditions are involved—they are at least managed expeditiously. I acknowledge that in this case that has not happened.
  My hon. Friend acknowledged in his closing remarks that tribunals have to manage these matters. One cannot establish essentially medical criteria to entitle someone to receive a benefit—whether mobility allowance, attendance allowance or, as in this case, severe disability allowance —and establish a medical body to make the decision and then have Ministers who are not qualified trample all over it. It would be nonsense to do that, as I know that my hon. Friend recognises.
  My hon. Friend has recounted much of the story, but perhaps I may tell it from the point of view of those on this side of the fence although, as I have said, it does not bring much credit to the workings of the system. The benefit that Mrs. Moore was claiming was severe disablement allowance and there are various criteria that have to be satisfied if a person is to be successful in such a claim.
  A person must have been incapable of work for a continuous period of 28 weeks. Additionally, a person who claims after reaching the age of 20 needs to be assessed as being at least 80 per cent. disabled for the whole of this qualifying period. I gather from the records that the late

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  Mrs. Moore last worked on 31 October 1985 and claimed severe disablement allowance on 4 April 1986, which is when my hon. Friend began his story. Her local social security office, which deals with claims for the allowance, properly arranged for the claim to be referred to an independent adjudicating medical practitioner to assess her degree of disablement.
  Arrangements were made for her to be medically examined for this purpose on 16 June but, unfortunately, she was unable to attend. New arrangements had to be made and the examination took place on 8 July. The adjudicating medical practitioner assessed her degree of disablement at 35 per cent. and a notification that her claim had been disallowed was issued on 22 July. That may not have been a satisfactory outcome, but at least at that point everything was proceeding with some promptness.
  We recognise that these decisions cannot be simply referred to Ministers and the way in which decisions can be challenged is through the independent appeal system. Mrs. Moore's appeal to a medical appeal tribunal was received on 1 September and the relevant papers, with the Department's observations on them, were sent to the tribunal on 24 September. It was thought that the tribunal might need additional medical information to help it with is assessment. Case notes were then requested from hospitals where Mrs. Moore had been treated. Extracts from those notes were made by a medical officer on 16 October and these were approved by the tribunal on 5 November. That was still reasonable progress.
  The tribunal was held on 14 April 1987 and it decided to assess Mrs. Moore as being 80 per cent. disabled from 1 September 1986. Unfortunately, no benefit was payable as a result of that decision due to the fact that the assessment had not run for the continuous 28-week qualifying period by the time of Mrs. Moore's sad death on 6 December 1986. I can well appreciate that Mr. Moore found this decision very disappointing. I should put it higher than that and say that he found it extremely distressing.
  In June 1988 my hon. Friend raised the matter with the then Under-Secretary of State and, following inquiries within his organisation, judge Byrt, the president of the social security appeal tribunals and medical appeal tribunals, wrote on 5 September 1988 to explain that Mr. Moore had been advised of his right either to apply to have the tribunal decision set aside or to appeal to the social security commissioner, but that no such application had been received. Mr. Moore applied to have the decision set aside on 28 September 1988 and, on that same day, his application was forwarded to the regional chairman's office in Leeds. As my hon. Friend will know, it was not until he again made representations that it was realised that the application had been lost between London and Leeds. The president's office wrote to my hon. Friend on 13 January apologising for the delay and arranged for a tribunal to consider the application on 20 February 1989. In the event, the tribunal refused the application. Mr. Moore was notified of that and was advised of his right to seek leave to appeal to the commissioner.
  I turn now to the involvement of the office of the social security commissioners in this case. The commissioners are
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  the responsibility of the Lord Chancellor, as my hon. Friend made clear he realised when he read out the letter from my noble Friend the Lord Chancellor.
  Mr. Moore applied on 24 February 1989 for leave to appeal to the commissioner against the medical appeal tribunal decision, but he omitted to send a copy of the tribunal decision. He was asked to produce it and, it was realised that the decision was within the three-month time limit enabling leave to be granted by the tribunal chairman. The tribunal chairman refused leave on 21 March 1989, after which the papers were returned to the commissioner's office. Efforts were then made to retrieve them. Some of them had been destroyed by the tribunal office and eventually our Department of Social Security office in Redcar produced a complete set of the original papers, which were received at the commissioner's office on 10 May 1989.
  At this point, something went very seriously wrong. A file should have been made up and put before a commissioner promptly for him to make a decision. Unfortunately, the clerk misfiled the case papers into a holding registry where case files sit pending receipt of further papers. This error was not discovered until 10 November 1989—a date of special significance to my hon. Friend—when the Lord Chancellor's Department was first made aware of this evening's debate.
  My hon. Friend may take some comfort from the fact that the case was put before a commissioner on the afternoon of 10 November and that leave has been granted. In an attempt to speed things along, observations have been requested within 21 days instead of 30 days as is normal. I am advised that notification of this decision was sent to Mr. Moore on that day, and the way is now open for the appeal to be considered by the commissioner in the normal way.
  The Lord Chancellor, on behalf of the office of the social security commissioner, has asked me publicly to reiterate the apology that was conveyed to my hon. Friend in writing for this most unfortunate delay in dealing with Mr. Moore's application for leave. Although there have been some delays at the commissioner's office in dealing with such matters—caused by the significant increase in the work load and the number of appeals over the past 18 months—the delay in this case was caused by a clerical error which, when discovered, was dealt with with great promptness.
  The Lord Chancellor has also asked me to thank my hon. Friend for raising the matter and to say that he has written personally to Mr. Moore to apologise. It was generous of my hon. Friend to acknowledge the heartfelt and generous nature of the apology that he received from my noble Friend. I can but add my apologies to those of my noble Friend for the problems that Mr. Moore has experienced in this distressing case. I cannot, of course, predict the outcome of an appeal—my hon. Friend would not expect me to do so—but our apologies are heartfelt.
  Question put and agreed to.
  Adjourned accordingly at twenty-seven minutes past Ten o'clock.