European Community

HC Deb 26 June 1991 vol 193 cc1007-91

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wood.] [Relevant documents: White Paper on Developments in the European Community, July-December 1990 (Cm. 1457), the unnumbered explanatory memorandum submitted by the Foreign and Commonwealth Office on 4 March 1991 describing the programme of the Commission for 1991, European Community document No. 5951/91 on free movement of workers between Spain and Portugal and the other member states, and the minutes of evidence taken before the Foreign Affairs Committee on 12 June 1991 (HC 77-ii).]

Mr. Speaker

Before the Foreign Secretary begins his speech, I regret that, although I do not think that 10-minute speeches enhance such debates, because fewer than 49 right hon. and hon. Members wish to participate, I shall in fairness to them put a time limit of 10 minutes on speeches between 7 pm and 9 pm. I urge hon. Members called before then to bear that limit broadly in mind, in the interest of those who follow.

4.18 pm

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

We are now about halfway through the negotiations in the two European intergovernmental conferences on economic and political union. We and our partners are planning on the basis that both conferences should reach a conclusion at Maastricht under the Dutch presidency. We are not seeking or expecting any delay in decisions beyond that point. Nor are we expecting a conclusion before then. It is natural to take stock at the meeting of Heads of Government in Luxembourg this weekend and now in this House of Commons. But I would ask the more breathless commentators to remember that the halfway mark is not the same thing as the finishing post.

There are many other important developments in the Community. For example, this year's agreement on farm prices respected both the interest of British farmers and budgetary disciplines. It provides a firm basis for the next state in achieving reform of the common agricultural policy.

Similarly, there has been good progress in negotiations between the European Community and the European Free Trade Association. When those are concluded—as we hope—they will extend the single market to 19 countries covering 370 million people. That will reaffirm that the European Community is outward looking and not an introspective, self-obsessed club.

It is perfectly true that the intergovernmental conferences are central to discussion at the present time. They raise again fundamental questions about what is the best shape and structure for Europe as we approach the 21st century. These issues were last tackled in the run-up to the signing of the Single European Act in 1985. I think that the changes that were made then worked well. It is unlikely that without them we could by now have completed almost 75 per cent. of the single market programme. I think that it was somewhat too soon to re-examine our structures and working methods. However, since last year most of our partners wished to do so, and we decided last year to take a full and positive part in both conferences.

I warmly welcome today's debate because it gives us a chance to grip reality. There has been something unreal about some parts of the recent public debate. I have felt sometimes like a soldier in one of those wars recounted by Homer or Virgil. In those epics, the prosaic tasks of the soldier are suddenly interrupted by interventions from on high. Attention passes to the clash of fabled gods, or even goddesses, in the heavens above his head. Naturally and rightly, their thunder holds all our attention. But when the lightning and thunder of the great ones dies away, those of us on the ground have to get on with the work. Let me tell the House how we are getting on with that work and how we intend to carry out our responsibilities.

My hon. Friend the Financial Secretary will have more to say about the conference on economic and monetary union when he replies to the debate. I shall confine myself to a couple of general remarks about that, restating a familiar position.

The Government will not recommend to this Parliament acceptance of a commitment to a single currency. As my right hon. Friend the Chancellor of the Exchequer made clear over the weekend, there are good reasons to be deeply sceptical about the feasibility of a move to monetary union at present. If, for example, it were to be attempted without substantial progress towards economic convergence, the economic costs would be substantial.

On the other hand, some years hence progress towards convergence might be more marked. A single currency might become feasible and might even have some attractions to consumers and markets. That was foreshadowed as a possibility in the hard ecu plan that we produced last year. In those circumstances, a British Parliament might wish to weigh up the political costs and opportunities of a move to a single currency in the light of economic experience. That is not something which we can prejudge either way today. It would be foolish, however, to close off that option from a future Parliament or to sit on our hands while the next stage of closer monetary and economic integration is planned.

In any case, quite apart from the question of a single currency, there is a good deal of advantage to Britain in achieving a stage 2 package that encourages convergence on low inflation and sound public finance across the Community. Through adopting a positive stance in the economic and monetary union negotiations, we have helped to focus negotiation on the next practical steps that should be taken towards closer economic and monetary integration. Indeed, it seems probable now that some form of hardened ecu will form an important element in stage 2. There is a great deal of work to be done during the discussions and a number of difficult and substantive issues remain unresolved. At Luxembourg, during the weekend, there will be an opportunity to take stock, but not to reach conclusions.

I shall concentrate on the discussions in the other conference—the one for which I am mainly responsible —on so-called political union. Some recent reports and some speeches by Opposition Members have portrayed us as a stag at bay in the manner of a Landseer painting. That is a romantic and not entirely unattractive image, but it is a wrong one. There are a number of proposals on the table that we shall sternly resist. We are by no means isolated in our views on most of them. Indeed, we have been steadily gaining ground on several of the issues that matter to us. In giving evidence recently to the Select Committee on Foreign Affairs, I outlined three of our key objectives. On all of them we are making some progress. The progress is not decisive, but some has been made.

First, we must achieve the right structure for the treaty. Those who favour the creation of a European state want to see all European co-operation ultimately channelled through the institutions established by the treaty of Rome. We do not accept such a model. It is necessary to have common institutions which are to some degree supranational, to develop and administer some common policies. As we have seen, that is true of the rules that govern the single market and its external manifestations in negotiations on world trade.

That logic does not apply in areas such as foreign and security policy or in the work of Interior or Justice Ministers. The treaty of Rome remains the bedrock of European integration, but there is nothing intrinsically more European about channelling all co-operation through the institutions of the Community rather than proceeding, where it makes sense, through co-operation between Governments directly accountable to national Parliaments.

That is why we favour a Europe in which separate pillars of co-operation are maintained, each reporting to the Heads of Government, sitting as the European Council. That is broadly the model on which the present draft treaty is based. Its proposal to keep intergovernmental co-operation and the institutions of the treaty of Rome separate is an important element in our idea of Europe. The text is not yet right, as many people have pointed out, and it needs further work to ensure that the pillars of co-operation really are separate. We shall press for that.

I shall elaborate a little on the point, as it has attracted so much attention in recent weeks. The subject of structure, or architecture, was discussed at the recent meeting of Foreign Ministers in Dresden. The President of the European Commission, Mr. Delors, criticised the presidency draft and sought to fuse the different pillars into one, but his approach was not accepted by ourselves or by the French and some others, and it has not been adopted by the presidency.

The recent appearance in the draft treaty of an aspiration to a "federal goal" is in effect an effort by the presidency to placate by rhetoric those who have not prevailed on the substance of the argument. Although we are happy, as in the past, to endorse the goal of an ever closer union, a commitment to a federal model, even as a distant aim, raises a different question, as the Prime Minister made clear yesterday.

I cannot recognise some accounts of the previous discussion on this subject in which I took part in Luxembourg on 17 June. Having been there, I can say that there was no ambush, no heated exchange, no interruption. I explained—courteously, but, I hope, clearly—among other criticisms of the latest presidency draft, why we could not accept the phrase about a federal goal. It is true that the phrase means different things to different people, and that on the continent it often signifies the diffusion rather than the concentration of power.

Mrs. Margaret Ewing (Moray)

indicated assent.

Mr. Jim Sillars (Glasgow, Govan)

indicated assent.

Mr. Hurd

It is interesting to see the Scottish Nationalist Members nodding their heads. The ambiguity of the phrase makes it a poor and dangerous phrase to import into a text of such significance—and the nods of the Scottish Nationalist Members rather reinforce my feelings on that point.

In Luxembourg, when Mr. Delors's turn came round, he courteously but clearly stated a view opposite to mine. But I was not by any means alone in what I said, and the discussion continues.

Mr. Tony Marlow (Northampton, North)

My right hon. Friend will recognise that I am one of the more sceptical members of the Conservative party and am deeply concerned about the ambitions of European institutions to take powers unnecessarily from the House.

I share my right hon. Friend's concern about federal ambitions and the existing European institutions taking over control—competence—with regard to defence, foreign policy, justice and immigration. But I—and, I suspect, many of my hon. Friends—find the proposals on a three-pillared approach that my right hon. Friend is putting before the House quite agreeable, and we would be happy to support them if he can bring them back to us at the end of the discussions on the treaty.

Mr. Hurd

I am grateful to my hon. Friend The consensus is gaining ground. It already has the support of the Leader of the Opposition, so let us proceed in that constructive spirit.

The second objective relates to security—

Mr. Paddy Ashdown (Yeovil)

The Foreign Secretary has touched on the nub of the matter—the word "federalism". I remind him that he had some harsh words to say about that after the Foreign Ministers meeting. It seemed that yesterday the Prime Minister took a much more conciliatory attitude towards the issue of federalism. He said that, if federalism was defined in terms entirely consistent with the only definition that I have seen in "The Oxford English Dictionary", and in terms that have already been accepted by all our European partners, it was acceptable to the Government. Is it not now the Government's position that, provided that federalism is defined in terms that have already proved acceptable to everybody else, it is acceptable to them?

Mr. Hurd

I have read carefully what the Prime Minister said. He was making exactly the same point as I am—that the word means different things to different poeple—and, I think, drawing the same conclusion, which is that, for precisely that reason, it is not very sensible to include the word in a treaty of this kind.

My second point concerns defence. Here, there is widespread agreement that Europe needs to do more, especially in tackling threats outside the NATO area. There was almost a consensus in the House in its analysis of the Gulf war that that was so. But in building up a European defence identity, we must not weaken NATO or confront the Americans with an exclusive European view. Because the Atlantic alliance and the presence of American and Canadian forces in Europe remain fundamental to our security, we want to strengthen the existing Western European Union, and make it, if we can, a bridge between NATO and the Twelve. We have made concrete proposals for achieving that, including the establishment of a European reaction force and the moving of WEU's headquarters to Brussels, alongside NATO.

Defence should not be embraced by the European Community, which includes neutral Ireland and which is likely—I hope—to include other neutral countries during the 1990s. We have made good progress within NATO and among the Twelve in establishing that any European defence identity must be distinct from the Community and must be complementary to NATO. That view was clearly accepted by our partners at the recent successful meeting of the North Atlantic Council in Copenhagen. It is not yet decisive progress, but we are getting on. If, in any new treaty, we can reconcile the need for greater European coherence in defence with the essential Atlantic foundations of that defence within the NATO area, it will be a substantial gain for the future.

Mr. Robert Adley (Christchurch)

As my right hon. Friend is taking a cool look ahead, does he agree with me that even words such as "neutral" may not mean the same in 10 years' time as they have meant since 1945 and that, in considering the structure of Europe, even words such as "federal" do not cause some of us to lie awake at night—especially if they have the meaning that he has described?

Mr. Hurd

Nor me, Mr. Speaker, nor me. Equally, however, it is not very sensible to include at a key point in a document which we hope will last for some time a word that is clearly open to endless argument and interpretation.

Our third objective is to strengthen the rule of law within the Community. The Community is, and must remain, a community of law. The fairness and consistency with which that law is implemented and enforced are crucial for individuals and companies. There can be few hon. Members who have not received complaints from their constituents that, in one way or another, European decisions are implemented here but not elsewhere. We need a level playing field, and it is up to the Community to ensure that we have one.

At the conference, we have made several proposals to improve the workings of the institutions with that in mind. The most radical is the proposal to give the European Court of Justice power to impose fines when member states fail to comply with judgments by the Court. We have one of the best records for sticking to the rules. Between 1982 and 1989, for example, Britain was referred to the European Court of Justice for infringement proceedings 20 times, while Germany was referred 49 times, France 82 times and Italy 157 times.

Recent figures show one European Court of Justice judgment outstanding against Britain, compared with four against the Netherlands, six against France, 12 against Germany, 13 against Belgium and 37 against Italy. Establishing the primacy of the rule of law is a fundamental principle on both sides of the House, and in the country as a whole. Our proposals to that effect made little headway initially, but they have gathered considerable support, and are now included in the latest version of the draft treaty.

We want to encourage a more active role for national Parliaments in scrutinising Community legislation and co-ordinating their responses to it. We want to strengthen the hand of the European Parliament in overseeing the way in which the Commission spends European taxpayers' money; and we want to establish the principle of what, in the jargon, is called "subsidiarity".

That, too, is a confusing word, but it embraces a sound principle. It means the establishment of rules whereby decisions are made at the lowest practicable level. Centralisation is regarded as undesirable in almost all Community countries, and moves towards it do not become any more desirable if a "Euro" label is attached to them. We are working to devise a formula whereby action will be taken at Community level only if it cannot be taken effectively at national level.

Dr. Dafydd Elis Thomas (Meirionnydd Nant Conwy)

Does the Foreign Secretary accept that he has just defined federalism?

Mr. Hurd

If the hon. Gentleman consults all the commentaries, learned and unlearned, that have been produced in this country during the past two or three weeks, he will observe that the definitions of federalism are multiple and contradictory. Let me repeat that it is simply not sensible to use the word: that is why it has not been used up to now, and why the Community's founding fathers did not employ it. It has been brought in for the tactical purpose that I have described.

Mr. Hugh Dykes (Harrow, East)

Will my right hon. Friend give way?

Mr. Hurd

I will, but then I want to get on.

Mr. Dykes

Notwithstanding what my right hon. Friend has just said—quite rightly—did not the word "federal" appear in the 1950 Schuman declaration?

If we are proposing an increase in the European Parliament's supervision of, and powers over, the Commission, is it not somewhat illogical not to increase its powers over the Council of Ministers?

Mr. Hurd

I do not agree. The gap in democratic control does not apply to the Council of Ministers. [HON. MEMBERS: "It does."] What am I doing here? I am answering to the House for our performance at the Council of Ministers. But the Commission, and those who actually spend the European taxpayer's money as a result of Community decisions, are not subject to an equivalent examination. We want to divert the undoubted energies and ambitions of the European Parliament into an area that has been very important in the history of the House of Commons—not so much into extra legislative powers as into greater powers to assess, monitor and invigilate what the Commission does.

Dr. David Owen (Plymouth, Devonport)

The Foreign Secretary has defined the "three pillars". What is his attitude to subparagraph 2 of article J of the draft treaty, which allows qualified majority voting on nine suggested topics referred by the European Council? This is an over-arching of those three pillars which has serious implications for independent foreign policy-making.

Mr. Hurd

I entirely agree; I am just coming to that aspect.

In negotiations such as those in which we are engaged, other member states have their objectives, too. The give and take of negotiation is getting under way. A number of suggestions are on the table, about which we are by no means persuaded. They include the issues to which the right hon. Member for Plymouth, Devonport (Dr. Owen) has rightly drawn attention. They include proposals for enhancing the powers of the Commission, extensions in qualified majority voting, which we believe to be unnecessary, a major increase in some areas of Community competence, a major increase in resource transfers to poorer member states, giving the European Parliament the right of co-decision over legislation, and commitments in the social field—which the Labour party favours but which we believe would destroy jobs.

Let me say a word about the social dimension. We accept the need for proper standards of social provision to underpin the single market. Indeed, we are the only country to have implemented all 18 directives in the social programme agreed up to the end of 1990. Most of the draft social directives on the table may ultimately be acceptable. As I said at Question Time, one of them was passed yesterday. However, we are not prepared to see Community competence spread into industrial relations.

For good or ill, traditions of collective bargaining in this country are very different from those on the continent. It is not necessary to have identical rules at Community level in this area. We do not intend to have our advances of the last decade—which, heaven knows, were hard won—thrown into confusion. Look at the number of disputes and strikes now, compared with the mid-1970s. Yes, there have been advances both in law and in practice. We do not intend to see them thrown away by an ill-judged attempt to force industrial relations practices throughout the Community into a straitjacket.

Community legislation in this area must not push up labour costs, thereby reducing the ability of European business to compete in world markets; nor should it work in such a way as to prevent economic convergence between the performance of the Community's richer and poorer states. It is interesting to note that it is this subject which invigorates the Labour party. It was the discovery of the social charter that acted as the excuse, I suppose, for the Labour party's most recent about-turn on Europe. The Labour party is now on its seventh policy on Europe. It supported membership in 1962, opposed it in 1964, supported it in 1966, opposed it in 1971, supported it again in 1975, opposed it yet again in 1983 and now, in 1991—although I have some difficulty in perceiving it—it appears to support membership once more.

By my reckoning, the right hon. Member for Manchester, Gorton (Mr. Kaufman) has acted as midwife to, or has been present at, the birth of at least six of those seven policies. We are not talking about minor shifts of emphasis—nothing as modest as that. We are talking about a full 180 degree about-turn every time. I see that the right hon. Member for Gorton looks hale, hearty and full of bounce. I am certain that he has more policy reversals in him yet. It is rather important that the shifts and shuffles of the Labour party should continue to be conducted in opposition rather than in government.

Sir Teddy Taylor (Southend, East)

Will my right hon. Friend give way?

Mr. Hurd

Perhaps my hon. Friend will allow me to get on a bit. [Interruption.] Let me finish this passage; then I shall give way to my hon. Friend.

I welcomed the extensive space devoted by a number of newspapers recently to the views of the Leader of the Opposition on economic and monetary union. They were carried in full. Extensive space was, indeed, needed. There were many long words, but, when strung together, they amounted to nonsense. The truth of the matter is that the Labour party has no coherent policies on Europe. They are empty. The Labour party appears to be united only in its support for those Commission proposals in the social sphere that would undermine prosperity and destroy.

I commend the early-day motion on today's Order Paper in the name of my right hon. Friend the Member for Guildford (Mr. Howell). He seems to have attracted a great deal of attention and support in a short time. I hope that my right hon. Friend's early-day motion will stimulate the right hon. Member for Gorton, when he rises to his feet, to enlighten us, at least partially, about what the Labour party's European policies really are.

Sir Teddy Taylor

Before the Foreign Secretary sorts out the Labour party, will he give us some guidance about what action is available to Her Majesty's Government if the Commission presents directives to change our industrial relations law, under majority voting under the Single European Act, which the Government think are wrong? What powers are available to the Government? What would they do if, as is likely, that happens next year?

Mr. Hurd

I do not think that that is likely to happen next week. The events of yesterday in the Social Affairs Council bear that out. Where there is majority voting, we have found to a considerable extent, and certainly yesterday, that we have enough partners in this argument to block draft directives of which we disapprove. Where there is the need for unanimity, as again there was yesterday, we sometimes find that we need to oppose. We shall continue to do our best to sustain the policy and principles that I have outlined.

Having posed a few questions for the right hon. Member for Gorton to brood over, may I say a few words about the right hon. Member for Yeovil (Mr. Ashdown) and the Liberal Democrats? He is a joy to listen to on these occasions. He is always happier with his feet off the ground. Both at home and abroad, this is characteristic, and rather endearing. The Liberal Democrats love phrases, but they do not pause to examine what those phrases mean—federalism, a united states of Europe, a common defence policy.

"Those phrases sound jolly—let's go for them," the right hon. Gentleman says. He sounds energetic, lovely and lively when he says them—[Interruption.] The loveliness wears off after a bit, but the liveliness remains. These matters merit a little more examination than the right hon. Gentleman gives them. He would like us to leap cheerfully at every brightly coloured fly that dangles over the river, but some of these phrases have hooks in them. It is sometimes better to look before one leaps.

The European Council in Luxembourg this weekend will be but one step further in the negotiations. I should he surprised if the occasion were entirely serene. Summits of this kind, as is the nature of democratic debates, throw up some turbulence, but in the end the meeting next weekend will take stock and pave the way for decisions that will he taken later in the year, according to the timetable that I have described. We do not think it sensible to try to pick individual topics for decision at this stage. The package of measures, if we can reach agreement on it, will need to be seen as a whole. If that package is not acceptable to all member states, there will not be a new treaty. In those circumstances, the Community would continue as before.

However, we are working for agreement. There are a number of important prizes to be gained at these conferences. We want to see the Community move forward, but there is no possibility of Britain's being pushed into a new treaty that is repugnant to us.

Mr. Tony Benn (Chesterfield)

There is one decision that it is open to the Government to take by themselves—the decision about how this matter, when it is concluded, is to be implemented by Britain. Does the right hon. Gentleman believe that the Government or the House has any moral or constitutional right to give away the powers of the electors without their being specifically consulted?

In that context, will the right hon. Gentleman remember that, whatever view he may take about the Labour party, the one thing that was clear from the beginning was that there should be an election or referendum before Britain entered? That point was embraced by the Labour party and endorsed by the public. We are discussing the rights of the electors. They cannot be handed away without their explicit consent.

Mr. Hurd

The right hon. Gentleman raised this matter at Question Time. I am strongly opposed to a referendum on this point. It is the responsibility of Parliament. I understand that there is to be a general election in this country some time during the next 12 months. It is not intended that any changes that are agreed as a result of these conferences will enter into effect before 1 January 1993.

Mr. Bowen Wells (Hertford and Stortford)

I am sure that my right hon. Friend's welcome exposition of Government policy is persuading not only the House but the nation to support the Government's negotiating stance. Does he agree that, if we are to enhance the powers of the European Council, we should ensure that national Parliaments meet regularly and that those attending the European Council report to it as well as to their national Parliaments?

Mr. Hurd

I should like national Parliaments to find ways of working more closely together and of sharing experiences. It is not for the Government to lay that down, but if enough right hon. and hon. Members favour that approach, openings are available for them to take.

In the intergovernmental conferences, we are not seeking to form an axis with any other member state. We carry on conversations and dialogue with each of our partners and form different alliances on different topics. On defence, we have worked closely, for example, with the Dutch, Portuguese and, more recently, the Italians. On subsidiarity, we are working closely with the Germans. On the structure of the treaty, as we identified in Dunkirk on Monday, there is much common ground between ourselves and the French, and on institutional matters we share many views with the Danes and Irish. That means that we are contributing to debates not as outsiders but as full and confident members.

After 18 years of membership, the Community belongs to Britain as much as to any other member state. We have an idea of Europe that involves deepening existing co-operation and widening the Community to embrace new members. We will work for a Community that is outward-looking, that is liberal and that shoulders its fair share of international responsibility.

If successful, the two conferences will shape the Community's institutions for several years to come. Next year, the Community will have a fresh work load, and in the second half of the year will carry on its work under a British presidency. Next year, we shall have to tackle again the finances of the Community, including the next stage in the reform of the common agricultural policy. We shall also have to begin to consider how to handle the fresh applications for membership that, because of its success, the Community is attracting from a growing number of our European friends. We must find the right way of making them welcome. Those will be difficult tasks.

We are often asked to lift our eyes beyond the immediate work load. Indeed, we are sometimes criticised, and sometimes criticise ourselves, because we do not clearly define the final objective. I see us as the craftsmen rather than the visionaries of the Community. We tend to ask the awkward questions—"What does it mean? How does it fit into existing policies? What will it cost?" That is necessary—my right hon. Friend the Member for Finchley (Mrs. Thatcher) was rightly expert at it—but it does not mean that we lack imagination in thinking about the future.

We cannot dictate what our children will make of the Community, but I am sure that we must leave them in a position where they can effectively influence the shape of Europe. History would deal harshly with us if we retreated into some form of querulous isolation, worried always at the prospect of being outwitted by clever foreigners and acting always as a brake on the ideas of others without putting forward ideas of our own.

I have never believed that the Community was simply a free trade area. Of course we must complete the single market and defeat the protectionists. We must win the day against those who want to create a fortress Europe, which would separate us from north America, Japan, the east of Europe and the third world.

There is more to the Community than that. The first and essential achievement was political reconciliation between the countries of western Europe, whose history had been one of destruction and warfare. We have now moved ahead to the positive side of the political work. As Foreign Secretary, I see more clearly day by day the advantages of working jointly in foreign policy with our partners when we can agree a common line—for example, in our dealings with Yugoslavia and the Soviet Union, in helping the emerging democracies of eastern Europe and in the Arab-Israel dispute. Divided, each of us individually would make a weaker impact than when we act together.

As the right hon. Member for Devonport said, common action must be based on agreement. I am not in favour of trying to achieve a mechanical or forced agreement through the use of majority voting in foreign policy. I am in favour of working more strenuously over a wider range of subjects to reach agreement, and then acting effectively together on that agreement.

That is my job, and it is also the job of some of my colleagues. We are only at the beginning of working together in Europe against international crime and environmental pollution. I foresee that work expanding steadily as the need and benefits become clearer sector by sector.

I am sure that that work should not be confined to a single framework simply because that was the framework chosen in 1957 by those who signed the treaty of Rome. What is crucial is not the machinery but the will to act. The will to act together creates the habit of reaching agreement —sometimes after fierce discussion—which we see illustrated week by week in Council after Council. We are trying to reconcile the advantages of the Community with the strengths of the nation state. That is without precedent in the history of Europe, or indeed of the world, but it is in the interests of our country and of the Community that we should be full-hearted in that task. We shall persevere, and we have a good hope of success. I believe that that policy, which is forward looking and yet realistic, has the support of the great majority of hon. Members and of the great majority of our people.

4.55 pm

Mr. Gerald Kaufman: (Manchester, Gorton)

The House always feels more at peace after a speech by the Foreign and Commonwealth Secretary. Today, we have been enlightened by cultural references to Homer and to Landseer. He made another reference to European culture when, with the profound question, "What am I doing here?", he alluded to Sartre's existentialism. At one point, the right hon. Gentleman daringly tipped a toe into party politics. Having listened to him for the past 37 minutes, it makes one wonder what all the fuss of the past few weeks has been about.

The Labour party will vote against the Government tonight to show our condemnation of their incompetence and bungling in the negotiations at the two intergovernmental conferences. Their failure to work out a clear negotiating line and to stick to it has already caused great damage to Britain's economy and industry and will cause greater damage as the year proceeds.

The Government are unable to take any other course because their main negotiations is not with our Community partners but with Conservative Members of Parliament. That is why, in breach of the precedents for these debates since 1983, there is no substantive motion before the House today, not even a take note motion. The Government fear that if a motion or amendment of substance were debated, the split in their ranks would show in the division Lobby.

Mr. Jonathan Aitken (Thanet, South)

Will the hon. Gentleman give way?

Mr. Kaufman

In a moment; let me proceed a little. That is why, when negotiating with his fellow foreign Ministers in Luxembourg last week, the Foreign Secretary is reported by The Daily Telegraph to have made an emotional plea. Mr. Boris Johnson, its European Community correspondent, said: Mr. Hurd, Foreign Secretary, appealed to EC colleagues for the language to be toned down, at least during the present period of Conservative turmoil over Europe.

Mr. Aitken

Will the hon. Gentleman give way?

Mr. Kaufman

When I reach the end of this passage.

The political editor of The Daily Telegraph, Mr. George Jones, said that the Foreign Secretary is understood to have warned the German Chancellor that any attempt to force the pace could cause a serious split in the Conservative party in the run up to the General Election.

Mr. Aitken

I am fascinated by all this talk about splits. In that context, can the right hon. Member for Manchester, Gorton (Mr. Kaufman) explain the Labour party's attitude to a group of his colleagues known as the Common Market Safeguards Committee, which issued a statement claiming that it would be bizarre to criticise the Government for saying no to federalism. Is that the view of Opposition Front-Bench members?

Mr. Kaufman

The hon. Gentleman had better wait and see what I have to say about federalism. That will come a little later in my remarks—[HON. MEMBERS: "Today?"] Yes, certainly today.

The Foreign Secretary disclosed the tension that he felt in the comments reported by The Daily Telegraph. That tension has also been revealed in the list that the Foreign Secretary published of the videos that he has been buying recently for the Foreign Office. They include "The Dreaded Appraisal", "Stress", "This is Going to Hurt Me More Than it Hurts You", "Decisions, Decisions" and "Oh What the Hell (parts 1 and 2)". Only a few months ago—[Interruption.] I realise that things may be different for the Prime Minister who, according to the Daily Mail, watches video nasties featuring the right hon. Member for Finchley (Mrs. Thatcher)—[Interruption.]

Mr. Speaker

Order. Let us make progress in an orderly fashion.

Mr. Kaufman

Only a few months ago, the Foreign Secretary felt able to take a much more relaxed view. When we debated these matters towards the end of last year, he told the House that there was a great deal more light and sweetness on this side of the House than there was on the other side."—[Official Report, 8 November 1990; Vol. 180, c. 153.] Well, we have them both here this afternoon: light in the form of the right hon. Member for Finchley and sweetness in the form of the right hon. Member for Old Bexley and Sidcup (Mr. Heath)—or is it the other way round?

We are told that the right hon. Member for Finchley has a speech ready in her handbag. We very much look forward to hearing the right hon. Lady, who normally has a handbag in her speech.

The Prime Minister is in a position that would drive even a professional contortionist to despair. His two predecessors are in total disagreement with each other about the European Community. However, both assert that they support the present Prime Minister's policy on Europe.

Several Hon. Members

rose—

Mr. Speaker

Order. Many of the hon. Members who are pointing across the Chamber want to participate in the debate. It will be difficult for me to call them if they continue to interrupt in that way.

Sir Peter Tapsell (East Lindsey)

Does not the total absence of content in the speech of the right hon. Member for Manchester, Gorton (Mr. Kaufman) show the absolute failure of the Labour party to evolve any policy on Europe?

Mr. Kaufman

The hon. Gentleman should wait a little longer and he will then receive an answer to his question.

The right hon. Member for Old Bexley and Sidcup is unequivocal on the subject of the European Community. In the Daily Mail last week, he said—[Interruption.] I am sorry that Conservative Members jeer at articles by the right hon. Member for Old Bexley and Sidcup. In that article, the right hon. Gentleman said that he was proud to support the Prime Minister on the European Community. He said that he did that precisely because the right hon. Member for Finchley was at odds with the Prime Minister.

However, the right hon. Member for Finchley also supports the Prime Minister, although she expresses it in unusual terms. She says of the Prime Minister and the Foreign Secretary in the interview with David Frost to be broadcast tonight that "suddenly they're fighting staunchly". She sounds a little surprised, but she supports the present Prime Minister—[HON. MEMBERS: "Talk about Europe."]. I am talking about the right hon. Member for Finchley and her views on Europe. [Interruption.]

Mr. Speaker

Order. The debate is of great interest to the House and to a great many people outside who are listening to and watching us.

Mr. Kaufman

The right hon. Member for Finchley said —[Interruption.]

Mr. Adley

On a point of order, Mr. Speaker. You must have noticed that the Leader of the Opposition cannot find a seat. Can it be that he wants to be near the door?

Mr. Speaker

Order. It is not for me—[Interruption.] Order. Let us get on in an orderly fashion.

Mr. Kaufman

The Prime Minister is also absent from the debate. I thought that this debate was all about Parliament advising the Prime Minister about what he should be talking about in Luxembourg this weekend.

The two ex-Prime Ministers disagree with each other, while they both say that they agree with the present Prime Minister. The Prime Minister must decide which of the two who agree with him he agrees with. He cannot agree with both of them. If he repudiates one or the other, he splits part of his party away from him. That is why the Government's position is so equivocal that even his most sycophantic admirers in the press condemn it.

The Daily Telegraph this week stated that the Government's position was cautious almost to the point of evasiveness. A few days ago, The Times said that the Prime Minister was "dodging and weaving" and continued: Mr. Major appears at present to have no clear position on the central determinant of British economic and foreign policy in the 1990s. The Prime Minister's problem is that he has no alternative to the position that he has taken—

Mr. Marlow

On a point of order, Mr. Speaker. This is a serious debate. Can you find someone who is capable of making a serious speech?

Mr. Speaker

Order. This is indeed a serious debate. I therefore hope that we can listen to it and behave ourselves in a serious manner.

Mr. Kaufman

The curious thing that Conservative Members seem not to understand is that their organised disruption is not seen by television viewers and that their efforts, although rowdy and unruly, are making no impression outside the House whatsoever. It has always been significant that, when Conservative Members have their backs to the wall, they try to destroy debate in the House.

The Government have a basic problem in dealing with this issue. The Community does not know where the Government stand our own country does not know where the Government stand and the House does not know where the Government stand, because the Government do not know where the Government stand. Neither past nor present members of the Government are consistent on the most fundamental matters. Not only do they not agree with each other, but they sometimes do not even agree with themselves.

Examine their position on the exchange rate mechanism. Interviewed by Brian Walden when she was still Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher) supported the exchange rate mechanism and said: I am very sure about it. She said that twice to make it clear, yet, last week in New York, the right hon. Lady sang a very different tune. She said that Finance Ministers of countries in the exchange rate mechanism were left like innocent bystanders at the scene of an accident. When the Chancellor of the Exchequer was asked about that matter on Sunday, he said, That's not quite how I might put it. The Prime Minister had to repudiate the right hon. Lady, pointing out: we entered the exchange rate mechanism last year when my right hon. Friend the Member for Finchley (Mrs. Thatcher) was Prime Minister".—[Official Report, 20 June 1991; Vol. 193, c. 461.] and saying that it was right to do so. The Prime Minister was forced to show his total disagreement with his predecessor, even though his predecessor says that she agrees with him.

Of course, beyond the exchange rate mechanism lies the question of the central bank and the single currency. On those matters the Government are in a total shambles. They cannot even agree on the time scale. The chairman of the Conservative party, the right hon. Member for Bath (Mr. Patten), said earlier this month: Any decision on a single currency would not be put before Parliament for at least two years.

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

Will the right hon. Gentleman give way?

Mr. Kaufman

Not at the moment, no. I would not want to interrupt the flow of the sedentary interruptions from the Conservative Benches.

The Chancellor said last week that the decision on a single currency was "years away". He specified the number of years not as the 10 of the chairman of the Conservative party, but as six, seven or eight. He put the decision even further off, saying: seven, eight or 10 years' time. It is no wonder that he and his colleagues wish to push the problem as far away as possible, for they have no idea at all what to do about it. For a while, they thought that a way of fending off the evil day was to confuse matters with their notion for a hard ecu. We hear little or nothing about that these days. The Foreign Secretary gave the hard ecu no more than a dismissive reference or two this afternoon. That is just as well, because none of them was at all clear about what would become of the hard ecu. The right hon. Member for Finchley, as Prime Minister, supported it because she thought that it was a barrier against a single currency. She said: I do not believe that that formula could develop into a single currency."—[Official Report, 28 June 1990; Vol. 175, c. 493.] The Financial Secretary to the Treasury, who is to reply to the debate tonight, took a contrary view. He told the House of Lords Select Committee last year that the next stage of having a single currency could happen more quickly by going down the path of the hard ecu. He confirms that today, therefore differing with his right hon. Friend. The Prime Minister himself came somewhere in between in a speech last year which launched the hard ecu. He said: In the very long term, if peoples and Governments so choose, it could develop into a single currency.

Mr. Dykes

rose—

Mr. James Paice (Cambridgeshire, South-East)

rose—

Mr. Kaufman

Hon. Gentlemen have had their say sitting down. I do not see why I should give way to them.

Unlike the right hon. Lady, the Prime Minister turns out to have no problem with a single currency. The right hon. Lady last week warned that such a concept would take the heart out of the purpose of our Parliament. However, last week the Prime Minister, in an interview in The Daily Telegraph, said: We accept the principle of a single currency. That is what the Prime Minister said. That acceptance of a single currency by the Prime Minister has very wide implications. The Chancellor has made that clear. Last year, he said: History does not provide many examples of a currency union without political union. That was when he was addressing the Bruges Group. At that time the Chancellor was warning that a single currency meant acceptance of political union. [Interruption.] I am quoting the Chancellor of the Exchequer, if the right hon. Gentleman wishes to repudiate that.

The Prime Minister has said—

Mr. Tim Janman (Thurrock)

Will the right hon. Gentleman give way?

Mr. Speaker

Order. I clearly heard the right hon. Gentleman say that he is not giving way. The hon. Gentleman who is rising is seeking to participate in this debate. I say to him again and to his hon. Friends that it will be very difficult to be called if they intervene as well.

Mr. Kaufman

The Chancellor of the Exchequer said that he warned that a single currency meant acceptance of political union. The Prime Minister has said that he accepts the principle of a single currency. It follows that he must accept the consequence foreshadowed by the Chancellor of the Exchequer, which is political union, so what is all the fuss about federation?

The answer is, of course, that it is a fuss for public consumption only, for the Prime Minister is very careful to state with the utmost boldness his firm and unequivocal opposition to propositions that no one whatever is putting forward. He says that he opposes an imposed single currency, when he knows that it is quite impossible for anyone to impose a single currency on an unwilling United Kingdom. He says that he rejects the idea of a federal superstate, when no one whatever is proposing a federal superstate.

Mr. Genscher, the German Foreign Minister, made that quite clear on Sunday when he said that, to him, federalism means devolution of power to the lowest practical level of government and not the creation of a centralised superstate.

Mr. Patrick Nicholls (Teignbridge)

Will the right hon. Gentleman give way?

Mr. Kaufman

The Prime Minister himself recognised that during his visit to—

Mr. Nicholls

On a point of order, Mr. Speaker. This is supposed to be a debate on the immediate state of Europe. Is it in order for the right hon. Gentleman to speak for more than 20 minutes and say absolutely nothing about what his policy is?

Mr. Speaker

Order. It is a parliamentary debate. The whole House knows that, in a debate, if a right hon. or hon. Member does not give way, the hon. Member who is seeking to intervene must then resume his seat.

Mr. Kenneth Hind (Lancashire, West)

Further to that point of order, Mr. Speaker. In a serious debate of this nature is not it reasonable to ask a group of Members who put themselves forward as an alternative Governmment to tell us where they stand on the most important policy of the day relating to Europe?

Mr. Speaker

When we get to the Back Benchers—if we get to the Back Benchers—no doubt we shall hear that —[Laughter.] Perhaps I phrased that rather badly. It was in no way a condemnation of the speech by the right hon. Member for Manchester, Gorton (Mr. Kaufman).

Mr. Kaufman

In thanking you for what you have just siad, Mr. Speaker, may I say that I should have been ready to give way to a number of Conservative Members, in the proper way in which civilised debate is conducted in the House—

Mr. Beith

rose—

Mr. Speaker

Order. The right hon. Member for Gorton was addressing a remark to me.

Mr. Kaufman

If the Government Chief Whip had not made arrangements to stop a civilised debate taking place —[Interruption.]

Mr. Speaker

Order. This is a House in which we have a tradition of civilised debate. I ask the House to allow the right hon. Gentleman to continue his speech and not to seek to interrupt him unless he is prepared to give way.

Mr. Kaufman

We know how these people operate, Mr. Speaker, and we have no intention of being intimidated by their hooligan tactics.

Mr. Beith

Will the right hon. Gentleman give way?

Mr. Kaufman

indicated assent

Hon. Members

Hooray!

Mr. Beith

I am most grateful to the right hon. Gentleman. Could he find a moment to say whether he is in favour of a single currency and whether he believes that a European central bank should enjoy independence in its responsibility for price stability?

Mr. Kaufman

If Conservative Members had remained silent, I should have come to those matters about 20 minutes ago—[HON. MEMBERS: "Answer".] As it is, if they continue as they are doing I doubt whether I shall get there in another 20 minutes.

We were dealing with a question which an hon. Member put to me earlier—federalism. When he was in Dunkirk earlier this week, the Prime Minister recognised the problem about interpretation and the different definitions of federalism when he pointed out that the whole imbroglio about the word federalism boiled down to a question of definition. One of his spokesmen from No. 10 Downing street said, equally sensibly, at the weekend: You cannot get hung up on the words of any particular area. That is why it was a mistake for Mr. Poos to introduce the work federalism in Luxembourg. It creates an unnecessary row about a word when the nature of the political progress being put before the Community is much more important. That pointless row gave the Foreign Secretary the chance to seem what the right hon. Member for Finchley called "suddenly staunch". However, such phoney wars cannot go on indefinitely because, despite what the Chancellor says, decisions are not years but only months away.

The Prime Minister may have won some time this weekend and may win some more at the weekend in Luxembourg. He is seeeking to turn procrastination into policy. The headlines this week show that. The Guardian said: Major wins time on Europe and the Daily Telegraph said: Major postpones the showdown. If the showdown is postponed at Luxembourg, it will certainly come at Maastricht, which is only six months from now.

The Prime Minister had hoped to kick the whole problem into touch until after the general election. His bolt-hole has been the diplomacy of delay, but the Prime Minister has to get through this year, right through to Maastricht, almost certainly without a general election. Therefore, at Maastricht he will have to make decisions which could split his party wide open.

The Foreign Secretary has confessed the precise nature of Tory negotiating tactics. He said last week: We are doing what Margaret Thatcher always did when she was Prime Minister—we are arguing, we are hoping to agree. She argued and then she agreed over and over again. That tactic is not only undignified, but bad for Britain. Because the Government start out by opposing everything and then end up caving in about everything, they are not taken seriously when they oppose propositions which it is necessary and sensible to oppose.

Mr. Hurd

Not for the first time, the right hon. Gentleman has made an imperfect quotation. When I said that my right hon. Friend and the Government agreed after arguing, I added: when the result is a good one. I do not know how else the right hon Gentleman thinks that one progressses in life; one argues, one makes a case and, if negotiations are successful and the result is acceptable, one agrees. How else does he intend to proceed?

Mr. Kaufman

The fact is that the Government have caved in on issues when they said that they would not. The right hon. Member for Finchley stated condition after condition for entry into the exchange rate mechanism, including reducing inflation. Yet the Government under her and with the present Prime Minister and the Foreign Secretary went into the exchange rate mechanism when none of those conditions had been fulfilled. That is what is meant by arguing and arguing and then agreeing.

There are issues on which it is necessary for us to disagree strongly with propositions made by our Community partners. However, that disagreement is not taken seriously because it is only one of a whole range of disagreements. For example, at Luxembourg this weekend four major issues relating to political union will be discussed: a common foreign and defence policy; more powers to the European Parliament; extending majority voting on the Ministerial Council; and the social action programme. There is every reason to make progress in three of those areas, even if not to the extent being proposed.

If the United Kingdom delegation were able to do as the Opposition propose, and propose sensible ideas on the European Parliament, majority voting and the social charter, it would be heard with more respect and would have more chance of a response over the issue on which the Opposition believe that a stand should be made—the proposition for a common defence policy.

The Labour party is opposed to such a policy because it confuses the purpose of the European Community, it unnecessarily duplicates the role of the North Atlantic Treaty Organisation and it could act as an obstacle to the desirable accession to the Community of neutral countries such as Sweden and Switzerland.

The hon. Member for Christchurch (Mr. Adley) asked whether the definition of neutrality had changed as a result of the cold war, but the fact is that the constitution of Switzerland requires that country to be neutral and it can be changed only by a referendum. These are very important matters. I believe that a firm no on a common defence policy would have a far better chance of success if it were not accompanied by a stubborn no on practically everything else.

It is the same with economic and monetary union. EMU will come. Indeed, the Government are committed to it. The right hon. Member for Finchley made that very point accurately when she was Prime Minister and she has made it since; the Foreign Secretary has also made it. We signed up for economic and monetary union 18 years ago. The question is not whether it will come, but how and when and under what conditions. If the right hon. Gentleman opts for the two-track approach—the Delors compromise—he will do grave damage to the country, perhaps for generations to come.

Last week, the right hon. Gentleman admitted to the Select Committee on Foreign Affairs that the United Kingdom cannot in the end stop our 11 partners going ahead with EMU if they are agreed among themselves. If the United Kingdom was to veto a treaty of the 12, the 11 could agree a treaty of their own, but in the event of a two-track approach, or of the other 11 going their own way without the United Kingdom, do the Government really believe that Britain could continue as before? Of course it could not. We would be affected in a myriad fundamental ways. In the end, we should probably have to accede to a structure that had been built without any regard for Britain's needs or wishes because we had not contributed to it.

In the 1950s and 1960s, President de Gaulle voted the applications for membership of the European Community made by Harold Macmillan and Harold Wilson until he had obtained a structure that suited him and what was then the other five. When the United Kingdom joined, under the right hon. Member for Old Bexley and Sidcup, we had to accept a structure built to suit others, not to suit us. At least that predicament was not of the right hon. Gentleman's or the House's making, but if Britain is excluded from this next and crucial phase, it will be unable to blame anyone else. We shall have only ourselves to blame.

That is why the Labour party says that we should make positive proposals for political progress, and we have a list of such proposals. That is why the Labour party puts forward positive proposals on economic and monetary union and political accountability for the central bank. We have described in detail how that can be achieved and, what is more, we have potential allies in the Community to help us achieve it.

What is more, on convergence, which the Government rightly say is essential if we are to enter a central bank and consider a single currency, we do not merely have to wait for it to come about. The Labour party believes that we should make specific proposals to bring about convergence, including regional policies, structural policies and policies to combat unemployment. All those proposals are anathema to the Government.

I am not saying for a moment that everything that we proposed would be accepted. Everything that any country proposes never is—that is the way the Community works —but a positive contribution gets a positive response, and we would at least get some of what we wanted. That would be important for Britain and for the European Community. The Government, proposing nothing and opposing everything, will get nothing. The they will do what the Foreign Secretary has explained—they will argue and then agree over and over again. The reason is that the Government are fighting a rearguard action over the European Community. They have no idea of what they want and no vision of what can be achieved.

There are those in the House—certainly including myself—who have never been starry-eyed supporters of the European Community. Far from it. I have been a sceptic, but I can at least see that in a world where the United States, despite its problems, has a continental economy, in a world where Japan dominates international investment from the west coast of the United States right through to my constituency in Manchester, where we used to have a wholly British-owned computer manufacturer which has now been taken over by the Japanese because of the Government's destruction of the industrial sector, we are approaching an era in which the development of the Pacific rim and the huge giants of China and India will eventually come to play leading parts in the world economy. In those circumstances, a country such as Britain, which has great talents, skills and capabilities, but only a medium-sized economy, cannot hope to survive and prosper on its own.

I believe passionately in British sovereignty and in the sovereignty of this Parliament to which we have been elected. Indeed, I originaly opposed British membership of the European Community, not for economic reasons, but because of my fears for parliamentary sovereignty. I do not resile in any way from the position that I took or from the votes that I cast in the House and in the referendum, but unlike Conservative Members and unlike the right hon. Member for Finchley, I know that I cannot wish away the developments of the European Community over the past 18 years.

Unlike the right hon. Member for Finchley, who did not pay much account to parliamentary democracy when she guillotined the Single European Act in the House, I have come to the view that a wider Europe need not sacrifice the basic prerogatives of a sovereign United Kingdom Government. The right hon. Lady's notions of sovereignty did not prevent sterling from being buffeted to the extent that a recession was regarded by her—wrongly —as the only sure protection for it. Sovereign Britain did not have a sovereign currency. The former Chancellor recognised that, even outside the exchange rate mechanism, the level of sterling was governed by what happened to the deutschmark. That, to my mind, is sovereignty in name, not in fact.

Today, this sovereign British Government are not in control of the economy—the economy is in control of the Government. Membership of the wider grouping on the proper terms can give a British Government greater freedom to pursue their own internal and distinctive economic and social policies. At present, the Government have the worst of two worlds. I want them to have the best of two worlds. European Community policies—provided that the United Kingdom Government contribute constructively to them—can strengthen Britain's freedom of internal policy and, therefore, Britain's sovereignty. A Labour Government will ensure that they do.

5.38 pm

Mrs. Margaret Thatcher (Finchley)

The right hon. Member for Manchester, Gorton (Mr. Kaufman) started his speech by making it clear that his party would vote against the Government tonight. He gave no justification for that course of action. He and his hon. Friends know full well that the hand of my right hon. Friend the Prime Minister would be greatly strengthened in Luxembourg if he had a really good vote behind him when he goes there on Friday. I hope that many people—[Interruption.] Not only did the right hon. Member for Gorton give no justification for that course of action: he gave virtually no positive proposals whatsoever. At one time, he seemed to advocate a policy of perpetual disagreement in the Community; then, having complained about unemployment, he launched into an attack against Japanese investment in this country. Many people in this country are very grateful for Japanese investment.

May I thank my right hon. Friend the Foreign Secretary for his clear exposition and for the way in which he puts things? I noted that, at Luxembourg, we shall not reach conclusions, but he will, I think, be the first to agree that we can influence the way in which things go at Maastricht by the arguments and proposals that we make. My right hon. Friend made it very clear that one of the difficulties of discussing the matter of the Community is that it is riddled with jargon and Eurospeak, and that words are used which do not have a precise meaning, such as the word "subsidiarity". It is a vague term which raises far more questions than it answers. When we use those terms, we should be careful to define them.

I do not wish to speak for very long, Mr. Speaker, so may I therefore set the background, as I see it, to my remarks and then raise five points that I hope my right hon. Friends will consider in their deliberations in Luxembourg?

The issues that we are debating today are fundamental to the future role of this Parliament, and deserve to be treated seriously. They are fundamental to the kind of Europe in which our children will live and they are fundamental to our future relationship with the wider world, especially the eastern European states and the United States of America. The fact itself that we are debating these issues reminds us of the cardinal principle of our system of government—that Ministers are directly answerable to Parliament and that the buck stops here.

My right hon. Friend the Prime Minister has previously spoken eloquently of his wish to see Britain at the heart of Europe. He is right, and we have been. That is how we secured reform of the Community's finances. That is how we won reform of the common agricultural policy, although there is more to do, and that is how we started the creation of the single market. None of those things could have been achieved from the sidelines. We had to be in the midst of battle, and we were. We won many battles, and as we finished the battles, the position was far, far better for Britain than it was when we started. It is by staying in the centre that we can press the case for free trade through the general agreement on tariffs and trade and for reaching agreements with the countries of eastern Europe. My right hon. Friends have pursued those matters with vigour, and they are right to do so.

The summary of the documents for the forthcoming Luxembourg Council—I have not seen the full documents, because they came too late, and I share the views of those who protested that they were not available—reveals a quite different destiny for Europe from any that we were ever given to expect when we went in. They are proposals for a federal union. They call for a common foreign, security and, in due course, defence policy, in which majority voting would apply. They call for a great extension of Community powers and competence in energy, in health and over labour laws—again, often with majority voting.

We had some experience of the extension of majority voting in the Single European Act. I suggest that we are very careful before we consider extending majority voting any further. The fact is that majority voting means that we give the Community the right to impose on the British people laws with which the House—the elected representatives—may fundamentally disagree. That is a very, very serious step to take. The document also calls for a central bank to set monetary policy, leading to a single European currency. The Times has referred to all this as "supranationalism run riot". My right hon. Friend the Prime Minister declared in the House on 18 June: A European super-state would not be acceptable to me or to the House—and in my judgment it would not be acceptable to the country".—[Official Report, 18 June 1991; Vol. 193, c. 142.] I wholeheartedly agree with both The Times and my right hon. Friend.

Few of us will forget what Mr. Delors told Members of the European Parliament in 1988. He said: In 10 years time, 80 per cent. of economic legislation and perhaps even fiscal and social legislation will be of Community origin. That is the road that he wants us to take, and it is the road that we must resist.

I understand that my right hon. Friends cannot reveal their full negotiating hand, but I hope that, in their negotiations in Luxembourg, they will keep in mind the following five points. First, the present debate in Europe touches issues more profound than any since the Community's foundation. It is of an entirely different order of magnitude and importance from the debate on the Single European Act. That made some important changes in the concept of majority voting to make it more difficult for countries that do not believe in free trade to block the completion of the Common Market. It repeated earlier commitments to economic and monetary union, while attempting to define it as only economic and monetary co-operation. What is now being considered is a massive extension of the Community's powers and competence into almost every area of our national life and that of other member states. It would be the greatest abdication of national and parliamentary sovereignty in our history.

Some people argue that the changes envisaged in the draft treaties on the table in Luxembourg would not happen for many years, so there is no need to worry. That is a very dangerous approach, because, once those powers were given away, they would never be given back. All the evidence indicates that, while our people want Britain to be actively involved in Europe—and of course, I was the Prime Minister who enabled the channel tunnel to get going, so I do believe in having more to do with Europe —our people do not want to see a massive extension of the powers of Brussels into every corner of national life even if it is dressed up as a step-by-step approach—a kind of federal Europe achieved by stealth. I fully support the firm stand that my right hon. Friends have taken— [Interruption.]

Mr. Speaker

Order.

Mrs. Thatcher

I fully support the firm stand that my right hon. Friend the Foreign Secretary and my right hon. Friend the Prime Minister have taken against any commitment to a federal Europe. I would hope that most people in the House were against a federal Europe; otherwise, what is the point of people standing as candidates at the next election—to come back here and propose to hand over all their powers as representatives of constituents to another Parliament?

The second point—[HON. MEMBERS: "The second point."] Thank you very much. The second point is that we should not let those who support a federal Europe pretend that they are somehow more European than the rest of us. They are not; they are just more federal. There is nothing specifically European about a federal structure—indeed, the opposite: it is the nation state which is European.

It has been the great achievement of the Community to bring about greater co-operation between those nation states—not to merge them. Instead of pouring distinctive nations into institutions and arrangements of the same mould, we should be encouraging different kinds and degrees of co-operation between European countries. My right hon. Friend the Foreign Secretary said as much in his speech on 31 May in Shropshire, and I heartily agree with him.

That sort of European co-operation is already developing—for example, in other European matters, France feels easiest with a different defence relationship with NATO than the rest of us, but in practice she contributes in important ways to the west's defence. No one says that France is isolated—they accept the difference.

The Schengen group of countries have been able to reduce their frontier controls because of their common borders. We recognise that that would not do for us in Britain, because considerations of security and immigration are quite different for an island nation. But that does not mean that they cannot reduce their borders because all their geography indicates that. These different relationships make sense for those who participate, but they are not a model for everyone. The true Europeans are those who base themselves on Europe's history and traditions rather than on constitutional blueprints.

Thirdly, we should not for one moment fall for attempts to argue that a federal Europe would mean a devolution of powers. If that were the case, why change what we have at present? Powers are devolved, in that they are held by national Parliaments and Governments, as they should be. For Mr. Delors to say that his proposals would mean devolving powers is ridiculous. They are not his or the Community's to devolve.

Mr. Dykes

rose—[Interruption.]

Mrs. Thatcher

Our sovereignty—[Interruption.] I gave way— [Interruption.]

Mr. Dykes

rose—

Mr. Speaker

Order. I think that the right hon. Lady gave way, but the hon. Gentleman did not rise again.

Mr. Dykes

rose—

Mrs. Thatcher

May I continue? I understand that quite a lot of Privy Councillors want to speak.

Mr. Jimmy Hood (Clydesdale)

On a point of order, Mr. Speaker. [Interruption.]

Mr. Speaker

Order. What is the point of order?

Mr. Hood

As I am sitting opposite the hon. Member for Harrow, East (Mr. Dykes), perhaps I may be of some help. The hon. Gentleman did stand up, but he was pulled down by a colleague sitting next to him.

Mr. Speaker

I do not know about things like that.

Mr. Dykes

rose—

Mr. Speaker

It is up to the right hon. Lady.

Mrs. Thatcher

My hon. Friend the Member for Harrow, East (Mr. Dykes) might find it better to intervene when I have finished my next sentence.

Our sovereignty does not come from Brussels—it is ours by right and by heritage. We choose what we devolve to the Community—not the other way round.

Mr. Dykes

The hon. Member for Clydesdale (Mr. Hood) was correct—I was pulled down by one of my colleagues—

Hon. Members

Name him.

Mr. Speaker

The hon. Gentleman should be more robust.

Mr. Dykes

I apologise, Mr. Speaker, if all this has delayed the House when there is pressure on time. I am most grateful to my right hon. Friend for giving way. On the definition of federalism that she has just enunciated, does she agree that it was the American Secretary of State, James Baker, who said that devolution with common integrated structures was the definition of federalism?

Mrs. Thatcher

That is precisely why I made my point clear. Our sovereignty does not come from Brussels, and I hope that my hon. Friend is not arguing that is does. It is ours by right and by heritage. We choose what we devolve to the Community—not the other way round.

The fourth consideration which I hope my right hon. Friends will have in mind is the danger of being drawn along by what start out as vague commitments but end up as highly specific and damaging proposals. There is a much greater willingness in some European countries than in Britain to sign up to great rhetorical statements and declarations, without worring too much about what they will mean in practice; and it is welcome that, as some of the earlier declarations of intent have been committed to treaty language, a number of Governments—not just ours —have become more worried about the practical consequences. Such is the case with the social charter.

Moreover, some are now seeing that a single currency could not possibly work with the disparities between European economies as great as they are now—and that setting the goal of a single currency has no relevance to Europe's current economic problems. Moreover, to go to a single currency—

Mr. Robert Sheldon (Ashton-under-Lyne)

rose—

Mrs. Thatcher

May I finish this section?

Moreover, to go to a single currency is not just a practical matter: it is a fundamental question of principle. It is not only a merger of currencies: it is to give up for all time the right of the Banks of England and of Scotland and our Treasury to issue our own currency, backed by our own economic policy, answerable to our own Parliament. That is why I do not believe in a single currency.

If, nevertheless, some other members of the European Community wish to agree to the idea of a single European currency—and not all of them belong to the exchange rate mechanism yet—they are entitled to go ahead and do so. Luxembourg is already linked to the Belgian franc, and the Dutch guilder is close to the deutschmark.

But unless legislation on a single currency were contained in a separate treaty, certain consequences could follow. I shall give three. First Britain, although not in a single currency herself, may be expected to contribute to the huge increases in structural funds required in order to allow the weaker member countries to participate in EMU.

Secondly, unforeseen consequences could arise as European Courts interpret the single currency provisions in the context of the full treaty of Rome.

Thirdly, there is no way in which the economies of the former communist states of eastern Europe could withstand the pressures placed on their fragile industries by a single currency—witness what has happened to eastern Germany.

We have to complete the transformation of the countries of eastern Europe into free enterprise democracies, and enable them to join the European Community as soon as possible. They need an anchor to the west.

I shall give way now to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), before I come to my final point.

Mr. Sheldon

I agree with quite a lot of what the right hon. Lady has said about European monetary union. However, like many hon. Members, I have seen a number of the reports of what she is supposed to have said as well as those things she has actually said. I find it difficult to understand why the right hon. Lady accepted the exchange rate mechanism when she has said so many harsh things about it.

Mrs. Thatcher

The right hon. Gentleman and I can go into this, but it will take a few moments. First, I am fully in agreement with an exchange rate mechanism that is anchored to the deutschmark, because it is, in a way, like anchoring to the gold standard, provided that that is done at the right value. That is what we have done, and we have done it with a latitude of 6 per cent. That should be perfectly enough to accommodate any swings in the exchange rate.

It is if one moves to a single locked currency that one gets enormous difficulties, because there is no latitude to vary the currency. Therefore, any difficulties in the monetary or economic system have to go either to increased inflation or to increased recession and increased unemployment. The 6 per cent. swing gives us some latitude, but I believe that joining the exchange rate mechanism gave us all we needed for stiffening against inflation, and I do not believe that it is necessary or desirable to go any further into stages 2 or 3— [Interruption.] The right hon. Gentleman asked me a straight question and, as always over the past 31 years, I have given him a straight answer.

Finally, looking beyond the borders of the European Community, we have to strengthen and develop Europe's trade with the United States and the rest of north America, Canada and Mexico, perhaps through moves to a transatlantic free trade area. Further, the European nations have to encourage the Soviet Union and its constituent republics as they struggle along the path of reform.

We shall not achieve any of that if we accept a centralised, inward-looking European community. In both Luxembourg and Maastricht, we must speak out and reach out to the wider world. In my right hon. Friend the Prime Minister we have a leader with the vision and sense of purpose to do just that. I wish my right hon. Friends well in their great task, and I give them my full support.

6 pm

Sir Russell Johnston (Inverness, Nairn and Lochaber)

I shall not spend a long time on the speech made by the right hon. Member for Finchley (Mrs. Thatcher) because I suspect that other hon. Members will do so. [Interruption.]

Mr. Speaker

Order. Will the hon. Gentleman wait a moment? Would hon. Members leave the Chamber quietly, please?

Sir Russell Johnston

I shall simply remind the right hon. Lady of two short quotations. The first is: Periodic expressions of pessimism about the future of the Community have never turned out to be justified. Europe needs to advance its internal development. The progress that has been made towards 'an ever-closer union of the peoples of Europe' of which the Treaty of Rome speaks ‖ is unlikely to be reversed. The second quotation is shorter: It must be our objective to aim beyond the Common Commercial Policy through Political Cooperation towards a common approach to external affairs. Such a policy can only be achieved progressively: it must nevertheless be the aim before us. That quotation was from the declaration of Fontainebleau made by the right hon. Member for Finchley in July 1984. Certainly to my ears the right hon. Lady's position now, as expressed today and in recent days when she has made some remarks, is in tone and attitude very different. It is much more negative and much more—dare I say it—nationalist.

Why are we talking about political union in Europe? It is because we are doing more and more things together, in our economies, in agriculture, transport, the environment and many other areas. We need to find some way of regulating those activities in a democractic fashion. Unlike the Foreign Secretary, whose remarks I shall come to, Liberal Democrats do not accept that such regulation is felicitously achieved through the Council of Ministers. We are far from being the only people who take that view.

It is right that the word "federal" should be at the heart of the argument. I am astonished at the notion that no one in Britain knows what the word "federal" means and that it means something different in those funny continental countries. Have we forgotten that we gave federal systems to Australia, Canada and the Federal Republic of Germany? Why did we give a federal system to the Republic of Germany? It was in order that Germany would be a decentralised country. Now we are claiming that we do not know the meaning of the word. The argument about Scotland's government appears to have passed the House by. People seem to have forgotten that the argument was between independence, the status quo and a federal solution of some nature.

My dictionary says that federal means "founded upon mutual agreement"—that is a good start—and a union or government in which several states, while independent in home affairs, combine for national or general purposes". That is exactly what we seek to do—to combine for certain purposes.

The Foreign Secretary attacked my right hon. Friend the Member for Yeovil (Mr. Ashdown)—perhaps attack is a little strong. He tapped him with a paper napkin and said that my right hon. Friend was guilty of deploying line phrases. I have never noticed it myself—[Laughter.] The Foreign Secretary said that my right hon. Friend did not entirely understand those fine phrases. Let me quote some fine phrases to the Foreign Secretary.

Thinking as a European and being firmly rooted in one's own native soil,"— that would appeal to the right hon. Member for Finchley— I am convinced that in order to succeed, Europe will have to learn to live by the motto of 'Unity in Diversity' … (it) is in fact a very sound and pragmatic structural principle of the sort of federal system we have in mind for Europe. Europe will be a federal Europe—it will not be a unitary Europe. That was from a speech made by Chancellor Helmut Kohl in Edinburgh on 27 May this year when he accepted a doctorate in that university. I do not think that the good burghers of Edinburgh were astonished at the use of the word or found it incomprehensible. On the contrary, they knew exactly what it meant.

The Liberal Democrat argument is that federalism is about more democracy, not less. The difference between us and the Government is that the Government, as the Foreign Secretary said, think of an intergovernmental Europe in which the Governments parley, debate and deal. We think of a citizens' Europe in which individuals in each of our Community countries have a direct voice in what happens through the European Parliament. Federalism is about limiting central power.

Mr. Sillars

Will the hon. Gentleman give way? I seek a genuine clarification.

Sir Russell Johnston

The hon. Gentleman is always genuine. Carry on. Hurry up.

Mr. Sillars

The hon. Gentleman is usually more courteous. He explained that he is talking about power expressed by the peoples of Europe in a European Parliament. Does that also imply a European Government, which is the Executive of that Parliament?

Sir Russell Johnston

In time, it will. None of us knows exactly what shape that will take, but in the present circumstances we are dealing with the existing institutions —the Parliament, the Council and the Commission. There may be a time long hence, when we shall have some sort of "Europe des regions." I was most attracted by that idea, but it will not be realised overnight.

The point that I was about to make is worth stressing for the benefit of the right hon. Member for Finchley. She attacks federalism as some sort of centralising concept, which is the opposite of what it is. It must be said that, during the past 10 years, centralisation within the United Kingdom has dramatically increased. Local government has been weakened. There has been no attempt to establish regional centres of power in England and no recognition of the aspirations of the Scots and the Welsh to some sort of self-government. I aver that the Conservatives have been complaining about centralisation abroad while practising it at home.

Mr. John Gorst (Hendon, North)

Will the hon. Gentleman reflect and perhaps comment on the news that we are receiving from Yugoslavia, which is facing the problems of federation when the republics would prefer confederation, which is a looser arrangement? Will he also reflect on the growing difficulties of the Soviet Union? The problem there is that when disparate peoples have been brought together too closely they do not necessarily work harmoniously together.

Sir Russell Johnston

I hesitate to cogitate for too long, because many hon. Members wish to speak, but I shall lance that argument straight away. In the case of both the Soviet Union and Yugoslavia, centralised power was artificially imposed by dictatorial force. I accept that in the Soviet Union there was a mirage of federalism, but it did not exist in reality. There was a little more reality in Yugoslavia, but nothing like enough to appease the feelings of the Slovenes or Croatians. In the European Community, we are talking about people coming together willingly because of the impetus of the economy to decide how things that must be done together should best be done to benefit everyone.

People continually say that no one makes the position clear. We are quite clear that we want the European Parliament to be strengthened and given powers of co-decision with the Council. We also want it to be elected under a common, fair, proportional system. I am tired of people prating and pomping about democracy when one considers how unrepresentative the House of Commons is. I want discussions in the Council to be open. It is in the interests of the United Kingdom, Germany and France to work for common foreign and defence policies.

The advantages of monetary union to individual citizens and our industries are clear. First, it will make trade and cross-border capital flows easier as barriers to trade are reduced and currency fluctuations ended. A single currency is the logical next step from a single market, as was said by the right hon. Member for Old Bexley and Sidcup (Mr. Heath), whose long, trenchant and honourable defence of the Community I salute.

Mr. Janman

Will the hon. Gentleman give way?

Sir Russell Johnston

It is not that I do not like to give way, but time is pressing and I do not wish to give way too often.

Businesses are looking for stability and the capacity to project price, which this will give them. Secondly, monetary union will give the British economy the balance of a sustained counter-inflation policy that it has long been denied. We are not only not afraid of an independent central bank—the Labour Front Bench indisputably is —but we welcome it. We should be only too pleased to follow the example of the Bundesbank model because it works. Neither do we think that the Bundesbank will somehow totally extricate itself from the democratic system. On the contrary, one saw that in Kohl's decision to override Pohl on the unification problem. It was an institution committed to price stability.

Finally, contrary to what the right hon. Member for Finchley said, this is good news for the central and eastern European countries that have come to democracy. In the United States the right hon. Lady spoke about "a wealth wall" being built between the European Community and the new democracies. With respect, that is nonsense. Her argument exploits the new freedoms in the east to block further progress in the west.

I accept that Europe does not end with the European Community, but the new Europe begins with the European Community. The new democracies want us to succeed. They want a dependable currency to which they can relate. They would prefer that to be the ecu rather than the deutschmark and we should be pleased that the Germans want that, too. That will be possible because Germany takes not an aggressive but a co-operative view. In nightmares, I sometimes wonder what it would be like if the right hon. Member for Finchley had been Chancellor of Germany.

The European debate should be less about the power of nations, because the nation state has brought much blood to the European continent. The nation state in terms of the old concepts of sovereignty has seen its day. I want a Community that lives in the minds of its citizens. I accept that, of necessity, the Community will set certain parameters, frameworks, minimum standards and rights for trading relations, fair competition and minimum entitlements in the social sense, and will provide opportunity through the regional and social funds and rights before the law. However, in my view it will not suck in more and more power but will be a group of people seeking a Europe that will not only benefit its own citizens but will make a remarkable contribution to the democracy of all the world.

6.15 pm

Mr. Edward Heath (Old Bexley and Sidcup)

I felt sad that the right hon. Member for Manchester, Gorton (Mr. Kaufman) attempted to turn a motion on the Adjournment—intended to be an open discussion of probably the most serious problem facing us at the moment—into a party issue, particularly one of personalities. It was unlike him, and he probably regrets it. I am saddened even more by the Opposition's decision to vote against the Adjournment motion tonight. It is unusual in this House to vote against an Adjournment motion, and it will be taken by all the Labour party's friends in the European Community as another change in the Labour party's position and as being against the views expressed by the Prime Minister. Again, that is a matter for regret.

It is 41 years to the day, the hour and almost the minute since I rose, at 6.12, to make my maiden speech urging the then Labour Government to participate in discussions on the formation of the first European Community. I spoke then for 14 minutes. It think, Mr. Speaker, that you would adjure me that, without interruption—I had no interruptions then—I should take only the same time, and I shall therefore endeavour to do so.

Why did the then Labour Government refuse to take part in those discussions, to which they were invited by Jean Monnet and the six other countries that had agreed to take part? Their reason, amongst others, was that there was no definition of a Community. The answer to that was, "No, but we shall work together to produce the definition of a Community," and that is precisely what they did.

We are now in exactly the same position over the political developments of the Community. The Prime Minister has been absolutely right to try to dissuade us from entering a long artificial and sometimes bitter argument about federalism, because what we are invited to do, and what the Foreign Secretary will do, is discuss the political organisation, how it should be built up, and what its powers and effectiveness should be. We should accept that immediately and not say, "Yes, but what will the end be?" The purpose of the operation is for us to take part in defining and creating the end. That is how the Community works.

The Foreign Secretary rightly said that, after this debate, his job is to get down to that work. He will recall the work on the Community negotiations that was carried out from 1970 to 1974, when he was with me. Time and again, in the 1960s, in our first negotiations and again in the 1970s, the political leaders in the Community said, "We just do not understand how you can carry on a negotiation and, on every occasion, have to return to the House of Commons to read a long detailed report, be subjected to 45 minutes or an hour's questioning and be pressed from all sides to give solemn undertakings about particular aspects of it." That is absolutely true.

Therefore, I hope that the Foreign Secretary will never be either surprised, or ashamed of saying, "This is a matter with which we are dealing, and I shall not be bound absolutely by the words that I say now." If he did not say that, we would have no freedom for negotiation and no ability to persuade, hopefully successfully, other people to share our views.

We are in the same position as we were in 1950 over the future developments of political unity, foreign policy and defence policy. As the then Labour Government refused to participate, it took us 22 years before we became a member of the Community. We must never make that mistake again. We cannot afford to do so, whether in relation to monetary or foreign or defence policy or political union. We can see how such developments are already taking place in Europe, and I beg my right hon. Friends the Foreign Secretary and the Prime Minister not to take the view that, in order to satisfy some part of opinion, they must say no to begin with, drag out the process and finally accept that the other 11 want it. That would not give us a status in the Community that we could later use for other purposes, but it would make the jobs of the Prime Minister and the Foreign Secretary infinitely more difficult than they would otherwise be.

All the signs are that, certainly across the Community and to a considerable extent in this country, people are not as worried about federalism as apparently we are in the House. We gave federalism to Canada, Australia, Nigeria, India and a large number of colonies which wanted their independence—[HON. MEMBERS: "They were not colonies."] A number of them were colonies. Why do we think that not only the word "federalism" but that system of government is so horrible? The Community is responsible for working out what form of government there will be.

Sovereignty exists to be used for the benefit of the people, not for the satisfaction of Governments or politicians. Unfortunately, for many centuries sovereignty was used to wage war in Europe against other countries. That era is over, thank God. When the second world war was over, those of us who survived were determined to prevent it happening again. That was the origin of the creation of the Community. It was Churchill who, in 1940, first stated in his proposal to France that we would become one country and one nation, and it would be an indissoluble unity. Future unity will be discussed at the end of the year. Ever closer unity is set out in the treaty that we signed and fully accepted.

Sir John Stokes (Halesowen and Stourbridge)

Will my right hon. Friend give way?

Mr. Heath

No, I am sorry. I am trying to stick to Mr. Speaker's request that our speeches should be as short as possible, because 49 hon. Members wish to speak. Otherwise, I would gladly give way to my hon. Friend, who was a great Oxford friend. However, if I give way once, I shall have to give way again.

Every member of my Cabinet agreed to ever closer unity for the whole of the Community.

Mr. Dennis Skinner (Bolsover)

Every member?

Mr. Heath

The hon. Gentleman interrupted earlier, and said that it was the Whip that achieved that agreement, but we had a free vote. It was the Labour party which used the Whip that night, but 72 of its Members defied it, and we won with a majority of 112.

On the subject of monetary policy, I am sure that entering the exchange rate mechanism was absolutely right and is still right. I regret that we did not do so five years earlier, but that is history. Economic monetary union must come as soon as possible, and with it the single currency. Industry wants the single currency, and we must pay attention to the requests and demands of industry.

Mr. Bob Cryer (Bradford, South)

No request from the manufacturing and textile industry.

Mr. Heath

The hon. Gentleman may believe that, but the view of industry as a whole throughout the country is that it wants a single currency, as it will facilitate its activities, give it greater opportunities and lower costs. It is important for the whole country that, when we have a single currency, we shall for the first time bring home to everyone—manager and worker—exactly what the relative position is of the goods produced in each of the Community's member countries. That message will be brought home to everyone in this country and will lead us to make the various necessary changes to compete effectively and get our balance of payments in order. That is a vital aspect of the single currency.

Some of my constituents ask me about the royal family and the Queen's head. There are eight royal families in the Community and it would be perfectly possible to make arrangements for a single currency and coinage on which all eight royal families could be represented. It is also interesting that it was not until 1960 that the Queen's head appeared on this country's bank notes, so those that use that factor as a major argument should remember that it is a new development for us.

A common foreign and defence policy is bound to come, and we have already had attempts at a common foreign policy. Foreign and military problems over the Gulf showed that it was impossible to have a common policy, but that it was necessary to have one. It was because other countries had different judgments about interests in the Gulf that such problems arose. It is now essential that the problems of each part of the world should be thrashed out in a common foreign policy produced by Community members.

We should also have a common defence policy. 1 hear talk about a bridge between Europe and the United States. We do not require a bridge; we are together in the North Atlantic Treaty Organisation, along with Canada. What is required is that Europe should take a greater share of defence responsibility and work out its own common policy. I know that some people who have held high positions in the defence sphere do not accept that view, but it is consistently put forward. An attempt was made to implement that policy 30 years ago, but, because of France, it was unsuccessful.

However, we can now make a successful attempt in the knowledge that the relationship between the defence policies of France and Germany is closer than ever before. If we are to have a common defence policy, we must have the political institutions to deal with it, and that is the next stage on which the Foreign Secretary and the Prime Minister will be engaged. I am sure that they will handle it extremely well.

We have already given up a large part of our sovereignty to NATO—an attack on one member is an attack on all. We do not have time to say, "We do not accept this; we do not want our sovereignty affected." We have given up our sovereignty in that respect. We have pooled our sovereignty within the Community, other countries share it with us, and we share theirs. That process will inevitably continue and will become more and more satisfactory because it will benefit the people of this country, which must be our main purpose.

Why are Sweden and Austria applying to become Community members? They are already in a free trade area, and they know that the Community is infinitely better than that. That was why we applied to enter the Community. We created the free trade area in 1958 when we were not prepared to take the decision to enter the Community, but by 1961 we realised that it was not the answer. That is when we had to have first arrangements for negotiations. Sweden, rather unexpectedly, and Austria are both applying to be full members of the Community. That is because they like the Community and realise that a free trade area does not satisfy them.

As for the defence consideration, I believe that Austria's position is changing. We have sometimes said that Austria is bound to neutrality by the four-power treaty of 1955, but that is not correct, as Austria is now saying. It made a statement that it would be neutral, but that is all. Austria itself can change that. If it became a member of a Community with a defence policy, I believe that it would want to be involved in that policy.

The position of Eire is also changing. It said that it would never become part of a defence policy which was Atlantic, but a European defence policy is different. I believe that Sweden, with the collapse of the Soviet Union, will also be prepared to consider its position. If Sweden and Austria are to be full members of the Community, we will naturally expect them to take a full part in the foreign and defence policies of the Community.

We can encourage the countries of central Europe by our investment and our technology, and by being careful to ensure that they are not in a position in which they can say that there is an attempted takeover by the capitalism of the west, which is in their minds. We must recognise that it will take them time to come up to the level that we in the Community have reached. There is nothing selfish about that. There is no question of our using our wealth to keep them out. West Germany is pouring wealth into what was East Germany to try to bring that area up to the required level. What was West Germany acted on currency even before the unification of what were the two countries. The currencies were unified. That is exactly what Erhard did when he took over as Minister of Finance under Adenauer in what was then West Germany. The Germans should have our admiration for what they have done in what was East Germany.

After 40 years of repression in Czechoslovakia, Poland, Hungary and Bulgaria, leaving aside Romania for the moment, and inactivity in the industries of those countries, it will take them a considerable time, however hard they try and however much we help, before they can be on a comparable basis with the members of the Community.

I have stated before the cases of Spain and Portugal. After the two dictators died, it took those countries 10 years before they were able to say to the Community, "We are now in a position when we can become a full member." They were right. The position of Spain, however, was infinitely stronger than that of any of the eastern European countries now. Under Franco, Spain developed a strong middle class, which was trained administratively, financially and technically. The members of that middle class took over and ran Spain, and they were backed by a powerful king who put down the first attempt at rebellion. None the less, 10 years passed before Spain could present itself as a full member of the Community.

Central and eastern European countries are realising the problems that they are up against. If they were to become full members of the Community now, notwithstanding 1992 and the removal of all barriers, they would be swept off the face of Europe. There is nothing that the present members of the Community would want to buy from them. There are no services that we require from them. However, they, knowing what we have, would want it. That is natural. The process is bound to take time, and it must be handled carefully by us in the west. The Community is using its resources to help the countries of central and eastern Europe in the process, and rightly so.

When the Community began in 1950, it was unique in many ways in world history. That is also true of its institutions. We, the countries of the Community are sui generis. There has never been anything like us before and there is nothing like us anywhere in the world. We shall continue to be sui generis in the developments which my right hon. Friends the Prime Minister and the Foreign Secretary will work out.

The United Kingdom made a unique decision of immense historical importance when it decided to go into the Community in 1972. The decisions that will be taken at the end of the year will similarly be of immense importance for the future of the Community, for our country and for future generations. We shall benefit from the continued development of the Community as a community, and that should be our purpose.

6.34 pm

Mr. Denis Healey (Leeds, East)

The right hon. Member for Old Bexley and Sidcup (Mr. Heath) and I have lived through the events that we are discussing this evening for 50 years. I now share his view that Britain made a great mistake in not involving itself in the negotiations that took place in 1950 and in the years that followed. As the right hon. Gentleman reminded us, the Conservative leadership took exactly the same view as the previous Labour leadership when it took power, and it took 10 years to change its mind. I agree also with what he said later about the importance of Britain playing a constructive and, to some extent, visionary role in the Community. It struck me that he used words similar to those which were employed by my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman).

These are not necessarily party issues, but, inevitably, party politics sometimes becomes mixed up with them. Almost all the speeches that have been made so far have disappointed me, if I may say so, because they have ignored the most important economic and political events of recent years. Changes in each of those sectors is already having a major impact on the way in which the Community will develop in future, and that will continue.

It has not been mentioned that information technology, combined with the abolition of exchange controls, has robbed all countries which have abolished exchange controls and have information technology of economic sovereignty. Money is now managed by a mafia of young lemmings, who send 20 times as much money across the foreign exchanges in search of speculative gain as is required to finance world trade in both services and industry. The young men on the financial markets determine exchange rates, and through exchange rates they determine interest rates. Through both, they determine inflation and growth in all countries. That makes most of the argument about economic and monetary union almost irrelevant to the real world.

I note that the right hon. Member for Blaby (Mr. Lawson) shakes his head. I well remember that in the middle of the Conservative party conference in 1989 he was compelled to increase British interest rates—that was before we joined the ERM—within 40 minutes of the Bundesbank raising German interest rates, after spending £2,000 million of our reserves trying to delay the increase until at least the conference was over. So much for sovereignty. I am glad to see that the right hon. Gentleman is now nodding in agreement. I described exactly what happened.

These developments have had an enormous effect on how the exchange rate mechanism works. It is bizarre that in recent years the currencies which under the old system would have been weakest as a result of high inflation and a bad balance of payments, such as those of Britain, Spain and Italy, have found their currencies at the top of the grid. The country with the best economic performance, the lowest rate of inflation and the highest rate of growth—Germany—has often found its currency at the bottom of the currency grid.

One lesson that can be derived from these events is that we cannot leave such massive issues at the mercy of markets that can behave so perversely. They produced the crash of Black October, and they have produced similar results in many parts of the world in the past 12 months. However, no Government on their own can buck markets, not even a Government who are a member of the ERM. Capital flows across the exchanges every day are six times larger than the foreign reserves of all the countries in the ERM, so the scope for managing exchange rates through intervention is limited.

I do not have time even to sketch the way in which I think that a group of countries working together could influence markets for the better. I am certain, however, that it will be essential for Britain, with other members of the Community, to pay attention to the problems to which I have drawn attention rather than to the many abstract problems that fall within the present agenda for economic and monetary union which, in my view, will lead to them wasting their time. I also believe that the Community must address the social consequences of its economic actions. It is ridiculous that the Community is not prepared to develop a common social policy to meet the consequences of the economic and financial changes that it introduces.

The other great change that has taken place is much more recent. The change in the financial system is about 10 years old now, but the other big change—the end of the cold war—began in 1989 and was formally ratified by the proponents of the cold war at a conference less than a year ago in Europe.

The end of the cold war has produced an explosion of nationalism on both sides of what used to be the iron curtain. The interesting lesson that we can learn from that is that the federation of separate nation states has not been able to withstand those nationalist forces. All the existing international federations are now breaking down or are under great strain—the Soviet federation, the Yugoslav federation and the Czechoslovakian federation. Even the Canadian federation is threatened with the secession of Quebec, which is asking for a referendum such as that which the Croatians and the Slovenes have just held in Yugoslavia.

Britain should recognise that fact as much as any country should, because, as the right hon. Member for Old Bexley and Sidcup pointed out, at one time we were the great federateurs. We created the West Indian federation, which broke down under disagreements between the islands concerned. We created the central African federation, which broke down for similar reasons. The Nigerian federation is not a good example because it had to be established by the bloody civil war over Biafra.

It is worth reminding ourselves that even the American federation, which is not international but was composed of small bodies of colonists—at that time, they were all from Britain—required the bloodiest war in which America has ever been engaged to settle its internal problems. More people were killed in the American civil war than in all the wars that have followed, up to and including the Gulf war, yet it took place when the United States had only one seventh of its present population. Even the Swiss federation, which has been cited today, was established after a civil war between its existing states and the so-called Sonderbund, in 1847.

With respect to those who believe, as the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) appears to, that a federal superstate is an answer to the problems of nationalism in the modern world, such a belief flies in the face not only of history but of recent experience. On that matter I find myself unwillingly agreeing with the right hon. Member for Finchley (Mrs. Thatcher)—it was the only thing in the right hon. Lady's speech with which I did agree—[HoN. MEMBERS: "What about Germany?"] The German federation was imposed by the victors on a vanquished Germany to prevent it from having central power. That federation should not be used as an analogy for anything that might happen in Europe. It is quite different. The analogy would be if it were decided to break Britain up into a federal state giving separate representation to Yorkshire, the west country—that prospect would please the Liberal Democrats—Wales, Northern Ireland and Scotland. That would not be especially desirable.

It is essential that the world must find new forms of political relationship which respect the undoubted force of nationalism—nationalism is by far the strongest single force in world affairs—yet which would not allow the nation state that was so praised by the right hon. Member for Finchley to produce war on an ever-increasing scale, as it has done continually since it came into existence at the end of the 18th century. The nation state is quite a recent product—there were different sorts of states before that. Even in its present form, the European Community has at least done that. War between its members, who have so often fought one another in the past, is now absolutely unthinkable. Nevertheless, taking the problems of recent federations into account, we must be cautious, as the Government rightly are, in moving further in that direction.

The most important issue that we face today is that of enlarging the Community. Membership of the Community is the best and only hope for the east European countries to make the necessary transition to stable democracies and prosperous market economies. If they fail to make that transition, the consequences for western Europe could be cataclysmic. Tens of millions of impoverished and desperate people would flood across the frontiers into western Europe, as they did into western Germany before unification. For that reason I believe that widening the Community must take precedence, if necessary—if there is a choice—over deepening it.

Of course, I believe that all the European Free Trade Association countries that wish to do so—as I believe that they all will, once Austria and Sweden have joined—will come in as well. We shall have a completely different sort of Community, in which most of the arguments that we have exchanged in the House today will be totally irrelevant.

I regret that Britain is not bringing those issues before the public at present. The Foreign Secretary did not do so in his speech today. Too often, Britain's behaviour seems to have justified the judgment of the Quai d'Orsay—the French Foreign Office—which called us hesitant in action, maladroit in execution and infirm of purpose when it counted. I reassure the Foreign Secretary that those words were used to describe a previous Conservative Government after the Suez campaign in 1956—but I have heard similar words used about the conduct of the present Government.

I find it ludicrous that the party that forms the British Government should now be split over theoretical arguments about sovereignty and a federal super-state which have no relevance in the world that we now inhabit. The situation reminds me of the Punch and Judy show in the Labour party 10 years ago over unilateralism and multilateralism which prevented my party from discussing the real difficult problems of defence—some of which, I am bound to say, have not yet been tackled by the Government.

I believe that the Punch and Judy show that has monopolised our television screens for the past week—and, indeed, some of the debate today—must end.

Mr. Skinner

Why?

Mr. Healey

On this issue I would rather put my country and my world before my party. However, I assure my hon. Friend that I may find it necessary occasionally to comment on the behaviour of the Conservative party because, after all, it forms the Government who represent Britain in the negotiations.

The Conservatives have done nothing to explain the issues that I have attempted to describe. We are now told that the Conservative party chairman is the evil genius behind the Prime Minister—certainly he is the leading Christian Democrat in the Tory Government. The party chairman has failed to remind his colleagues in the past week that last year, before the Conservative party decided to encourage its Members of the European Parliament to join the European People's party, that organisation produced a manifesto committing it to work for a federal constitution of the European union.

I am not entirely surprised that the chairman of the Tory party has preferred to escape from confronting those little local difficulties into a rhetoric that has grown increasingly baroque in the past week or so. With my own ears, I heard the right hon. Gentleman saying on television last week, "The Government have a heroic commitment to hard-nosed pragmatism." The same day, he followed that up with another interview, in which he said that European monetary union was, "spectacularly hypothetical". Sometimes I wish that the right hon. Gentleman had been gobsmacked at birth.

Just to satisfy my hon. Friend the Member for Bolsover (Mr. Skinner), let me say a word about the Prime Minister. I watched the right hon. Gentleman's face as his predecessor spoke this afternoon and I have never seen such inspissated gloom etched on a human visage in my life. When the right hon. Member for Finchley (Mrs. Thatcher) said that she planned to support him in the next election, he must have been reminded of Lenin's promise to support the social democrats as the rope supports the hanged man.

All of us like the Prime Minister and it is difficult to be rude about him—I have not yet attempted it—but I must confess that he reminds me of one of the most notable characters in current folklore—Charlie Brown in "Peanuts". You may remember, Mr. Speaker, because I am sure that you are an avid follower of "Peanuts", that Charlie Brown was once approached by Lucy—a bossy little girl—[Laughter.] The parallel escapes me. Lucy asked Charlie to join her on an ocean cruise, so they got on the boat and she took Charlie up to the sun deck and said to Charlie, "Now, Charlie, there you will see a stack of deckchairs, and you have to put your deckchair up—and Charlie, if you want to look backwards, you put it facing the stern of the boat"—which she obviously preferred herself—"but if you want to look forward into the future, you place it facing the prow of the boat." "Now, Charlie," she said, "which way do you want your deckchair facing? Charlie replied—so much like the Prime Minister—"I don't seem able to get my deckchair unfolded."

I hope, without great confidence, that the Prime Minister will manage to get his deckchair unfolded at some time in the next 12 months. But, of course, after 12 months, the liner will be under a different captain.

6.53 pm

Mr. David Howell (Guildford)

The right hon. Member for Leeds, East (Mr. Healey) is, of course—[Interruption.]

Mr. Speaker

Order. Will hon. Members who are leaving please do so quietly?

Mr. Howell

The right hon. Member for Leeds, East is quite right to remind us that the most enormous changes have taken place in Europe over the past two or three years —and more are taking place even as we debate the motion before us, particularly as yet more fearsome dangers develop in the Balkans and as Yugoslavia begins to fragment. No doubt we shall see many more dramas as the Soviet Union, the creation of Lenin, is replaced by something entirely different in the coming years.

When we hear great debates about the European Community, its purposes, origins and intentions, we all sometimes feel that we are fighting battles of old—I agree with the right hon. Member for Leeds, East on this—and about the issues of yesterday, and that we are not concerned with the problems, issues and needs of the Europe of today and how best to address them.

Let me start with the speech made by the right hon. Member for Manchester, Gorton (Mr. Kaufman), who got into a bit of a muddle. The right hon. Gentleman seemed to start by getting rather swamped by his press cutting service. Once he got going, however—and I came to the serious part of his speech—he eventually expressed the view that there was some kind of monolithic set of European views and that Britain was fighting a desperate rearguard action against it. If the right hon. Gentleman listened more carefully to his right hon. Friend the Member for Leeds, East, and to others who understand what is happening in Europe today, he would realise that his view of a line-up of the eleven, all holding a monolithic commitment to a single currency from Lisbon to Berlin and to a federal European state, does not accord with the views or the motives of any of the major states of the Community today.

We do not need to guess at that—to suck our thumb and hold it in the wind—because we can see that, at the moment, the motives of all the various countries are very different and that the politics of the Community are leading us into fascinating new patterns. At the moment, the Germans still want just to submerge their identity in a larger federal European state, but they want that to come very slowly indeed, because they are extremely nervous that the deutschmark will be watered down if the French, the Spanish and others get their sticky political fingers on it. So the Germans want to go slowly.

The French have quite different motives for wanting to reassert themselves at the centre of Europe—some would say, unfairly, for trying to reverse the verdict of Waterloo. At any rate, they want to assert a kind of Europeanism which I do not think is shared by the federalists in Italy, who take yet another view, which is that Brussels would probably be able to manage their affairs better than Rome —which is why they are totally in favour of everything to do with a federal Europe—or the Spanish, whose main concern, which has emerged clearly in recent weeks, is that they want and hope for substantially larger dole-outs of money to compensate for any federal involvement that they may pursue.

The various countries have different motives, and to regard them as a massive rugby line-up, with poor little Britain having to fight against them with no hope of changing their views, is a complete falsification—a complete parody—and encourages the kind of unnecessary defeatism that Britain should not for one moment accept.

The right hon. Member for Leeds, East was again right to say that we must understand what the European Community's motivations now are. We know what they used to be. Right at the beginning, they included reconciliation between the French and the Germans—the "never again" mentality. They used to include the aim of forming a west European enclave for capitalism against the great Communist leviathan in eastern Europe. Frankly, both those motives have long since given way to the much more subtle and important task of creating a gigantic prosperous centre of free trade—a great single market—in which the old fortress mentality and the idea of lining up against nameless enemies from the east have disappeared. I have no difficulty at all—although I think that some of my hon. Friends have a difficulty—in envisaging a new Europe, whose motives are different from the original motives, moving at a variety of speeds. I am not even sure that I accept the idea of speed, because it implies a clear destination, but, in any case, I have no difficulty in envisaging a Europe moving in different gears and in different ways and with different and diverse policies all within the broad aims of the European Community.

Our corner on European monetary union is that we want European co-operation and want to try out the idea of a common currency—the hard ecu, or a hardened ecu, or a hardened basket ecu, or whatever the Spanish want —but that we are very sceptical about the idea of ever seeing a single currency operate throughout this gigantic continent, let alone throughout the enlarged continent that Europe is bound to become.

I find that—as the Americans would say—an entirely comfortable position. We should not be afraid to fight our corner and to set out clearly why we are where we are. We should be prepared to explain why, although we see the benefits of a degree of monetary co-operation and—if we stretch the sense of the word—union, we also strongly endorse the perfectly respectable arguments that hold that a single currency is a rather silly idea.

Perhaps, at the time of the treaty of Messina and the formation of the Common Market, we missed a few buses, or failed to catch a few trains. In this instance, however, such analogies prove false: history does not repeat itself, but, as Mr. Balfour said, historians repeat each other. This time, there are not buses to be missed—although, if we drive too fast, there will be car accidents to be avoided. We are, I think, right to develop ideas for a common currency, if people want it. We should allow the choices of the future to lie with the people of the future, if the markets say that it makes sense for a single currency to be run by a single central bank for the whole gigantic continent. Personally, I think that they will say the opposite, and that in 10 or 15 years' time—given the existence of more electronic and information technology—Europe may have more currencies than it has now.

As I have said, I envisage no difficulties over the monetary aspect; I think that we can fight our corner. Now for the political side. We hear the word "federal"—which my right hon. Friend the Foreign Secretary, in what I considered an excellent speech, called a poor and dangerous word. Today, of course, he is right: to Conservative Members at least, the word has come to mean some rather undesirable things that we have spent a whole decade trying to get rid of. It evokes the collectivising and centralising mentality that struck us as so uncongenial in comparison with enterprise and the market economy.

It was not always like that, however. A long time ago —in pre-collectivist and pre-socialist history—"federal" meant something entirely different. To James Madison and company, the founding fathers of the United States of America, it meant extremely limited and carefully circumscribed central powers; they wanted not a strong centre, but a weak one. The aim of the liberals of those days was to establish a weak centre for the federation, or confederation, that became the United States.

Because of the American civil war, two world wars and other factors, the proposals of the founding fathers did not work out. They argued, however, that, from time to time, certain powers should be given to that weak centre, and that, from time to time, certain powers should be taken from it. There should, they said, be no inevitability about successive increases in power at the centre. That was the true spirit of what was then called "federation"; alas, the word has now been hijacked, and I understand why some of my hon. Friends—and my right hon. Friend the Foreign Secretary—find it difficult to deal with.

That, however, should not stop us arguing in favour of our view of the European political structure of the future. It is, as my right hon. Friend said, the right structure; and, if it must be translated into English as "confederal" instead of "federal", I see no problem in that. The structure to which I refer is based on nation states' ascribing to the centre—the Community institutions that are their servants as opposed to their masters, inferior rather than superior in terms of political power—certain tasks that from time to time should conveniently be done on a Europewide or Communitywide scale. Those tasks must be performed under a strictly accountable Council of Ministers.

I do not see why we should not boldly assert that that is our European view—and we are good Europeans; certainly the country wishes us to be. We want a Europe that is rather different from the old-fashioned, collectivised federalist ideal: we do not believe that there must be huge strength at the centre if the system is to work. We must look both to a future that will not require that strength and to the distant past, when our forefathers perceived that a gigantic, collectivised state machinery was not required to enable nations to co-operate effectively.

For more than a century, thus fashionable political philosophy espoused, and led to, a drift of power to the centre. I believe that, at this point in our history, we have a fabulous chance to enable European countries to come together and work together, free from the vanities and conceits of collectivism and the overweening state. We have a real opportunity to establish a different kind of Europe—different, in a way, from what the United States has become, and certainly different from the now collapsing Union of Soviet Socialist Republics. That was the ultimate over-centralised structure; such structures cannot hold, and are destroyed by the spirit of the age and the advance of technology, as Mr. Gorbachev is rapidly discovering.

Conservative Members have told us this afternoon that we should be very afraid of certain things—although my right hon. Friend the Member for Old Bexley and Sidcup seemed to be saying that we should not be afraid of anything. Certainly there are some dangers. Perhaps I am myself courting danger if I take the middle position; Aneurin Bevan said that those who walked down the middle would be run over, so I shall probably emerge as a pancake.

The real danger is the danger of paralysis in a European Community that is too inward-looking and to preoccupied with strengthening its central institutions. We should fight that danger—not just Britain, but many other democrats and liberals; perhaps Liberals as well. Conservatives, too —indeed, all non-socialists—do not want an early 20th-century socialist Leviathan to be recreated on a European scale.

There are two ways in which we can fight that self-paralysis. First, we can do so through the vigour of our positive arguments, not only here in London but at every meeting attended by my right hon. Friends. We see the need for further European development of every kind; we see the need for reform of the Community institutions; but those institutions are our servants, not our masters. That is the principle on which our proposals for political reform must be based.

Through his calm and common-sense approach, my right hon. Friend the Prime Minister has succeeded in depolarising the fruitless debate of the past, and reduced it to the key question: not whether we should be in or out, but what European structure we should now have. As my right hon. Friend the Foreign Secretary pointed out, our ideas should be to the fore. We should not be constantly on the defensive, saying what we do not like.

That is the first thing that will save us and our friends from what has come to be called federalism—wrongly, in my view; it is really the centralism endorsed by those who want much stronger institutions at the centre, telling us what to do in a quite unnecessary way. The second—here I agree with my right hon. Friend the Member for Finchley (Mrs. Thatcher)—is the opening up of eastern Europe, and the marvellous commitment of the Governments who are succeeding the communist regimes of Poland, Hungary, Czechoslovakia and the rest to market economics and open, free trading. That may push the protectionists in western Europe—and they are there—and the centralists —they are there, too—on to the defensive, and stop them constantly presenting their views as though they were the good Europeans and the rest of us were not. I believe that it ought to do that, and also to put our ideas of the European future on the offensive.

Let me echo earlier speakers by saying that, above all, we must understand that if the eastern European countries, having sloughed off communism, fail to make it to democracy and market prosperity—and they are not there yet—we shall all fail. That is the ultimate surrender of the very task for which the Community was formed; it may not be an exaggeration to say that the second world war was fought for it. It was the dream then that Europe should be a continent of free nations, although that disastrously failed to materialise in 1945.

Mr. Devlin

Does my right hon. Friend agree that, if the rest of the Community goes ahead without us and we are left outside, still dominated by the decisions of those who remain within, we, too, shall have failed?

Mr. Howell

My hon. Friend's question has been asked many times over the years. It presupposes that a great, unified team is marching ahead and that Britain is outside it. I believe that not to be true. The political scene is far more open. It is possible for us, using our best skills, to join in. What will defeat us is our silence, equivocation and total negativism. If, however, we are positive, we shall have a role to play with the other parts of Europe that decide to go ahead together. We ought to go ahead with them.

Political reform in Europe is needed. The treaty of Rome will probably have to be amended. I have no doubt that that will come out of one of the intergovernmental conferences, just as proposals for monetary development will come out of another intergovernmental conference. On the political side, however, we need very tightly defined powers for the Commission—

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. I remind the House that speeches between now and 9 o'clock are limited to 10 minutes.

7.10 pm

Mr. Peter Shore (Bethnal Green and Stepney)

As always, I find myself in substantial agreement with the right hon. Member for Guildford (Mr. Howell). In particular, I would emphasise what he said about the importance of a wider Europe—a more all-embracing Europe than the present Community of the Twelve. In addition, whatever that Europe's policies are, they should not be Euro-centrist. We are now part of a world community. We should be involved in global management, not simply with the affairs of Europe. That is one danger that the increasingly tightening bloc in Western Europe faces.

I want to turn to what I believe is at the very centre and heart of the debate—federalism. The debate is not just about the word but about the reality of federalism. What I say will, I hope, be helpful to the House. The right hon. Member for Old Bexley and Sidcup (Mr. Heath) asked, "What is wrong with federalism? Did we not give it to Canada?" By saying that, I think that the right hon. Gentleman showed that he had entirely missed the point.

We are not talking about devolution within a sovereign state. All sovereign states have different measures of local government, regional government and so on. That is not the issue. Those who say that it is are concealing the truth and confusing others. The essence of the federalism that we are talking about is when a sovereign state accepts a higher tier of government than itself—when it is prepared to transfer powers to that higher body, powers which previously it exercised exclusively on its own behalf.

In countries that practise federalism, we know that there are three marks that distinguish every federal state that has ever existed. One of them is a single currency and a central bank. Show me a single federal state that has not got them. There is not one. Secondly, a federal state is one in which its external affairs—trade, foreign affairs, security and defence—are no longer controlled by itself as a sovereign power but transferred to the higher authority. The third distinguishing mark is the recognition that, when there is a conflict between the lower tier—the old nation state—and the upper tier of the federation, it is the upper tier whose laws have supremacy. As we know, that is written into every European Community Act.

If we look at the substance of the two treaties—I am not talking about the use of the word "federal"—what do we find? One is about economic and monetary union, in which the proclaimed goal is a single currency and a central bank. The other treaty—I am glad that the Foreign Secretary does not want to go along with it, and I hope that he will resist it very hard—would lead to the creation of a common security policy, a common foreign policy and a common defence policy. There is no doubt about what they are up to.

Article H of the draft treaty, which is not before us today, says: Member states shall support the Union's foreign and security policy actively and unreservedly in the spirit of loyalty and mutual solidarity. They should ensure that their national policies are in line with the common positions agreed upon. They shall refrain from any action which is contrary to the interests of the Union or likely to impair its effectiveness as a cohesive force in international relations. The Council shall ensure that these principles are complied with". Article K says: Once the objectives and means of a joint line of action have been defined, each Member State should be bound by the joint line of action in the conduct of its international activity. There follows this lovely sentence: At international conferences and in international organisations, the Union's position shall, as a rule, be put by the Presidency. If such a commitment is accepted, we shall not even have a voice. How do we exercise our power and our voice in the Security Council if we allow the presidency to speak for us and on our behalf? I know that the Foreign Secretary will resist that with all his power, but make no mistake: the essence of these two treaties is that they are federal treaties in character and in intent.

The opening words that Mr. Delors and Mr. Poos have put together are explicit on the matter. They have let the word "federalism" out of the closet. They say at the very beginning: This new Treaty marks a new stage in the gradual process leading to a federal type Union. They end with these words, under the heading "Final Provisions": An intergovernmental conference"— another one— shall be convened by 1996 at the latest to examine the provisions of the said treaties from the standpoint of strengthening the federal nature of the union. No British Government and no Leader of the Opposition, if he were in government, would dare sign to those words and commitments. It would be a breach of faith with the British people and an unforgivable act against the interests, wishes, prosperity and independence of this country.

7.16 pm

Mr. Jonathan Aitken (Thanet, South)

It is a pleasure to follow the right hon. Member for Bethnal Green and Stepney (Mr. Shore), whose trenchant speech, like that of the right hon. Member for Leeds, East (Mr. Healey), had the useful effect of showing up the speech of the right hon. Member for Manchester, Gorton (Mr. Kaufman) for what it was—a second-rate, evasive, scissors-and-paste job, quite unworthy of anyone aspiring to the job of Foreign Secretary.

On our side of the House, the debate has been dominated by two ex-Prime Ministers. I am extremely happy that the Government's negotiating position is very much closer to the views of my right hon. Friend the Member for Finchley (Mrs. Thatcher) than to those of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). That negotiating position, spelled out with excellent clarity by my right hon. Friend the Foreign Secretary, is one of being hostile to federalism, staunch in the defence of our parliamentary sovereignty and positive in its enthusiasm for union through European co-operation. One should be intrigued by the negotiating skills for building these pillars of co-operation outside the competence of the Commission. That is certainly the right way to go. I applaud that approach and thoroughly support it, but one must ask: can my right hon. Friends, as negotiators, deliver it when it comes to the crunch at Maastricht?

The trouble we face is that there is an impatience in certain European quarters with the British emphasis on co-operation, evolution and pragmatism. That impatience comes not from the member states but from the Commission. It is the Brussels Commission that is fighting for its empire of the future and that wants to extend the Community's competence in a whole range of areas that impinge on our national sovereignty.

Let us look, for example, at Home Office issues—terrorism, drugs, immigration, security. No nation wants to co-operate more than Britain does with that sort of pillar of union inside Europe to fight these various Home Office matters, but the one thing that we do not need is to have that truly national area of policy subjected to the paraphernalia of the treaty of Rome, majority voting and so on. Our negotiators are right to resist such policy being sucked into the competence of the Commission.

It is crucial to understand that the device by which the Commission seeks to extend its competence appears in the preamble, or chapeau, of the draft political union treaty—the inclusion of the words "federal destination" or "vocation federale". That device will give the Commission the prescriptive right to bring such policy under its control.

That is why it is crucial not to use federalism as a semantic argument, but to tackle it head on. It is the litmus test of whether we should veto the political union treaty and whether the phrase "vocation federale" is included in the umbrella, preamble or chapeau of the treaty.

There is a second litmus test, because, under article 189, the draft treaty seeks to impose the radical, revolutionary principle that my right hon. Friend the Foreign Secretary mentioned—co-decision in legislation for the Commission and the European Parliament. That would take sovereignty from national Governments and Parliaments. Co-decision in legislation, as all Back Benchers know, is impossible in its practicalities and quite wrong in principle. I am certain that those two litmus tests—the vocation federale and the treaty, if we signed it—would be a massive and irreversible diminution of Britain's parliamentary sovereignty.

To show the depth of what I am saying, I take the House to the heart and soul of the draft treaty, which is in print for the Luxembourg summit but apparently is not in the Library. I refer to the parts of the treaty that seek to impose majority voting on a range of new law-making areas, such as industrial policy, energy policy, tourism, health, culture and defence. Those policies have been central to the responsibility of national Governments and Parliaments for centuries. A political union treaty, in anything like its present form, will mean an unacceptable shift of power from Whitehall and Westminster to the Commission. That momentous change must mean the downgrading of Parliament to the level of a regional assembly or a glorified county council.

Surely, as British legislators, we should draw the line in the sand right there. If those elements still appear in the treaty after the Maastricht conference in December, that will be the crunch, and we will have to face up to the grim possibility of vetoing it. One need not be too pessimistic; there is plenty of negotiating to be done.

When making decisions on our future role in Europe, there is a difficult conflict, or at least tension, between Britain as a parliamentary nation and Britain as a trading nation. We joined the Common Market, as it was then called, to extend our trading opportunities. We certainly do not want to lose the advantages of the single market or to be excluded from this powerful club—as a trading nation, we have a great role to play in the club by making it more outward looking, less protectionist, larger and more of a genuine free-market enterprise—but to stay in the club, must we make certain concessions and accept some reduction in our parliamentary sovereignty. The answer to that question is yes in pursuit of co-operation, but no in pursuit of federalism.

Let us remind ourselves that federalism was not in the original treaty of Rome. The original treaty referred to an ever closer union among the peoples of Europe. I see that as union through co-operation. That idealism was good enough for Schuman, Adenaur, Spaak and Monnet and should be good enough for us, our partners and even the Commission.

The more I participate in Euro-debates, the more I realise that the true argument on Europe is not between opponents and proponents, between Europhiles and Europhobes, but between dreamers and realists. The crunch of realism will come when we vote on what has been negotiated at Maastricht. The $64,000 question is, should Britain accept a political union treaty or EMU treaty, the effects of which will mean a substantial change in our constitutional arrangements and a severe reduction in the power and sovereignty of Parliament? If the treaty that has been finally negotiated means accepting a federal destination, and it says so, the principle of co-decision in legislation and vast expansion of majority voting into new law making that has hitherto been controlled by the House, Government and Parliament should say no and veto the treaty.

With six months of negotiation remaining, we should not talk too easily about vetoing. I do not believe that it will come to that. Let us trust our Prime Minister and ministerial negotiators to achieve what we all want to achieve in knocking out the more objectionable parts of the draft treaty. Let us wish them well in their efforts to build a pillar-by-pillar union by co-operation. Let us hope, too, that our European partners are listening to these arguments, will take heed of our special British and parliamentary concerns and will change course enough to let us build an European union by co-operation and not by federalism.

7.25 pm

Mr. Giles Radice (Durham, North)

We can all agree, whatever the heat of the debate, on the importance of the decisions taken at the two intergovernmental conferences, especially the one on economic and monetary union. Whether we stay out of or participate in the arrangements that emerge from the IGCs, they will help to shape our destiny for the next 50 years.

I agree with the right hon. Member for Old Bexley and Sidcup (Mr. Heath) that the United Kingdom must participate fully in economic and monetary union and in the moves to closer political union. I do not believe that we can afford to be excluded. Three times in the past 40 years, Britain has decided to stay out of agreements to integrate western Europe. Each time, the decision proved to be against our best interests.

When the United Kingdom rejected the Schuman plan at the beginning of the 1950s, it helped to establish the Franco-German hegemony, which is now such a dominant feature of the Community. In the mid-1950s, we stayed aloof from the plans to establish a Common Market and ensured that the shape and rules of the Community were designed to suit the interests of the original Six and did not reflect British needs. We also missed out on the great period of Euro-growth in the 1960s and 1970s. At the end of the 1970s and during the 1980s, we refused to join the exchange rate mechanism and not only deprived ourselves of an extremely valuable counter-inflationary discipline but were shut out from the central economic management of Europe, although we were increasingly affected by the decisions that were taken.

We cannot afford to be excluded again. Those who fulminate so fiercely against EMU should have the courage to give us the alternative. A Britain outside economic and monetary union would be relegated to the second league.

Mr. Austin Mitchell (Great Grimsby)

Why?

Mr. Radice

If my hon. Friend will keep quiet, I shall tell him.

Inward investment would go to the inner group of the EC at our expense and our financial dominance in Europe would be threatened.

The right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has implausibly suggested that Britain outside EMU could become the Hong Kong of mainland Europe. Even if we could agree that that would be a desirable objective, I doubt whether an excluded Britain would be able to play that role.

It is significant that key peripheral countries such as Sweden and Austria are now applying to become full members of the EC obeying all the rules including the move to EMU. On the other hand, a British Government who took the decision in principle to join EMU would not only be in a good tactical position to influence the timing and shape of the eventual EMU package which emerges at Maastricht, but would give their economic decision makers a long-term objective which would help them to take the right decisions to improve the underlying performance of the economy in terms of inflation, productivity levels and investing in the supply side.

A decision in principle would thus help to create conditions that would lead to the convergence which hon. Members on both sides of the House believe is necessary to make EMU work. In those ways, participation in EMU would assist in keeping Britain in the European first division and would therefore would be in the best interests of this country.

In the few minutes that I have left, I want to consider the debate about the political implications of the two intergovernmental conferences and the language that has been used. We have heard much about the "F" word—federalism. I do not want to add much to what has already been said, except to agree with those who believe that it is basically a red herring.

To some extent, the EC already has some federal aspects. European law has primacy over laws legislated by national Parliaments. Under the Single European Act, the Council of Ministers takes certain decisions by qualified majority voting. The Commission has considerable executive power particularly in agriculture and trade. The European Parliament is also directly elected.

However, clearly the EC is not in any real sense a federal state on the German model or any other model. Nor is it likely to be in the near or medium-term future, whatever my colleagues may say. Instead, it is moved forward according to the Monnet strategy of building a united Europe in an ad hoc, block-by-block way.

The right hon. Member for Old Bexley and Sidcup is right: the EC is sui generis. We cannot use the old terms to describe it. Peter Jenkins was right, when he stated in Tuesday's Independent: Europe's destiny … is more likely as a sui generis community of nations, increasingly federal in some aspects, but increasingly confederal in others, a pluralistic amalgam of interdependence and local independence. So the debate about federalism is a red herring. However, in addition to the "F" word there is the "S" word which is used by Britain. That is "sovereignty". As the Select Committee on Foreign Affairs pointed out, to the United Kingdom the notion of national sovereignty is almost indistinguishable from the concept of parliamentary sovereignty. That arouses great passion in British political circles, although, according to the polls, it is not so important among the electorate.

I remember the then Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), during her disastrous Rome summit statement which led to her downfall, taking me severely to task when I suggested that her hostility to a single currency threatened to relegate the United Kingdom to the European economic second division. She asked me why then, as an advocate of EMU, I was bothering to stand for Parliament. Behind the right hon. Lady's taunt lies her belief in exclusive parliamentary sovereignty.

However, the notion of absolute parliamentary sovereignty has already been severely eroded by our membership of the EC. The right hon. Member for Finchley was a member of the Cabinet that took us into the EC which now has an extensive system of law. The Government signed the Single European Act which established qualified majority voting. The Government also joined the exchange rate mechanism which limits the right to change the value of the currency. All those actions have eroded parliamentary sovereignty.

In any case, the doctrine of parliamentary sovereignty, so confidently advocated by Dicey at the end of the 19th century and now so fervently echoed by the right hon. Member for Finchley a century later, is out of date in terms of individual rights. It has proved inadequate to defend British citizens against the abuse of power by the Executive.

Significantly, there have been 21 judgments against the United Kingdom in the European Court of Human Rights —the largest for any signatory nation. Seventeen of those have taken place under this Government. The new democrats of the EC cannot fail to note that the Community countries with written constitutions and a codified Bill of Rights have performed far better in respect of individual rights than the United Kingdom, which has relied exclusively on parliamentary sovereignty.

The United Kingdom is the most centralised state in the Community. In most other member states the regions now have considerable powers guaranteed by their constitutions. In the Community, it is the doctrine of parliamentary sovereignty—not federalism—that upholds centralised power. It is certainly right to be concerned about democracy in the Community, but the answer to the question about the democratic deficit is far more likely to be found in extending the powers of the European Parliament, as the socialist parties in the EC argue, than vainly trying to defend the indefensible—the anachronistic doctrine of exclusive parliamentary sovereignty.

We must insist that our negotiators free themselves from such outdated concepts and ignore emotional language such as we heard from the right hon. Member for Finchley. Instead, they should consider carefully where British interests lie and be clear about their aims and press for a positive and constructive outcome. Common European action is needed when national effort is inadequate. It is very much in the interests of the British people and other European nations to join together to create common policies, rules and institutions. Our future lies in the European Community.

7.36 pm

Mr. Nigel Lawson (Blaby)

I welcome this debate, which is about one of the most important and challenging issues facing our country at the present time. Happily, with the conspicuous exception of the speech by the right hon. Member for Manchester, Gorton (Mr. Kaufman) from the Opposition Front Bench, the speeches we have heard today have lived up to the importance of the issue.

The Government undoubtedly have an extraordinarily difficult hand to play. I believe that they are playing it with considerable skill and they deserve the full backing of hon. Members not merely on this side of the House but of the House as a whole.

I speak as a long-time supporter of British membership of the European Community. Like many others, I welcomed the Community as an inspired constitutional innovation far more intimate than any conventional alliance, but less than a federation, providing a framework in which independent nation states could co-operate as never before.

Despite the common agricultural policy, the Community has proved over the one third of a century since its foundation to be a remarkable success, particularly now, with the single market programme in full swing—although some difficult decisions lie ahead—and the prospect of enlargement to include the European Free Trade Association countries and, as soon as practicable, the countries of central and eastern Europe.

With regard to the central and eastern European countries, incidentally, when certain of those countries—in particular Hungary, Poland and Czechoslovakia—are making heroic efforts to achieve the unprecedented transformation from a command economy to a market economy and their peoples are suffering as a result of the short-term hardships inevitably incurred in the adjustment process, it is deplorable that the European Community should deny them the markets that they so badly need for their agricultural produce.

But, the CAP apart, the Community has proved to be a remarkable success—and it is the beacon to which Hungary, Poland and Czechoslovakia are now drawn. However, paradoxically, it is at just this point that we are being asked, in effect, to jettison the Community and to replace it with a full-blooded federation.

The origins of that misguided initiative are sometimes misunderstood. They are various, but pre-eminent is the fact that France has always seen itself as the heart and head of the Community. It has therefore found the dominance of the Bundesbank in the important monetary field increasingly irksome. In fact, I believe that the dominance of the Bundesbank, which has not been imposed on the member states of the Community, but arises from the free play of market forces assisted by the independence of the Bundesbank—something from which we could learn—has served Germany and Europe as a whole. But for France it was politically objectionable and it was thus in their view necessary to abolish the Bundesbank. That could be done only by replacing it and, indeed, all the other national central banks by a new European central bank responsible for a single European currency. But that move, however understandable—although, I believe, misguided—has the most profound political consequences. Even the Financial Times a few months ago admitted: The economic benefits of EMU remain speculative. The ultimate effects on the distribution of power between member states on the one hand and the European Community as a whole on the other are likely to prove substantial. EMU is a political project, as the Commission states. That is quite true, but let me quote from an even more exalted authority than the Financial Times, Hans Tietmeyer, a very able man who is the present deputy president-elect of the Bundesbank. Indeed, in two years, when important events are going to take place, he will almost certainly be the president of the Bundesbank. A fortnight ago, he said: All participants must be clear that the loss of monetary sovereignty will make national efforts to solve domestic economic problems impossible … EMU requires a single monetary policy and effective rules to enforce budgetary discipline on the member states. These prescriptions are difficult to implement because they affect national sovereignty. On this issue it becomes clear that EMU can work only within a wide-ranging political union. That is what Hans Tietmeyer said, and he is absolutely correct. In other words, it requires a federal Europe—a united states of Europe—or a single super-state, if one likes to use that word, with a federal constitution.

A single currency requires a single bank which must be matched by a single Government and a single state if the democratic deficit, which people are concerned about as it is at present, does not become completely impossible and intolerable.

Of course, there is nothing whatsoever disreputable about advocating a federal Europe. The only thing that is perhaps the faintest hit disreputable is the behaviour of those who maintain that there is no real issue—that it is merely a question of semantics. Would that it were so, but nothing could be further from the truth. Federalism is indeed, as the Liberal spokesman, the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) said, a dispersion of power, but it is a dispersion of power within a single nation state. It presupposes the existence of that nation state. That is the point.

The question really is whether federalism—a federal Europe—is right either for Britain or indeed for Europe as a whole. In my judgment it is not. Look around the world today. As the right hon. Member for Leeds, East (Mr. Healey) pointed out, almost everywhere, multinational federations are under intolerable strain, from Yugoslavia, which is falling apart as we speak, to Canada whose Government are struggling desperately to keep French Canada and English Canada together. There are many other examples.

The right hon. Member for Leeds, East was right to identify the acute difficulties in the foreign exchange markets today, but the solution lies not in EMU, but rather in the development of the G7 process of co-operation, because this is a worldwide problem, along the lines which I and others tried to get going with the Plaza agreement and the Louvre agreement some years ago.

A federal Europe, if it were ever to come about, would produce just the same strains that we see in other multinational federations today, and they would inevitably be exploited by nationalist demagogues of the worst kind. That is something that I view with the deepest foreboding.

Finally, I revert briefly to the question of the single currency. It is, fortunately, a long way off, so there is time for the issues to be fully argued out and for wiser counsels to prevail. Meanwhile, I believe that the Government are entirely right in refusing to be bounced into agreeing to the principle of a single currency on the disingenuous grounds presented to them that progress is possible only if there is a clear commitment about the precise nature of the ultimate destination. Not only is that not how the Community has worked in the past and not a sensible way to work now, but it is disingenuous, as I have said, because it ignores altogether the vital political question of what precisely is the proposed constitution of the new single-currency Europe.

It is only when that—the destination that until recently dared not speak its name—has been fully hammered out, with this country playing its full part—I have never at any time nor will I advocate the empty chair—that this House can sensibly be asked to decide whether it wishes to preserve the constitutional status quo—that is to say, to preserve the European Community which has been a constitutional innovation and a great success, or whether it wishes to embark on some new and, in my view, profoundly unwise adventure.

7.45 pm

Mr. Robert Sheldon (Ashton-under-Lyne)

I start by agreeing with the right hon. Member for Blaby (Mr. Lawson) that this debate has indeed been impressive. It is right that the clear differences that we have heard within each side of the House have been expressed in the way that they were by the right hon. Member for Finchley (Mrs. Thatcher), who praised the Government but certainly disagreed with many of their policies, and by the right hon. Member for Old Bexley and Sidcup (Mr. Heath).

The central issue is whether we wish to remain a country enmeshed within the Community. If we do, we have to pay some attention to the wishes of other members, particularly when we find ourselves in a minority of one. Such a minority position is not a matter for rejoicing, as the former Prime Minister seems to think; it is a matter for great dismay.

If we play such a part in opposing what other countries want, in the end they will find ways of managing without us. The story of the dog in the manger did not end with the dog for ever denying food to the hungry; there are ways of dealing with such a dog. That role can operate only for a limited time. We could find ourselves bypassed. Once again, we could find ourselves excluded.

Why is it that other countries seem to see such advantages where we see few or none? Let me detail some disadvantages. My principal opposition to EMU is that we are a country economically much weaker than the Government seem to think we are. We need to restore our manufacturing industry to the comparable levels of the past and comparable levels with Germany. In fact, if we had an economy as flourishing as Germany's, I would be a whole-hearted supporter of the EMU. The system of a central bank in Europe, leaving aside the control of it, will favour the powerful economy. I only wish that that was us. Even if policies were wise and far-sighted, there would be great time lags in their results. The public expect earlier successes than even the most enlightened programmes can provide, and elections come round before even the most far-seeing policies can deliver.

What are the prospects for a European central bank? Britain would, of course, have a representative, and the bank might have to report to a group of Finance Ministers. Controlling a central bank in one country is difficult enough. I recall a Chancellor of the Exchequer envying the role of the Governor of the Bank of England. There is the day-to-day tussle even when it is nationalised. Nobody can doubt the present Chancellor's problems with the Governor. In Germany, as we know, it is even more difficult.

Why did we nationalise the Bank of England? Why did it get the support of prominent Conservatives such as Bob Boothby? It was because the lack of control was obvious. An international bank with immense powers would supposedly be controlled by people from different countries with different views and different languages. Since when have politicians been prepared to hand over such authority to such a powerful bank or to give it authority in the day-to-day running of monetary affairs for the whole of Europe? We cannot be sure that our Prime Minister will be as powerful as the chairman or the governor of such a central bank.

The trouble is that the major loss to the independence of the United Kingdom would be its ability to set our exchange rate. My right hon. Friend the member for Leeds, East (Mr. Healey) is correct: one cannot have complete control over one's exchange rate, but one can have some. In an area where there is so little control, that little is certainly of value. The case of East Germany is a problem writ large. If it is bad for us, how much worse would it be for a country like Portugal or Greece?

The role of the exchange rate is crucial to the conduct of economic policy. If one could separate the economic controls that one can devise, I have always held, "Let me control the exchange rate and you can have everything else." The economic performance, the balance of trade and balance of payments desperately depend on the role of the exchange rate, which would be the responsibility of the managers of monetary union. Such a monetary union could not work for long in the way that enthusiasts for it expect.

Even in the old East Germany the only prospects for success—in their exchange rate equalisation with western Germany—lie in an enormous outpouring of funds from West Germany for 10 to 15 years before it will have the advantages of West Germany. That is the position when the two are part of the same country, sharing the same language and culture. In the Community of the future, such massive movements of capital are, to say the least, unlikely. In the absence of those, the Community cannot accept a central bank which would provide gains to the wealthy at the expense of losses to the poor.

Of course we want convergence, but it will take a long time and will require certain political decisions which many countries will find distasteful. However, we are not the only people who are claiming to see into the future. Such a commonplace observation must be occurring to people in the other 11 countries. If those economic laws are certain, they will be so proved and will result in changes within the Community.

I do not believe that there are industrial dragons in other countries waiting to do us down. If Europe is not a co-operative venture, it is nothing; it will collapse under its own deceptions. The Community has to convince each participant of the advantages to them. That is why so many countries in Europe, outside the Twelve, want to participate in and to join the Community, and we must welcome that fact. The future of the Community must lie in co-operation—without co-operation it is bound to disintegrate. The trouble is that the determined non-co-operators reside within our country.

There comes a time in any organisation when the impetus for change is so great that to resist it means the ultimate exclusion of the dissenters. It is far better to point out the difficulties, discuss the problems and assume our rightful place in the field of consultation and deliberation and so use our influence for good as well as for the common good. That is why it will be necessary to ally ourselves with other Community countries, which will eventually come to realise the dangers, including those of federalism, and construct new ways to provide for such an authority.

We have to decide our future on the basis of what we may be giving up and of what we may get in return. Is it the right to an independent destiny? The real great British disease lies in comparative analysis, when we compare our hopes for the future with the present performance of others. Such words as "economic miracles" and "Germany, watch out" play a large part in this Walter Mitty world. Meanwhile, we maintain absurdly high interest rates, which are inflicting great and lasting damage on our manufacturing industry. Reducing interest rates may weaken our position in the exchange rate mechanism, but that is a risk which we should be prepared and willing to take.

It is a pity that the right to continue our own, if disastrous, economic policy is seen as the right to control our own destiny. That so-called "right to our own destiny" has to be offset by the danger of failing to play our full and proper role in a Community which has consistently been more flourishing than we have been on our own.

We still have certain advantages, but we have failed wretchedly to make the most of them. Probably our greatest benefit is that we share the language of the United States of America and the geography of western Europe. Our position as a bridge between them ought to have been of immense advantage to us. By playing a full and less reluctant role we could still use some of those advantages which we possess even yet.

7.54 pm

Mr. William Cash (Stafford)

Today we have heard some of the most interesting contributions to the debate on the future of Europe for many years. Having participated in such debates over a long period, I believe that it is important to view this debate in the context of recent speeches by the Prime Minister at Swansea, the Chancellor of the Exchequer to the conference on economic and monetary union the other day, and the evidence of the Secretary of State for Foreign and Commonwealth Affairs to the Select Committee on Foreign Affairs a few days ago. If we look at the content of those speeches and observations, against the background of what we have heard today, it will be apparent that there is a genuine centre of gravity in the Conservative party and across the Floor of the House, which arches over party political interests.

Above all, this is a national question and for that reason those of us who have tried to stake out territory on this matter have done so with vigour and have received some flak for it.

The idea that we could get ourselves into a federal Europe is absolutely unthinkable, and that is clear from speeches made from both sides of the House today. If one message goes out to Mr. Delors and the European Commission today from a series of vigorous, robust, clear and constructive speeches, which were not anti-European, that message is that the House does not wish us to become part of a federal Europe.

As the Prime Minister said the other day, one cannot stop history. He also said that one cannot stop the European Community. Some hon. Members want the essence of this House to be reflected in the European Community and that is its democratic traditions. That is the essence of today's debate. The heart of Europe lies in its parliamentary assemblies and this Parliament is at the heart of democracy in Europe.

One agenda to which we have not given much thought during the debate is that, if there were to be a federal Europe, who would run it? We ought to glance at that during these discussions.

It is clearly stated in the basic law of Germany that there should be a united states of Europe, and that has been forgotten. We must ask ourselves about the cluster alliances which would tend to gravitate around the economic dominance of Germany. I am not saying that I would not want Germany to play a full part in a co-operative Europe, but I do not believe that it would be in our interests, or in the interests of Germany, to allow that country to develop a predominant role, based upon the Franco-German axis which has been generatd since the 1940s and 1950s for valid reasons. That would tend to dominate the Community and would not be in the interests of the people of Europe or of this country.

Another problem is whether we should accept the draft treaty amendments now being proposed. If one examines the proposals, one sees that it is not merely a question whether there might be federalism. If one takes the draft treaty at face value, it is crystal clear that it is talking about the high contracting parties establishing among themselves a union and not, as I heard earlier, an ever closer union.

The treaty marks a new stage in a process leading gradually to a union with a federal goal. Citizenship of the union is the essence of it. Every page of the document—its breadth, its length and its depth—is pure federalism. Therefore. we are not merely up against the prospect of whether the word "federalism" might be introduced into the language of the Community. The truth is that, in six months, when the debate takes place in Maastricht, we shall be faced with the question whether we could accept it. It is clear from today's debate that we could not. If that is the case, we should ask ourselves how we are able to get into the negotiations in December and extricate ourselves in such a short time. If only we had been able to discuss these issues more openly before. I am afraid that that question might have to remain unresolved.

Another issue to be considered is that Germany does not want a central bank and economic and monetary union of the type proposed until 1996. What is the reason for getting into this serious discussion which is now in train and for staying with it in December? We should be persuading our partners in the European Community that what is happening will help destroy the very Community that we want to maintain. That is the problem.

On "The Money Programme" the other day, I heard the German Economics Minister say that, in the light of the reunification of Germany, he was worried about Germany being faced with civil disorder. That scenario will, a s I understand it, be compounded by the withdrawal of social security benefits from 1.7 million Germans on or about 1 July, with all the strikes and difficulties in the rest of Europe—in Greece and in France where the growth rate is also plummeting. Why on earth are we still faced with the prospect of that happening, not as a dance on a theological pin and not as a question of semantics about subsidiarity which would shove everything up to the top so that we should have a centralised system, but as the political reality of seeking to do something that is politically and economically unrealistic and not in the interests of Europe, let alone the interests of the people of this country?

We must ask ourselves some fundamental questions not only about whether we can square the theoretical circle about the constitutional arguments that we have discussed today, but whether we can square the circle of the political and economic realities with which we are also faced. We should bear in mind the words of Humpty Dumpty in "Alice's Adventures Through the Looking-Glass" who, when asked about the meaning of words, said that they can mean whatever one chooses them to mean. He went on: The question is … which is to be master—that's all. At the heart of the question is not merely the issue of semantics—what is federalism or what is subsidiarity—but the use of power; the use of power which could easily gravitate to some countries at the expense of this country by the cluster of alliances to which I referred. However, if that did not work and we were trapped into a system that would not produce the right results, there could be massive instability as a result of which the whole of Europe could disintegrate at the end of the century when we could least afford that to happen. The experiences of the USSR and of Yugoslavia have shown that to be the case, and we need to learn their lessons. The debate is not about semantics, but about the realities of political life.

8.4 pm

Dr. David Owen (Plymouth, Devonport)

One important feature of the debate is that there is a readiness on all sides of the argument to accept that we are dealing with fundamental questions. I welcome that, for there has been nothing worse than the attempt to evade the underlying reality that the founding fathers of the European Community always dreamed of a European state. That was checked by General de Gaulle, and when Britain decided to join in 1971, the House was assured by many people, not least the then Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath), that we were entering not a united states of Europe, but a European Community that had changed of its own volition as a result of the acceptance of the French position that no country could have its vital interests overridden, that the Luxembourg compromise existed and that the European Community would be a community of nation states, a confederation.

It is humbug to try to pretend that the word "federalism" means devolution, or that it is about giving power to Scotland—of which I approve—or to Northern Ireland and Wales. I want to see a federal United Kingdom and I believe that it makes sense. I do not wish to see a federal state of Europe in which fundamental decisions affecting the destiny of this country are made by that state, its own elected president, its own Cabinet and its own European Parliament. It is high time that the right hon. Member for Old Bexley and Sidcup came clean and said that that is what he wants. It would not be a bad idea if the right hon. Member for Finchley (Mrs. Thatcher) also came clean. She does not like the European Community as it is. She would prefer a free trade area and resents elements of the transfer of sovereignty over and above a single market.

I believe that the vast majority of people in the House and in the country want a European Community that is genuinely sui generis, which is not modelled on the United States of America, which cedes and has already ceded sovereignty in various key matters and which is not trying to cull that back. In external affairs we have already ceded responsibility to the Commission for negotiating the general agreement on tariffs and trade. The draft treaty now asks us to cede—undoubtedly and ineluctably—decisions on foreign policy and on defence and security.

I read the treaty for the first time today, and there is no question in my mind but that, were it to be put before us in December, we should have to reject it. It will undergo much negotiation; it may be possible to remove some of these elements, and we will have to seek compromises on various matters.

Much attention has been paid to European monetary union. The right hon. Member for Finchley accepted a Europe of different patterns and recognised that the Schengen group of countries—initially five or six, and now eight—have accepted no borders between them. That seems perfectly acceptable, and it would be wrong for Britain to say that they should not do so. They have contiguous borders. It makes sense to them, and nobody should object.

We must get used to seeing a variegated pattern for the European Community. As I understand it, the Government are saying that if within the European Community some member states wish to opt for a single currency and fixed exchange rates, we shall not stop that development. However, we are not ready to say that we would join that system now. We will not act as we did over the European monetary system and say that it is not a question of when, but of whether. We are reserving our judgment on both whether and when. We want so to design the treaty that it does not mean that one is a pariah because one has stayed outside it.

Can anyone seriously believe that Greece will be in a condition to have a single currency and fixed exchange rates within the next decade? There are a number of other Community countries that will also not be in that condition. I fear that if we sign up for a treaty in which only Britain is allowed to be a rather oddball exception, it will encourage the belief in Brussels in a tight, narrow Community. It will then be said, "Of course, we cannot have Poland, Hungary and Czechoslovakia in."

The right hon. Member for Old Bexley and Sidcup (Mr. Heath) made the matter clear. He seemed to expect that it would be 20 years before such countries could come in. The right hon. Gentleman cited the problems of Spain. I remember that many people in Brussels argued that Spain could not be taken into the European Community in 1977 and 1978. It is to the credit of the then Labour Government that we strongly argued for enlargement, and Spain has been a striking success.

What are we about in this European Community? Are we seriously saying that we dare risk a failure of the transition from a communist country to a democratic market economy for Poland, Hungary and Czechoslovakia? If there is one border in Europe which could bring back war and certainly tension, it is the Polish-German border. If there were a massive economic barrier between those two countries, there would be tension and problems. It is time that we said to the European Community, "For geopolitical reasons, you must expand to those three countries."

We might even have to say to the Scandinavian countries, "Of course you are going to come in, but hold back a little while we enlarge and you take on responsibility for Estonia, Latvia and Lithuania when they become"—as I hope they soon will be—"free and independent nations again, wanting to make the transition to democracy and to a market economy, and needing the help of the Scandinavian countries." Yes, we will have a community of 24 or 26 countries in the first decade of the new century, but our fundamental responsibility is to make certain that the countries that have come out of the communist fold succeed. Then it will be time for us to spread our wealth and expertise into the Soviet republics, and then it may be time to take on the problems of Bulgaria, Romania and Yugoslavia.

We cannot do it all. We have seen the problems that the united Germany faces in the former East Germany. It will be a difficult task to achieve the transition successfully, especially for Poland, but it is our moral and ethical responsibility to do so. Hungary opened its border to Austria, which was the key factor that allowed the Berlin wall to break down. The Germans have a moral responsibility. We who left Czechoslovakia to stand alone in the 1930s have a moral responsibility to help the Czechs to rediscover their nationhood.

Let us not be ashamed of nationhood. There were comments about the horrors of nationhood. What about the glories of nationhood? What about the fact that Britain was prepared to stand on its own at one stage in the cause of freedom? This is not chauvinism or jingoism. I am prepared to concede more sovereignty in some areas within the European Community. It may be difficult for us to do that, and compromises will have to be made. We may have to agree to discuss in a co-operative sense some areas of policy, which hitherto we have not wanted to do.

The key point is the question of majority voting. If we go down the route of paragraph 2 of article J in the draft treaty we allow majority voting for some areas of foreign policy decided by the European Council. Are we saying that, every time that the European Council meets, and foreign policy is on the agenda and common action is agreed, we will veto it? That is the only way if we are to preserve the principle. If we do not veto it every time it comes up, we allow majority voting. That is nonsense.

What are the nine areas suggested? They include relations with the Soviet Union, which may be the most complex and difficult question that Europe has had to face and on which the present members of the European Community have had very different views in recent memory. Many of them were not prepared to deploy cruise and Pershing missiles. Many were not prepared to stand firm against the Soviet Union. Many have not been prepared to take on international terrorism. Many were not prepared to support us in the Gulf war. Belgium has refused to supply ammunition to the British forces within the past 12 months. Am I now to be told by the Belgians that we are to have foreign policy decision-making on a majority basis? It is nonsense, and it has to be made clear that it is nonsense.

The value of the British Government's position at present is that they are arguing their case as Europeans. That is the great achievement of the Prime Minister and of the Foreign Secretary, and that is why they deserve our support in the Lobby tonight. They are not arguing as people who want to turn the clock back or as people who do not want the European Community to succeed. They are not saying that there are some areas of new sovereignty that we are willing to concede. They are saying that it is in the interests of Europe that the European Community does not become a federalist, narrow, inward-looking, mercantile and rather neutralist outfit. There is an idea that this will be a superstate. Half my worry is that it would not have the power that is needed.

8.15 pm

Sir Richard Luce (Shoreham)

I am glad that the right hon. Member for Plymouth, Devonport (Dr. Owen) focused some of his remarks on central Europe, and I will come back to that issue. In a debate like this, one cannot help but reflect that it is an occasion on which to take stock and to look at the overall perspective. We tend to lose sight of that when we live in the Community day by day.

One cannot help two reflections. The first is that it is a remarkable achievement that we are arguing in the Community about how we should evolve rather than fighting wars as we have done twice this century. That in itself is a remarkable achievement.

The second reflection is that, if we were to withdraw tomorrow morning from the Community, we could only ask ourselves what the consequences would be for Britain. They would be total isolation, no political influence and economic decline for this country. Those two reflections in themselves denote the importance of the debate about our membership of the Community.

Against that background, I thought that the speech of the right hon. Member for Manchester, Gorton (Mr. Kaufman) was quite astonishing. We were waiting to hear what the Labour position was on the Community. The speech reminded me very much of a play by Samuel Beckett called, "Waiting For Godot", which I watched as a student. We waited and we waited, and Godot never came. I must confess—perhaps I should not, as a former Minister for the Arts—that it was the only play I ever walked out of. At least I did the right hon. Gentleman the courtesy of staying in the Chamber.

By contrast, we had an inspiring speech by my right hon. Friend the Foreign Secretary, which reinforced what the Prime Minister said so strongly—that we in Britain must be at the heart of Europe. I cannot help but reflect, having listened to the speeches of my right hon. Friends the Members for Old Bexley and Sidcup (Mr. Heath) and for Finchley (Mrs. Thatcher), former Prime Ministers and former leaders of the Conservative party, that both have played a notable part in building up Europe. My right hon. Friend the Member for Old Bexley and Sidcup took us into Europe and my right hon. Friend the Member for Finchley played the most prominent role in helping to create a single market in Europe. Both of them have played a remarkable role in that connection. Even if they are not prepared to rest content with that, at least I will rest content with that.

The clear theme that comes out of the debate is that the Community is constantly developing and evolving, and that there is no single label such as "federation" that is the appropriate answer. The process is sui generic—it is developing of its own accord, and we must look at it in that way.

Against a background of a constructive, sensible and pragmatic approach by the British Government, and one in which we intend to comply, once we have agreed to a decision, with the decisions of the Community, we must consider the eastern—or as I prefer to call it, the central—European situation. In my view, nothing could be politically more important for the future of Europe than the stability of central Europe. We are already involved in negotiating association agreements and in negotiating with the European Free Trade Association. However, we must remember the lessons of the 1930s, when a former Conservative leader talked about. "a far-away country" about which "we know nothing". My goodness, we came to regret that attitude of mind and that approach. Just look at the consequences. We cannot afford to see that happen again.

Above all, next weekend in Luxembourg, it is supremely important that we give a clear message of support to the democracies of Poland, Hungary, Czechoslovakia and the others. Following the end of Soviet domination and of communism, they are now struggling to achieve democratic systems and to develop economically in a plural society. If they fail, that could lead to disaster for all of us—not just for them. It could lead to disillusion, to authoritarian rule, to the growth of ethnic tension, to fragmentation and inevitably, as we have seen throughout the centuries, to rivalry from their large neighbours.

The Community has rightly done much by providing emergency aid, food, structural and economic aid. Although all that is beginning to happen, it is crucial that we now reach an association agreement with those three countries that gives them access to trade. As my right hon. Friend the Member for Blaby (Mr. Lawson) rightly said, the most vital thing for them at present is for their agricultural and other produce, and goods and services, to have access to the outside world. Between now and the Maastricht meeting, it is important that we decide the likely implications of those three countries—and the other nine—acceding to the Community in the longer term, because their accession will almost double its size. We cannot ignore that issue. Even if it means slowing down the pace of achieving closer co-operation within the Community, that is a price worth paying for welcoming the central European countries into the democratic fold of European nations.

When my hon. Friend the Financial Secretary to the Treasury replies to the debate, I hope that he will tell us whether the Community is giving priority to assessing those implications and, above all, to giving a warm welcome, a gesture of friendship and encouragement, to central Europe by providing those countries with an association agreement and the clear signal that, in due course, we will welcome them fully into Europe. That political gesture is of the utmost importance, not only to them but also to ourselves.

8.21 pm

Mr. Nigel Spearing (Newham, South)

At the beginning of his speech, the right hon. Member for Shoreham (Sir R. Luce) referred to the parts that have been played by his right hon. Friends the Members for Old Bexley and Sidcup (Mr. Heath) and for Finchley (Mrs. Thatcher), who are both former leaders of his party. I should like to reflect first on their "contributions" and then to turn to the machine of the European Community in its legislative form. I believe that the hon. Member for Strafford (Mr. Cash), who said, "It is all right as long as it is not federal," is being a little over-optimistic.

The position of the right hon. Member for Old Bexley and Sidcup can be summed up by what he did to the Crown in Parliament, which, as everybody agrees, was our final authority until 1972. In passing the Act for which many Conservative Members voted, the right hon. Gentleman effectively said that the legislation of the European Community could, without further enactment, become the law of the United Kingdom. In other words, that Act and that right hon. Gentleman constructed a bypass around the Crown in Parliament. It is true that, at that time, the only area in which majority voting operated was the rural byways of the common agricultural policy, but those provisions bypassed the Crown in Parliament, and thus this House and the electorate.

The right hon. Member for Finchley then came along. She is a great marketeer and is keen on markets, wanting freedom from the oppressive state. But markets are not necessarily free of authority: the more complex the market, the more rules are needed. Let us look at the money markets. What is a bank? It is what the Bank of England says. It is what our statutes say it is. The more markets there are, the more authority is needed to control them. The idea behind the Single European Act was to ensure a multiplicity of markets throughout the Community in almost everything—trade, money, speculation or specification and, potentially, in the wages and conditions of people at work, which is known as the social dimension because men and women are economic persons and, if nothing else, are part of the labour market.

Knowingly or otherwise, the right hon. Member for Finchley agreed the definition of the single market as "an area without internal frontiers." In that connection, people think of lorries, barriers and 1992, but they do not think of the legal frontier of the market—yet frontiers can be legal as much as physical. If one removes the legal frontier, as required under article 8(a) of the Single European Act, one has to provide an authority over the whole. The Single European Act centralises that authority for any market.

In addition, that authority is determined not by unanimity but by majority voting. There are three elements to this issue—"without further enactment", "without internal frontiers", and "without unanimity". Taken together, those eight words represent an awesome degree of central power. That central power exists even now—even without economic and monetary union. That central power is not, and need not become, federal—it exists as a unitary power.

There has been a lot of talk about federalism and about federal organisations. Federations can be either weak or strong but, on any definition, they all involve a separation of powers. Under the treaty of Rome, however, there is very little separation of power, because power is centralised to an extraordinary and remarkable extent. The Foreign Secretary may talk about subsidiarity at the best place, but the centre decides where that best place shall be. As the Single European Act and the idea of a single European multiplicity of markets automatically make that place the centre, subsidiarity cannot apply in any case.

What then becomes of national Parliaments? Like other colleagues, I have had the privilege of meeting many parliamentarians from other countries. Sadly, we have come to more or less the same conclusion—that even now, with the present single market being due for completion at the end of 1992, national Parliaments can be little more than national advisory councils on the scope of the present European treaties. If any hon. Member thinks that a national Parliament can do more, I should be pleased to hear about it.

That is the present scope of the national Parliaments according to the European treaties, even in relation to European monetary and political union, which we have been discussing today. Therefore, I advise those Conservative Members who think that they can get rid of that "F" word, "federalism", that that is not really the point, because the basis of power already lies in a unitary structure, which, by definition, has great power at the centre.

Although the Financial Secretary to the Treasury is no longer in his place, I understand that he will be replying to the debate, so I should like to ask him a question. The Prime Minister has said that he will not allow a single currency to be foisted upon us—at least, not without the acquiescence of the House. However, under the so-called "compromise" which has been suggested, I can see a different scenario.

If we have fixed and irrevocable exchange rates, a common interest rate and a single economic policy, does it matter what one calls one's currency? Do they not amount to the same thing? Would it not be possible to keep the pound, just as the Irish kept the punt, although only as a matter of presentation? I fear that the Government may seek to go down that road to fulfil the demands which are properly made from their Back Benches. The Government will merely create a presentational solution, while there would be economic and monetary union in every sense of the words.

I conclude with three questions which must be answered fully and squarely if the British public are to understand the issues. First, if we are to avoid a central Government of bankers, by bankers and for bankers, how can we have a central political institution which has not in effect become a centralised European Government?

Secondly, what study have our Government made of the benefits of economic and monetary union? If they have carried out such studies, will they please publish them? What study has been made by any other Government—I am referring to national Governments, not to the Commission or the Council of Ministers—of the same matter? What benefits do other Governments expect will be available?

Thirdly, given the scope of the treaty—perhaps much watered down from the drafts which are floating around now—on political, economic and monetary union, and however the bankers and the money are controlled, what future do members of all parties in this House see for national political parties? Surely, national political parties can operate only within the power given wholly to national Parliaments.

If the power of national Parliaments is much reduced, what is the use of a national political party? If the function of parties is limited, or if they disappear into some great European arrangement—there are already moves in that direction, certainly across the Floor of the House—what is the value of the vote of the citizen of the United Kingdom?

8.31 pm

Rev. Ian Paisley (Antrim, North)

Previous dreams of a great central European power have been responsible, as history accurately records, for war, hatred, bloodshed and disaster. In the past, those dreams have turned into nightmares. Anyone who visits Strasbourg, Brussels or the institutions of the Community is well aware that there is a mad craze to build a new superpower in Europe. One has only to examine the construction of certain pressure groups in the Strasbourg Parliament and read the reports that come out of them to know exactly what those groups are up to.

We are told that the great new power that will come to fruition will take away from this and other national Parliaments 80 per cent. of the matters with which we now deal. Where will they be dealt with? They will be dealt with according to the President of the Commission in Brussels. The amazing thing is that we are told that the system of taking 80 per cent. of the powers of national Parliaments to Brussels is a form of wonderful devolution. It will spread power to the lowest possible level. In my opinion, the lowest possible level must be in the moral level. The change will certainly not benefit the constituents.

We are also told that we are to have a central bank. We are told that it will be a financial wizard and that it will give us a single currency. It will dictate both monetary and economic policy for all who are in the superstate.

When one sits in Europe as I do, one hears wonderful things. Conservative Members may not know that in the last debate in the previous session of the European Parliament, one of their colleagues—a Mr. John Stevens who represents Thames Valley—told his colleagues not to be unduly worried because Parliament would realise its ambitions once people had "Europe in their pockets"—in other words, the ecu in their pockets. He will find that Britain will not have Europe in its pocket, but that Britain will be in the pocket of Europe.

We are also told that the supergovernment will take over not by election or democratic principles but by appointment. The great so-called European ideal was produced by Delors and his clique. The House should note that the members of the Commission are not the masters of Europe. They should be the servants of Europe. It is about time that that message went out from this House.

It worries me that by a cunning scheme of propaganda our nation is reckoned to be a poor European. Yet when I take up the standard of our nation in Europe, I discover that we are well ahead as Europeans. Let us take the directives that must be made part of our law in order to bring in the Single European Act. Belgium lectures us, yet it has not even touched 31 directives. Denmark has never even considered 25 directives and Spain has not considered 38 directives. The Italian Foreign Minister read a lesson to us all on television the other night about what Italy intended to do. Yet Italy has never even looked at 70 directives. Greece has not considered 28 directives; the Republic of Ireland has not considered 44 directives and Holland has not considered 35 directives. Yet Britain has to implement only 23 more directives. We are third in the league, yet we are lectured that if we say anything about Europe or denounce anything that is done in Europe we shall not be considered good Europeans.

This Parliament has been a good European. It has been too good about playing cricket by the rules while other nations ignore the rules altogether. It is wrong for people to say that, simply because we object to certain European proposals, we are not playing the game. Our nation has played the game, even too well.

What have been the effects of our membership of the Common Market? To hear some of the folks speaking today, one would think that everything that the right hon. Member for Old Bexley and Sidcup (Mr. Heath) told us during the referendum campaign had come true. We were told that membership of the Common Market would be a panacea for all our ills and would cure unemployment. What has happened? Before the United Kingdom joined the EC, its home market was larger than it is today. The seven other countries in the European Free Trade Association, the Republic of Ireland and all the Commonwealth states charged a lower level of duty on United Kingdom commodities. Between 1957 and 1973 United Kingdom manufacturing output rose by 67 per cent., but from 1973 to 1988 it rose by only 3 per cent. We need not expect the market to be the be-all and end-all of our troubles.

The report of the European Commission tells us what we can expect in this great new Europe. It tells us that the economic forecasts for Europe are not encouraging. The slump and deterioration in the Community are expected to worsen. The report says: Economic growth in the community decelerates significantly from 3.3 per cent. in 1989, to 2.7 per cent in 1990, and 1.4 per cent. in 1991. Investment growth slows down dramatically in 1991 to a poor 0.8 per cent. Employment creation will almost reach a standstill in both 1991 and 1992. Do we want to hand over this Parliament's powers which alone can deal with our economic ills and the employment question, to a Commission that admits that that is what lies ahead in Europe?

According to a leading socialist, Mr. Metten, at the previous debate in Strasbourg, the idea is to create the new bank and put it into an annex to the treaty that can never be amended by any Parliament. Will the Government stand for that?

8.40 pm

Mr. Jim Sillars (Glasgow, Govan)

The two speeches that I found slightly amusing this afternoon were made by the right hon. Members for Finchley (Mrs. Thatcher) and for Plymouth, Devonport (Dr. Owen). They were good speeches, but from a Scottish nationalist point of view they were amusing. The right hon. Lady said that the nation state was the foundation of European union, but the United Kingdom is a multinational state. The right hon. Gentleman said that we should not be ashamed of nationhood and made a stirring speech that received cries of "Hear, hear" from both sides of the Chamber. If I had made such a speech about Scottish nationhood I would have been denounced as a narrow nationalist.

My party's policy is to obtain Scottish independence and for an independent Scotland to be a member state of the European Community, just like Ireland and Denmark, which the Foreign Secretary said earlier this afternoon were his partners in one of the consensus-building exercises in which he is engaged. However, I shall concentrate on the political and constitutional issues and, were I in an independent Scottish Parliament, I would make the same kind of speech as part and parcel of the debate on the future development of the European Community.

At first, the European Community was entitled the "European Economic Community", and there is bound to be a logical progression from that foundation to a single market, from a single market to a monetary union and, ultimately, from EMU to a single currency. Time does not permit the deployment of the arguments on that particular proposition, but those economic impulses, and the framework and institutions that they throw up, automatically create a need to address the political framework of the European Community. The political institutional framework must match the economic framework that is developing.

I am in favour—as is my party—of the maximum amount of unity possible, not only in western Europe but in eastern Europe. I have much sympathy with those who argue for a federal Europe because I understand perfectly their motivation to bring the peoples of Europe together more cohesively than ever before. However, I wish that they would not go down that road, because I do not believe that it will reach the objective that their motivation sets in train.

The speech by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) was fascinating. He told us that there was no problem in defining "federal". When I asked him, in the context of giving greater powers to the European Parliament, whether that meant that an executive would be drawn from the Parliament, he had great difficulty admitting that an executive would have to be drawn from that Parliament in a proper federal constitution. He tried to escape by saying that that was some way down the road. He also said that one reason why he believed in federalism was that it meant more democracy. I am not sure whether that is so. Federal organisations in the world show that a test must be applied to see whether they can work effectively in a truly democratic sense. I define "truly democratic" as being whether it engages the individual person in the decision-making process within that political entity.

Confederal Canada lacks the required homogeneity constantly to work in a perfect way—or as near perfect as human beings can get. The test of homogeneity is very important. For example, I cannot conceive of a federal united states of Europe where a citizen in Taranto in southern Italy is tuned into the argument in exactly the same way as someone in Inverness or a town in Germany, understanding perfectly the common policies that apply to them all, and where the person in Taranto will vote in accordance with what he or she thinks is good for the person in Inverness because he understands the social and economic problems there. That does not exist in Europe because the culture and history vary widely. Such understanding is unlikely ever to exist in what we now call the European Community.

If we get it wrong—if the size is too big and it is not homogeneous—the Government machine will be alienated from the citizen. An excellent example exists in the United States of America, where only 70 per cent. of those entitled to vote register to vote. The turnout at presidential and congressional elections shows that there is something fundamentally wrong if my test of people feeling engaged is applied. In the great Kennedy-Nixon debate, which the world thought was extremely important—as a young person, I stayed up all night watching the results on television—only 62.8 per cent. of voters turned out. In the great Vietnam presidential election in 1968, only 60.9 per cent. of the electorate turned out. In 1988, the turnout was 50 per cent. and in the 1990 congressional elections, the turnout was only 33 per cent.

It must be difficult for a state with such a large population and geographical spread to achieve the political homogeneity about which I was arguing. The European Community must develop forms of union and greater unity, but it would be far better if we understood that it must be done on an incremental and ad hoc basis over a long period.

I return to the point that I made earlier about my desire for greater union and unity within the European Community. The European Community represents a potential core of stability in a continent that is not in a stable position at present. Some hon. Members have said that Europe will not experience a repetition of what happened in 1914–18 and from 1939–45. I am less sanguine. There are many problems to be solved in western and eastern Europe and the relationship between them. Having developed a degree of co-ordination and unity over a period of time, the European Community represents a model and a core of stability round which the rest of Europe can cohere in due course. However, the Community's relations with eastern Europe are fundamentally important.

In 1918, peoples and statesmen throughout Europe got it wrong and we got it wrong again in 1945. Earlier this afternoon at Question Time, the hon. Member for Bolsover (Mr. Skinner) told the Foreign Secretary that he was concerned with the past eleven hundred years of history. I am not particularly concerned with 1,000 of them, but am most concerned with what has happened in the 20th century. Because we got it wrong in 1918 and 1945, this has been a blood-drenched continent, and we cannot get it wrong this time.

8.49 pm

Mr. Terence L. Higgins (Worthing)

I shall begin by taking up a point made by the right hon. Member for Manchester, Gorton (Mr. Kaufman) in the slightly sordid preamble to his speech, which was longer than the speech itself. In it he sought to exploit the view that Conservative Members were divided down the middle on this issue, which is not so. I believe that a small number of Conservative Members are Euro-enthusiasts and, at the other extreme, there are perhaps a greater number who are Euro-sceptics.

Certainly, those extreme views have, to some extent, been personified by the opinions expressed by my right hon. Friends the Members for Old Bexley and Sidcup (Mr. Heath) and for Finchley (Mrs. Thatcher). It is perhaps a little ironic that the constituents of my right hon. Friend the Member for Old Bexley and Sidcup have been more adversely affected than anyone else by the channel link with Europe and curious that my right hon. Friend the Member for Finchley should conclude that the right place to attack the whole federal idea was the United States of America—an idea that did not seem to occur to her or her audience.

The vast bulk of Conservative Members, and I suspect Opposition Members, are firmly of the opinion that we should not take either of those extreme views but, on the contrary, do everything we can to back my right hon. Friend the Prime Minister in what are immensely difficult negotiations of fundamental importance to the future of not only this country but Europe as a whole. Therefore, it is important to do all we can to ensure that those negotiations come to a satisfactory conclusion.

I share the views expressed by the right hon. Members for Bethnal Green and Stepney (Mr. Shore) and for Plymouth, Devonport (Dr. Owen) and a number of my hon. Friends that the draft treaty floating around the House—still unofficially, I am sorry to say—is unacceptable in a great many respects. My right hon. Friend the Prime Minister has a difficult task during both sets of negotiations at the intergovernmental conferences. We have to decide where to strike the right balance. We are pretty clear about the draft treaty and I want to stress a point made in a report by the Treasury and Civil Service Select Committee on the Delors report: The power of the House of Commons over the centuries has depended fundamentally on the control of money, both taxation and expenditure. This would be jeopardised by the form of monetary union proposed by the Delors Report which would involve central undemocratic direction from within Europe of domestic budgetary policies. The control of money that has been fundamental to the power of the House over the centuries.

I greatly welcome what my right hon. Friend the Foreign Secretary said about it being wrong to hold a referendum on the issue of a single currency. The issues surrounding it are extremely complex and confusing. There is a fundamental difference between a single currency, where all other currencies are abolished, and a common currency set alongside the existing currencies. I suspect that, if we had a referendum, the number of people capable of making such a distinction would be remarkably small.

What should we do about the single currency? Are we in favour of a single currency in principle? We certainly did not receive an answer to that question from the right hon. Member for Gorton this afternoon. I shall make my own position clear: I am in favour of a single currency for Worthing and, by and large, for the United Kingdom, but I am totally opposed to the idea of a single currency for the world as a whole. The crucial issues are the size of the geographical district being considered and the differences in economic performance in relation to a number of important factors.

It would be totally wrong for the Government to go along with a treaty that stated that we should move to a single currency at a certain date without regard to what had happened in relation to convergence. I agree with the view expressed by a number of my hon. Friends that, if we had a single currency, it would place a barrier in front of outsiders, making them incapable of joining that single currency system within the next 50 to 100 years. That in turn would diminish the extent to which the Community could be widened into eastern Europe and elsewhere. Therefore, the issue of a single currency is crucial.

The Delors report envisages that, in order to offset the traumatic effect of perpetual unemployment, which a rapid move to, or general agreement on, a single currency might create in some parts of the Community, there should be a large fund from the EC moving from one part of the Community to another. There are two objections to that. First, allocating resources to underdeveloped areas has not worked in the past. Secondly, there would be no guarantee that such financial flows would take place. Therefore, we should strive to create common interests with a number of other Community partners, not least Spain and Portugal, and oppose the idea of a single currency.

The broad scope of economic opinion is that, even if we moved to a single currency, it would not be necessary to hand over control of fiscal matters, whether taxation or public expenditure, to the Community. The control of such issues by the House is important. I am puzzled, because those are simple points that any decent, first-year economics student should make, but we have failed to get that message over in the Community. I do not know why Community members are pressing ahead with those ideas, which would be disastrous for us if we were to rush ahead on a preconceived timetable.

My right hon. Friend the Member for Finchley made an important point when she said that, if we were not to go along with a single currency but some other Community members were, it would be totally inappropriate to start making large fiscal transfers that were supposed to offset the effect of the single currency. I am worried about the way in which the rotation of the presidency of the Council of Ministers from one country to another gives an enormous impetus to whomever happens to be president to say, "We must do something impressive." That happens each time the presidency changes, which is after only a short period. If we were to lengthen that period, whoever happened to be president would take a less macho approach.

We have tremendously a difficult role to play. Mr. Delors seems to think that it has something to do with the date of our election, and that if we let him go ahead with what he wants now, we can then decide whether to go along with it after the election. That is a total misconception of what this is all about.

We have a role to play in obtaining the right solution for the United Kingdom and for Europe as a whole. It is right that my right hon. Friends the Foreign Secretary and the Chancellor of the Exchequer should put over the simple arguments that I have sought to advance during the negotiations. There will be extremely difficult negotiations in both intergovernmental conferences, but I have great confidence in the ability of my right hon. Friend the Prime Minister and his ministerial colleagues to reach a satisfactory solution. That is something on which I believe my right hon. and hon. Friends are united, and I would hope that Opposition Members could reach that position as well.

It is my impression that those who occupy extreme positions are beginning to come more towards the centre. It is right that right hon. and hon. Members on both sides of the House should give clear warnings on the real dangers that we shall face if we do not recognise that we are discussing matters of the greatest importance. It would be extremely dangerous to rush into a timetable.

8.59 pm

Mr. Brian Sedgemore (Hackney, South and Shoreditch)

The speeches of the two former Conservative Prime Ministers, the right hon. Members for Finchley (Mrs. Thatcher) and for Old Bexley and Sidcup (Mr. Heath), showed clearly that one purpose of the debate is to enable us to express our grief about the way in which European issues threaten to destroy the Conservative party. As Jacques Delors, our dear socialist friend would say, "C'est la grand tristesse pour tout le monde." In other words, such sorrow for us all.

Recent unattributable briefings from Downing street have sought to suggest that there are only six venomous vipers on the Tory Back Benches who are causing trouble over Europe. Senior Foreign Office officials have told me, however, that they are working on the basis that there are about 80 spotted snakes among Tory Members, whose poisonous tongues will have to be excised if the European dream is to come true. My response to those officials has been to say that those 80 or so Tory Members are no more than the dying embers of the old order and are the sarcophagi of British political life. Perhaps it is only right on moral as well as political grounds that a backward, fractious and ignorant island like ours should have about 80 backward, fractious and ignorant Tory Members sulking and skulking on the sidelines of Europe and of history.

On 30 May I attended an all-day conference organised for senior business men and women, which was entitled "European Monetary Union in a Turbulent World". The first speaker, the Chancellor of the Exchequer, gave what everyone present described as a surly, anti-European address. Over lunch, the Germans and French to whom I was speaking expressed alarm at the Chancellor's lack of authority, stature and gravitas. The Chancellor's speech was followed by one by Rudiger Dombusch, a distinguished American academic from the Massachusetts Institute of Technology. He said that joining EMU was rather like getting married—one could either draw up a long list of reasons for not marrying or just get on with it and marry. I think that he added, "We have just heard the list."

On 10 June, in an effort to make up for the damaging effect which his speech of 30 May had had on our European partners, the Chancellor met Pierre Beregovoy from France, Guido Carli from Italy and Hennig Christopherson, the EC Economic Affairs Commissioner, and led them to believe that the British Government accept the principle of EMU. Unfortunately for the Chancellor, Beregovoy, Carli and Christopherson made the content of their private conversations public. Immediately all hell was let loose in this country, and on 11 June the Government, who only the day before had been dealing with the Second Reading of the Dangerous Dogs Bill, came under savage attack from the pit bull terriers of the Bruges Group. The Prime Minister was accused of being scared to use his veto and his predecessor, the right hon. Member for Finchley, was reported as having said of him, "He stands for nothing. He is nothing."

At almost every Question Time now, a member of the Bruges Group asks the Prime Minister to exercise his veto over developments in Europe. Invariably he answers, "We will not allow a single currency to be imposed on this country without the consent of Parliament." Commenting on this on 15 June, The Economist under its byline, "Bagehot", said: But Right-winger's question has gone unanswered. Challenged to veto change, Mr. Major instead offers a vote before the change is implemented in Britain—something quite different. Yet nobody complains. The exchange has been on the level of: 'Is the Eiffel Tower a fish? Yes, she is a banana.' (Rumbles of assent from Tory benches). Where in the world, except in this place, would such prime ministerial ineptitude be tolerated?

Nor does the Prime Minister's approach impress Sir Alan Walters, the former chief economic adviser to the right hon. Member for Finchley. Sir Alan is worried about the exchange rate at which Britain joined the ERM and its damaging effect on the recession. He is right to be worried. Like Sir Alan, I do not speak with hindsight. On the very day that we joined the ERM, I said that the rate was too high. Moreover, it seems inconceivable that we should be thinking in terms of holding the rate of DM 2.96 to the pound right up to the point at which EMU and the creation of a single currency comes into operation, as it assuredly and happily will. At the current rate of exchange, Britain will not be able to return to its warranted rate of economic growth until 1994 at the earliest.

The Labour party's position on EMU and the creation of a single currency is translucently clear. It is that we accept the principle of monetary union with a single currency, but we believe that we will first need some years of a Labour Government to improve our economic performance in relation to that of Germany. It takes just 36 words to set out the Labour party's position.

I am convinced that the creation of a European central bank controlling monetary policy, with a single interest rate throughout the Community, will inevitably and inexorably lead in the direction of close and intimate political union.

I do not understand the Foreign Secretary when he says that Britain will not accept a federal European structure. Using words and political concepts according to their ordinary meanings, the European Community already has a federal structure, and Britain is a member. The question is not: "Does Britain support a federal destiny for Europe?" but "What kind of federal destiny do we support?" To be or not to be a federalist—that can no longer be the question. We are all federalists now.

In Britain we must accept that such values as our parliamentary democracy contains have to compete in the intergovernmental discussions on a new constitutional settlement in Europe, both with the French system of government as laid down by Napoleon and with the German devolved and regional system of government, which arose from the post-war settlement. Both the French and the German systems work better than ours, but I believe that Europe should model itself on the German system and be prepared to test that system to destruction. In particular, the European Parliament needs a second regional chamber to balance the enhanced powers to be given to the first chamber.

In Britain we have nothing to lose and much to gain from federalism. It is time that we preferred success to failure and stopped sneering at the material wealth and culture of the French, Germans and Italians. It is time that we spurned small-minded and shrivelled isolationist views and—on this side of the House, at least—co-operated with our Euro-socialist friends on the continent to inspire our nation. That is what we should be voting for tonight—the triumph of European socialism in less than two years in Britain, Spain, France and Germany, led by Felipe Gonzalez, President Mitterrand, Bjorn Engholm and the next Prime Minister of this country—my right hon. Friend the Member for Islwyn (Mr. Kinnock).

9.7 pm

Sir Teddy Taylor (Southend, East)

The hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) always appals me—the changes in his views remind me of a Militant supporter collecting funds for the Primrose League. He has suddenly become a violently enthusiastic European, but what he tried to say about what would happen to the Conservative party or to the Labour party is largely irrelevant. I hope that he and others appreciate that if the proposals were accepted it would matter not one bit whether we had a Conservative, a Labour or a Liberal Government—or any other kind. The same basic policies would be applied irrespective of who won the election.

The vital issue that we should consider is that of democracy. Whether one supports the Conservatives, the Labour party, or anyone else, or the principle of our democratic system of government is that people can choose. If they think that the Government are doing a rotten job, they can chuck them out. It they do not think that the Government are doing well they can give them a warning at a by-election.

The tragedy of the transfer of power to Brussels and the European Community is that people's views are wholly irrelevant. If we look to eastern Europe and elsewhere we see that where Executives and civil servants have power without any kind of democratic control, the same thing always happens: they become wasteful and irresponsible towards the public. If we throw away our democracy something very serious has happened.

This was expected to be a debate in which everyone would disagree, but the strange thing is that almost everyone has agreed. Almost every speaker has said that the subjects that we are discussing are vital and constitutionally significant. It worries me sick that we have heard almost exactly the same words in almost every debate whenever we have transferred sovereignty away from the House.

During the debate on the Single European Act, which was guillotined late at night, the same words were used. When we gave extra cash to the EEC, the same words were used. When we had the so-called reforms of the CAP and gave extra cash for that, the same words were used. But on every single occasion, after all the complaints and all the protests, the House of Commons has voted away its sovereignty because it has been reassured in some way. On the Single European Act, the House was apparently satisfied by the assurance that majority voting would be used only to enhance free trade. Sadly, it is now being used for almost everything—almost every law affecting us at present. On increased funding, the assurance that we were given was that there would be strict budgetary controls; they proved to be a joke.

What worries me is that, today, word is again going around that these are significant, dangerous and worrying proposals but that, so long as we do not have federalism, everything will be okey. I am sure that the Foreign Secretary will accept that all this federalism talk is a load of rubbish. If we had a federal state in Europe today, we should have more sovereignty guaranteed for the House than we have at present.

Today, because of the power of the various authorities and because of what is in the treaty, hardly any basic power is left to the House of Commons. It has almost all gone. To say that we shall enjoy some kind of victory if the word "federal" is removed is merely to give the House an excuse to agree to what is happening.

It worries me that there has been a failure to face up to reality in the debate. We hear about free trade in 1992. Over a year ago, I asked my county council to tell me of any firm anywhere in Essex that would benefit from the specific proposals. I am still waiting for an answer. I have asked my local chambers of commerce, "Does anyone here know of any firm that will benefit?" Again, I am still waiting for an answer. Yet glossy pamphlets are put out saying, "We will have free trade."

Even the superb right hon. Member for Plymouth, Devonport (Dr. Owen) says, "At least we will hold on to our frontier controls." The right hon. Gentleman said that eight of the member states are to go ahead, three are left out and, happily, Britain is excluded. The right hon. Gentleman is not up to date. We have been excluded until the latest date—1995—the control of our frontiers has gone, and all that remains to us is the derogation. The sad fact is that we have lost almost everything. That is why it is vital that, in this occasion, we make the right decision and hold on to what little sovereignty is left.

We pretend that we still have sovereignty. People write us letters saying, "Please cut interest rates." On the radio the other night, we heard some idiot from CBI saying, "We appeal to the Government to cut interest rates." What we have to tell them that there is nothing that we can do about interest rates. We must wait and see where the ERM washes us. If we want to cut interest rates, the only way to achieve that is to send some of our friends over to try to create instability in Germany. The Government's powers are virtually nil, so we are kidding ourselves if we pretend that there are great powers that can be exercised by Labour, the Conservatives or anyone else.

We have to get it right. I am one of those who have voted against the various measures, waving the union jack with a dozen other Tories and saying, with them, "We are doing a grand job." The sad fact is that, although we talk about these things, we get nowhere at all.

I fear what will happen when we have another vote. The Conservative party is changing pretty dramatically. There have always been a dozen of us who have regarded the EEC as a nasty protectionist racket, and there have always been half a dozen Tory Members who think that the EEC is the best thing since sliced bread, but the mass in the middle have been broadly supportive of the EEC. The change is now affecting them. Although they broadly support the EEC, they are now worried, concerned and alarmed—as we have heard today—about what is happening to our democracy and our economy.

We are at a time of change, but the change will not affect everyone. I am sure that it will not affect the Secretary of State, but it is affecting most Conservatives and a lot of business men. We must simply hold on to what sovereignty we have. What the Prime Minister appears to be suggesting could be the best way of holding on to it, and that is a twin-track Europe—twin-track without any commitment to join in treaties or to pay the vast sums that will be spent by the central bank. The central bank will be able to do many things, but the main thing that it will do is to hand out billions and billions of pounds to try to achieve convergence. As long as it is "if' and not "when" —as long as no cash is committed—the twin-track approach might at least allow us to hold on to some of our basic sovereignty.

I believe that the Conservative party is undergoing a change—at least we are anxious to achieve unity—and that the principle of a twin-track Europe, without any possible commitment—and without any question of a contribution of cash—may be a way in which we can unite the Conservative party, which is understandably worried and concerned. It would also be generally acceptable throughout the country. If we do that, the time may come when we can ask Labour what its basic policy is.

Ultimately, the issue is far more important than what will happen to Labour or to the Conservatives. Let us at least accept that if we allowed the treaties to be implemented with our name on them and to be applied to us, it would not really matter which party won the next election. The same thing would happen: our democracy would be wholly eroded.

If we have one duty, it is to safeguard our democracy and not pass the powers to a central, bureaucratic machine over which the people have no control.

9.15 pm

Mr. Austin Mitchell (Great Grimsby)

There is no doubt that this year is a major turning point. This is our last chance to draw lines. If the proposals now envisaged, or any like them, are accepted, we shall be locked into a remorseless and irreversible momentum towards political federalism and the powers of our Government and our Parliament will be reduced to the equivalent of the powers of a charge-capped local council. We shall also see the peripheralisation of the British economy. Neither process is in Europe's present interests: we should consider the wider Europe, not just the little Europe that is advocated by some of my hon. Friends.

Our main aim should be to bring Europe together—to bring the eastern European states into a wider and looser relationship. Every time that we make that relationship deeper and more "committing", we erect bigger barriers against the states that we need to help and integrate. The same applies to the nations of the European Free Trade Association. We must not become more exclusive and selfish, and keep such nations out.

Nor do I accept the idea that we should build this federalism on the basis of economic and monetary union. We have already had 11 years' experience of the first stage, in the form of the European monetary system. The consequences of that have been disastrous for the European economy: growth has slowed more, unemployment has risen more and the deflation record has been worse than in most comparable economies. The position, in all those respects, has been worse than that in the United States and the EFTA countries. Europe's record has been even worse than the pathetic record of our Government. Europe has become the deflationary blackspot of the advanced industrial world—and this has been only the first stage of economic and monetary union.

We have now embarked on the second stage. Britain's experience of the exchange rate mechanism, since the present Prime Minister forced it on his wilting, submissive, nervous predecessor, has been disastrous. We have been locked into a deflation process that has become inescapable. The Government say that, if we get inflation down, interest rates will fall. That simply is not true; interest rates will fall only when the level of the pound permits it. Our control over our interest rates, which we need to manage the economy, has been subordinated to the need to keep the pound in the currency band. It is like trying to improve the weather by nailing the needle on the barometer.

Last October, when we entered the ERM, the level was over-valued—more than 20 per cent. up against the deutschmark, in real terms, on the level in the last quarter of 1986. That will have exactly the same consequences as those described by Keynes in 1925, when Churchill returned to the gold standard with an over-valued level.

We are now locked into a depression—a deflation—that is the preliminary to a sustained deflation of the kind that France experienced in the 1980s. That still awaits us, but we shall experience it at the end of the present ordeal. Economic and monetary union would compound the problem. It could work in only two sets of circumstances. The first is an absolute convergence of growth, productivity and industrial power. Without that, we get the strong draining the weak, as is happening in east Germany, or there needs to be a massive machinery of redistribution—the McDougall committee suggested about a tenth of European gross domestic product—to offset the consequences. Neither is proposed. If we say not whether but when, we abandon the attempt to get either of those two preconditions, which will be disastrous for this country.

In the absence of control over our interest rates and exchange rates and our budget and tax policies, we will be unable to rebuild the economy. The role of this Parliament will then change. Traditionally, the role has been to bring our grievances first to the monarch, then to the Executive and now to the party in power. We shall continue to bring those grievances—there will be many more of them—but there will be nobody here to bring them to.

9.20 pm

Mr. George Robertson (Hamilton)

This memorable debate has spectactularly shown that grand passions are rightly and properly excited by the European debate. This is far from being the first time when Europe has dominated the headlines and produced wildly differing but equally strong felt opinions.

As so many hon. Members have emphasised and underlined in the debate, this is a momentous time for our country and our continent. At this time, therefore, of all times, with the intergovernmental conferences under way and, behind closed doors going into the details of arrangements that will last for a generation and beyond, for our Government to appear to have as their principal and overriding objective the impossible task of holding together their own warring factions is the most foolish and unproductive of all negotiating techniques. It represents a genuine tragedy for this country.

I agree with my right hon. Friend the Member for Leeds, East (Mr. Healey) that the issues that we are debating today are so basic to our nation's future that we must and should be clear about our objectives. My right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) made clear the Labour party's objectives in the intergovernmental conferences. Hon. Members who were not listening will be able to read the details in Hansard tomorrow.

Let me make it perfectly clear that the Labour party believes in Europe, broad and deep, as a community, not just as a market. We believe that closer co-operation on monetary policy between the European Community countries is both inevitable and desirable. We believe, too, that our European Community partners are intent on economic and monetary union. That was the objective of the Single European Act that Conservative members endorsed in the Lobby. Our partners want a European central bank, leading, if possible, to a single European currency. The Labour party believes that it would not be in the national interest if Britain allowed itself to be excluded from such developments, but have our own conditions for that process.

First, accountability must be at the heart of the process, with the Council of Finance Ministers having the task of providing strategic guidance for the union. Secondly, there must be convergence between the economies. That will be necessary, not just for this country but for any system to operate. In distinction to the Government on the issue of convergence, we believe that there should be instruments that will make that convergence happen. That means strengthened regional and other structural funds.

The Financial Secretary to The Treasury (Mr. Francis Maude)

Will the hon. Gentleman tell us, because I am sure that he and his right hon. and hon. Friends have worked this out very carefully and done their sums very carefully, what sum they propose should be added to the Community's budget for this additonal regional structural policy and what effect it would have on the net contributions to be paid by British taxpayers to our colleagues and partners elsewhere in the Community?

Mr. Robertson

I was coming to that, but I shall deal with it now. Unless the Government change the rules on the regional funds, any increase—there will be an increase in regional funds, whether the Government like it or not —will mean that we will be larger net contributors to the budget. The rules must be changed to allow inter-regional transfers. We are not in a position to give—

Mr. Maude

rose—

Mr. Robertson

I have little time to make my speech. I cannot give way to the Minister, who keeps bouncing up and down all the time.

I make clear and repeat what my right hon. Friend the Member for Gorton said this afternoon, amidst the hubbub of Conservative members. Our objectives for the political union IGC are clear. We support the social charter and the social action programme. We favour majority voting in the Council of Ministers on social and environmental matters. We favour some extension of power to the European Parliament and early enlargement of the Community by its immediately welcoming Austria and Sweden, which have applications on or about to lie on the table.

That places Labour firmly in the mainstream of European thinking and in a strong position to negotiate with sensitivity and good will on the other matters that are being suggested.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Will the hon. Gentleman give way?

Mr. Robertson

I shall make progress with my speech.

It would be impossible to wind up the debate without mentioning the right hon. Member for Finchley (Mrs. Thatcher). [HON. MEMBERS: "Where is she?"] I understand that the right hon. Lady informed the Chair that she would be slightly delayed in returning for the wind-up speeches because she is attending a dinner in honour of the late Ian Gow—a friend and an individual for whom I had enormous respect. I forgive her and hope that these views will be communicated to her. Speaking last Monday to friends of mine—and of the Government Chief Whip—on Chicago Council about foreign relations, she said: a little less silence might be called for. We got full value this afternoon, when the right hon. Lady outlined five principles, with the implied, perhaps even explicit, threat of going critical if the Prime Minister does not stick to them. She said that she was in favour of the broad band of the exchange rate mechanism and that, it is not necessary to go beyond that. The Prime Minister has said that we shall soon move into the narrow band of the ERM. He told The Daily Telegraph last week: We accept the principle of a single currency. Clearly, war is declared between the Treasury Bench and the Conservative Back Benches. I urge the Prime Minister, in his interests and those of the country, to ignore and defy the instructions and advice from the Finchley bunker.

I understand that the Prime Minister is a cricket fan. Like me, he attended the second test last week. It was the first cricket match I had seen; it took me only an hour to find out who was batting! When I heard that the Prime Minister was there, I thought that he must have been thinking back to the memorable words that were uttered in the House last year by the right hon. and learned Member for Surrey, East (Sir G. Howe). Speaking of the previous Prime Minister's tactics on Europe, he said: 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."—[Official Report, 13 November 1990; Vol. 180, c. 464.] The right hon. Lady still seems to be breaking bats. In the interests of our country, the Prime Minister would be wise to avoid that.

Divided at home, isolated in Europe, the Government continue cynically to put party before country in these vital negotiations. Because of that and because, unique among our debates on this formula since 1983, the Government have not had the courage to table a motion, we will vote against them at 10 pm.

The greatest evidence of the Government's confusion was revealed in their obsession with the "F" word—federal. It appeared last week in the latest of three draft treaties produced by the Luxembourg presidency. I remind my colleagues who quoted copiously from that draft that it is simply a draft and that many changes have been made in the various documents.

The latest draft was tabled last Monday by the Luxembourg presidency, and our Foreign Secretary promptly pressed every panic button in sight. He ignored the discussions on the three pillars and the substance of the final form of the treaties. He ignored the suggested new competences of the Community that were tabled at the same meeting and the sections about majority voting and the powers of the European Parliament. At his press conference afterwards, it appeared that nothing mattered more to Her Britannic Majesty's Principal Secretary of State for Foreign and Commonwealth Affairs than the inclusion of the word "federal".

Mr. Hurd

That is entirely wrong. I did not even mention the matter at my press conference until I was asked. I mentioned all the other matters which the hon. Gentleman said that I failed to mention. He has got it exactly the wrong way round.

Mr. Robertson

Sources close to the Foreign Secretary said that he was slightly agitated by a comment from Jacques Delors, who was not even a member of the intergovernmental conference.

As has been said in the debate, "federal" is a trigger word which is confusing and heavy with conflicting symbolism signifying different things to different people. That is why it does not appear in any of the declarations of the confederation of Socialist parties of the European Community—not because we are afraid of the word, but because it obscures rather than illuminates the issues at stake.

However, as my right hon. Friend the Member for Leeds, East said, when the chairman of the Conservative party applied for membership of the European People's party in April, he made it absolutely clear that the application enjoyed his full support and that of the Prime Minister as Leader of the Conservative Party. Sir Christopher Prout, the leader of the Conservative Members of the European Parliament, was clear and unambiguous in his letter backing that application. He wrote: I should like to emphasise that my colleagues fully support, inter alia: The institutional development of the Community into a European Union of a federal type". He went on to say that they believed in the development of a common foreign and security policy within Europe. He then stated that he and his colleagues believed in the establishment of an Economic and Monetary Union with an independent European Central Banking System and the ultimate goal of a single currency. That application came not with the imprimatur of an obscure Member of the European Parliament, but in the name of the chairman of the Conservative party and the Prime Minister. When we hear so much noise about the word federal and what it means and how important it is to the British Government, we must bear that carefully in mind.

In a week of desperate, demeaning and pleading visits around European leaders, the Prime Minister has claimed a so-called triumph—[Interruption.] The Foreign Secretary may hum and hah. Is he going to pretend that there are no divisions of opinion or a stark and obvious contrast between the Prime Minister's words and those uttered by his predecessor even this afternoon?

The triumph that has been achieved in a week of meetings has been the exorcism of one word and a little extra time before the Government must fall into line and capitulate with the majority. That is a ludicrous semantic juggling act which simply postpones the inevitable—as inevitable as the tactic of the right hon. Member for Finchley of very noisy opposition followed by abject surrender.

It is a point of national importance that the Government's form of negotiation is uniquely unproductive. They stand out against the imposition of a single currency when they know that it cannot be imposed. They stand for an opt-out clause on the EMU when they know that the only alternative that is involved is a guaranteed second division status for this country. They stand for the rights of the British Parliament, but the same party drove through the Single European Act on three-line Whips and on a whipped guillotine motion. They may have a victory on the withdrawal of the "F" word, but on the key matters in Europe they are marginalised. Only on a common foreign and security policy, which in itself is a minority pipe dream, to which we certainly do not subscribe either, can they count on the fact that no pressure will be put on them. On all the rest, this last-legs Government are out of line and out of touch and, pretty soon, will be out of time.

The Government set themselves against all the rest on an increase in majority voting in the Council of Ministers. They set themselves against fast-track decision-making on social and environmental affairs to accompany and complement decisions that were taken on the single market for the commercial and business world. They set themselves against the powers of scrutiny for the European Parliament that are designed at least to put back some accountability to areas that have already been ceded to European level and have now been left without any scrutiny by elected representatives.

We see the European Parliament having power to supplement but not to replace the work of scrutiny on what is being done in our name in Europe. The Government set themselves against a targeted regional policy when they know that it will be necessary to make the convergence about which they talk actually work. They set themselves against the social action programme and look sillier and sillier as they become more and more isolated.

The Secretary of State for Employment—an expert on unemployment since, of course, we have the fastest rising rate of unemployment for the second time in a decade—tells us that the regulations that will come forward are a guarantee of more joblessness. However, the ordinary voter will ask the architects of unemployment in this country whether, if that kind of regulation and those kinds of proposed standards have produced the benefits enjoyed by workers in Germany, Denmark, France and Belgium, that is not a better risk to take than staying in the jobless, growthless paradise being created by this Government. The social charter makes simple, basic, elementary common sense to our partners, even the right-wing partners in Europe, who recognise that a framework of rights for working people within which the social partners can continue their own detailed arrangements is necessary to make the single market fair and effective.

The Government know that they will have to give way on some of those key issues if any agreement is to be reached—the sort of agreement that the Foreign Secretary so reasonably explained was the outcome of any negotiations. However, the future of Britain in the new Europe is far too important to be relegated to third place behind binding Tory wounds and their faint hope of an election win some time next year. The negotiations have to be played with vision and purpose and with some idea of what role Britain needs in Europe and what we have to do to obtain it. No other country seems to be so hopelessly preoccupied with semantics and symbolism as we are and as our Government are. The Government increasingly resemble Japanese soldiers who were left behind in island jungles, unaware that the war was long over.

Won or lost, like it or loathe it, the Common Market war is over and it is no longer a matter for any of us to be in or out, cool or warm, or pro or anti-Europe or European integration. European politics is now British politics, as the previous Prime Minister knows only too well. What is at issue now is not if, but how, we fully participate in the affairs of the European Community.

Instead of emulating our endless and self-indulgent guerrilla war over words, the other countries in Europe are engaged and succeeding in the substance of what Europe is all about: in the reform of the common agricultural policy with all its impregnable lunacies; in developing a Community industry policy that will enable Europe to compete effectively with Japan and the USA; in research and technology; and in looking to the enlargement of the Community, towards embracing with enthusiasm the vibrant economies of the EFTA countries and providing realisable targets for Europe's new democracies, the countries of central and eastern Europe.

In the week when Germany's capital has moved 500 miles to the east, Britain has moved even further to the periphery of the Community. We should be looking forward to the opportunities of Britain's presidency of the Community in the last half of next year, establishing what our priorities will be for the post-1992 Community. That is what is preoccupying Opposition Members, because that is looking forward.

If the Government were less interested in saving their own skins and more interested in the national interest, they would be doing the same. What can Britain do for Europe and what can Europe do for the people of Britain? Those are worthy and proper questions for our country to have the answers to. Sadly, the country will get genuine leaders who are willing to answer them only when they have a new Government—a Labour Government—and the sooner the better.

9.40 pm

The Financial Secretary to the Treasury (Mr. Francis Maude)

This is the fourth of these debates that I have had the privilege to take part in in the past two years. Since I have been a Minister, I have taken part in a great many European debates and, if it is not too trite to say it, it is on such occasions above all that the House rises above party political point scoring. In general, there is an adversarial system in the House—the Chamber reflects that system, unlike those of many of our counterparts who have hemispherical chambers which perhaps reflect a less adversarial system. It is ironic that a less adversarial and less partisan approach is reflected in European debates.

Of all the European debates in which I have taken part, none has been as great or as serious or has been graced by so many distinguished parliamentarians as this one. I counted two former Prime Ministers, two former Chancellors, one former Foreign Secretary, and a number of former Cabinet Ministers, and many other distinguished right hon. and hon. Friends and Opposition Back Benchers, who have a good deal of experience in these matters and have participated in such debates for many years.

Mr. Devlin

Like my hon. Friend, I feel that this is an important occasion and that the House should have been able to express its views. Given the large number of former Prime Ministers and Privy Councillors who have spoken today, would not it have been better to schedule a two-day debate for the subject so that the whole House could take part?

Mr. Maude

Those are not matters for such as I to decide. I would have had no regrets about a longer debate —it is valuable. The seriousness of the debate reflects the fact that the issues involved go to the heart of what the House of Commons is about.

The debate has lifted us above and beyond the narrow short-term perspectives of party political politics, with one or two exceptions. The vacuum that most of us perceived in the early part of the debate came from the Opposition Front Bench. I except from that comment those Liberal Democrats and Labour Back Benchers whose speeches were distinguished by seriousness, thought and independence.

The right hon. Member for Manchester, Gorton (Mr. Kaufman) signally failed to rise to this parliamentary occasion. I feel inclined to buy shares in the press cutting service to which he subscribes—he must be comfortably its best customer. I am gratified that one of my modest offerings found its way into his speech. I do not think that the press cutting service received a fee for that, because it was left over from a previous speech. This was at least the eighth time that that quotation has been used in such debates, and I am becoming very fond of it. It is nice to have it repeated on these occasions.

There was a serious vacuum in the Opposition Front Bench. The right hon. Member for Gorton signally failed to answer the questions that he was asked, and the hon. Member for Hamilton (Mr. Robertson), when I asked him a couple of simple questions, gave an inadequate answer and then refused to amplify.

The European Community is now a powerful force in the world, especially in economic terms. It and its members were the first to provide help for the reforming countries of eastern and central Europe, and it is forging strong and flexible bonds with those countries through the association agreements now being discussed to which my right hon. Friend the Member for Shoreham (Sir R. Luce) referred. It is correct that it was a British plan that was readily accepted by our partners in the Community, and we hope that the discussions will be brought to fruition later this year.

As my right hon. Friend the Foreign Secretary said, in the discussions being conducted with the countries of the European Free Trade Association, we seek to create the largest single market that there has ever been. It is now not controversial to predict that both sets of discussions are likely to be preliminaries to a substantial enlargement of the Community in the coming decade.

If I judge the sense of the House correctly, that development is regarded as desirable and inevitable by a majority of hon. Members, if not by a consensus. As it grows and as its economic weight develops, the Community will have its special duty reinforced as the world's largest trading bloc and it must exercise its power responsibly. The Community must be sure that it leads the discussions in the general agreement on tariffs and trade towards a liberal free-trade solution. The day the European Community seems more interested in its internal debates and in its internal evolution than in its relationship with the wider world will be the day the Community begins to die.

The single market has most enhanced the Community's status in the eyes of the world. That cause has been passionately espoused by Britain. We have urged it with our rhetoric, driven it in the negotiations and implemented it in practice. I was interested to learn that yesterday one of the Commissioners, Mr. van Miert, said at a conference in London that, once a directive has been agreed, Britain was better than any other country at translating it into national law. He contrasted Britain with Italy where, he said, they were good at making fine European speeches, but had a poor record at turning European law into Italian law. He said that he was not content with the Italian record of living up to their European commitments.

No member state has a better record of compliance and implementation than Britain. It is right that we should recognise that certain consequences flow from that. If a member state dislikes a proposal and judges its effects to be harmful, two courses are open to it. The first is to agree to the measure but subsequently not to implement or enforce it, thus leaving it a dead letter. The second course is to seek changes in negotiation to render it acceptable, and to reject it if such changes cannot be achieved. We take the second course, and we usually achieve the changes that we seek. It is very rare, where there is qualified majority voting, for Britain to be outvoted. However, it must be clear that the extension of qualified majority voting is less acceptable to a country that religiously implements agreed measures than to countries that take a more relaxed view of their legal obligations.

We cannot go along with the Opposition and the Liberal Democrats in their headlong rush down that track. Those who advocate it must be prepared to answer the question: do they believe that Britain should abandon its rigorous approach to implementation, or are they content that Britain's businesses should be disadvantaged relative to their competitors in more relaxed regimes abroad? That is an important question which has to be answered if those proposals are to be pursued.

Two measures under discussion illustrate the dangers —the directive on part-time and temporary work, and the directive on working time. Both would reverse growing flexibilities in the labour market. Many have pointed to the growing benefits of part-time—what is known in the Community as "atypical"—work. I quote from the European Commission's own annual economic report. It says: Rising wage pressure in a context of still high level of unemployment points to the need for more fundamental structural reform in labour markets to strengthen employment creating investment … Further obstacles to employment creation should be removed and wage setting procedures should allow a fuller reflection of differences in productivity so as to improve adjustment of demand and supply of labour. Those directives would run directly counter to that spirit, and they would carry huge costs in the United Kingdom alone. As we are the country which, history suggests, is most likely to implement such directives, if agreed, it seems to me that we have an overwhelming case for resisting them. Equally, we have an overwhelming case for resisting the extension of qualified majority voting to other similar measures.

My right hon. Friend the Foreign Secretary dealt comprehensively with the discussions on political union at the outset, and I have little to add. The debate shows how the Government's approach carries overwhelming support in the House and, I believe, in the country. It must surely be right to seek improvements to the treaty of Rome. It must surely be right to develop more and better means to co-operate closely to do those things together that cannot effectively be done separately. That was the approach of my right hon. Friend the Member for Finchley (Mrs. Thatcher) in her speech at Bruges and it is an approach which, with support elsewhere in the Community, we shall continue to press. Again, if I judge the sense of the debate correctly, that is what hon. Members of all parties would like us to pursue. Essentially, the House would want us to press improvements in co-operation between Governments.

Mr. Stuart Bell (Middlesbrough)

The Foreign Secretary said that he would leave to the Financial Secretary the debate on economic and monetary union, and on the hard ecu. It would be useful for the House if the hon. Gentleman could dwell on that.

Mr. Maude

I will come to that in a moment. On the political union discussions, it must be right for us to urge our approach, to seek progress on these fronts from within the negotiations and to be, as my right hon. Friend the Prime Minister said, at "the heart of Europe". The House would expect that, and I believe that the House would support it.

But the House would not expect us to agree, nor would the House support, the adoption of a federal goal for Europe. It may be as my right hon. Friend said, that the phrase has different meanings for different people. It may be that those who urge a federal goal are visionaries with their eyes cast forward to an inevitable federal destiny, but I do not believe that it is a destiny which the country desires or that the House would accept. I say again to the House that we shall not ask it to do so.

I turn now as the hon. Member for Middlesbrough (Mr. Bell) suggested I should, the discussions on economic and monetary union. Those discussions have been disappointing in many ways—but only to those commentators who promised themselves blood, conflict, drama and division. Week after week they have waited, fingers poised over the pre-programmed key of their word processors which prints "Britain isolated". I fear that they may be disappointed yet. Some have urged that we should seek conflict by declaring in advance that we will use our veto, as if we were faced with an unalterable text which had either to be accepted, or rejected. This is not how it works.

The right hon. Member for Gorton demonstrated his clear failure to understand how the process of negotiation in the European Community operates. He jeered at the Foreign Secretary's description of negotiations, which was that one argues and argues and then agrees if the outcome is acceptable. That seems a pretty accurate description of negotiations. I do not know what the right hon. Gentleman would suggest in its place—perhaps he would agree and agree and then argue if the result were unacceptable.

We are talking about a process of negotiation. Treaty changes can be agreed only by unanimity. The negotiation is to establish what it is that all 12 member states are agreed upon. Some have said that we should set out what we will agree to in detail and in advance. It is not fudging the issue or being evasive to say that it would be premature to do that. We are only halfway through the negotiations. The propositions are not yet fully formulated.

We can say, and we have said, that there are some things that the treaty should not contain. We will not, for example, accept treaty changes that commit the United Kingdom to take part in a single currency. To answer the point raised by the hon. Member for Newham, South (Mr. Spearing), I accept that that includes an irrevocably fixed exchange rate. They both amount to full currency union. We will not accept treaty changes that commit us to take part in that, but that is not to say that there will never be a single currency. It is not even to say that Britain will never be part of a single currency. It may be that, years hence, a future British Government and a future British Parliament will want to decide whether Britain should take part in a single currency, but that will be a decision for that British Parliament and that British Government at that time.

The balance sheet of economic political and constitutional advantage and disadvantage cannot be struck until then. Those who argue that we should try to strike that balance now—and either rule it in or rule it out for definite—are submitting to a fallacy because if we were to stand aside—

Mr. Robertson

rose—

Mr. Maude

If the hon. Gentleman will forgive me, I shall not give way to him because I have only four minutes left.

If we were to stand aside from the negotiations, we should debar a future House of Commons from making that decision.

Mr. Robertson

rose—

Mr. Maude

No, I am sorry: I shall not give way to the hon. Gentleman because I have only four minutes left and I want to come on to the hard ecu, which may well be the matter in which the hon. Gentleman is interested. If we were to stand aside from the negotiations and not take part in them, we should debar a future House of Commons from making that decision. Equally, if we committed ourselves now to a single currency, we would pre-empt that future decision. Both approaches are unacceptable.4

I believe that the House and the country support our approach. Indeed, that position is increasingly accepted and understood by our partners in the Community. We are really saying that, as this is not something that can be agreed at this stage, we should concentrate on those matters on which agreement can be reached.

One large and important area that was scarcely discussed until the last 12 months is stage 2 of economic and monetary union. It is now pretty clear that there will be a hardened ecu of some sort in stage 2, which will be much more widely used than today. However, many questions remain unanswered. No one has yet decided the route by which it should be hardened—whether it should be done by the British, Spanish or German approach or by that of the Commission. The matter of whether it should be issued in note and coin is also undecided, as is the issue of whether it should be managed by a monetary institution. Perhaps those are not matters of fundamental principle; they are essentially technical but crucial issues which have to be decided and on which there are almost as many views as there are Governments in the Community.

The debate continues, and it is a debate which has been initiated, led and profoundly influenced by Britain. The right hon. Member for Gorton said that he would seek to divide the House because—I paraphrase—he thought that he could exploit some grubby short-term party political gain. I believe that he misjudged the mood of the House—

Mr. Kaufman

rose—

Mr. Maude

I know that he—[HON. MEMBERS: "Give way".] I am not going to give way to the right hon. Gentleman—

Mr. Kaufman

rose—

Mr. Speaker

Order. One at a time.

Mr. Maude

I know from the expressions on the faces of his right hon. and hon. Friends when he made his speech that the right hon. Member for Gorton misjudged the mood of his party. His party wanted this matter to be taken seriously. It wanted a serious debate so that the House could express its view—

Mr. Kaufman

rose—

Hon. Members

Give way.

Mr. Speaker

Order.

Mr. Maude

The right hon. Gentleman occupied 45 minutes earlier with absolutely nothing. I shall not allow him to take up my time when I have something to say.

The right hon. Gentleman promised to set out the party's proposals. He set out several things that his party would seek. Two of them are not up for grabs in this negotiation in any case. The country can be grateful that his party is not taking part in the negotiations. The Labour party's approach has been characterised by waffle, muddle, drift and deceit, and the House will be glad that this Government, this Prime Minister, this Foreign Secretary and this Chancellor of the Exchequer have conducted these important negotiations.

Mr. Derek Foster (Bishop Auckland)

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

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

Question put accordingly, That this House do now adjourn: —

The House divided: Ayes 158, Noes 312.

Division No. 196]	[10 pm
AYES
Abbott, Ms Diane	Ashley, Rt Hon Jack
Adams, Mrs Irene (Paisley, N.)	Barron, Kevin
Allen, Graham	Beckett, Margaret
Anderson, Donald	Beggs, Roy
Archer, Rt Hon Peter	Bell, Stuart

Bermingham, Gerald	Lofthouse, Geoffrey
Blair, Tony	Loyden, Eddie
Boateng, Paul	McAvoy, Thomas
Boyes, Roland	Macdonald, Calum A.
Bradley, Keith	McKay, Allen (Barnsley West)
Brown, Gordon (D'mline E)	McKelvey, William
Brown, Ron (Edinburgh Leith)	McLeish, Henry
Callaghan, Jim	McMaster, Gordon
Campbell, Ron (Blyth Valley)	McNamara, Kevin
Campbell-Savours, D. N.	Madden, Max
Canavan, Dennis	Marek, Dr John
Clark, Dr David (S Shields)	Marshall, Jim (Leicester S)
Clarke, Tom (Monklands W)	Martin, Michael J. (Springburn)
Clwyd, Mrs Ann	Martlew, Eric
Cohen, Harry	Maxton, John
Cook, Robin (Livingston)	Meacher, Michael
Corbett, Robin	Meale, Alan
Corbyn, Jeremy	Michie, Bill (Sheffield Heeley)
Cousins, Jim	Mitchell, Austin (G't Grimsby)
Cox, Tom	Moonie, Dr Lewis
Crowther, Stan	Morgan, Rhodri
Cryer, Bob	Morley, Elliot
Cunningham, Dr John	Morris, Rt Hon A. (W'shawe)
Dalyell, Tam	Morris, Rt Hon J. (Aberavon)
Darling, Alistair	Mullin, Chris
Davies, Rt Hon Denzil (Llanelli)	Murphy, Paul
Davis, Terry (B'ham Hodge H'I)	Oakes, Rt Hon Gordon
Dewar, Donald	O'Brien, William
Dixon, Don	O'Neill, Martin
Dobson, Frank	Orme, Rt Hon Stanley
Doran, Frank	Patchett, Terry
Duffy, Sir A. E. P.	Pike, Peter L.
Dunnachie, Jimmy	Prescott, John
Dunwoody, Hon Mrs Gwyneth	Primarolo, Dawn
Eadie, Alexander	Radice, Giles
Eastham, Ken	Randall, Stuart
Fatchett, Derek	Rees, Rt Hon Merlyn
Field, Frank (Birkenhead)	Richardson, Jo
Fields, Terry (L'pool B G'n)	Robertson, George
Fisher, Mark	Rogers, Allan
Flannery, Martin	Rooker, Jeff
Flynn, Paul	Ross, William (Londonderry E)
Foster, Derek	Rowlands, Ted
Foulkes, George	Ruddock, Joan
Fraser, John	Sedgemore, Brian
Fyfe, Maria	Sheerman, Barry
Galbraith, Sam	Sheldon, Rt Hon Robert
Galloway, George	Shore, Rt Hon Peter
Garrett, Ted (Wallsend)	Skinner, Dennis
Gilbert, Rt Hon Dr John	Smith, Andrew (Oxford E)
Godman, Dr Norman A.	Smith, C. (Isl'ton & F'bury)
Golding, Mrs Llin	Smith, Rt Hon J. (Monk'ds E)
Gordon, Mildred	Smith, J. P. (Vale of Glam)
Gould, Bryan	Soley, Clive
Graham, Thomas	Spearing, Nigel
Grant, Bernie (Tottenham)	Stott, Roger
Griffiths, Nigel (Edinburgh S)	Strang, Gavin
Griffiths, Win (Bridgend)	Taylor, Mrs Ann (Dewsbury)
Hain, Peter	Thompson, Jack (Wansbeck)
Hattersley, Rt Hon Roy	Turner, Dennis
Heal, Mrs Sylvia	Vaz, Keith
Healey, Rt Hon Denis	Walley, Joan
Henderson, Doug	Wardell, Gareth (Gower)
Hogg, N. (C'nauld & Kilsyth)	Wareing, Robert N.
Hood, Jimmy	Watson, Mike (Glasgow, C)
Howell, Rt Hon D. (S'heath)	Welsh, Michael (Doncaster N)
Howells, Dr. Kim (Pontypridd)	Williams, Rt Hon Alan
Hoyle, Doug	Williams, Alan W. (Carm'then)
Hughes, John (Coventry NE)	Wilson, Brian
Janner, Greville	Winnick, David
Jones, Barry (Alyn & Deeside)	Worthington, Tony
Kaufman, Rt Hon Gerald	Young, David (Bolton SE)
Kinnock, Rt Hon Neil
Leighton, Ron	Tellers for the Ayes:
Lestor, Joan (Eccles)	Mr. Frank Haynes and
Livingstone, Ken	Mr. Ray Powell.
NOES
Adley, Robert	Alison, Rt Hon Michael
Aitken, Jonathan	Allason, Rupert

Alton, David	Fearn, Ronald
Amery, Rt Hon Julian	Field, Barry (Isle of Wight)
Amess, David	Fishburn, John Dudley
Amos, Alan	Fookes, Dame Janet
Arbuthnot, James	Forman, Nigel
Arnold, Jacques (Gravesham)	Forsyth, Michael (Stirling)
Arnold, Sir Thomas	Forth, Eric
Ashby, David	Fox, Sir Marcus
Aspinwall, Jack	Franks, Cecil
Atkins, Robert	Freeman, Roger
Baker, Nicholas (Dorset N)	French, Douglas
Baldry, Tony	Fry, Peter
Banks, Robert (Harrogate)	Gale, Roger
Barnes, Mrs Rosie (Greenwich)	Gardiner, Sir George
Batiste, Spencer	Garel-Jones, Tristan
Beaumont-Dark, Anthony	Gill, Christopher
Beith, A. J.	Gilmour, Rt Hon Sir Ian
Bellingham, Henry	Glyn, Dr Sir Alan
Bendall, Vivian	Goodlad, Alastair
Bennett, Nicholas (Pembroke)	Goodson-Wickes, Dr Charles
Benyon, W.	Gorman, Mrs Teresa
Bevan, David Gilroy	Gorst, John
Biffen, Rt Hon John	Grant, Sir Anthony (CambsSW)
Blackburn, Dr John G.	Greenway, Harry (Ealing N)
Body, Sir Richard	Greenway, John (Ryedale)
Bonsor, Sir Nicholas	Gregory, Conal
Boscawen, Hon Robert	Griffiths, Peter (Portsmouth N)
Boswell, Tim	Grist, Ian
Bottomley, Peter	Ground, Patrick
Bottomley, Mrs Virginia	Grylls, Michael
Bowden, Gerald (Dulwich)	Gummer, Rt Hon John Selwyn
Bowis, John	Hague, William
Boyson, Rt Hon Dr Sir Rhodes	Hamilton, Rt Hon Archie
Braine, Rt Hon Sir Bernard	Hamilton, Neil (Tatton)
Brandon-Bravo, Martin	Hampson, Dr Keith
Brazier, Julian	Hanley, Jeremy
Bright, Graham	Hannam, John
Brown, Michael (Brigg & Cl't's)	Hargreaves, A. (B'ham H'll Gr')
Bruce, Ian (Dorset South)	Harris, David
Buck, Sir Antony	Haselhurst, Alan
Budgen, Nicholas	Hawkins, Christopher
Burns, Simon	Hayhoe, Rt Hon Sir Barney
Burt, Alistair	Hayward, Robert
Butler, Chris	Heath, Rt Hon Edward
Carlile, Alex (Mont'g)	Heathcoat-Amory, David
Carlisle, John, (Luton N)	Heseltine, Rt Hon Michael
Carrington, Matthew	Hicks, Mrs Maureen (Wolv' NE)
Carttiss, Michael	Hicks, Robert (Cornwall SE)
Cash, William	Higgins, Rt Hon Terence L.
Chalker, Rt Hon Mrs Lynda	Hill, James
Channon, Rt Hon Paul	Hind, Kenneth
Chapman, Sydney	Hogg, Hon Douglas (Gr'th'm)
Churchill, Mr	Hordern, Sir Peter
Clark, Rt Hon Alan (Plymouth)	Howard, Rt Hon Michael
Clark, Rt Hon Sir William	Howarth, Alan (Strat'd-on-A)
Clarke, Rt Hon K. (Rushcliffe)	Howarth, G. (Cannock & B'wd)
Conway, Derek	Howe, Rt Hon Sir Geoffrey
Coombs, Anthony (Wyre F'rest)	Howell, Rt Hon David (G'dford)
Coombs, Simon (Swindon)	Howells, Geraint
Cope, Rt Hon Sir John	Hughes, Simon (Southwark)
Cormack, Patrick	Hurd, Rt Hon Douglas
Cran, James	Irvine, Michael
Currie, Mrs Edwina	Irving, Sir Charles
Davis, David (Boothferry)	Jack, Michael
Day, Stephen	Jackson, Robert
Devlin, Tim	Janman, Tim
Dicks, Terry	Johnson Smith, Sir Geoffrey
Dorrell, Stephen	Johnston, Sir Russell
Douglas-Hamilton, Lord James	Jones, Gwilym (Cardiff N)
Dover, Den	Jopling, Rt Hon Michael
Dunn, Bob	Kellett-Bowman, Dame Elaine
Durant, Sir Anthony	Kilfedder, James
Dykes, Hugh	King, Roger (B'ham N'thfield)
Eggar, Tim	King, Rt Hon Tom (Bridgwater)
Emery, Sir Peter	Kirkhope, Timothy
Evans, David (Welwyn Hatf'd)	Knapman, Roger
Evennett, David	Knight, Greg (Derby North)
Fallon, Michael	Knight, Dame Jill (Edgbaston)
Farr, Sir John	Knox, David
Favell, Tony	Lamont, Rt Hon Norman

Lang, Rt Hon Ian	Roe, Mrs Marion
Latham, Michael	Rumbold, Rt Hon Mrs Angela
Lawrence, Ivan	Ryder, Rt Hon Richard
Lawson, Rt Hon Nigel	Sackville, Hon Tom
Leigh, Edward (Gainsbor'gh)	Sainsbury, Hon Tim
Lennox-Boyd, Hon Mark	Sayeed, Jonathan
Lester, Jim (Broxtowe)	Scott, Rt Hon Nicholas
Livsey, Richard	Shaw, David (Dover)
Lloyd, Sir Ian (Havant)	Shaw, Sir Giles (Pudsey)
Lloyd, Peter (Fareham)	Shaw, Sir Michael (Scarb')
Luce, Rt Hon Sir Richard	Shelton, Sir William
McCrindle, Sir Robert	Shephard, Mrs G. (Norfolk SW)
Macfarlane, Sir Neil	Shepherd, Colin (Hereford)
MacGregor, Rt Hon John	Shepherd, Richard (Aldridge)
MacKay, Andrew (E Berkshire)	Shersby, Michael
Maclean, David	Skeet, Sir Trevor
McLoughlin, Patrick	Smith, Tim (Beaconsfield)
McNair-Wilson, Sir Michael	Soames, Hon Nicholas
McNair-Wilson, Sir Patrick	Speller, Tony
Madel, David	Spicer, Sir Jim (Dorset W)
Major, Rt Hon John	Spicer, Michael (S Worcs)
Malins, Humfrey	Squire, Robin
Maples, John	Stanbrook, Ivor
Marland, Paul	Stanley, Rt Hon Sir John
Marlow, Tony	Steel, Rt Hon Sir David
Marshall, John (Hendon S)	Steen, Anthony
Marshall, Sir Michael (Arundel)	Stern, Michael
Martin, David (Portsmouth S)	Stevens, Lewis
Maude, Hon Francis	Stewart, Allan (Eastwood)
Maxwell-Hyslop, Robin	Stewart, Andy (Sherwood)
Mayhew, Rt Hon Sir Patrick	Stewart, Rt Hon Sir Ian
Mellor, Rt Hon David	Stokes, Sir John
Mills, Iain	Summerson, Hugo
Miscampbell, Norman	Tapsell, Sir Peter
Mitchell, Andrew (Gedling)	Taylor, Ian (Esher)
Mitchell, Sir David	Taylor, Matthew (Truro)
Moate, Roger	Taylor, Sir Teddy
Monro, Sir Hector	Tebbit, Rt Hon Norman
Montgomery, Sir Fergus	Thatcher, Rt Hon Margaret
Morrison, Sir Charles	Thompson, D. (Calder Valley)
Moss, Malcolm	Thompson, Patrick (Norwich N)
Moynihan, Hon Colin	Thornton, Malcolm
Neale, Sir Gerrard	Thurnham, Peter
Nelson, Anthony	Townsend, Cyril D. (B'heath)
Neubert, Sir Michael	Tracey, Richard
Newton, Rt Hon Tony	Tredinnick, David
Nicholls, Patrick	Trippier, David
Nicholson, David (Taunton)	Twinn, Dr Ian
Nicholson, Emma (Devon West)	Vaughan, Sir Gerard
Norris, Steve	Viggers, Peter
Onslow, Rt Hon Cranley	Wakeham, Rt Hon John
Oppenheim, Phillip	Waldegrave, Rt Hon William
Owen, Rt Hon Dr David	Walden, George
Page, Richard	Walker, Bill (T'side North)
Paice, James	Walker, Rt Hon P. (W'cester)
Paisley, Rev Ian	Waller, Gary
Parkinson, Rt Hon Cecil	Walters, Sir Dennis
Patnick, Irvine	Wardle, Charles (Bexhill)
Patten, Rt Hon Chris (Bath)	Watts, John
Patten, Rt Hon John	Wells, Bowen
Pattie, Rt Hon Sir Geoffrey	Wheeler, Sir John
Pawsey, James	Whitney, Ray
Peacock, Mrs Elizabeth	Widdecombe, Ann
Porter, Barry (Wirral S)	Wiggin, Jerry
Porter, David (Waveney)	Wilkinson, John
Portillo, Michael	Wilshire, David
Powell, William (Corby)	Winterton, Mrs Ann
Price, Sir David	Wolfson, Mark
Raffan, Keith	Wood, Timothy
Renton, Rt Hon Tim	Woodcock, Dr. Mike
Rhodes James, Sir Robert	Yeo, Tim
Riddick, Graham	Young, Sir George (Acton)
Ridley, Rt Hon Nicholas
Ridsdale, Sir Julian	Tellers for the Noes:
Rifkind, Rt Hon Malcolm	Mr. David Lightbown and
Roberts, Rt Hon Sir Wyn	Mr. John M. Taylor.

Question accordingly negatived.