Personal Statement (Hansard, 13 November 1990)

§ Sir Geoffrey Howe (Surrey, East)

I find to my astonishment that a quarter of a century has passed since I last spoke from one of the Back Benches. Fortunately, however, it has been my privilege to serve for the past 12 months of that time as Leader of the House of Commons, so I have been reminded quite recently of the traditional generosity and tolerance of this place. I hope that I may count on that today as I offer to the House a statement about my resignation from the Government.

It has been suggested—even, indeed, by some of my right hon. and hon. Friends—that I decided to resign solely because of questions of style and not on matters of substance at all. Indeed, if some of my former colleagues are to be believed, I must be the first Minister in history who has resigned because he was in full agreement with Government policy. The truth is that, in many aspects of politics, style and substance complement each other. Very often, they are two sides of the same coin.

The Prime Minister and I have shared something like 700 meetings of Cabinet or shadow Cabinet during the past 18 years, and some 400 hours alongside each other, at more than 30 international summit meetings. For both of us, I suspect, it is a pretty daunting record. The House might well feel that something more than simple matters of style would be necessary to rupture such a well-tried relationship.

It was a privilege to serve as my right hon. Friend's first Chancellor of the Exchequer; to share in the transformation of our industrial relations scene; to help launch our free market programme, commencing with the abolition of exchange control; and, above all, to achieve such substantial success against inflation, getting it down within four years from 22 per cent. to 4 per cent. upon the basis of the strict monetary discipline involved in the medium-term financial strategy. Not one of our economic achievements would have been possible without the courage and leadership of my right hon. Friend—and, if I may say so, they possibly derived some little benefit from the presence of a Chancellor who was not exactly a wet himself.

It was a great honour to serve for six years as Foreign and Commonwealth Secretary and to share with my right hon. Friend in some notable achievements in the European Community—from Fontainebleau to the Single European Act. But it was as we moved on to consider the crucial monetary issues in the European context that I came to feel increasing concern. Some of the reasons for that anxiety were made very clear by my right hon. Friend the Member for Blaby (Mr. Lawson) in his resignation speech just over 12 months ago. Like him, I concluded at least five years ago that the conduct of our policy against inflation could no longer rest solely on attempts to measure and control the domestic money supply. We had no doubt that we should be helped in that battle, and, indeed, in other respects, by joining the exchange rate mechanism of the European monetary system.

There was, or should have been, nothing novel about joining the ERM; it has been a long-standing commitment. For a quarter of a century after the second 462 world war, we found that the very similar Bretton Woods regime did serve as a useful discipline. Now, as my right hon. Friend the Prime Minister acknowledged two weeks ago, our entry into the ERM can be seen as an extra discipline for keeping down inflation."—[Official Report, 30 October 1990; Vol. 178, c. 888.] However, it must be said that that practical conclusion has been achieved only at the cost of substantial damage to her Administration and, more serious still, to its inflation achievements.

As my right hon. Friend the Member for Blaby explained: The real tragedy is that we did not join the exchange rate mechanism … at least five years ago. As he also made clear, That was not for want of trying."—[Official Report, 23 October 1990; Vol. 178, c. 216.] Indeed, the so-called Madrid conditions came into existence only after the then Chancellor and I, as Foreign Secretary, made it clear that we could not continue in office unless a specific commitment to join the ERM was made.

As the House will no doubt have observed, neither member of that particular partnership now remains in office. Our successor as Chancellor of the Exchequer has, during the past year, had to devote a great deal of his considerable talents to demonstrating exactly how those Madrid conditions have been attained, so as to make it possible to fulfil a commitment whose achievement has long been in the national interest.

It is now, alas, impossible to resist the conclusion that today's higher rates of inflation could well have been avoided had the question of ERM membership been properly considered and resolved at a much earlier stage. There are, I fear, developing grounds for similar anxiety over the handling—not just at and after the Rome summit—of the wider, much more open question of economic and monetary union.

Let me first make clear certain important points on which I have no disagreement with my right hon. Friend, the Prime Minister. I do not regard the Delors report as some kind of sacred text that has to be accepted, or even rejected, on the nod. But it is an important working document. As I have often made plain, it is seriously deficient in significant respects.

I do not regard the Italian presidency's management of the Rome summit as a model of its kind—far from it. It was much the same, as my right hon. Friend the Prime Minister will recall, in Milan some five years ago.

I do not regard it as in any sense wrong for Britain to make criticisms of that kind plainly and courteously, nor in any sense wrong for us to do so, if necessary, alone. As I have already made clear, I have, like the Prime Minister and other right hon. Friends, fought too many European battles in a minority of one to have any illusions on that score.

But it is crucially important that we should conduct those arguments upon the basis of a clear understanding of the true relationship between this country, the Community and our Community partners. And it is here, I fear, that my right hon. Friend the Prime Minister increasingly risks leading herself and others astray in matters of substance as well as of style.

It was the late Lord Stockton, formerly Harold Macmillan, who first put the central point clearly. As long ago as 1962, he argued that we had to place and keep ourselves within the EC. He saw it as essential then, as it is today, not to cut ourselves off from the realities of 463 power; not to retreat into a ghetto of sentimentality about our past and so diminish our own control over our own destiny in the future.

The pity is that the Macmillan view had not been perceived more clearly a decade before in the 1950s. It would have spared us so many of the struggles of the last 20 years had we been in the Community from the outset; had we been ready, in the much too simple phrase, to "surrender some sovereignty" at a much earlier stage.

If we had been in from the start, as almost everybody now acknowledges, we should have had more, not less, influence over the Europe in which we live today. We should never forget the lesson of that isolation, of being on the outside looking in, for the conduct of today's affairs.

We have done best when we have seen the Community not as a static entity to be resisted and contained, but as an active process which we can shape, often decisively, provided that we allow ourselves to be fully engaged in it, with confidence, with enthusiasm and in good faith.

We must at all costs avoid presenting ourselves yet again with an over-simplified choice, a false antithesis, a bogus dilemma, between one alternative, starkly labelled "co-operation between independent sovereign states" and a second, equally crudely labelled alternative, "centralised, federal super-state", as if there were no middle way in between.

We commit a serious error if we think always in terms of "surrendering" sovereignty and seek to stand pat for all time on a given deal—by proclaiming, as my right hon. Friend the Prime Minister did two weeks ago, that we have "surrendered enough".

The European enterprise is not and should not be seen like that—as some kind of zero sum game. Sir Winston Churchill put it much more positively 40 years ago, when he said: It is also possible and not less agreeable to regard this sacrifice or merger of national sovereignty as the gradual assumption by all the nations concerned of that larger sovereignty which can alone protect their diverse and distinctive customs and characteristics and their national traditions. I have to say that I find Winston Churchill's perception a good deal more convincing, and more encouraging for the interests of our nation, than the nightmare image sometimes conjured up by my right hon. Friend, who seems sometimes to look out upon a continent that is positively teeming with ill-intentioned people, scheming, in her words, to "extinguish democracy", to dissolve our national identities and to lead us through the back-door into a federal Europe". What kind of vision is that for our business people, who trade there each day, for our financiers, who seek to make London the money capital of Europe or for all the young people of today?

These concerns are especially important as we approach the crucial topic of economic and monetary union. We must be positively and centrally involved in this debate and not fearfully and negatively detached. The costs of disengagement here could be very serious indeed.

There is talk, of course, of a single currency for Europe. I agree that there are many difficulties about the concept—both economic and political. Of course, as I said in my letter of resignation, none of us wants the imposition of a single currency. But that is not the real risk. The 11 others cannot impose their solution on the 12th country against its will, but they can go ahead without us. The risk is not 464 imposition but isolation. The real threat is that of leaving ourselves with no say in the monetary arrangements that the rest of Europe chooses for itself, with Britain once again scrambling to join the club later, after the rules have been set and after the power has been distributed by others to our disadvantage. That would be the worst possible outcome.

It is to avoid just that outcome and to find a compromise both acceptable in the Government and sellable in Europe that my right hon. Friend the Chancellor has put forward his hard ecu proposal. This lays careful emphasis on the possibility that the hard ecu as a common currency could, given time, evolve into a single currency. I have of course supported the hard ecu plan. But after Rome, and after the comments of my right hon. Friend the Prime Minister two weeks ago, there is grave danger that the hard ecu proposal is becoming untenable, because two things have happened.

The first is that my right hon. Friend the Prime Minister has appeared to rule out from the start any compromise at any stage on any of the basic components that all the 11 other countries believe to be a part of EMU—a single currency or a permanently fixed exchange rate, a central bank or common monetary policy. Asked whether we would veto any arrangement that jeopardised the pound sterling, my right hon. Friend replied simply, "Yes." That statement means not that we can block EMU but that they can go ahead without us. Is that a position that is likely to ensure, as I put it in my resignation letter, that we hold, and retain, a position of influence in this vital debate"? I fear not. Rather, to do so, we must, as I said, take care not to rule in or rule out any one solution absolutely. We must be seen to be part of the same negotiation.

The second thing that happened was, I fear, even more disturbing. Reporting to this House, my right hon. Friend almost casually remarked that she did not think that many people would want to use the hard ecu anyway—even as a common currency, let alone as a single one. It was remarkable—indeed, it was tragic—to hear my right hon. Friend dismissing, with such personalised incredulity, the very idea that the hard ecu proposal might find growing favour amoung the peoples of Europe, just as it was extraordinary to hear her assert that the whole idea of EMU might be open for consideration only by future generations. Those future generations are with us today.

How on earth are the Chancellor and the Governor of the Bank of England, commending the hard ecu as they strive to, to be taken as serious participants in the debate against that kind of background noise? I believe that both the Chancellor and the Governor are cricketing enthusiasts, so I hope that there is no monopoly of cricketing metaphors. It is rather like sending your opening batsmen to the crease only for them to find, the moment the first balls are bowled, that their bats have been broken before the game by the team captain.

The point was perhaps more sharply put by a British business man, trading in Brussels and elsewhere, who wrote to me last week, stating: People throughout Europe see our Prime Minister's finger-wagging and hear her passionate, 'No, No, No', much more clearly than the content of the carefully worded formal texts. He went on: It is too easy for them to believe that we all share her attitudes; for why else has she been our Prime Minister for so long? 465 My correspondent concluded: This is a desperately serious situation for our country. And sadly, I have to agree. The tragedy is—and it is for me personally, for my party, for our whole people and for my right hon. Friend herself, a very real tragedy—that the Prime Minister's perceived attitude towards Europe is running increasingly serious risks for the future of our nation. It risks minimising our influence and maximising our chances of being once again shut out. We have paid heavily in the past for late starts and squandered opportunities in Europe. We dare not let that happen again. If we detach ourselves completely, as a party or a nation, from the middle ground of Europe, the effects will be incalculable and very hard ever to correct.

In my letter of resignation, which I tendered with the utmost sadness and dismay, I said: Cabinet Government is all about trying to persuade one another from within". That was my commitment to Government by persuasion—persuading colleagues and the nation. I have tried to do that as Foreign Secretary and since, but I realise now that the task has become futile: trying to stretch the meaning of words beyond what was credible, and trying to pretend that there was a common policy when every step forward risked being subverted by some casual comment or impulsive answer.

The conflict of loyalty, of loyalty to my right hon. Friend the Prime Minister—and, after all, in two decades together that instinct of loyalty is still very real—and of loyalty to what I perceive to be the true interests of the nation, has become all too great. I no longer believe it possible to resolve that conflict from within this Government. That is why I have resigned. In doing so, I have done what I believe to be right for my party and my country. The time has come for others to consider their own response to the tragic conflict of loyalties with which I have myself wrestled for perhaps too long.