European Community (Intergovernmental Conferences)

HC Deb 20 November 1991 vol 199 cc269-390

[FIRST DAY]

[Relevant document: Minutes of Evidence taken before the Foreign Affairs Committee on 19th November ( House of Commons Paper 35-i)]

Mr. Speaker

Before we begin this important debate, let me say that well over 60 right hon. and hon. Members have applied in writing to participate in it today. Sadly, it may not be possible to call them all, but I shall do my best, provided speeches are brief. I propose to place a limit of 10 minutes on speeches between 7 and 9 o'clock. I hope that those who are called before 7 o'clock and those who are called after 9 o'clock will bear that limit in mind in the interests of their colleagues, as the debate is to continue until midnight.

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

Mr. Bob Cryer (Bradford, South)

On a point of order, Mr. Speaker. As you are aware, several amendments have been tabled. I understand that under Standing Order No. 9, as amended by Standing Order No. 14, you can select only one amendment because the motion has to be voted on after 10 o'clock. Nothing else is to be voted on after 10 o'clock. Can you confirm that if an amendment to an amendment were tabled and were to be considered suitable by you for voting on, should it be voted on before 10 o'clock the amendment could then be voted on after 10 o'clock, as well as t e substantive motion? That would enable the House to have a clearer division on ideas than is apparent from the two Front-Bench motions.

Mr. Speaker

That would be possible if I had selected the amendment, but it is hypothetical because no such amendment is on the Order Paper.

3.34 pm

The Prime Minister (Mr. John Major)

I beg to move, That this House, believing it is in Britain's interests to continue to be at the heart of the European Community and able to shape its future and that of Europe as a whole, endorses the constructive negotiating approach adopted by Her Majesty's Government in the Inter-Governmental Conferences on Economic and Monetary Union and on Political Union; and urges them to work for an agreement at the forthcoming European Council at Maastricht which avoids the development of a federal Europe, enables this country to exert the greatest influence on the economic evolution of the Community while preserving the right of Parliament to decide at a future date whether to adopt a single currency, on issues of Community competence concentrates the development of action on those issues which cannot be handled more effectively at national level and, in particular, avoids intrusive Community measures in Social areas which are matters for national decision, develops a European security policy compatible with NATO and co-operation in foreign policy which safeguards this country's national interests, increases the accountability of the Commission, enhances the rule of law in the Community including improved implementation, enforcement and compliance with Community legislation, improves co-operation between European governments in the fight against drugs, terrorism and cross-border crime, and through these policies secures the long-term interests of the United Kingdom. The European Council in Maastricht is set to decide issues which are crucial to the future of the European Community and to Britain's role as a leading member of it. This afternoon I would like to set out what is at stake, the parameters of what we can accept and also what we cannot accept.

I shall deal, first, with a misconception that is held by some of our Community partners. They believe that Britain may argue hard against many of the proposals—object to them and protest—but that then we shall sign up to whatever is on offer at the 59th minute of the 11th hour. I urge them not to make that misjudgment; it would be fatal.

The Government want to reach an agreement at Maastricht. We are negotiating for one. There is still some way to go and I hope that we will be successful, but it may be that a deal is genuinely unobtainable. If we do not reach an agreement, it will be a setback. So it must not be through misunderstanding, or misjudgment, and certainly not through bad faith. Therefore, this afternoon I will make our position clear.

For historical, geographical and political reasons, the issue of membership of the European Community has been more controversial in Britain perhaps than in any other member state. We joined the Community late, and we joined a Community whose rules were drawn up by the original members and not by us. The structure of the Community's budget meant that only two countries—Britain and Germany—were net contributors. The common agricultural policy was designed to benefit those countries with small and often inefficient farmers. It took time, effort and controversy to redress some of those imbalances. My right hon. Friend the Member for Finchley (Mrs. Thatcher) secured a more equitable budget arrangement, and now we have started on the reform of the common agricultural policy.

Those issues have often obscured the benefits to Britain of the European Community. The first and perhaps overriding benefit is the contribution which the Community has made to democracy, stability and prosperity in post-war Europe. The Community is unique in having its own framework of law that is binding on member states. That framework of law is changing, not least to enable us to create the world's largest single market. Prior to the Single European Act, we were at a disadvantage. Britain had removed most of the barriers which stood in the way of countries wanting to export to us, but the reverse in no sense was the case. We often faced barriers to the export of our goods to other Community countries.

It is because of our membership of the Community that Nissan cars, made in Sunderland, can be sold freely in continental Europe. Seventy-five per cent. of the Sunderland factory's production went for export last year.

It is because of Community law that we shall be able to sell our financial, banking and insurance services freely throughout the Community. It is thanks to the collective strength of the Community that we can negotiate a good deal for Britain in international trade negotiations with the United States and Japan.

Those are all positive advantages. They illustrate very clearly why the countries of the European Free Trade Association, none of them economic slouches, have just done a deal with the Community. That agreement gives them the benefits of the European single market. In exchange, they have had to accept our regulations and our standards without having any say in framing them. Most of them now want membership of the Community to give them that equal say in framing the Community's laws.

There are, in truth, only three ways of dealing with the Community: we can leave it, and no doubt we would survive, but we would be diminished in influence and in prosperity; we can stay in it grudgingly, in which case others will lead it; or we can play a leading role in it, and that is the right policy. It does not mean accepting every idea that is marketed with a European label. It does mean trying to build the sort of Europe that we believe in, and I will turn specifically to that in the course of my remarks.

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

rose—

The Prime Minister

If the hon. Gentleman will forgive me, I would like to make a little progress. I have much to say in order to cover the points in which the House will be interested.

At the Luxembourg European Council in June, draft texts on monetary union and political union were produced that had huge deficiencies but which did recognise many of our concerns. In September, a new Dutch text on political union appeared. That was quite unacceptable and we rejected it. It was withdrawn, and replaced a few days ago. These early texts have caused much alarm about proposals that this country would and could never have accepted.

I will turn first to the treaty articles on economic and monetary union. The treaty of Rome defines as its goal the achievement of an ever closer union among the peoples of Europe. In 1972, the Heads of Government of the Community—and of Britain, Ireland and Denmark, who were about to join—agreed the objective of the progressive realisation of Economic and Monetary Union". That goal was enshrined in the preamble to the Single European Act, but these goals were never defined.

The treaty now before us envisages the realisation of economic and monetary union through the creation of a single European currency to replace the historic currencies and a European central bank to manage monetary policy.

In stage 1 the single market and single financial area will be completed; competition will be strengthened; capital movements liberalised; and the greatest possible number of currencies will join the exchange rate mechanism of the European monetary system. The United Kingdom is fully committed to stage 1 which began on 1 July 1990. The substantive provisions of the treaty apply to the second and third stages of economic and monetary union. It is here that we begin to run into the areas of greatest difficulty and controversy in much of the negotiation before us.

In the second stage, the text proposes to establish a European monetary institute, essentially the present meeting of European central bank governors under another name. Its task would be to strengthen the co-operation between the member states' central banks and to promote the co-ordination of monetary policy. In stage 2, the European currency unit would be developed and hardened. During the whole of this period, monetary policy would remain entirely in the hands of member states. The European monetary institute would have a consultative and advisory role, and that alone.

The present stage envisages that, before the end of 1996, the member states of the Community would take stock, in the Economic and Finance Council and in the European Council, and reach a decision as to whether to move to the final stage of economic and monetary union. A crucial element in the decision whether or not to move to stage 3 would be the economic convergence of the member states. We were the first country to argue that convergence was vital before monetary union could even become a possibility. That view is now accepted by our partners. The latest text sets out strict convergence criteria on inflation, on interest rates, on successful membership of the narrow band of the exchange rate mechanism and on the avoidance of excessive budget deficits.

The Council of Ministers would decide who has met the conditions, and the European Council would decide unanimously whether or not the conditions were right for a move to stage 3. We believe that there should be at least eight member states ready to move to stage 3 before that step could be taken.

Our insistence that there should be no imposition of a single currency is well known: by that we mean that we cannot commit ourselves now to entry at a later date as a result of the treaty. We are therefore insisting that there must be a provision in the treaty giving us the right, quite separately from any European Council decision, to decide for ourselves whether or not to move to stage 3. That decision can be taken only by this House.

That means that, even if the requisite majority of member states decide to embrace full economic and monetary union with a single currency and a single central bank, Britain will not be obliged to do so. Whether to join—not just when to join—will be matters of separate decision by Government and by Parliament. Nothing in the treaty that I sign will bind us now to the decision that we must take then. Nothing in the treaty that I sign now will bind us then, because at this stage we cannot know what the circumstances then will be and whether it will be in the economic interests of this country to take part.

Mr. Beith

Is not the Prime Minister now outlining a fourth option, which is that Britain remains a member of the European Community, but excludes itself from the development of the single currency, and thereby excludes itself from being the financial centre of Europe and from gaining the full advantages of membership?

The Prime Minister

Expressly not. I am outlining circumstances that mean that we would decide to join provided the circumstances were right and that the House thought it was right. We are not committing ourselves to joining now without knowing the circumstances, without knowing the conditions, and without knowing what economic chaos it might lead to.

Mr. Giles Radice (Durham, North)

Can the Prime Minister see any advantages for Britain in joining a European single currency?

The Prime Minister

I shall come to those points in a few moments.

Mr. Jim Sillars (Glasgow, Govan)

rose——

The Prime Minister

I have given way twice already. I will give way to the hon. Gentleman later.

One of the most sensitive issues in this debate is the conduct of the United Kingdom's fiscal policy—the powers to tax, borrow and spend. It is common ground that excessive budget deficits should be avoided and that the absence of such deficits should be a convergence condition for moving to stage 3. It is also agreed that there should be no legally binding budget deficit ceilings and sanctions in stage 2.

For stage 2, the treaty would provide for a formal process whereby the ECOFIN council can, on the basis of a Commission report, examine any state's economic policy and budgetary position. If it finds a budget deficit to be excessive, it can make non-binding policy recommendations. While the arrangements for prompting a Commission report would be an innovation in the text, the other powers of examination and recommendation are not. The Council can do that now—and it does.

Mr. Terence L. Higgins (Worthing)

Does my right hon. Friend agree that the Dutch draft as it now stands says, in paragraph 1 of clause 104B, that countries "shall not"—I repeat, "shall not"—have an excessive budget deficit, which is then defined? Clearly that wording needs to be amended.

The Prime Minister

I agree with my right hon. Friend. We have made it clear to our partners that we are still negotiating on that point and that we have not accepted that binding element in stage 2. As my right hon. Friend will see in a moment, we shall go further in terms of our position on binding deficits subsequently in stage 3.

Where we part company from some other member states is on stage 3. The Dutch draft treaty provides the ECOFIN Council with legally binding powers, backed up by sanctions, to require a member state to reduce its deficit. We consider that there is no better sanction than the market, and we will continue so to argue in the intergovernmental conference.

There are some hon. Members who say—I respect the feeling behind this—that the creation of a single currency and a European central bank should be blocked now. They believe that, if it is not, the pressures on us to join at a later stage will be irresistible. I am not of their view. It is true that, technically, we could block the adoption of an economic and monetary union treaty in its present form —that is, as an amendment to the treaty of Rome.

What we could not do is to prevent some or all of the other eleven member states making a separate treaty on their own outside the treaty of Rome. Those who argue that they would not do so are mistaken. They are as mistaken as those who said that, without Britain, the original Community would never happen, or that if it did, it would amount to nothing. I fear that I do not agree with hon. Members who take that view. I believe that they are wrong, and potentially damagingly wrong for the long-term interests of Britain.

Mr. Sillars

Will the Prime Minister give way?

The Prime Minister

No, if the hon. Gentleman will forgive me for a moment.

Therefore, I do not believe that it would be right to block the treaty on economic and monetary union, provided that it contains within it the conditions that could make such a union a success. Nor is it necessary to do so to safeguard our own interests. For the text gives this country the crucial provision that we need, which means that we can decide at a time of our own choosing whether to join or not.

Mr. Sillars

Let us imagine that we proceeded down the road that the Prime Minister describes. The other countries create a single currency, the ecu. This Parliament decides not to become involved. Would sterling then float free, or would it be forced to shadow the ecu? If it is forced to shadow the ecu, what is the point of remaining out?

The Prime Minister

That is one of the matters which have been discussed only in preliminary form. It is likely that sterling would have a relationship with the ecu, but that is not yet determined, because the treaty is not yet concluded. It is precisely for that reason that we are still negotiating both in ECOFIN and at the European Council.

If the convergence conditions set out in the draft treaty are not met, we would certainly not wish to be part of an economic and monetary union with a single currency. But if they are met, our successors may wish to take a different view. A single currency could be the means of safeguarding anti-inflationary policies for the whole of the European Community. That would be a great prize. But the House knows that there is a price to pay for that prize. The price is that it would take from national Governments the control of monetary policy. That would be a very significant political and economic step for Britain to take. We cannot take that step now, but nor should we exclude it.

We have in front of us not, as it has been described, an opt-out clause but a clause that we have secured which enables us to opt in—if we wish, when we wish, and in conditions that we judge to be right. I believe that we should keep open that option and not foreclose it now.

In many respects, the treaty on political union poses starker problems. We are committed under the treaty of Rome to ever closer union among the peoples of Europe". Under the Single European Act, the member states of the Community agreed to transform relations as a whole among their states into a European union". The purpose of the new treaty text is to define what political union means in practical, legal terms.

For many of our Community partners the definitions are not as important as they are for us. For many of them the diminution of the power of national Governments and national Parliaments is not an issue. They accept the idea of a European federation. We have never done so. When we joined, we accepted that Community law would take precedence over national law, but for that very reason we have always been concerned about the scope of Community law—precisely because it took precedence. In these negotiations, we have shown ourselves ready to discuss individual changes in the role of the Community where these are in the national interest, but we are not prepared to accept wholesale changes in the nature of the Community which would lead it towards an unacceptable dominance over our national life.

Mr. Tony Banks (Newham, North-West)

I am sure that the Prime Minister accepts that the Germans are as interested in their national interest as we are in ours. Why, then, does he believe that the Germans want to move so quickly towards a federal Europe?

The Prime Minister

The Germans have a different political history and structure from the one that we have in the House. It is for Germany to make its judgment. It is for the Government and this House to make the judgment that we believe is right for Britain. We should not be bound by what other countries think is right for them.

It is against that background that we approach the political union treaty with its implications for our national sovereignty. Unlike the provisions on economic and monetary union, these provisions can be adopted only if all 12 member states and their Parliaments agree. That safeguard is there to be used if it needs to be used.

There are many definitions of what federation means, but to most people in this country the notion of a Federal Europe leads over time to a European Government and Parliament with full legislative powers, to which national Governments and Parliaments are subordinate. I do not believe that that is a road down which the country would wish to go. We will not therefore accept a treaty which describes the Community as having a federal vocation. Such a Community will not succeed.

Let me set out the main elements of the political union treaty, and our attitude to them. First of all is the treaty's structure. The first Dutch text in September brought all the elements of the treaty under a single structure—a unitary structure. That would have brought foreign policy, defence policy, interior policy and justice policy under the treaty of Rome and within the jurisdiction of the European Court of Justice. It would have been a massive stride towards a centralised federal structure.

Such a treaty may be popular with some of our European partners, but it is unthinkable for us. We made that clear, and those provisions have now been withdrawn.

The new treaty text would create what have become known as separate pillars. Some elements of our co-operation with our Community partners will come with the existing framework of Community law. Other elements of co-operation—notably on foreign and security policy, and against crime and terrorism—would be conducted on an intergovernmental basis. So, too, would co-operation in dealing with immigration and asylum. Those elements would be outside the treaty of Rome and outside the jurisdiction of the European Court of Justice. This means that there would be no supranational authority to adjudicate on the decisions taken by member states.

Those changes are welcome. The countries of the European Community would be able to co-operate within a legal framework, but the European Court would not be involved; the Commission would not have the sole right to make proposals. Those changes represent a significant step forward towards practical, more flexible arrangements.

We began co-operation in foreign policy, security and defence on an intergovernmental treaty basis, and we did so as a result of the Single European Act. Co-operation in foreign policy with our partners in the Community is in the interests of this country. On most issues, we carry more clout collectively than we would alone. It has therefore been a successful policy.

Under the Single European Act, we strengthened our co-operation by introducing the concept of joint action. That will continue under the new treaty. The text proposes that joint action, once determined by consensus, would be binding on all member states. Decisions on what should constitute joint action would be taken by unanimity, but it is proposed that detailed decisions, putting a decision of principle into practice, would be taken by a majority of member states.

Sir Patrick Duffy (Sheffield, Attercliffe)

Will the right hon. Gentleman give way on that question?

The Prime Minister

I have not quite finished the point, if the hon. Gentleman will forgive me. He may not then wish to interrupt.

I see merit in joint action and in that joint action being carried out by member states. For example, were we to take a decision, as 12 member states, to impose sanctions on a country, it would be damaging for one member state to abrogate those sanctions unilaterally. In most areas it would be in our interest to work for joint action, but we cannot allow the search for joint action to inhibit our right to take separate national decisions essential for the pursuit of our foreign policy. Where we can act together, we will do so. Where we need to act on our own, we must be free to do so. Even where joint action has been agreed, there must be provision for a member state to act separately and unilaterally if it decided that its vital interests required it to do so.

Mr. Robert Hughes (Aberdeen, North)

rose——

The Prime Minister

The text proposes that majority voting should be used for implementing decisions. We see great difficulties in that proposal. What, for example, is the difference between a decision of principle taken by unanimity and an implementing decision to be taken by majority vote? None of our partners has yet found a satisfactory answer to that question.

Mr. Hughes

rose——

The Prime Minister

That seems to be a recipe for muddle and confusion. The onus must be on those who want to change the existing arrangements to justify that change. Thus far they have not managed to do so.

Mr. Hughes

rose——

The Prime Minister

If the hon. Gentleman will forgive me, I have declined to give way to him and I do not propose to change my mind.

On defence, the position is clear. We have in NATO the means of our defence. At the recent summit, all the members of NATO were clear that we must do nothing to call in question the continuing American and Canadian presence in Europe. Europe should undoubtedly do more for its own defence, but we do not need to invent a new structure for that to happen. We need to develop a policy that is consistent with our existing obligations and arrangements through NATO and the Western European Union.

It is for that reason that Britain and Italy put forward proposals which would build up the WEU, not as the European alternative to NATO, but as the European pillar of NATO. We would establish close links between the WEU and the European Union. We can discuss security issues in the European Council, but we cannot accept a situation in which the European Community would effectively set up a competing security structure.

Mr. John Wilkinson (Ruislip-Northwood)

rose——

The Prime Minister

I give way to my hon. Friend.

Hon. Members

Oh.

Mr. Wilkinson

May I say how much I welcome my right hon. Friend's announcement today that WEU is to be the European pillar of NATO, that we should fully contribute to WEU and to NATO, and that there should be no incompatability between them? As he has dealt with many matters in detail, can he say what the aims and objectives of Her Majesty's Government will be at Maastrict?

The Prime Minister

I can certainly say to my hon. Friend—[Interruption.]

Mr. Speaker

Order. The Prime Minister.

The Prime Minister

The Government's aims at Maastricht on that point are entirely clear. They are to build up the WEU and to ensure that it has an adequate relationship with NATO and the European Council but is not subordinate to either NATO or the European Council. That point was made perfectly clear after the NATO summit, and I am happy to reiterate it today.

Europe should undoubtedly do more for its own defence. It is for that reason that Britain and Italy put forward proposals which would build up the WEU substantially. We would establish close links between the WEU and the European Union, precisely as my hon. Friend expected me to indicate a moment ago. We can discuss security issues, but we cannot under any circumstances have any shred of subordination of the WEU to the European Council. There is no case for making the WEU subordinate to the European Council. We cannot and will not accept any treaty that contains such provisions.

Sir Patrick Duffy

The Prime Minister properly recognises that the British-Italian proposal satisfies the essential tests of complementarity and lack of duplication, and therefore is entirely compatible with NATO and the continued presence of the United States in Europe. He has not mentioned the competing Franco-German proposal. Is not that still on the European security agenda?

The Prime Minister

The Franco-German proposal suffered a considerable rebuff as a result of the meeting on NATO in Rome some time ago.

As I expressly said a moment ago, we cannot accept a treaty that requires the Western European Union to be subordinate to the European Council—that is the essential core element of the Franco-German paper. It follows, therefore, that we do not accept the provisions of that paper, but we do accept those of the Anglo-Italian paper, which would lead to the arrangements that I described to the House.

We must not get into the habit of thinking that all European development has to take place through the European Community. I know that there are many in Europe who want to set everything in a Community legal framework, for fear that, if they do not, old nationalisms may reassert themselves, but that is not our view. We want to work more closely with our partners, but that co-operation does not always have to be in the same fixed framework. We have to find patterns of co-operation which work, and that may frequently be on an intergovernmental basis rather than in a full Community framework.

Mr. Tony Benn (Chesterfield)

May I ask an essential question with which the Prime Minister has not yet dealt? Even with the reservations that the right hon. Gentleman has set out, which will be studied with great care, the changes that he proposes are fundamental in character and will affect parliamentary democracy itself. Does not the right hon. Gentleman believe that partnership with Europe must be paralleled by partnership with the British people? He has placed much emphasis on the citizen's choice and the citizens charter—the people's right to hold accountable those who have power over them. Are not the British people entitled to give the final verdict on whatever emerges from Maastricht?

The Prime Minister

As I said at Question Time yesterday, I do not favour the idea of a referendum, which underlies the right hon. Gentleman's question. I do not favour referendums in a parliamentary democracy, despite the arguments that others have advanced.

The role of the European Parliament is one of the most difficult issues in the development of the Community. There are widely differing views about it. Some believe that it should have the power to initiate legislation. We do not believe that. Many member states would like to give the European Parliament an effective power of co-decision, to make it an equal partner with the Council in determining Community law. We cannot agree to that. The Council of Ministers, whose members are answerable to their national Parliaments, must be the body which ultimately determines the Community's laws and policies. But the European Parliament is elected. From its inception it has had the power to block the budget, to sack the Commission, to propose amendments to Community legislation, and to give assent to certain international agreements. Its powers were increased by the Single European Act.

If we are to control the growth of Community law, it is essential that we have democratic control. National Parliaments, this Parliament in particular, have played a crucial role in that, and will continue to do so. I pay tribute to the Scrutiny Committee and the hon. Member for Newham, South (Mr. Spearing), who has chaired it with tireless skill. That work must continue.

Under the treaty of Rome, the European Commission has sole power of initiative for Community legislation. It also has certain independent powers—for example, supervising the implementation of Community law and initiating legal action against states thought to be in breach of it. Yet the Commission is unelected and largely unaccountable.

The Government would like to see the European Parliament given a greater role in monitoring the Commission and in scrutinising its role as the implementing authority of Council decisions. The Parliament should have a greater role in auditing the Community's expenditure. We would be willing to see the Parliament's links with the citizens who elected it strengthened through the appointment of a Community ombudsman directly answerable to the Parliament.

The European Parliament already has the power to dismiss the Commission. We are willing to see it take a greater role by approving the appointment of the Commission, although we do not think it right to give the Parliament the power of dismissing individual Commissioners. Those who favour the idea argue that it would lead to greater efficiency within the Commission. I am more inclined to believe that it would be likely to lead to a witch hunt against those Commissioners who carry out their duties without fear or favour.

Mr. Tam Dalyell (Linlithgow)

How would the Prime Minister envisage arbitration between a Government and the Commission on thorny problems such as additionality and RECHAR, which is affecting all our constituencies?

The Prime Minister

That is a matter for the Government to discuss bilaterally, not a matter to put in the treaty.

At an earlier stage, some member states were preparing to give the European Parliament far-reaching powers to impose its will on the Council of Ministers. We could not accept that, and we have secured radical changes that take us a long way from co-decision. The latest Dutch presidency text would give the European Parliament a more limited right to block certain Commission proposals once they had been adopted by the Council of Ministers. The Dutch presidency envisages applying this principally to those subjects to which majority voting was extended under the Single European Act. We are prepared to consider some blocking power for the European Parliament, but it must cover a far narrower range than that set out in the present Presidency text.

There is a tendency for the Community to want to legislate over a wide area. That tendency needs to be curbed [HON. MEMBERS: "Hear, hear."] That is the essence of what has become known as subsidiarity. I am aware that different people view it in different ways, but what subsidiarity must mean is that, if a problem can be dealt with at national level, it should be. If it can be dealt with at international level only, it should be. At international level we must then decide whether a problem is best tackled by the Community—which means the Commission, the Council of Ministers, the European Parliament and the Court of Justice—or by co-operation between Governments. We are looking to enshrine that principle of subsidiarity in the treaty.

There are areas where Community law must apply. A single market can work only if there are common standards. We need to know that our goods can compete on equal terms when we export. We want to be confident that imports meet safety standards.

There is no point in one country having one standard of river pollution and another country another. Pollution of the Rhine is equally damaging to France and to Germany, not to mention other North sea states. Majority voting was introduced in this area under the Single European Act and it could be extended under the new treaty, but there must be limits to this action. Whether a town bypass goes to the east or to the west has nothing whatsoever to do with cross-frontier pollution or competition policy or any other aspect of the single market. Those are issues that should rightly be settled at national level.

So too are matters relating to industrial practice, union relations and wage bargaining. We will not agree to extensions of Community competence which have nothing to do with fair competition but which would undermine the hard-won ability of industry to compete. Some claim that such measures would be in the interests of the working people, but in truth, they would not. One example under existing competence is the working time directive. That would make it illegal to work for more than 48 hours a week. It would add £5 billion a year to the costs incurred by industry. It would cost jobs. It would interfere in the right of individuals to decide how long they work, and it would inhibit their ability to earn for themselves and their families. We certainly do not wish to extend competence in this area.

In health, it may be right for the Community to complement national programmes through co-operative research and collaborative health campaigns, but the basic provision of health care is a matter for the national Government. So too for education. It is right for the Community to ensure mutual recognition of qualifications; it should promote student exchange and language training; but it cannot have a place in determining national educational curricula.

Significant extensions of Community competence were agreed in the Single European Act. Other extensions have happened by a gradual process of accretion. It makes sense therefore to codify and ring-fence Community competence, but the Dutch text goes much further than is justified by any of the criteria I have set out. We shall therefore seek to curb the proposed extensions of Community competence either by cutting out some of the proposals altogether or by ensuring in other cases that decisions can be taken only by unanimity.

Our present system of frontier controls helps protect this country from not only crime but illegal immigration, drugs, and terrorism. It would be irresponsible to weaken our controls, and we are not prepared to do so, but in the fight against international crime we need the maximum international co-operation, exchange of information and joint action. The Twelve are considering the creation of a European version of Interpol to bring our co-operation together on a coherent basis. I welcome that proposal. It is a classic case for intergovernmental co-operation between the countries of the Community rather than for co-operation within the framework of Community law. It is an area where Governments, not the Commission, have expertise. I hope that Europol can be established at the European Council at Maastricht on an intergovernmental basis.

For an agreement to be reached at Maastricht, there will have to be give and take on all sides. I have set out for the House the most crucial points.

On EMU, there must be strict economic convergence, and a provision that will allow this country to decide whether, not just when, to join a single currency.

On political union, we must safeguard NATO and avoid the creation of competing European defence structures.

We will co-operate in foreign policy, but that co-operation must not interfere with our ability to take decisions on our own national interests.

We must include powers for the European Parliament that give it greater control over the Commission but do not allow the Parliament to become an equal of the Council in making policy for the Community.

We must constrain the extension of Community competence to those areas where Community action makes more sense than national action or action on a voluntary, intergovernmental basis.

The Community has been the motor force of Europe's post-war development. The aim from the beginning was to achieve far-reaching goals by down-to-earth means. The goals were democracy, prosperity and stability in Europe. The means were the creation of a single market in goods and services.

Mr. Gerald Bermingham (St. Helens, South)

Will the Prime Minister give way?

The Prime Minister

No.

Today, the Community is still the motor force for Europe's development, but there is more at stake in Maastricht than the legal text that we shall have before us. In recent months, we have seen tumultuous changes in our continent.

Mr. Cryer

Will the Prime Minister give way?

The Prime Minister

I shall not give way to the hon. Gentleman.

At Maastricht in December, we shall shape the future of the Community. We must shape it in ways that will accommodate those wider European changes. Our overriding aim must remain democracy, stability and prosperity in Europe, but our responsibility is now wider than just to the existing members of the Community. It must also be to all the other European countries which are now returning to democracy for the first time in 50 years. Our door must be open to them.

We must prepare for the day when the EFTA countries in the north of Europe and the new democracies in the east of Europe want to become part of the Community. When they are economically ready to join the Community, we must be ready to accept them; and we must tell them so now.

We can now plan for a European Community stretching north to the Baltic and east to the Urals—a Community that embraces the free market principles that are at the heart of the treaty of Rome. Such a Europe would be more than an economic entity. It would not only guarantee prosperity, but would underpin democracy. It would put an end to centuries of mistrust, suspicion and war. It would secure a lasting peace across the whole of our continent. I believe that that is a Europe worth building and worth making sacrifices for. That is the Europe for which I shall argue at Maastricht.

I commend that Europe and this motion to the House.

4.19 pm

Mr. Neil Kinnock (Islwyn)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: 'regrets that Her Majesty's Government's preoccupation with divisions in its own Party has meant that in the Inter-Governmental Conferences it has not taken the negotiating approach necessary to ensure that the United Kingdom exercises decisive influence on the future of the Community in ways which will help to advance the living and working standards of the people of this country in company with other peoples of Europe; calls upon Her Majesty's Government to work for an agreement at the European Council which ensures inclusion of the Social Charter, qualified majority voting on social and environmental matters, powers for the European Parliament to hold the Commission to account in ways that complement the role of national parliaments, decision-making at the level—local, regional, national or Community—where maximum democratic control is at all times exercised, foreign and security policy co-operation without the development of a European Community military role, widening of the Community as rapidly as practicable, co-operation to combat terrorism and other crime, and strengthened powers for ECOFIN as the politically responsible counterpart to any European Central Bank system; and urges the Government to work to secure agreement to, and adopt policies for, high levels of employment, sustainable non-inflationary growth, balanced regional and national economic development and social cohesion, and for the fundamental reform of the CAP, in order to achieve real economic convergence in the years leading to economic and monetary union and a single currency as the essential foundation for those changes and to safeguard the long-term interests of the people of the United Kingdom.'. The background to this debate, and clearly the cause of this debate, involves the great change—or different kinds of change—taking place across the continent of Europe and within the European Community. The basic question at issue in the debate is whether the United Kingdom is to be carried along in the wake of those changes or to be a driving force for change. It is essential that our country takes a lead. That is the only way to exert the decisive influence over the direction and nature of the economic, political and social development under way in Europe. The British people know that; they are well aware of the dangers of Britain being in a second division in Europe, and they do not want to be left behind.

The need for an active and positive approach to change is well understood by Governments in the rest of the Community. They recognise the reality of the economic interdependence that now exists and which will be intensified by the completion of the single market. As a result, they are determined to build on that interdependence by moving towards economic and monetary union. They are clear about their objectives; they know what they want. This Government most certainly are not clear. As so often in the past, our Government are stuck in the defensive mud. Grabbing a begrudged compromise here; clutching an opt-out clause there. Devoting maximum diplomatic effort to dilution and delay. This is a dreary, demeaning and ultimately self-defeating posture. It is playing for a draw. I am grateful to the Daily Mail for that accurate description of the Government's attitude. It is not good enough for our country to have a Government who are playing for a draw. It became clear as the Prime Minister's speech progressed that that is precisely the most that he is playing for.

The country cannot be properly served by a Government who pretend that they can somehow call a halt to or defer the agreed purpose of the rest of the Community. As the right hon. and learned Member for Surrey, East (Sir G. Howe) advised everyone in the Financial Times last week, There is nothing to prevent a group of countries pressing on with a separate Treaty … The fact is that we cannot, even if we wished, stop the others going ahead. The Government must face that reality and its implications squarely, but they have not. They must stop trying to persuade themselves or the country that some sort of semi-detached arrangement can be made that will serve Britain's interests—there is no such arrangement. Anyone who thinks there is should simply consider what our country's position would be if our neighbours and trading partners formed a monetary union and, even though economic convergence had been achieved, Britain stayed outside. The Prime Minister refused to answer that question, which was asked by the hon. Member for Glasgow, Govan (Mr. Sillars). The implications of the Government staying out of a union when they had decided, on the basis of convergence, to form one, are serious and potentially disastrous.

More immediately, before those years pass and there is any immediate prospect of monetary union, it must be recognised how vulnerable Britain would be if the Government's strategy were to avoid commitment to the process under way in the European Community. That is not a theoretical matter, but a practical issue. If a British Government continued, as a matter of policy, to stand apart from the process, would inward investors who need access to markets of the whole community think of locating in a semi-detached country?

The Prime Minister referred to Nissan at Sunderland. Everyone in the House must want further inward investment and the development that comes with it. In the intervening period between Maastricht and the further stages, the Prime Minister and the Government must face the fact that, if they are standing apart, they will put a question mark over the prospect of further investment and further development.

Mr. Robert Adley (Christchurch)

The right hon. Gentleman spoke a short while ago of consistency and clarity. A few seconds ago, he mentioned inward investment and a Japanese company. I do not recall that that was always his keenest and most enthusiastic point. In 1972, when he and I were both in the House, I voted in favour of the European Communities Bill, as it then was, and the right hon. Gentleman voted against it. In 1974, I opposed the referendum on Europe when he was in favour of it. Will the right hon. Gentleman give the House one example—[Interruption.]

Mr. Speaker

Order. The hon. Gentleman is making an intervention, not a speech.

Mr. Adley

Will the Leader of the Opposition give the House one example of one major issue since 1970 to this very afternoon on which he has not changed his mind, purely for the electors' convenience, that relates to the European Community?

Mr. Kinnock

Immediately the hon. Gentleman and I entered the House—on the same day—I formed the view that he was a jerk, and I still hold that view.

Hon. Members

Withdraw!

Mr. Speaker

Order. Let us settle down. This is a very important debate that is being listened to outside the House. I am not sure—[HON. MEMBERS: "Withdraw."]—whether "jerk" is an entirely parliamentary expression. I have heard worse things here. Perhaps the right hon. Gentleman will refine his reference to the hon. Gentleman.

Mr. Kinnock

The question to which the Government must respond——

Hon. Members

Withdraw.

Mr. Speaker

Order. This gives a very bad impression to those outside the House.

Mr. Ivor Stanbrook (Orpington)

On a point of order, Mr. Speaker. Is it in order to insult an hon. Member by calling him a jerk?

Mr. Speaker

I have just said that I think that "jerk" is not among the list of unparliamentary expressions but I asked the Leader of the Opposition to refine it. Perhaps he will now do so.

Mr. Kinnock

Thank you, Mr. Speaker.

The question that the Government must answer—[HON. MEMBERS: "Withdraw."]—if they are to maintain their position—[Interruption.] If the Tory party demonstrates its great nervousness by its attempts to disrupt, the whole country will form an accurate opinion—[Interruption.]

Mr. Speaker

Order. Let the House settle down. I said to the Leader of the Opposition that "jerk" is not on the list of unparliamentary expressions but, bearing in mind the nature of this debate, it would help the House if he refined what he has said in the interests of good order.

Mr. Kinnock

I respect you, Mr. Speaker, and I respect the House. If the hon. Member for Christchurch (Mr. Adley) is offended, though I doubt it, I withdraw any offence.

The question that the Government must answer is whether, if they were to maintain their stand-back attitude and what they call their options, British investors—not simply inward investors—who want to sell their produce throughout the Community and the rest of Europe would give priority to investing and developing in Britain when they had every reason to believe that the Government were ever ready to withdraw from the European process. That is the real problem.

Mr. Terry Dicks (Hayes and Harlington)

Get on with it.

Mr. Kinnock

The hon. Gentleman has an incurable problem, so I cannot help him.

The Chancellor of the Exchequer (Mr. Norman Lamont)

The House will be grateful to the right hon. Gentleman, because he has been making a clear statement and drawing a clear distinction between the two sides of the House. May we take it from what he has said that he is saying definitely that he would be prepared at Maastricht to make an irrevocable commitment to a single currency? That is what he is saying.

Mr. Kinnock

I am coming to that precise point. It is interesting that the Chancellor should anticipate it, and I am sure that he will find the answer very satisfactory indeed. He will also discover that my desire—indeed, my absolute commitment—to ensuring that the House has a proper decision to make at any stage of development in the EC is at least equal to his. [Interruption.]

Mr. Speaker

Order. Will Conservative Members now please settle down? The Prime Minister was heard in silence, and I expect the same courtesy to be extended to the Leader of the Opposition.

Mr. Kinnock

The problem of the Government demonstrating a commitment to the continuing process in the EC is highlighted by the so-called opt-out clause. I understand that the Prime Minister wants to call it the opt-in clause. That is an interesting literary distinction, but I do not think that it is much more than that. As there is no possibility of any Government in the Community, certainly no British Government and certainly no Labour Government, not referring to their Parliament for a mandate before taking a step into entering monetary union, the opt-out clause simply codifies what will happen in any case, I believe, in every single one of the European Community democracies.

If that clause was taken to be a definition of the Government's position and repeatedly referred to as an escape route, which appears to be the intention, it would fundamentally undermine confidence in the Government's commitment to the European process. It would be a deterrent to investment and a disincentive to industrial development. That is a matter of basic practical issues, of jobs and of prosperity. Opting out would mean losing out. That is not an issue for some distant day in 1996 or 1998.

Mr. Norman Lamont

I assure the right hon. Gentleman that what he has said is not correct. Other countries are prepared to give a commitment that they will move to a single currency without reference back to their domestic Parliaments. We are not prepared to do that, and that provision will not be in the treaty unless we ask for it. Is the right hon. Gentleman saying that he would give a commitment on any terms less than those that we are prepared to give? That is a question that he has not answered.

Mr. Kinnock

I would not be giving evidence of bad faith by looking for an opt-out clause—and the reason is that, unlike the Prime Minister, I do not have to try to patch my party together.

The issue of the strength of the Government's commitment to the process is not one to be kept until 1996 or 1998, but must be faced by the Government now—not with devices to mollify the rival factions in the Conservative party, but with a determination to promote the opportunities for, and the living and working standards of, the people of this country.

Mr. John Butterfill (Bournemouth, West)

Will the right hon. Gentleman allow me to intervene?

Mr. Kinnock

No, I will not give way. There have been a few interventions.

The divisions in the Conservative party have already undermined the Government's position in their negotiations at the intergovernmental conferences. Every other Government in the European Community know that, for months past, the British Government's negotiating energies have been directed not at shaping the future of the Community but at papering over the cracks in the Tory party.

The Prime Minister must, even at this late date, put country before party. In the 20 negotiating days that remain before Maastricht, the Prime Minister must work for a treaty that will serve the best interests of Britain, and in doing so serve the wider interests of the Community. The right hon. Gentleman can do that by negotiating a more practical approach to the co-ordination of economic policies within the European Community.

Would it be right to conclude from the Prime Minister's remarks about the limitations on deficits that he completely rejects the 3 per cent. limit? Would it be right to conclude from his remarks also that in place of the stipulations that exist—which are much too rigid and impractical to be accepted—he would allow the co-ordination of deficits by the market? Would it not then be the case that the market would have a form of control—indeed, sovereignty—that would not work to the advantage of the Community generally or of Britain specifically? It would be useful if the Prime Minister intervened to tell the House precisely what formula he had in mind for the limitation of fiscal deficits.

In a reply to me in July, the Prime Minister recognised that there was a need to achieve "flexibility" in responding to changing economic circumstances. Is that what he has been seeking to negotiate in the references that he made to the limitations on deficits? There is widespread interest in that aspect, and I am sorry that the Prime Minister does not take this opportunity to make clear what should be a very straightforward point.

The Prime Minister

I have done so already, expressly and explicitly, in my speech—as the right hon. Gentleman would know if he had listened.

Mr. Kinnock

I am sorry, but the Prime Minister—I am sure without any intention—is not right about the way that he expressed himself on that point. However, the House will have further opportunities during the debate to clarify that important point.

The Government should be negotiating on the basic question of the European central bank, to ensure that, in the Prime Minister's words to me, a European central bank … would … be accountable to a directly elected body. I understand that the Government have not been negotiating for that. They should have been negotiating over the location of the European monetary institute and of a subsequent European central bank in the City of London, but they have never even raised those questions, despite the fact that, of all the countries of the European Community, the location of the central bank has much the greatest importance for Britain.

Our economy has a substantial financial services sector, which would be greatly disadvantaged if the central bank were located anywhere in the Community other than in this country and in London. The Government should be fighting hard, especially given the importance to the economy generally, and of jobs in particular, to ensure that the bank's location is established even as the European monetary institute is established.

Above all, the Prime Minister and the Government should be negotiating for the inclusion of a wider and more positive concept of economic convergence in the treaty than any that has yet emerged.

As the Prime Minister said, convergence would certainly mean bringing the European economies closer together."—[Official Report, 1 July 1991; Vol. 194, c. 25.] He meant in regard to "growth" and "performance", as well as in regard to "inflation" and "fiscal deficits". I agreed with that definition when the Prime Minister offered it in the House in July. That is the position from which he should be negotiating, but he has not started to do so yet.

The treaty definition of convergence is, of course, of crucial importance to the whole process of monetary union. The Government should be negotiating to gain full recognition of the fact that monetary union and a single currency could work successfully only if there were convergence in the real economic performance of countries: convergence in terms of growth and employment, as well as in terms of inflation and interest rates. No one can be satisfied with the present position. British and German inflation rates have moved together, but the German economy is growing at a rate of 3.5 per cent., while the British economy is in recession and shrinking by 2.5 per cent. Real convergence would mean similar and sustained growth rates, as well as similar inflation rates.

If that real convergence is to be achieved, it will be necessary for the Community and member states to have worked out, and agreed to implement, regional and structural policies that—in the words of the draft treaty—"promote … balanced development"; but the Prime Minister is not negotiating for that either. Real convergence of economic performance, accountability of institutions and active policies for balanced development are the essential ingredients that will be required to make a single currency practical and beneficial.

Mr. Nigel Forman (Carshalton and Wallington)

The right hon. Gentleman has just mentioned balanced economic and social development, and his amendment refers to "social cohesion". Is he aware that some EC partner states want mechanisms for cohesion to be written into the text of the treaties that may be signed after Maastricht? What is his party's attitude to that idea?

Mr. Kinnock

I understand that the Spanish have made a specific point of seeking to ensure that outcome. On the basis of recent information, I am able to distinguish between their insistence at this point and a useful negotiating ploy. The hon. Gentleman would be well advised to pay some regard to the settlement of next year's budget, and to set arguments for including specific references to social cohesion in the Maastricht treaty in the context of the bargaining that that budget will involve.

The Chancellor of the Exchequer has recognised the importance of convergence. Last Thursday, he said on television: If that convergence is not achieved then the establishment of a (single) currency could be a tremendous dislocation and be at tremendous cost. The right hon. Gentleman was, of course, absolutely right; but he went on to say: We ought to wait and see if this convergence happens". There you have it, Mr. Speaker. From the man who told us that unemployment was a price well worth paying, we now have the strategy for the 1990s—"wait and see". The Wilkins Micawber of 11 Downing street tells us to wait and see. No other Government in the European Community are taking such a supine attitude to the need to secure convergence.

Mr. Peter Shore (Bethnal Green and Stepney)

My right hon. Friend has made a number of important points about the changes that will be necessary if European monetary union is not to do the country enormous damage. Can he assure us that he would not be prepared to support the present EMU treaty, which does not contain the provisions and safeguards that he has mentioned? Can he confirm that he does not merely wish to have a treaty that does not currently exist?

Mr. Kinnock

The unfortunate fact that my right hon. Friend must recognise is that the current treaty has been negotiated by the current Government, who do not share our sense of priorities. I can tell him that, if we had been involved in the process during the years in which this Government were involved, proper priority would have been given to the very stipulations that we laid down some time ago about convergence, the accountability of institutions and the need for a change in regional and structural funding—as well as several other considerations, some of which are now contained in article 2 of the treaty. Given my right hon. Friend's well-known views and his desire to protect the interests of the British people, I am sure that he would have found his part in the process very satisfying.

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

Surely the right hon. Gentleman realises what nonsense he is talking. If he had been in charge, we would have been out of the Community, because that was the basis of his election campaign.

Mr. Kinnock

If Britain follows the policies and approaches set out by the right hon. Gentleman, it will be in the second division in the Community. To illustrate that point, let me remind the right hon. Gentleman of what his right hon. Friend the Chancellor said: wait and see if this convergence happens. That is not being said by any other country or Government in the Community. Other countries are not saying, "Let us wait and see if convergence happens; let us wait and see whether performance improves." They are saying, "Let us get on with building economic strength and working actively to secure convergence." That is what we in Britain must do: we must catch up, and then we must compete effectively as we have not done since the present Government came to office.

Several Hon. Members

rose—

Mr. Speaker

Order. The hon. Members who are rising are on the list of those wishing to speak in the debate. It will not make it very easy for them to be called if they seek to interrupt now.

Mr. Kinnock

The great problem for our country is the fact that our Government do not follow the policies that are necessary for the building of economic strength. Economic, industrial and social policies that are regarded by Conservatives, Christian Democrats, socialist Liberals and coalition Governments in the rest of the Community as the conventional duties of government are anathema to our Conservative Government. As a result, our country is in severe recession, with falling manufacturing output, falling investment and negative growth for the second time in 10 years. It is small wonder that, of the 940,000 jobs that have been lost in the Community in the past year, 768,000—80 per cent.—were lost here in Britain. Every day since the current Prime Minister took office, 3,000 people in Britain have lost their jobs. That is not convergence; it is divergence of the worst kind.

Not content with letting Britain's economic performance fall behind, the Government now want its social provision to fall behind as well. The 11 other Community Governments—Governments of all political persuasions—all accept the social charter and the extension of qualified majority voting to social policy. They understand that the single market must have a social dimension if it is fully to benefit the people of the Community. They face, realistically, the fact that in the single market there must be guaranteed minimum provisions of employment and social provision, so that countries with high standards are not undercut by those with low standards. Only the British Conservatives reject that rational view. Only the British Tories reject the social charter. Only this Government refuse to guarantee their people the same minimum rights as their fellow Europeans.

Eleven other Governments believe that employees are entitled to involvement in and information about the management of large-scale European companies. Only the British Government oppose that principle. Eleven other Governments believe that there must be general limits on daily and weekly working hours. Only the British Government oppose that principle. Eleven other Governments accept the proposals for basic rights to parental leave. Only the British Government are against that. Eleven other countries accept the extension of full-time employment rights to part-time workers. Only this Government oppose that in principle.

Not content with relegating the British economy to the second division, the British Government want the British people to have only second-class employment rights in Europe. A Government who deliberately stand in the way of basic employment rights for millions of British people cannot claim to be standing up for Britain. They cannot claim, either, to be at the heart of Europe.

By the same token, a Government who resist qualified majority voting on environmental policies fail in their duty to our country and to the Community. It is clear to everyone that management of the international environment is a Community responsibility. I hope that the Government will approach that question at Maastricht in the most positive way, given that they perpetually make claims about their commitment to the environment. They make other claims, of course——

Sir Peter Blaker (Blackpool, South)

Will the right hon. Gentleman give way?

Mr. Kinnock

I apologise for not giving way to the right hon. Gentleman. It is difficult to do so after so many interruptions, all of which have eaten into the time available. In order to keep a sense of balance, I shall have to deny the right hon. Gentleman the opportunity to intervene.

The Government claim that, whenever decisions are taken at Community level, they are the actions of bureaucratic and unaccountable members or agents of the Commission who are trying to push their way into every nook and cranny of national life. It is true that the Commission has great powers that have been ceded by Governments and Parliaments—powers that will not be reclaimed by Governments and Parliaments. All the more reason, therefore, to make changes to address the resulting democratic deficit by ensuring that the Commission is held more effectively to account by the European Parliament, which is elected by the people in every Community country. I was glad to hear what the Prime Minister said in his speech, but it has to be put to him that if it is right for a non-elected Commission to initiate legislation that affects everybody in the European Community, how can it be wrong for the elected members of the European Parliament to have the same right to initiate legislation?

In the European circumstances, which are still volatile—sometimes tragically so—the Community has inevitably and increasingly become the centre of political and economic development in the entire continent. The evolution of the Community is continuing, both with the European Free Trade Association countries and with the new democracies of eastern and central Europe. That change must be fostered. I was glad to hear the Prime Minister strongly confirm that today. Among the most important of the actions to be taken is the gradual development of associate membership and then, I hope, full membership for countries in eastern and central Europe, both to encourage economic advance and, vitally, to strengthen democracy.

The European Community now has a political identity that is in part being forged by the efforts of member states and in part by the movement of international events, especially in recent years. Some wish further to define that identity by adopting common foreign and security policies, with qualified majority voting. That, however, would produce a result which would probably be the opposite of the one that its proponents desire. It would weaken, not strengthen, the Community and its ability to act. Co-operation and consensus, therefore, remain the most useful and reliable arrangement for Community foreign and security policies.

Europe now has more democracy, more freedom and more potential for economic, social and cultural advance than ever before in its history, but we know that if that potential is to be fulfilled it cannot be left to chance. That is why we have put forward policies to promote efficiency and growth, opportunity and social justice. They are all essential components in the development of a Europe that is not only a market for its producers but a genuine community for all its people. Developing that market, building that community, is the future for Britain in Europe. It is that future that the Labour party will work for, and it is that future that the British people will vote for at the election.

4.55 pm

Mrs. Margaret Thatcher (Finchley)

I should like to make it clear at the outset of my remarks that tonight I shall support the motion in the name of my right hon. Friend. [Interruption.]

Mr. Speaker

Order. I say again—this time to those who sit on the Opposition Benches—that this debate is being watched and heard by very many people.

Mrs. Thatcher

For the sake of clarity, I repeat that I shall support the motion in the name of my right hon. Friend the Prime Minister and my other right hon. Friends. I congratulate my right hon. Friend on his speech and on the clear way in which he set out his views and indicated his way ahead. I know that he has difficult negotiations at Maastricht and that therefore he needs our support in those negotiations. I, for one, am——

Mr. Frank Haynes (Ashfield)

Will the right hon. Lady give way?

Mrs. Thatcher

Not yet.

I for one am very grateful for this opportunity that has been given to right hon. and hon. Members seriously to put forward their views on what should be a very great and serious occasion. When my right hon. Friend is negotiating in Maastricht, it will undoubtedly be a very tense and hard negotiation. He has already said that there are some proposals which are quite unacceptable to the Government, and he pointed out which they were. His task will be to remove those proposals before he comes back to this House. [Interruption.] In my day, that would have required the occasional use of the handbag. Now it will doubtless be the cricket bat, but that is a good thing because it will be harder.

The Government will achieve their objectives only by putting our arguments vigorously and persistently, by refusing to be intimidated by deadlines and by making it clear that there are certain points on which we are not prepared to surrender. [Interruption.] Right hon. and hon. Members may be certain that I shall make my views clear, if I am given the opportunity to do so. It is not my custom to use coded messages

My right hon. Friends have already shown that they can negotiate hard and that they have the courage to say no to proposals that are plainly not acceptable to the House. They have already explained why some measures should not be made by amending the treaty of Rome because that would bring them under the jurisdiction of the European Court, which has different methods of construing any proposal or legislation from those used by our courts.

I was astonished by the speech of the right hon. Member for Islwyn (Mr. Kinnock). This is a very serious debate. There are enormously serious issues affecting the future rights of the House and its future responsibilities. When we are talking about the rights and responsibilities of the House, what we are really talking about are the rights of our constituents, and they need to be treated very seriously indeed.

Mr. Benn

The right hon. Lady has referred to the rights of constituents. Will she please clarify the reasons why she is opposed to inviting the people, whose rights are to be bargained about at Maastricht, to reach the final decision? I know that she took a different view when we entered the Community, at the time of the referendum and at the time of the Single European Act, but given the enormity of what is now proposed, even with the reservations that the Prime Minister has properly expressed just before a negotiation, will she tell the House why she does not support the rights of the people to give the final verdict on such a major constitutional question?

Mrs. Thatcher

I shall have something to say about that towards the end of my speech. I shall address my remarks directly to the point that the right hon. Gentleman has made. I am very conscious that the only authority that we have is the authority given to us by the ballot box.

May I make one or two more comments on the speech of the Leader of the Opposition? I came to the same conclusion from his speech as my right hon. Friend the Chancellor—that the right hon. Member for Islwyn was going to have a single currency willy-nilly. He has already made up his mind. The argument that he uses is that, if others have it, we must. That is an argument for a flock of sheep, not for people who are sent here to analyse the problem and to use our minds and our reason to say which course we should follow. If ever it is said that whatever they do we must follow, then they will put all kinds of things on the table which we shall have to fight very much harder.

I know full well that the Labour party made a commitment to a single currency and attached certain conditions. That commitment was made before the draft proposals were published. When they were published, as the right hon. Member for Bethnal Green and Stepney (Mr. Shore) said, those conditions were not there. That should have made a difference to the Labour party's decision.

It is not surprising to some of us that the Labour party might wish to hand control of our financial and economic affairs to Europe, or indeed to almost anyone other than itself. It would suit it to get out of the responsibility and to pass it over to another body. That is not what we are here for. The fundamental issue—[Interruption.] I said that I am not accustomed to using coded messages. The fundamental issue——

Mr. Haynes

Will the right hon. Lady give way?

Mrs. Thatcher

Not yet.

I will take the broad-brush issues, because it is very easy to get lost in the detail. [Interruption.]

Mr. Speaker

Order. May I ask the House to settle down? This parliamentary debate is of great importance. I ask the House to deal with it seriously. [Interruption.] The hon. Member for Nottingham, North (Mr. Allen) must contain himself.

Mr. Allen

On a point of order, Mr. Speaker. It is within your discretion to impose a 10-minute rule on speeches. Is that applicable to all hon. Members, but more applicable to hon. Members who rarely turn up at this place?

Mr. Speaker

The hon. Member should know that it is not within my discretion to put a 10-minute limit on speeches at this point.

Mrs. Thatcher

Thank you very much. The speech would be shorter if I could get on with it.

The fundamental issue that will confront the Government at Maastricht is that the draft treaties propose an enormous, and, to me, unacceptable, transfer of responsibility from this House, which is clearly accountable to the British people, to the European Community and its institutions, which are not. In this House we are rightly——

Mr. Haynes

Will the right hon. Lady give way?

Mrs. Thatcher

In due course.

We are rightly jealous of our powers and responsibilities. As I said a moment ago, we are very much aware that our authority comes from the ballot box and that what we are talking about are the rights of the British people to govern themselves under their own laws, made by their own Parliament.

It has rightly been said that it is the character of a people which determines the institutions which govern them, and not the institutions which give people their character. Yes, it is about being British and it is about what we feel for our country, our Parliament, our traditions and our liberties. Because of our history, that feeling is perhaps stronger here than anywhere else in Europe, and it must determine the way in which our Government approach such fundamental matters.

My right hon. Friend the Prime Minister has said a good deal about the Single European Act, which has many lessons for us. It is not the case, as is sometimes alleged, that the Single European Act introduced qualified majority voting in the Community—it was already in the treaty of Rome. As my right hon. Friend said, the Act extended it in certain limited areas for the express and sole purpose of completing the common or single market by 1992. That was all. In the words of article 8A, these measures were adopted with the aim of progressively establishing the internal market over a period expiring on 31st December 1992. Moreover, although it was in our interests to have majority voting on some measures, it was not on others and unanimity was explicitly preserved for other important areas. As article 100A makes clear, qualified majority voting does not apply to fiscal provisions, to those relating to the free movement of persons nor to those relating to the rights and interests of employed persons. We would have expected some of the Commission's directives to have been taken under that unanimity clause, which requires us all to consent.

Mr. Haynes

Will the right hon. Lady give way?

Mrs. Thatcher

One moment—in due course.

The Commission, however, has subsequently tried to circumvent the unanimity requirements by bringing forward proposals under other articles of the treaty where qualified majority voting is the rule. It has received some support from the European Court, which made an interpretation that would not have been made by our courts.

I raise that because we should draw a clear lesson from what has happened under the Single European Act. Many of us gave assurances about the unanimity rules, fully believing that they would be honoured and that the spirit of them would be honoured. Any powers conceded to the Commission by agreement are likely to be widened in practice and extended into areas that we do not envisage. We must look at the draft proposals in that light.

The other important step in the Single European Act, as my right hon. Friend the Prime Minister said, was the agreement to strengthen and improve co-operation on foreign policy. That agreement was never made part of the treaty of Rome—and quite rightly not. There are two ways to go—the treaty of Rome, with the European Court's interpretation of it, which is quite different from ours, or an intergovernmental agreement which is binding upon us but which does not have to enter into our law and is not part of the treaty of Rome.

That agreement on political co-operation is an excellent agreement. It was wholly drafted by us in the Foreign Office—[Laughter.]—to whom I gladly pay tribute in connection with that agreement and hope that they will be pleased—but it was tabled after I had shown it to the Germans and the French to get their approval. It was a bit offside but, nevertheless, some would take it as a compliment.

Countries with a history and a tradition such as Britain's cannot allow their hands to be tied on defence and on foreign policy by making them or their implementation subject to majority voting. I was very grateful to the Prime Minister for what he said, because something in a speech made by my right hon. Friend the Foreign Secretary—I think, in The Hague—suggested that there might be majority voting for implementation. [HON. MEMBERS: "Oh."] I know that he will take it in very good part when I say that I read it, analysed it and thought that he was going a bit wobbly. However, I am delighted to hear from my right hon. Friend the Prime Minister that it is all to be agreed and that there will be no majority voting, that we shall continue under the intergovernmental agreements and not have things attached to the treaty of Rome.

Looking to the longer perspective, the history of our dealings with the European Community seems to consist of our conceding powers, of reassurances being given about their limits, of those limits being breached, and of the European Community then coming back with a new set of demands for more power for the Commission. That is the conveyor belt to federalism. That conveyor belt will not be stopped just by removing the word "federal" from the treaty.

I do not believe that any of my colleagues want federalism, but, judging from the right hon. Gentleman's speech, the Opposition are already committed to it. Faced with this, I believe that the majority of the British people do not want to hand over substantially more powers to the European Community. I believe that our objective must be to uphold the sovereignty of Parliament which has served us so well. That is more than can be said for the use that the Commission has made of some of its powers to promote what one newspaper has rightly described as "Euro-lunacies". I shall not waste the time of the House by listing them.

It was never the intention—

Mr. Haynes

rose——

Mrs. Thatcher

A little more patience.

It was never the intention, I believe, of the founders of the European Community that the Commission should try to exercise its control over every aspect of a nation's life in that way. Again, I was very grateful to my Foreign Secretary—[Laughter.] It is perfectly all right—my right hon. Friend is used to both praise and blame from me. Agreed? Excellent. Good.

Mr. Hurd

My right hon. Friend had a number of Foreign Secretaries in her time. I accept the tribute on behalf of them all.

Mrs. Thatcher

I am not quite sure whether he should.

However, that is why the Government are right to resist strongly—as my right hon. Friend said—attempts by some countries to bring education, health, social affairs, immigration and security into the treaty of Rome. We dealt with immigration under the Single European Act by a declaration which said that nothing in the Act should prevent us from making our own arrangements at borders to stop immigration, terrorism and crime. That is already agreed, and I hope that it will not be removed from the end of the Single European Act.

The right hon. Gentleman referred to the social charter. I have never for one moment regretted being isolated in opposing the social charter. If I had not opposed it, it would have been assumed that we had agreed to many of the directives—there are about 40 under that charter—and there would have been implied commitment to them. There is not. It was absolutely right to oppose it. Moreover, it would have placed unnecessary burdens and restrictions on our industry, it would, of course, have caused more unemployment and it would have been an unwarranted intrusion into our national affairs.

Most dangerous of all when it comes to the transfer of powers is the draft treaty on economic and monetary union. My right hon. Friend has already said that he will reject most of the political proposals. Economic and monetary union and being in charge of one's own economic policy go to the heart of our democracy and our powers. If one gives that up, one will have given up the capacity to make the main policies for which we are here and which affect the life of our nation.

Moreover, of course one is judged in an election on one's performance on the economy. Of course one is judged abroad on how successful we are and on how successful we were in transforming our economy from a socialist economy to an enterprise economy.

Mr. Tony Banks

rose——

Mrs. Thatcher

If the hon. Gentleman would listen for one moment.

That will be the battleground for an election. It would be pretty ironic if, when arguing about the performance on this issue on one side or the other, candidates had, in the next breath, to say, "It may be that we shall pass all these powers over to the Community and other institutions." That is an enormous battery of powers, as one has seen from the economic and monetary union.

Money Bills and the general economic policy are the exclusive responsibility of this elected House. We are not, in my view, entitled ever to give away those responsibilities or to give away the people's rights, which is what a single currency would mean. Nor do I believe that a single currency would be in this country's interests. It would require a vast transfer of resources to the poorer countries of the Community to enable them to meet the obligations of membership of a single currency—and that at a time when we in Britain are already giving more money in most years to the European Community than to the third world. [Interruption.] Look at the autumn statement. Many people outside——

Mr. Haynes

rose——

Mrs. Thatcher

No, I must give way to my hon. Friends on the Back Benches first.

Many people would have thought that we should give more money to the third world than to the Community. In the coming years, we shall be giving about £2.5 billion to the Community and £2.1 billion to the third world. That is before—[interruption.] No wonder they do not make very good speeches—they never listen. That is before any account is taken of increased requests for structural funds because of a single currency. I think that we should take that very much into account.

Most importantly, a single currency would take away any democratic accountability for our economic policies to the people of this country. I know that some people say, "Don't worry, a single currency will never come about, because the convergence conditions will never be achieved." The convergence conditions are totally unrealistic. Indeed, I doubt if they are achievable for many countries in the Community.

Mr. Tony Banks

Will the right hon. Lady give way?

Mrs. Thatcher

Certainly, it will be difficult—[Laughter.] It is dangerous to assume that, because the conditions are difficult at the moment, they will stay the same. It is quite possible that the Community will change them, while still keeping the goal of a single currency. Too often in the past, we have seen what we thought was a watertight agreement being subsequently eroded.

As my right hon. Friend the Member for Worthing (Mr. Higgins) has noted in correspondence in The Times, there is the serious question of surveillance of our economic policies by the Commission and the duty not to have an excessive deficit. From studying the section to which my right hon. Friend referred, it seems as if we shall be under surveillance anyway on a number of issues, even though we choose to use the exemption clause in the proposed treaty.

Mr. Haynes

Will the right hon. Lady give way?

Mrs. Thatcher

For old times' sake, I will give way to the hon. Gentleman before I go on to the important point about the exemption clause.

Mr. Haynes

Just a year ago, the Conservative party committed a dastardly act against the right hon. Lady. I have missed her from the Dispatch Box ever since. If she was still in the seat of power, what would she be negotiating in Europe?

Mrs. Thatcher

I am making a pretty good fist of just that.

My right hon. Friend the Chancellor of the Exchequer hopes to secure agreement to an opting-out or exemption clause, and one appears in the treaty. My concern, which is shared by many hon. Members of all parties, is how effective it would be in practice, bearing in mind the fact that, even if we exercise that power, we are still required to sign up to the goal of a single currency and to sign up to the institutions designed to prepare the way for it.

How easy would it be in practice to resist the pressures to go further? We do not want to be told that, because we have agreed to take part in the earlier stages of economic and monetary union under the proposed treaty, we have no real choice left but to accept a single currency. It seems to me as if that is the design of the whole draft proposals.

First, one has to have convergence with very different conditions. Before one can enter the single currency, one has to have another set of proposals—including, for example, that one has stayed within the narrow range of the exchange rate mechanism for two years. The hon. Member for Glasgow, Govan (Mr. Sillars) spotted the proposition. As my right hon. Friend the Prime Minister said, eight member states could go to a single currency. We are in the exchange rate mechanism.

If we wish to keep open the option of going into a single currency, we have virtually no freedom of action in that time. One cannot have different interest rates. If one's interest rates are lower, currency will flow out. If one's interest rates are higher, a good deal of money might flow in artificially. One would be linked inevitably to that single currency. The rate would be 2.5 per cent. and we should be unable to operate separately.

That is the design of the treaty. It always happens little by little. We should be told that we have come so far—from 6 per cent. to 2.5 per cent., and then from 2.5 per cent. to 2 per cent. or closer—that we have no option but to join. We must totally reject that, if need be——

Mr. Malcolm Bruce (Gordon)

Will the right hon. Lady give way?

Mrs. Thatcher

Not at the moment. The hon. Gentleman should listen to my argument.

As the hon. Member for Govan said, in such circumstances it would probably mean coming out of the exchange rate mechanism to keep our freedom of action. That is the danger of signing up to this treaty, and I hope that my right hon. Friends will consider that carefully. My right hon. Friends the Prime Minister and the Chancellor genuinely wish to keep open the right to go for exemption, and do not wish to be put by the treaty into a kind of funnel in which one has to go automatically to a single currency.

Mr. Dicks

After her clear analysis of the situation, will my right hon. Friend explain why she took us into the exchange rate mechanism?

Mrs. Thatcher

If one enters the exchange rate mechanism, one gets co-operation with the other European Community countries, and there is no need to go any further. One has the latitude one wants. That was the advice tendered to me on several occasions. We have a 6 per cent. latitude. Other countries have had to have their currencies devalued or revalued, and they have been perfectly able to do so in the circumstances. One uses the exchange rate mechanism and the deutschmark as a kind of gold standard, but one can change the value if one finds that one needs to do so and that the alternative would be unemployment. I hope that my hon. Friend the Member for Hayes and Harlington (Mr. Dicks) is satisfied.

In some ways, it would be better for those who want a single currency to be achieved to go to it by a separate agreement outside the treaty of Rome. If it is achieved through the treaty of Rome, we get all the difficulties of interpretation by the European Court. If people want a single currency, why should they not achieve it outside the treaty of Rome? We have had intergovernmental conferences outside the treaty. That would be the way to do it, and it would not get us into the difficulties that I have described, of signing up to the concept of a single currency, signing up to its institutions and being driven into what I regard as a trap.

I recall the debate on economic and monetary union on 2 November 1989, in which almost universal opposition was expressed in the House to the whole Delors concept of monetary union and a single currency. It was as recently as November 1989. I remember attending the next European Council and saying to my colleagues, "It is no good. Our Parliament just will not accept it. It goes to the heart of our parliamentary tradition". My colleagues understood that and were prepared to make provision for it.

There has been a colossal and inexplicable change, especially among Opposition Members. The Opposition seem to be prepared to give up the parliamentary supremacy that has been the heart of our constitution.

I want to reply to the point raised by the right hon. Member for Chesterfield (Mr. Benn) about a referendum. If at some point in the future there should be agreement between the parties in the House to abandon the right to issue the pound sterling—not only now, but in the future—and if the House agreed to abandon the right to issue our own currency, with all that that implies, and to adopt a single currency, the people would have no choice at an election time about that enormously important point.

If the Conservative party, the Labour party and the Liberal Democrats all said, "We are going to have a single currency, we are going to abandon the powers of the House of Commons and we are going to take away your rights," people could not make their views known through the ballot box at a general election.

Whoever got into power would not then have the right to claim that they had a mandate. They would not have had a mandate because they would have deprived the people of a choice. They would have done so not on a small thing, but on a major fundamental constitutional issue which was the right of the people. The only alternative for the people would be to vote for extremist parties—something which I should regret very much. There would be extremist candidates everywhere.

My right hon. Friends must address their minds to this matter. My right hon. Friend the Prime Minister said clearly that he believed in choice. He will provide choice. If everyone believes in the precise same arrangements on exemption from the single currency but we sign up to the concept, how could the people let their view be known? If one really wants to know the answer, one can find it in Dicey on the constitution. He came to the conclusion that, under those circumstances, the only thing to do was to hold a referendum, because that states clearly the issue and the merits and demerits. In our system, it would be no more binding than previous referendums which we have held in my time in Parliament. A referendum is advisory but it is not binding. The answer may be overwhelming. We had referendums in Scotland and Wales. Constitutional issues warrant a referendum.

Anyone who does not consider a referendum necessary must explain how the voice of the people shall be heard. Therefore, I conclude that we should let the people speak. If not, we shall deprive them of their say on rights which we are taking away not only from them but from future generations and which, once gone, cannot be restored. A referendum may not be popular with some members of my party, but I doubt whether they have thought it through.

I am grateful for the opportunity to express my views clearly. I believe passionately in this House. I have been here for 32 years, although that is not as long as some Opposition and Conservative Members. We should retain parliamentary supremacy. We should not make a massive transfer of power to the Community, which is not accountable to our electorate. Therefore, we should not join a single currency.

I understand that my right hon. Friends wish to keep open the option, but the option is inevitably open because future Parliaments may consider it. We do not have to keep it open. I understand my right hon. Friends' wish, but I want to be sure that it is genuine. [Interruption.] Yes, of course. So does my right hon. Friend the Prime Minister. I wish him well at Maastricht. Judging by the performance today, he will be our Prime Minister for a long time.

Mr. Speaker

I call Mr. Paddy Ashdown. [Interruption.] Will hon. Members leave the Chamber quietly?

5.33 pm

Mr. Paddy Ashdown (Yeovil)

May I say to the right hon. Member for Finchley (Mrs. Thatcher) how nice it is to have her back in the House here among us and not to hear her words wafted to us over the airways from Memphis, Tennessee. I hope she will come back as often as she can. We love to hear her expressing her views in the House, although judging by the faces of those on her own Front Bench, I am not sure that the same applies to them.

Those of us who have argued passionately and long about Britain's place in Europe—the right hon. Lady will understand what I am saying—will, having listened to her speech and in spite of its drawbacks, be delighted that the present Prime Minister is in his seat and that she is in another. I wish that she would not, as she did when she was Prime Minister, treat the Commission as if it were General Galtieri. That is the source of some of our problems.

For more than two years, we on these Benches have been saying that Britain's destiny in Europe is the most important issue which the House and the country will face in this Parliament. For two years and more, we have said that the confusion and division that has characterised the positions of both the Labour and Conservative parties would damage them and undermine Britain's best interests in Europe. For two years, we have said that sooner or later the Labour and Tory parties will have to come, however slowly, painfully and hesitantly onto the ground on which my party has always stood on Europe.

The speeches that we heard today from the Prime Minister and the Leader of the Opposition comprehensively vindicate that judgment. However late, opportunistic, hesitant and reactive, the late conversion of the two right hon. Gentlemen is thoroughly welcome. My only regret is that, by leaving things so late and entering the negotiations so reluctantly, both parties have done mortal damage to Britain's interests. We shall pay a heavy price for that in the years to come.

But I give credit where it is due. I congratulate the Prime Minister. He has moved a long way since the summer of this year, when I asked him to accept or reject the principle of a single currency. He has come to accept it, even though he would not do so then. I make this prediction to him. He knows, we know and most Conservative Members know that, although he has come a long way, he has to move a long way yet. The stone has started rolling down the hill. There will be alarms and excursions and dramas up to the last moment in Maastricht, but, whatever the Prime Minister says, we all know that he will sign up at Maastricht. For he knows that there is no alternative, to coin a famous phrase.

Mr. Jacques Arnold (Gravesham)

Will the right hon. Gentleman give way?

Mr. Ashdown

I shall give way in a moment.

If the question is yes or no on Europe, no is not an answer. The Prime Minister knows that, and I believe that he understands it. He knows that it is no answer to isolate Britain in Europe. Indeed, he admitted as much in his speech, when he explained why he could not reject a single currency. He said that, if the others went ahead, we could not be outside. That is correct. The Prime Minister knows that and I suspect that his tiny rump of European separatists knows it too, whatever they might say to the contrary. However vociferous separatist Members are, the question to which they have no answer is, "What future would Britain have if we rejected European integration in favour of isolation on the periphery of the continent which is geographically and historically our home?"

I give way to the hon. Member for Gravesham (Mr. Arnold). Ah, perhaps I have answered his question. Or did he intend to tempt me to provide the answer to the question that I posed?

Sir Teddy Taylor (Southend, East)

To avoid any confusion that might arise from the right hon. Gentleman's amendment, will he make it abundantly clear whether his party agrees with the principle of a referendum on the treaty? It is important that we should know. I want the right hon. Gentleman to answer yes or no, not to give a long answer.

Mr. Ashdown

The hon. Gentleman will discover that I shall give an unequivocal answer to that question in my speech.

Sir Teddy Taylor

Why?

Mr. Ashdown

I will tell the hon. Gentleman why. I intend to answer the question in my own time, not his.

I also congratulate the Labour party. As we heard today, it too has come a long way. I am not sure that it understands where it has arrived, but it has certainly come a long way. For Labour, it is a well-worn path. It has been here before. Labour has changed its mind on Europe twice in every decade since the 1960s—not so much the road to Damascus as another circumnavigation of the M25.

For the Labour party, on Europe, it is better to travel hopefully, even around in circles—or at least it is safer—than it is to arrive. So it will keep on travelling. No doubt it will do another circumnavigation when things turn round.

These conversions are welcome, as far as they go, but why is it that, yet again, Britain has been condemned, through lack of leadership, to be the laggard in Europe, instead of being among the leaders? Why is it that, once again, we have to be dragged along by others in Europe, unwillingly, uncertainly and at considerable cost to our influence?

My party's commitment to Europe has been consistent and clear. Our vision remains what it has been for four decades—of a Britain in the main stream of Europe, rather than seeking the illusory safety of a non-existent backwater. It is of a Britain which helps to share Europe's institutions instead of submitting to institutions shaped by others; a Britain which joins the leaders in creating an integrated Europe, rather than one which resists change until we have it forced upon us.

Mr. Andrew Rowe (Mid Kent)

If we are to recognise the right hon. Gentleman's description of Britain as the "laggard in Europe" perhaps he could explain how it is that, of all the signatories of directives in the European Community, we are the best at implementing them. If that is so, does he not think that there is some justice in our being cautious about accepting proposals for further progress from people who have not yet implemented what they have already signed up to?

Mr. Ashdown

The hon. Gentleman makes precisely the arguments that I make. We have obeyed the laws—we have had little hand in shaping them. That is the whole point. We have been forced to those conclusions without having the ability to shape the institutions.

Mr. William Cash (Stafford)

Rubbish.

Mr. Ashdown

The hon. Gentleman says it is rubbish, but is that not exactly what the Prime Minister said at the beginning of his speech? We did not shape the common agricultural policy, about which Conservative Members now complain. The fact is that we have to submit to it. We did not shape the treaty of Rome—we had to join it at the end of the day. I am seeking to avoid that. [HON. MEMBERS: "Johnny come lately."] I heard that comment from the Conservative Benches. This party has stood on this ground——[HON. MEMBERS: "which party?"] The party that I represent and lead has represented that position for 40 years, and we continue to do so. One does not look to the Conservative Benches or to the Labour Benches for a clear and consistent policy on Europe, but to this party.

Mr. Cash

Will the right hon. Gentleman give way?

Mr. Ashdown

No, I have given way sufficiently at this stage. The hon. Gentleman will understand that I do not wish to take up too much of the House's time. If he wishes to intervene later, I should be happy to consider giving way.

While Labour and the Tories, separately, find themselves in a minority of one in Europe, my party, whatever its position in the House, is in the majority and the main stream among European countries—a majority that spreads across all the parties.

We have no difficulty with monetary union. It is, after all, the logical and natural extension of the single market, into which the right hon. Member for Finchley (Mrs. Thatcher) took this country.

The important thing is that we do not underestimate the difficulties of monetary union. The right hon. Member for Finchley was right to point them out. We do not underestimate the difficulties that they will bring our country. We know that Britain will either have a difficult period of convergence before monetary union, or a painful period of adjustment after it, because monetary union will force this country to face up to the economic decisions that we have dodged for 40 years.

Our commitment to monetary union is not made because we think that it will be a soft option or that it will be easy; it is made because the alternative—economic isolation—is even more painful for this country.

We have no difficulty either with the idea of a European central bank. How else could one run an effective, responsible and firmly anti-inflationary monetary policy for Europe? Indeed, those who argue against an independent bank are making it clear that, for them, the defeat of inflation does not come first. That, not surprisingly, is the Labour party's view. The conditions that Labour sets on that issue, as on so many others, make it clear that, whatever its criticism of the Government's negotiating stance, it could not sign up to any agreement on monetary union that is likely to emerge from Maastricht. Its own conditions would preclude it.

Labour says that it would reject monetary union, unless it meets the conditions set out in Labour's document of 30 October. But the conditions that it set out would be rightly rejected by almost every other European Community country. So Labour's policy also points towards isolation.

Mr. Austin Mitchell (Great Grimsby)

Does the right hon. Gentleman not understand that, without either total economic convergence—or near-total—or a massive machinery of redistribution, economic and monetary union must be as ruinous for this country as it proved to be for East Germany?

Mr. Ashdown

I know that the Labour party is in favour of it, but I have already said that I do not believe that monetary union will be a soft option. The reason for going into it is because the alternative—presumably preferred by the hon. Gentleman—which is economic isolation, would be infinitely more damaging, and over a much longer period. But if we are to have monetary union, we must have a degree of political union, too.

I simply do not understand the Government's position. In one breath they complain, with some justification, about the interfering nature of the Brussels bureaucracy, but in the very next, they vote against increasing the powers of our democratic representatives in the European Parliament, to hold the bureaucracy to account.

The Government seem to believe—indeed, the Prime Minister said—that the right thing to do is to keep things as much as possible as they are, with the Council of Ministers controlling legislation. But if the Council of Ministers is so good at controlling the Brussels bureaucracy, how come there is so much to complain about?

The fact is that increasing the powers of scrutiny and of initiation of the European Parliament is the way that we bring Brussels—and the Council of Ministers—under effective democratic control, and if the Government stand against this then they are standing for the same status quo that annoys them now so much. They cannot have it both ways, and they had better make up their minds which of the two options they want. They must either keep things as they are and stop complaining or they must give our democratic representatives in Europe the power to hold them to account and to stop the interference from Brussels of which we now legitimately complain.

Finally, Maastricht will set the terms—[HON. MEMBERS: "What about the referendum?"] I promise hon. Members that I am coming to the referendum.

Maastricht will set the terms within which Europe will begin to establish a common foreign and defence policy, and rightly so. As European integration evolves, Europe's voice in world affairs will grow, and the need for Europe to speak with a single and powerful voice will grow too. We see the need for that so clearly in Yugoslavia. What we see in Yugoslavia today may well be the first example of the threats that will affect Europe's peace and stability. Threats to Europe's stability in the next few years will probably come, not from national conflicts about borders, but from older religious, ethnic and cultural conflicts which cross borders. As Yugoslavia has shown, it may well be that we have to call the power of the new Europe into being to cope with some of the problems of the old. [HON. MEMBERS: "We have failed in Yugoslavia."] Hon. Members sitting behind me say that we have failed in Yugoslavia, and so we have. Perhaps history will say that the Yugoslav problem came before Europe was ready—[Interruption.] I am glad to see some nods of approval for that thought on the Conservative Benches.

Mr. Adley

Will the right hon. Gentleman give way?

Mr. Ashdown

I shall give way in a moment.

Mr. Norman Tebbit (Chingford)

rose—

Mr. Ashdown

If the right hon. Gentleman will forgive me, I shall let him speak in a moment.

However, we had better be ready soon. Yugoslavia could be but a dress rehearsal for the problems that Europe will face if, as seems increasingly likely, the Soviet Union descends into economic chaos and disintegration. Then, a strong Europe, speaking with a common voice and able to exert its influence in the region, would be a rock of stability at the edge of a sea of confusion and potential chaos.

Mr. Adley

Does the right hon. Gentleman agree that those who say that the disintegration of Yugoslavia is an example that we should fear could not be more wrong? Surely history shows that Yugoslavia was created without any democratic institutions and without the involvement of any national Parliaments, whereas the coming together of European countries is with the consent of the Parliaments of those countries.

Mr. Ashdown

With the consent of the people, too, as I shall argue in a moment. I agree wholeheartedly with the hon. Gentleman.

Mr. Tebbit

When the right hon. Gentleman considers the difficulty of finding a common view in this House on what our policy towards Yugoslavia should be—I might ask whether the right hon. Gentleman thinks that European policy should be to keep Yugoslavia together, as the Serbs want, or to let it break up, as the Croats and others want—he may become more keenly aware of the unlikelihood of the 12 nations agreeing on a single policy towards Yugoslavia and then enforcing it, which would require military means.

Mr. Ashdown

Clearly, the right hon. Gentleman ignores the fact that, so far as I can tell, we have already gone a long way down that track by formulating much of a common foreign policy. If he considers how the matter has developed since the Gulf, he will see that much progress has already been made. If he asks me whether I think that it is conceivable that we could reach the kind of position about which he is talking in four or five years, my unequivocal answer is that I believe we will.

I want to make it absolutely clear, so that people understand, that this party has no interest in taking any action that will undermine NATO. Nor do we wish to see the United States leave Europe. Indeed, continuing US and Canadian involvement on the mainland of Europe is an important condition for stability in the foreseeable future. Nevertheless, wise Europeans will want to begin to plan for the contingency that the US may one day leave Europe, not because we want that, but because it decides to. That eventuality could well arise within this decade. Therefore, an integrated European pillar within NATO makes good sense for today and provides a sensible preparation for what may happen tomorrow.

It is for that reason that the new Europe must embrace the new European democracies. There is no conflict, as some, including the right hon. Member for Finchley, have suggested, between deepening and widening Europe. The Government may not understand that, but the emerging eastern European democracies do, as the President of Hungary confirmed to me only yesterday. The Europe that they want to join is absolutely not the loose grouping of trading states beloved of European separatists; it is the integrated Europe that Maastricht is all about.

We in this party have no difficulty in agreeing to the main proposals that are on the table at Maastricht. I do not say that we do not have our points to make about the shape of the Europe that Maastricht is all about, but Britain will make those points effectively only if we are leading the debate in Europe about Europe's future. Ministers seem to spend their time fighting lonely battles about issues that have either already been lost or are meaningless, rather than joining others to win battles about the things that really matter. There is no clearer example of that than the Government's ludicrous battle over the word "federal".

As the rest of Europe knows only too well, the whole case for Britain's opposition to federalism is based on the British Government's deliberate and obstinate misunderstanding of the meaning of the word. Was there ever a more ridiculous argument, since our mediaeval forebears disputed how many angels could sit upon the point of a needle? The rest of Europe knows and understands that "federal" means—not concentrating power, but spreading power. The Prime Minister can look it up in the dictionary of his choice and discover that that is the true meaning of the word.

Meanwhile, we have all been subjected to the ludicrous spectacle of the Government demanding decentralisation in Brussels, while emasculating local government in Britain and dismissing out of hand any notion of a Parliament for Scotland and Wales.

The real debate that we should be having in Britain is not about yes or no, because no is not an answer. The real debate should be about how we create a citizens' Europe, not a bureaucrats' Europe; how we can give each European citizen equal political rights by ending Britain's scandalous electoral system for the European Parliament and giving the British voter the same fair access and fair votes as are enjoyed by every one of our European partners; how we limit the Community's power to interfere inappropriately in our daily lives; what the residual powers are of national, regional and local government within a system of European political integration; and, above all, about how we resist the natural tendency of Brussels and, indeed, any bureaucracy to standardise, and create a Europe in which the national, regional and cultural diversity of our countries, which is our continent's greatest strength, is preserved. Unhappily, that is the debate that neither Britain, nor Parliament, has yet been allowed to have.

Mr. Michael Lord (Suffolk, Central)

Will the right hon. Gentleman give way?

Mr. Ashdown

The hon. Gentleman must forgive me. I am not giving way at this stage in my speech.

The two other parties have both been more concerned about covering up their internal divisions than about deciding Britain's external future. Naturally, that has led to some wonderful contortions. Over the weekend I heard the right hon. Member for Hertsmere (Mr. Parkinson), who is not in his place now, on the Walden programme. He set out his tough conditions for supporting the Government. There he was, saying how much he wanted to uphold this country's proud tradition of parliamentary democracy and how he would not be pushed around. In the very next breath he said that whatever the Government agreed at Maastricht, he would be bound to support them. So much for the courage of the convictions of the Euro-separatists. If they were convinced of their arguments, they would vote against the Government's motion tomorrow night. If the Prime Minister was convinced of his, he would tell them how little it mattered to him whether they did so or not.

Then there is the wonderful spectacle revealed on today's Order Paper. Those who have told us that Parliament is sovereign and that Europe will destroy that sovereignty have suddenly discovered that Parliament is not so sovereign that it cannot be overridden by a referendum.

We in this party do not believe in the absolute sovereignty of this or any other Parliament; we believe in the absolute sovereignty of the people. We accept the historic nature and importance of what is happening at Maastricht. In that, the right hon. Lady is absolutely right. It will alter the British constitution and change the way in which we govern ourselves. We believe that the British people should not go into Europe blindfold, as we are now in danger of doing, but with their eyes open, having seen the issues and having been able to debate them. We believe that they have a right to be involved in this decision, not separated from it.

If this Parliament remains as unrepresentative of the views of Britain as it is and if it continues to be subject to a conspiracy between the two major parties to keep the real issues of Europe off the agenda, it would be appropriate to give the people a say in this decision after Parliament has spoken. I give Parliament this warning—[HON. MEMBERS: "Oh."] Oh, yes. If the opinion polls are to be believed, a dangerous gap is opening up between how Parliament will vote tomorrow and the views of the British people. That gap will have to be bridged. I can see no way of bridging it other than by a referendum and a broad discussion of these issues.

Mr. John Butcher (Coventry, South-West)

rose——

Mr. Ashdown

No, I am not giving way. The hon. Gentleman will have to forgive me.

I do not fear the people's judgment on that matter. I believe that when they know the issues and hear the arguments they will see, as so many Members of this House do not, that Britain's future lies in an integrated Europe.

We shall vote against the Government motion. The Government have no clear vision for Europe. They simply want to bob along like a cork on the water, pushed this way and that by whatever is the prevailing tide of the moment. They have failed to show the kind of leadership that the country desperately needs on this historic issue. Their first aim has been the appeasement of their tiny separatist wing, rather than the long-term interest of the nation.

At this crucial moment Britain needs a Government who are clear, decisive and united on Europe. Instead, I fear, it has a Government who are confused, muddled and divided. Thank goodness a general election is not far away.

6.1 pm

Sir Geoffrey Howe (Surrey, East)

I begin by joining my right hon. Friend the Member for Finchley (Mrs. Thatcher) in lending my full support to the Prime Minister in everything that he said, and in giving my full support to the motion—although I fear that my right hon. Friend the Member for Finchley and I may not be able to agree on other matters, with which I shall deal later.

The Prime Minister's speech was as comprehensive as it was meticulous, and well reflected the balance of the motion. It deserves the wholehearted support of the entire House. The only thing that makes me doubt that is that the general proposition underlying it appears to have received some incoherent support from the Leader of the Opposition. If anything could have frightened us away from the proposition it would have been the failure of the Leader of the Opposition to advance a sensible argument on anything at all. I cannot imagine what comfort that gives the right hon. Gentleman's party.

Underlying the debate, a number of ancient fallacies have begun to re-emerge in this country and elsewhere. One that keeps recurring is that the Community to which we still belong remains an economic community, devoted only to economic objectives. That was never its purpose. It was one of the great post-war institutions whose central purpose was political—to put an end to the frightful nationalistic quarrels which had for decades, indeed centuries, seen the people of Europe tearing each other to pieces and spreading havoc far and wide.

The Community has gone a long way towards achieving that central purpose; towards taming nationalism without suppressing patriotism; towards sharing sovereignty without destroying nations; and towards putting the magic of markets to work for society in a stable democratic setting. In that way it has used economic means to promote the central political objective of ever closer union among the people of Europe". That was at the heart of the process at the outset, and it remains so.

The next fallacy that causes some confusion in the discussion is the persistence of what I regard as a narrow outdated approach to the notion of sovereignty. Such an approach was repudiated by Harold Macmillan, the then Prime Minister, when we applied to join the Community, as it had been by Winston Churchill before that. That idea is that sovereignty is something to be guarded, preserved and held in splendid isolation, the idea that we must always think of sovereignty as something that we are required to hand over, required to lose, to surrender or to sacrifice—conceding, in the words of my right hon. Friend the Member for Finchley, powers demanded by the Community.

That strikes me as an unduly negative approach. Sovereignty is not an undivided thing. If it were, the only ruler who was absolutely sovereign and monarch of all he surveyed was Robinson Crusoe. But he was sovereign of everything and master of nothing.

There is a great confusion involved in regarding sovereignty as in some way akin to virginity—"Now you have it, now you don't." It is not a zero sum game, or some kind of single-entry book-keeping exercise, related to "graph-paper economics". Sovereignty is an asset to be used, deployed, exploited, committed and joined in partnership with that of others.

I make no apology for reminding the House of the quotation from Sir Winston Churchill upon which I drew last year: It is said with truth that this involves some sacrifice or merger of national sovereignty. But it is also possible and not less agreeable to regard it as the gradual assumption by all the nations concerned of that larger sovereignty which can alone protect their diverse and distinctive customs and characteristics and their national traditions. That is a more positive and valuable view of sovereignty.

The historic deepening process of the Community was foreseen from the outset, which is why those who commended it to the country 20 or 30 years ago took care to see that it was not misunderstood. Harold Macmillan, at the time of the 1962 party conference at Llandudno, when he applied to join the Community, described it as perhaps the most fateful and forward-looking policy decision in our peacetime history. And so it remained.

"Ever closer union" is an objective which has been reaffirmed and defined time after time in successive meetings of the European Council. I remember that at the first European Council which my right hon. Friend the Member for Finchley and I attended together, in Stuttgart, it was reaffirmed as a clear objective. The Single European Act in 1985 reaffirmed the need to make concrete progress towards European unity in accordance with the Stuttgart declaration.

There has always been a temptation to regard the successive recommitments to the central political purpose of the Community as being confined to the small print, to be accepted only through gritted teeth and only on our terms. But it was never thus. It was always part of the process whose importance was made clear at the outset. My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) echoed Harold Macmillan's theme when he spoke to the House on 28 October 1971: I cannot over-emphasise … the importance … the scale and quality of the decision … whether we are going to decide that Western Europe should now move along the path to real unity … our decision tonight will vitally affect … the sort of world in which we British people and many generations to come will live their lives".—[Official Report, 28 October 1971; Vol. 823, c. 2202–3.] It was more than an event; it was the start of a process.

It is a fallacy to regard that process as some kind of negative slippery slope along which each reluctant step should be seen as more sinful than the last. That negative, apprehensive, fearful, even sometimes hostile tone with which some Euro-sceptics approach and discuss the question is wholly contrary to the best interests of Britain. Those who most confidently claim to speak for British interests sometimes seem to have the least confidence that those interests are likely to prevail. All too often they see the European enterprise as one huge thicket of hostility and conspiracy. They far too seldom see it as a field in which British talents and interests can prevail and multiply. We need to see the process as a series of opportunities to be exploited and carried forward in good faith.

My hon. Friend the Member for Cambridge (Sir R. Rhodes James), in his biography of Robert Boothby, quotes something that Churchill said to Boothby: We are not making a machine, we are growing a living plant. That is the reality. It is our task, now as ever, to nurture the growth of that plant in the right way.

I am glad that my right hon. Friend the Prime Minister dealt so firmly with one of the most gravely misleading illusions of the Euro-sceptics—that Britain can exercise a veto that will stop the process in its tracks. I was dismayed that my right hon. Friend the Secretary of State for Trade and Industry told the Confederation of British Industry a couple of weeks ago: This train cannot leave the station unless we are on board". That is not the position. A veto exercised at Maastricht will not bring the intergovernmental conferences to an end. They remain in place and will continue until member states reach common accord. So the issues could and would return—in Lisbon next June, and in Edinburgh the following December. If that were the course of events, I must tell my hon. Friends that a pointless attempt to veto Maastricht would make it much more likely that those IGCs would resume under the guidance of the Labour party, heaven forbid.

An even more serious delusion is to believe that our veto could bring the whole process to a halt. That overestimates the leverage of this country, and underestimates the weight and momentum of the others in support of the agenda. It is a further error to believe—the Prime Minister made this clear—that, if the veto were deployed, others could thereby be prevented from going ahead on their own. As my right hon. Friend said, there is nothing in Community law to prevent a smaller group of countries from pressing ahead with a separate treaty, outside the existing Community structure, to pursue policies that go further and faster.

That does not mean that we are without support for our arguments in the negotiations. So long as we take part in good faith, with respect for the common objectives, we may take part with the utmost vigour. If our arguments are good, we shall find supporters and allies. However, if we seek partners for a suicide pact in those negotiations, we will look in vain.

Mr. Ivan Lawrence (Burton)

Is it not right that such actions can be taken by our European partners only outside the treaty? It is totally illegal for them to take such action within the treaty.

Sir Geoffrey Howe

That is precisely my point. I am glad that my hon. and learned Friend has grasped it so clearly. There is nothing to stop a smaller group of nations, such as 11 out of the Twelve, going ahead with objectives that would leave us to one side and deprive us of the ability to contribute.

Dame Elaine Kellett-Bowman (Lancaster)

So what?

Sir Geoffrey Howe

I shall address that point later. I assure the House that if we were to stand aside in that way it would not stop our partners going ahead and it would ensure that we were left behind, quite possibly under a Labour Government.

Mr. Tebbit

rose——

Mr. Nicholas Budgen (Wolverhampton, South-West)

rose——

Sir Geoffrey Howe

I shall not give way.

Mr. Tebbit

rose——

Hon. Members

Give way.

Mr. Speaker

Order. If the right hon. and learned Gentleman does not give way, the right hon. Member for Chingford (Mr. Tebbit) and the hon. Member for Wolverhampton, South-West (Mr. Budgen) must resume their seats.

Sir Geoffrey Howe

I shall try to make my speech while finding opportunities, from time to time, to give way. I am beset on several sides, and I recognise the popularity of the case.

The emergence of the single currency as a lively issue in this debate is also unexpected in some ways, because, as my right hon. Friend the Member for Finchley said: Progressive realisation of economic and monetary union was agreed by the Community in 1972 and therefore was accepted by us when we acceded to the Community in 1973." —[Official Report, 12 December 1989; Vol. 163, c. 856.] That view was endorsed many times at subsequent summits.

Does that or does that not mean a single currency? It should not take people by surprise if it means a single currency. It is a legitimate, understandable objective. One of the reasons that the Community came into existence was to create an economic unit in Europe capable of competing on the scale of the United States, where a single currency can be traded from Connecticut to California.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

It has the same language.

Sir Geoffrey Howe

Yes. The United States has two advantages, which is all the more reason for looking seriously at the possibility of a single currency for the European Community.

Undoubtedly there would be a real advantage in achieving a single currency. I am glad that my right hon. Friend the Prime Minister said that that should be seen as the great prize. I accept, however, that a price would have to be paid for that prize. It is a prize because, without it, we are now spending 20 billion ecu per year on exchange costs between different countries. It would be advantageous not just to business men but to ordinary citizens if we could think in terms of one currency throughout our great continental mass.

A single currency is also regarded as something that is feasible, because the draft treaty on economic and monetary union is already close to agreement on the necessary arrangements. However, they must be on the right terms, as described by the Prime Minister. Effective convergence by the participants is crucial. A strong ecu is crucial. Accountability not just to the Bundesbank but to all member states is also crucial, but through and to an independent monetary institution. All those things can be achieved within the framework of the present proposed treaty. They do not impact on our right to retain independent control of our fiscal policy, expenditure and taxation. I believe that a strong, positive case can be made for a single currency. I would be prepared to support it on the right terms and conditions.

Mr. Dalyell

As a distinguished lawyer with considerable experience of European negotiations, who does the right hon. and learned Gentleman think is correct in the crucial argument about attribution and the whole question of additionality, which affects many of us? Is it the Prime Minister, who argues that Commissioner Bruce Milian is completely wrong or is it—[AN HON. MEMBER: "Is this relevant?"] It is relevant to many of our constituents—or is it the Commission, with its legal advice, which says that Britain will not receive many millions of pounds for the science budget or RECHAR? Who does the right hon. and learned Gentleman believe is right?

Sir Geoffrey Howe

The hon. Gentleman flatters me by inviting me to offer a legal opinion. He seems to have confused me with the character who, 20 years ago, was one of the Law Officers to the Crown. It is not my function to answer such a question. The hon. Gentleman must find a more suitable target.

Mr. Budgen

Will my right hon. and learned Friend give way?

Sir Geoffrey Howe

I think that I must be allowed to get on, in view of the nature of the previous intervention.

The Prime Minister is not arguing the case for the acceptance of the single currency now. However, it is entirely right to provide for the opt-in clause of the kind that is found in the present treaty. It is of the utmost importance to have such a clause, because it changes the automatic quality of the proposals originally put forward by Mr. Delors and the Delors committee. It provides for that kind of option. It was the Delors proposal that was at the heart of the debate in this House two years ago.

An even stronger case can be made for the single currency. What if all the others are able to agree within the framework of the treaty so nearly agreed by my right hon. Friend? What if they are able to put together a single currency? How then stands the case for us to stay out? I should tell my right hon. Friend the Member for Finchley that this has nothing to do with flocks of sheep, dead or alive. It depends upon the heart of the argument, the practical argument about the interests of this country.

If the single currency goes ahead, it is likely to extend not just to present Community members, but, as the Community maintains its open door to the east, will apply to the European Free Trade Association countries and many if not all of the COMECON countries, and may become the key currency for many other countries, probably starting with the republics of the Soviet Union.

If such a thing happened just across the water from Britain, the ecu would become world currency and it would challenge the over-borrowed dollar and the yen for leadership of world markets. The European monetary system as such would disappear. If the pound sterling stood alone outside the single currency, it would be uniquely exposed. We would have to pay high transaction costs for exchanging currency, we would have high volatility in our exchange rates and high interest rates, and face a threat to inward investment that would also threaten the City of London. It is ironic that even the Swiss are now reluctant to face the prospect of exclusion.

We must ask ourselves whether we shall truly benefit our trade, our investment and the prosperity of our people if we defect from the club at the very point when almost the whole continent is thrusting to join it. I am grateful that my right hon. Friend the Member for Blaby (Mr. Lawson) is ready for the Government to sign up to the EMU text under suitable conditions. I certainly agree with that, although my right hon. Friend and I may not agree on other matters.

We must remain at the heart of the debate, not just for economic reasons but because of the Community's growing political importance. As far back as 1962, Harold Macmillan said clearly that if we stayed out of the Community: We would find the US and the Community concerting policy together on major issues, with much less incentive than now to secure our agreement or even consult our opinion. To lose influence both in Europe and Washington, as this must mean, would seriously undermine our international position. If that was true then, how much more true must it be today?

Mr. Tony Banks

Will the right hon. and learned Gentleman give way?

Sir Geoffrey Howe

No, not for the moment.

We have seen, even from this debate, that we have now reached the point where scarcely any of the sceptics even argue that we should leave. They all accept that we should remain in the Community and, in those circumstances, we should do so in a way that enables us to take the fullest advantage of it.

We must face the real issues. They are totally concealed by over-simplified talk of the threat of a federal European super-state—yes or no? There is a huge range of theoretical and practical possibilities between the wholly independent—"sovereign" if one wishes—nation state and the wholly integrated federation of the United States or the Federal Republic of Germany. There are many different staging points on that spectrum. The question now is whether and, if so, where and how far we need to adjust the present position.

The real issues of importance are the quality and scope of the quasi-federal structure that already exists. The House must be grateful to the Prime Minister for the measured and comprehensive analysis that he has offered on all the issues that arise.

The biggest existing shortcoming in the present Community is in relation to the need for more solid barriers to the enlargement of Community competence. On that subject, I agree with the former Prime Minister, my right hon. Friend the Member for Finchley, and the present Prime Minister. The Prime Minister said that it was necessary to codify and ring-fence that part of the structure. It is right to resist ill-defined extensions of Community competence in social matters. It is right to resist extending Community competence that would threaten winning in the wrong way the "battle of Downing street", which we have won "in place of strife" on behalf of the Labour party—by reversing all our industrial legislation.

The Prime Minister was right to assert the importance of subsidiarity, and the terms and the drafting of article 3B of the treaty are crucial. Equally, it is not unreasonable, when discussing the democratic deficit, to recognise that there is a case for a modest enhancement of the European Parliament's role—to introduce an additional element of democracy, without subtracting from the role of this House but by complementing it.

It is certainly not unreasonable to accept some development of the role of the Community in security and foreign policy. That would be a logical extension of the proposals put forward, as my right hon. Friend the Member for Finchley reminded us, in 1985 by the United Kingdom for political co-operation, provided that we retain—the Prime Minister was clear about the definitional needs—the need for unanimity on the key provisions of whatever structure is designed.

Likewise, on defence, the fundamental role of NATO must be preserved, but the central and developing role of the Western European Union as the European pillar for that part of our defence needs also to be developed.

Finally, it is sensible to develop the concept of a common citizenship in the Community. Some people are opposed even to that, in a narrow and unattractive way which I do not much like. A Community citizenship would be the most practical fulfilment of a dream enunciated by Sir Winston Churchill. It shows us how we should approach the matter. He said: We hope to see a Europe where men"— and women, he might have added— of every country will think as much of being a European as of belonging to their native land, and wherever they go in this wide domain will truly feel 'Here I am at home'. Does not that set the right, far-ranging tone for this debate? Certainly the Prime Minister's speech did so clearly and impressively. It contrasted sharply with the narrow, over-simplified terms in which the debate is all too often conducted. Too often it is conducted in terms of unbridgeable opposites, false antitheses and exaggerated choices. I emphasise that it is not a choice between a mythical independent sovereign state and a mythical federal super-state, nor a choice between one market and one country.

All too often, the sceptics, in language of beguiling simplicity, succeed in concealing the strictly practical middle way which alone can offer Britain a real future in Europe. That is the way to achieve and sustain a realistic prospect of influence and prosperity in the new Europe as it exists on our doorsteps, rather than as the sceptics still pretend it to be.

If we were to be led astray by the bogus dilemmas and narrow perspectives that have sometimes set the parameters of Britain's European debate in recent years, the achievements of the past 12 years would be set at zero. To avoid that calamity, we must ensure that the other European states do not move ahead without us—not now, not ever. We must remain determined—as I am sure the Prime Minister is—to lead from the inside, firmly committed to our European destiny, which we shall help to shape.

I am delighted that my right hon. Friend the Prime Minister is so clearly determined to follow that path. It is well in line with the instincts of his predecessors. In the 1950s, Churchill set the ideals. In the 1960s, Macmillan took the initiative. In the 1970s, my right hon. Friend the Member for Old Bexley and Sidcup carried it through. In the 1980s, my right hon. Friend the Member for Finchley achieved fundamental and far-reaching reforms. It is clear from the prospectus offered by the Prime Minister today that he is determined and well qualified to have a clearly directed and formidable impact on the Community in the 1990s.

My right hon. Friends the Prime Minister and the Foreign Secretary deserve the fullest possible support from the whole House, and I wish them well.

6.27 pm

Mr. Peter Shore (Bethnal Green and Stepney)

I shall not follow the right hon. and learned Member for Surrey, East (Sir G. Howe) very far, except to suggest that if he used the word "self-government" instead of the word "sovereignty", he might understand why that cannot be shared but can only be enjoyed along with others.

The heart of the debate is the nature of the treaties before us. This is a moment of great importance and great choice for the British people. As I have listened to the contributions that have been made, I have noticed that there is a fundamental divide between those who have sufficient self-confidence in their own people and the ability of our nation to survive and prosper as a free democracy, and those who have abandoned and despaired of that prospect and are looking for a new way in which they will be absorbed within a vast European federation. I think I know where I stand on that issue, and I hope that every other hon. Member also knows where they stand.

I said that this is a moment of choice, and I wish to illustrate how strong is the commitment in the treaties that we are discussing to a federal union. I know that there are nuances of federalism, but article A of the treaty states: by this Treaty the High Contracting Parties established amongst themselves a Union … this Treaty marks a new stage in a process leading gradually to a Union with a Federal goal". That is the opening article of the treaty. One of the concluding articles—article W.2—says: A conference of representatives of the Governments of the Member States shall be convened in 1996 in the perspective of strengthening the Federal character of the Union". The 200 or 300 pages of the treaties on economic, monetary and political union not only put to us all the propositions, but we are promised a further assault on what is left of our national independence in a new treaty and a new IGC, with the perspective of strengthening the federal character of the union. Those are clear words.

One of the great mistakes that we have made in the past, as the right hon. Member for Finchley (Mrs. Thatcher) acknowledged, is that we do not always read the treaties closely enough. Unfortunately, the Single European Act was ambiguous and defective in several places. That is why the Commission has been able to construct all sorts of additional powers. It did so by interpreting, with the help of the Court, some parts of that treaty. The preamble to the treaty expressed in general terms the old rhetoric of Europe and of "ever closer union", which gave considerable force and drive to the new proposals that we are discussing.

I fear that we must watch with the utmost care the words actually used. I was pleased to hear the Foreign Secretary say yesterday before the Select Committee on Foreign Affairs, and the Prime Minister repeat again today, that they will not have the commitment to a federal Europe. I understand that to mean that they will not sign a treaty which contains, in articles W and A, a commitment to a federal Europe. That is an important step, which we should all welcome.

The right hon. Member for Finchley was right to say that we have to consider not only the words but the content of the treaties, which present us with a greater difficulty. There are three great sectors of our national life which are being affected by the economic, monetary and political union treaties, and with which we are all familiar. The first is progress towards economic union, monetary union, a single currency and a central bank—which is pretty major in itself. Secondly, the treaties seek to embrace the whole of foreign and security policy within a process that will be determined by majority voting—whether or not that will be within or outside the old treaties is yet to be determined. Thirdly, they seek to extend the control of European institutions over immigration and asylum issues in this country.

If one considers any federal Government in any other part of the world, one knows perfectly well where the key powers are located. For example, in the United States they are located with the federal Government in Washington. That Government inevitably have control over the currency, with one federal bank; they are uniquely entitled to conduct foreign relations, defence and security business, and they decide who has the right to come and live in the United States and who does not.

Those are three crucial components of national sovereignty and independence. The treaties aim—we hope that they will not succeed—to transfer those powers from the keeping of the British Parliament and people to the grievously undemocratic authorities in the European Community.

Mr. Tony Fayell (Stockport)

I agree with the right hon. Gentleman that it is important to scour the treaties; every hon. Member should read them. It is not good enough merely to look through the treaties to see whether they contain the words, "This is a federal treaty." We must consider what is contained in the treaties. Does the right hon. Gentleman agree that, when we read the treaty on political union, it is clear that it aims for a federal union? Chancellor Kohl and President Mitterand have said that, and all our 11 partners believe it to be so.

Mr. Shore

The hon. Gentleman is absolutely right. So many of our continental colleagues do not bother to disguise the fact. Almost exactly a year ago today, Mr. Andreotti made it absolutely plain in a speech to the European Assembly that, for the first time, there were federal proposals for monetary union and for a single currency to be transferred to the European authorities. Other European statesmen said the same thing. In order that we might not forget him and his great concerns, Mr. Delors reminded us in his address to the Assembly this morning that he wanted the treaties to have a character of a still more federal nature.

Mr. Budgen

Does the right hon. Gentleman agree that a further danger lies in the fact that the European Court is an openly political organisation in that it does not construe European law in a narrow way, as our judges do, but does so in the light of general policy objectives? As those objectives move, ratchet-like, towards a federal structure, the decisions of the European Court will inevitably be antipathetic to those of us who wish to perserve the rights of national parliaments.

Mr. Shore

The hon. Gentleman is absolutely right on the issue of where the rights of the federal part of the European constitution impinge on those of the nation state. If the court is the ultimate arbiter of where the line is to be drawn, it has a most important and dangerous political character.

The three sectors in which the treaties seek to establish the competence of the European authorities are crucial to national sovereignty and national independence. I should like to think that foreign policy was as securely rescued from the grip of the European Community as the Prime Minister led us to believe this afternoon. However, the text contains some strong words. Article A.4 states: The Member States shall support the Union's external and security policy actively and unreservedly in a spirit of loyalty and mutual solidarity … The Council shall ensure that these principles are complied with". It continues to define in an interesting way what it calls "joint actions". It contains a declaration by the member states on the sectors in which joint action is to be taken as soon as the treaty comes into force. There is a list of sectors, including involvement in peacekeeping operations in the United Nations context, relations with the USSR and transatlantic relations.

Article C states: Whenever the Council decides on the principle of joint action it shall lay down the Union's general and specific objectives … the Council shall stipulate as a general rule that the detailed arrangements for carrying out joint action shall be adopted by a qualified majority". Much will depend on the line and division drawn between the collective process of launching an initiative and the implementation that will be undertaken through joint action.

The division is not clear, and I fear that there will be a dangerous overlap of one process into the other. I fear that joint action will lead to many majority decisions being taken on foreign policy issues, which I do not believe that the House would consider it right to cede to the European community. I am glad that both Front-Bench teams show considerable accord that that is not in our interests and should not be pursued.

Mr. Chris Mullin (Sunderland, South)

Is it such a terrible thing for us to have a common European foreign policy as, for most of the past 45 years, our foreign policy has been in the grip of the United States, which I found regrettable? It cannot get any worse, can it?

Mr. Shore

Yes, it can, and I may have to disagree with my hon. Friend about that. I may also have to disagree with my right hon. Friend the Member for Chesterfield (Mr. Benn). I have no doubt that a common European foreign policy would have led to total inaction in Europe on the Gulf war, which would have been wrong. I am glad that we did not have a common policy then. That illustrates the sorts of problems which will arise.

I believe that, even when people disagree about what should be done, they should retain the freedom of action to do what they believe is right. If it was the wish of the British Government not to intervene, it should have had the right not to intervene, not because of a majority vote in Europe, but because it made that decision for itself.

Dr. Kim Howells (Pontypridd)

Will my right hon. Friend give way?

Mr. Shore

No, I shall not, at least for a little while.

Another issue of major importance to the Government, but particularly to the Opposition, is the impact on economic powers and economic self-government of the measures proposed to take us into economic and monetary union. After all, many crucial powers of economic regulation have been abandoned in the interests of joining the European Community, such as control over trade, control over capital movements and control over many other things. I am not happy about all those abandonments, but that is the position.

What is left? What are the economic regulations that we can use to help guide the general course of the economy, to influence demand and to bear upon levels of unemployment? We have interest rates, mortgage rates, exchange rates, public spending and deficits. We know that deficits are justifiable in some years and are properly very large, and that in other years they do not make sense and should be non-existent. These judgments have to be made by the Chancellor of the Exchequer of the day. After all, such decisions go to the essence of his Budget judgments.

What do we find? An entire protocol is devoted to setting out what the Chancellor of the Exchequer would be able to do if the United Kingdom became a full member of an economic and monetary union. The protocol refers to excessive deficits and provides that our Chancellor of the Exchequer of the day shall never have a public service borrowing requirement—I am glad to see my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) in his place on the Opposition Front Bench—of more than 3 per cent. It seems that that is to be the limit.

That provision would not be merely a voice in the Chancellor's ear, as it were, because the Commission would have the right to make public its advice, which would be to the extreme embarrassment of my right hon. and learned Friend if he happened to be Chancellor. Matters would go further than that, because a system of penalties could be imposed upon a sovereign Government. The penalties would take the form of fines and the stopping of structural funds, for example. It would be as if a Conservative Minister were dealing with a rebellious local authority that a Conservative Government did not like and which they thought should be rate-capped. It would not be tolerable for any British Government to accept such a system. It would certainly be intolerable for any Labour Government, who would have a strong reason to intervene in the economy.

Mr. Budgen

Will the right hon. Gentleman give way?

Mr. Shore

No. I must hasten to complete what I have to say.

We hear about the accountability of the European central bank. It is said that that feature would make it acceptable, but how do we make a European central bank accountable to all the different Ministers of the European Community? I do not think that it is possible to do that, but it is written into the articles of the treaty that the bank shall be independent. Not only that, no one shall take instructions from outside the governing board of the bank. It seems that no one from outside shall seek to give instructions to the bank.

That is not acceptable. We shall find ourselves handcuffed and chained under economic and monetary union. No instruments of policy will be left for us to use. The present problem with the exchange rate mechanism is well known to the Treasury and, of course, to the Chancellor of the Exchequer, who would like more freedom. At present, he would like to lower interest rates, but he is trapped within the bands of the exchange rate mechanism, for reasons of which we are aware.

Mr. George Walden (Buckingham)

Will the right hon. Gentleman give way?

Mr. Shore

No. I wish to draw to a rapid conclusion. I know that many other right hon. and hon. Members wish to speak.

The concept of federation should be examined much more closely than hitherto, and with a good deal more sense of history. There are, I believe, 160 sovereign nations in the world of all sizes and shapes. Many of them are far weaker, less happy and less prosperous than the United Kingdom. I know of none, however, except the countries of the European Community, that are trying to construct federations. Most of them have become nations as a result of escapes from empires or imposed federations.

National feeling is not the great ogre and the great chauvinist horror that has been painted by some. Sometimes it is like that, but it is Janus-headed: on the other side of the coin it is one of the liberating forces for mankind. Let us be clear about that. There should be no shame about our commitment to our independence, to self-government and to the democracy that we have, with all its imperfections. Our democracy is a damned sight better in this House than it is anywhere else in Europe.

6.45 pm

Mr. William Cash (Stafford)

I had a little local difficulty in Committee Room 6 the other day when it came to my position on Europe. Nevertheless, it is a matter of intense importance to us all that we work together, as I said during the debate on the confidence motion last year, to establish a role for the British people over the next 10 or 15 years.

There is much in the motion with which I agree. I acknowledge in my amendment, which has been supported by my right hon. Friend the Member for Chingford (Mr. Tebbit), that at this stage in the negotiations it is proper for the Government to preserve their position and not to disclose everything they will do. I accept that entirely. Having said that, however, I have to say that several matters have been omitted from the motion—omissions that cause me some concern.

First, the motion does not reject the principle of monetary union, which lies at the heart of the debate. It raises in turn the principle of democracy and the manner in which we are able to represent the interests of the people who voted for us to be Members of this Parliament. It is not our Parliament, it is their Parliament. It is important that that point is made in the amendment.

Mr. Walden

I hope that my hon. Friend, when talking about economic and monetary union, will squarely confront the dilemma that faces him, me and every other Member of this place. Whatever our reservations about economic and monetary union, many of which I share with him, what happens to this country if other states adopt an economic and monetary union and a single currency, and the system works? What happens if that brings them trading, economic and military advantages from which we are excluded?

Either our position is that these people, these foreigners, are incompetent and cannot make the system work—that is one view—or it is that we shall be happy even if we are excluded from advantages because we are somehow inherently superior to them and do not mind being economically inferior. Unless the question is faced and answered, the House will not be facing what may be a real economic dilemma.

Mr. Cash

My hon. Friend has made an interesting intervention, but I think that he has not asked the real question. The first question that must be asked and answered is whether we are prepared to trade off the democracy that is inherent in the House for a system that will not necessarily deliver the benefits that my hon. Friend has mentioned. The two things are not mutually exclusive.

We can achieve price stability, surely, by our own efforts. We can work within the European Community to help that to happen, and that is why I voted for the Single European Act. That, however, has nothing to do with the matters that my hon. Friend has mentioned. When we examine the mechanics that have been set up by the proposed central bank, it is clear that unelected and unaccountable bankers will be determining this country's economic policies and, therefore, those of my constituents and those of every other Member.

Under present arrangements, we can arrive at decisions for ourselves while we work within the European Community at the same time. There is no need for us to take this next step. Because I believe that that is the fundamental democratic right of the British people, I hope that we will reject the principle of monetary union.

Sir Nicholas Fairbairn (Perth and Kinross)

I hope that my hon. Friend will deal with political union, which means effectively the extinction of Great Britain, Britishness, British influence and all that we stand for. Can my hon. Friend explain why, when we have just seen the disintegration of the fallacy of a bogus supranational state at one end of Europe, it seems sensible to create one at the other end?

Mr. Cash

I could not agree more with my hon. and learned Friend. Nothing is more absurd than for us to see what has happened in the USSR during the past six months and in Yugoslavia and eastern Europe and to observe that those people have fought for and obtained their freedom when we are being drawn, some would say by some kind of historical inevitability, in the opposite direction. That cannot make sense. Surely hon. Members on both sides of the House appreciate the inherent contradiction of that.

Mr. Tony Banks

How can the hon. Gentleman possibly make a useful comparison between the break-up of an empire under Stalinism in eastern Europe with the coming together of mature democracies in a voluntary process within the EC?

Mr. Cash

The answer to the hon. Gentleman is simply that, if he looks at the new proposed constitution for the Union of Sovereign States, he will see that the one thing that it does is to make sure that it does not go down the route that I understand he would propose we go down now. I suggest that the hon. Gentleman considers that.

Secondly, there is much talk about the vague word "subsidiarity". I think that it means whatever anyone wants it to mean. However, as I have said on previous occasions, quoting from Lewis Carroll, The question is … which is to be Master—that's all. When I observed the emphasis that was placed in the motion on the superior European competence at the expense of the national competence that was to be prescribed under the motion, and when I looked at the question of economic and monetary union and asked myself where the main powers will be dealt with under the principle of subsidiarity, I concluded—I do not believe for a minute that any hon. Member would contradict me—that they will be dealt with at the top by the unelected and unaccountable bankers.

At the same time, that will strike at the heart of democracy and the rights of our constituents. That is why I object to it. There is an inherent deceit in the concept. I regret that that is a problem which permeates so much of this hall of mirrors that we experience in relation to the EC.

Sir Russell Johnston (Inverness, Nairn and Lochaber)

Is the hon. Gentleman suggesting that, because the Federal Republic of Germany has the Bundesbank, it is not a democratic country? That is the same argument.

Mr. Cash

The Bundesbank is nothing like as independent as it is made out to be. Articles 9 and 12 of the Basic Law make it perfectly clear that the Bundesbank has responsibility for currency stability, but subject to the overall political control of the German Government.

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

Does the hon. Gentleman agree that sooner or later the European Court of Justice will have to offer a definition of the legal concept of subsidiarity?

Mr. Cash

The hon. Gentleman and I sit on the Select Committee on European Legislation, and we have discussed that matter on many occasions. All the matters which will be gathered together under the broad concept of subsidiarity will go to the court. That is why, in the speeches that we have heard today, some distinction has been drawn between those competencies which are to go to the Court of Justice and the others which the Government rightly want to keep out because they are pillars of co-operation which must be dealt with in terms of intergovernmental co-operation. The problem is that. once the European Court of Justice has been allowed to become involved in questions relating to budget deficit and so on, we shall have opened a Pandora's box of problems, because the court will not be able to make the right decisions.

Furthermore, the constitution which has been laid down for the European central bank will not make the decisions any easier to make. They will still be political decisions. However, the difference is that no one will know whom to blame; no one will know how to get rid of them. The central bank is to have complete independence. If it makes decisions which are inherently wrong, what will happen? It is precisely because, over the past 300 years, the House has developed a concept of democratic accountability in relation to the redress of grievance, taxation, the economy and all that goes with it that we can fairly and properly represent the interests of our constituents.

The right hon. Member for Yeovil (Mr. Ashdown) talked about the sovereignty of Parliament. That was an extraordinary way in which to put his arguments across. It is not the sovereignty of Parliament that matters; it is the sovereignty of the individual who goes to the ballot box, has a free choice and makes his decision, for which people have fought and died. We do not have to apologise for that, nor do we need to be pessimistic and defeatist, economically or politically, about our ability to produce results which are in the interests of the British people. But at the same time we can work within the framework of the EC. I voted for the Single European Act. I was a founding member of Westminster for Europe in the 1970s. But I have always felt that it was essential to maintain a realistic and practical approach to its development.

That brings me to my next point—the European Parliament. I do not believe that it would be right to extend the powers of the European Parliament in principle in a way that would have the effect of taking away the responsibility of Ministers to answer questions in the House exclusively in relation to matters of competence which apply to the United Kingdom. That raises the question of what those competencies should be and takes me back to the point about subsidiarity.

Once that enormous cavern of uncertainty has been opened up, we shall enter the grey hole which lies at the centre of the Government's motion. That is why I tabled my amendment. I felt that it was necessary to try to address the question of what was left out of the motion in order to concentrate hon. Members' minds on what it is that we should be addressing.

Mr. Butterfill

Does my hon. Friend therefore agree that the question of subsidiarity is vital to our consideration of the matter and that it would be completely unsatisfactory if disputes of subsidiarity were referred to the European Court of Justice, particularly in view of its record? If subsidiarity were defined in the treaty, would it not be better for there to be another body to consider disputes regarding subsidiarity? My hon. Friend knows what I have in mind—it has been suggested in this place, by the French Gaullists and by the Irish—that we should have a separate body composed of members of member Governments and our Government to make such decisions rather than the Court of Justice.

Mr. Cash

I should be more inclined to go down my hon. Friend's route than the one proposed, because I see the most terrible difficulties emerging. What worries me when I hear people speaking, understandably, about the aims of the Community, and saying that we want peace, prosperity, stability, and all that goes with them, is that I believe that we are seeing the development of a policy that was devised in the 1950s for absolutely correct reasons at the time, in dealing with the aftermath of the second world war, and with the cold war, but which has been displaced by the bringing down of the Berlin wall and the reunification of Germany.

It is precisely because I believe that some of the policies adumbrated by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), for example, are based on the thinking of the 1950s and 1960s but are not relevant to what is happening in the 1990s, that I become so worried. I look around the world and see tremendous instability and uncertainty, such as in Yugoslavia and the USSR, and ask myself what will happen if the central bank starts to lay down rules that some of those countries cannot obey.

What will happen if the policies included in all the treaties were implemented by majority voting? Mr. Chevenement told my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs on 4 January—I read this in The Economist— If there was majority voting in relation to these matters, there will be no Gulf war. The consequence of that would have been such that it is doubtful that the Americans would have been able to embark on that conflict on their own.

The new arrangement that we are being encouraged to adopt will create not stability and prosperity, but tension and instability, because, if one tries to compress together people of different cultures and languages, has a European Parliament that will be largely a neuter, and does not have that basic democratic line between a Member of Parliament and his constituents, a Minister on the Government Front Bench who is answerable to Members of Parliament, and thereafter the Council of Ministers, I guarantee that we will end up with a system which is undemocratic, and which will create confusion followed by instability and tension—when it is exactly the opposite of that for which I would hope, from all the developments in eastern Europe and the USSR over the past two years.

Several Hon. Members

rose——

Madam Deputy Speaker (Miss Betty Boothroyd)

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

7.2 pm

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

I agree with some of the concluding remarks of the hon. Member for Stafford (Mr. Cash) about the speech of the right hon. and learned Member for Surrey, East (Sir G. Howe). I am convinced that he could have made that speech five or even 10 years ago, because it wholly ignored the convulsive context in which we are making decisions today about our future in the European Community.

For 45 years, Europe has enjoyed a peace of sorts—a peace based not on the European Community, or even on nuclear deterrence and nuclear power, but on the crude partitioning of Europe and the post-war settlement created by Roosevelt, Stalin, and Churchill. That was the basis of post-war peace. That post-war arrangement succeeded because it addressed itself to the two fundamental issues that caused war before. It prevented territorial changes and divided Europe so that some form of balance-of-power relationship and a sphere of influence were created.

Peace was paid for at a heavy price—at the price of freedom for the peoples of Hungary in 1956, and of Czechoslovakia in 1968, and of hundreds of thousands behind the Berlin wall in the 1960s and thereafter. Within the past two years, we have seen before our very eyes the dissolution and destruction of that post-war settlement and the emergence of new problems. It would be enough of a challenge to devise a new European order to replace the post-war settlement, but this year we are witnessing also the dissolution of nuclear super-power. Measured against those challenges, the treaties, drafts, and constitutional changes proposed by Ministers of the Twelve are at best all irrelevant, and at worst obstacles in the way of finding solutions to the real European problems that now confront us. The remarks of the right hon. and learned Member for Surrey, East did not once address those aspects.

We now face a major new European order. Those of us who are sceptical about the way that we should progress with the proposed treaties are not narrow-minded Europeans. The narrow-minded Europeans are those who are looking to create institutional ossification, in the form of institutions of the kind that emerged in the 1950s and 1960s.

I remind the House that the Common Market was created by the visions of Jean Monnet and others, but was rooted in the cold war. It created a number of institutions in a cold-war Europe, and I am sorry that the Prime Minister did not mention until the last few minutes of his speech the Community's role in addressing the problems that confront Europe today. It is amazing that, at a time when we are watching the constitutions of eastern and western Europe crumble, together with state-centred, non-pluralistic systems of politics and economics, we should be seeking to create—as the treaties will, if they are unamended—a more centralist, less pluralistic, economic and political system for the Community's 12 member states.

That—as my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) made clear in the illustration that he gave from the treaty—is at the heart of the problem. At the very moment when we are seeing, rightly, the abandonment of constitutions that incorporate phoney, immutable laws, such as the dictatorship of the proletariat, the treaties seek to create half-baked economic maxims of their own. As my right hon. Friend the Member for Bethnal Green and Stepney said, what place is there in a treaty or in a constitution for Europe that tries to create relationships between the diverse cultures and characters of even the 12 countries that comprise the present Community for such half-baked examples of economic theory as that which would dictate that public borrowing should not exceed 3 per cent. of gross domestic product? That is just as nonsensical a maxim to write into a constitution as that which imposed the dictatorship of the proletariat in the past in the countries of eastern Europe.

Irrespective of the practical arguments, clause after clause of the European monetary union draft articles seek to impose a rigid form of economic behaviour. There is nothing pluralist or democratic about centralist nonsense such as that to be found in article 106: Where exercising the powers and carrying out the tasks and duties conferred upon them … neither the ECB, nor a national central bank … shall seek or take instructions from any democratically elected body, Government, nation, or combinations thereof. Is that the right basis for a pluralistic, democratic Community and society? It is the very reverse. It is the constitution of a potential corporate state, however democratically based it might be. I will not support any treaties that come before the House that include provisions of that kind.

Our priorities and energies must be directed at finding solutions to the broader, new European order, which is absolutely essential given the drastic changes that have occurred in central and eastern Europe. We must bring within the fold of the Twelve Czechoslovakia, Hungary and Poland, whose freedoms were destroyed by the cold war. We must incorporate them in a direct working relationship, and give the fullest possible support to their liberty and democracy.

The treaties will do nothing to help that process. They will merely entrench the division of Europe rather than widening it. I believe that the only way to bolster the relationship between central European states and the Twelve is to reach out, politically at first and then economically, and thus bring the two groups together. Unless we do that, we shall not see a new European order that will provide peace and collective security by devising institutions and relationships to prevent conflicts such as the one in Yugoslavia, and others that may emerge on our television screens. Instead, we shall return to the old European order that led to tensions and territorial disputes, and to the great powers—and other powers—fishing in waters that did not belong to them.

At this stage in the history of Europe, it is especially important not to ossify the existing relationship of the Twelve in the form of new treaties. We should reach out to a broader Europe. That, I believe, will bring us all peace and prosperity in the 1990s.

7.10 pm

Mr. Cranley Onslow (Woking)

Sadly, the Leader of the Opposition has not matured sufficiently to avoid the schoolboy technique of answering an awkward question with an insult, and then using the row that that provokes as an excuse for not giving way to further interventions. That was a bad start to a speech that did not get much better.

The most fervent admirers of Brussels would, I think, find it difficult to describe the Commission as anything other than its own worst enemy. The Sunday Times has rehearsed some of the more familar reasons—for instance, the definition of the carrot as a fruit, enabling it to be brought within the terms of some obscure directive; a Greek Commissioner's abuse of the Commission's competence in health and safety, in an attempt to restrict Sunday working hours; the extraordinary antics of an Italian Commissioner in regard to environmental matters; and the long-running and more deep-seated farce of the common agricultural policy.

None of those examples is a great advertisement for the Commission and its works, and it is not surprising that many of our constituents consequently regard Brussels as, in a sense, the headquarters of a hostile power. I therefore welcome the aim of the negotiations—to make the Commission liable to inspection, invigilation and close scrutiny on the part of the European Parliament. That can only be for the good, and it is long overdue.

None the less, it is not the central issue. I have no difficulty in supporting the Government's motion, which effectively sets out the other issues that must be given greater priority. I am sure that the Government and the Prime Minister have taken the right attitude on the question of a common foreign policy: it is idle to suppose that such policy can be formed other than by consensus, and it was a great waste of time to air the subject at all. The same applies to defence policy. It would clearly be impossible for Her Majesty's forces to be asked to risk their lives in support of a military venture that the House did not support.

Policies on immigration and asylum are integral to national identity. They must be determined by the House, and the Government were right to insist on that in their motion. Some Opposition Members may well see the Maastricht negotiations as an opportunity to try and introduce socialism into the country by the back door—no doubt they will disclaim any such motives, but it occurs to me as a possibility—and I am equally sure that Conservative Members are right to resist such an intrusion into our democratic process.

Existing Community organs and agreements must be made to work better. That applies especially to competition policy. I do not know whether all hon. Members are familiar with some of the vagaries of European practice. Under Dutch company law, for instance, a company that is threatened with a takeover can clone its own shares, enabling the directors to double their voting rights. I do not believe that that is consistent with 1992—any more than I believe that the ability of the French to invoke the interêt national at the drop of a hat is consistent with the level playing field that we all seek to achieve. I hope, and believe, that we shall continue to make swift progress on those points.

I find it encouraging that my right hon. Friend the Foreign Secretary has been able to secure an amendment to article 171, under which it will be possible for defaulting states to be taken to court, prosecuted and fined if they fail to conform to the directives by which they should be bound. I hope that the Commission and the courts will not hesitate; there are too many laggards under the arrangements that are supposed to exist in our so-called common system.

My right hon. Friend the Prime Minister rightly attached importance to the interests of European non-member states—both the members of the European Free Trade Association, and the countries that have emerged from behind the iron curtain into a new freedom—and to the need for us to enable them to join the Community when they are ready. If we close the door against them, we shall be doing Europe, and ourselves, a great disservice. However, I have not yet heard as much as I should like to hear about the interests of some other European member states; perhaps I shall later.

I have heard—and I believe it to be true—that Chancellor Kohl is anxious for Maastricht to be used as an opportunity to bind Germany into the European Community. I have also heard that the French Government share that objective. Given the history of both countries, that is understandable; but, if it is so much in the interests of France and Germany, I think it only fair for them to pay the principal cost of the rope that will do the binding. We should be cautious about the extent to which we commit ourselves to sacrifices that may be made for ends that do not represent our own top priorities.

I understand that there are people known as Euro-fanatics; some may not be far from the House at this moment. I do not necessarily quarrel with such people, because their views are sincerely held, but they sometimes seem to fall into the same category as the famous mountaineer who, when asked why he wanted to climb Mount Everest, replied, "Because it is there." When I made that comparison to someone today, he said, "That is not wholly fair. There is a difference: Mallory could have walked away from Everest—he did not have to climb it—but we cannot walk away from Europe."

There is truth in that, and we should not forget it. We are a European nation, and we cannot alter our status now. There is another option, however, and it is significant that the Prime Minister stated it so clearly today. Mallory and Irving could have waited until conditions improved; they did not have to make a dash for the summit. So, if necessary, can we.

We are under no compulsion. The Prime Minister has the freedom to wait. We must encourage him to exercise it, if he thinks that that is right, rather than commit this country to anything at Maastricht. He must deploy the best and the most powerful case in support of British interests. We want the Prime Minister to return from Maastricht having successfully negotiated an agreement that will win the support of this House.

7.19 pm

Dr. David Owen (Plymouth, Devonport)

I am a lifetime supporter of British membership of the European Community, but I have never believed that that support implies acceptance of a united states of Europe. The Social Democratic party will support the Prime Minister's motion. We believe that it represents the best way forward, not just for this country but for Europe. I wish that we had been able during the last few months to persuade our European colleagues that we are not arguing just for a narrow British position. I want a common foreign policy and a common defence policy. I want the maximum degree of unity, but I also want a treaty to be constructed that carries no inexorable commitment to a united states of Europe.

We cannot stop our European partners arguing for a united states of Europe. They are entitled to do that in a free European democracy, but we are entitled to hold our ground and to argue that we as a nation were never committed to a united states of Europe in 1973, that we are not committed to it now and that we do not intend to pre-empt that decision.

The former Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), was in danger of being, like a tram, stuck in a groove. She referred to the debate on Jacques Delors proposals in 1989. They were anathema to all of us. They sought to impose a single currency on all Community states. We do not sufficiently realise that we are no longer discussing a treaty that, like a tree, has grown only from the trunk of the European Commission, the European Parliament and the treaty of Rome. We are now discussing treaties that are based on three or four separate pillars.

I accept that all aspects relating to the single market fall under the treaty of Rome and carry a commitment to more powers for the European Commission and the European Parliament. We cannot interpret the single market as narrowly as some Conservative Members of Parliament. It embraces social factors and the environment. It will pay us to recognise that. The right hon. Member for Finchley was right to concede majority voting so that the single market could be in operation by 1993.

Those of us who desperately want Czechoslovakia, Poland and Hungary to be admitted to the European Community during this decade, with the transition over by the year 2000 before they are economically ready for it, have to accept that majority voting will be needed if the single market is to be operational in former command communist economies. It is geopolitically essential that we put Poland, Hungary, Czechoslovakia and Austria before Sweden, Finland and Norway in terms of membership. An exact parallel can be drawn with Spain, Portugal and Greece when they were admitted early for political and democratic reasons.

When I look at the European Community I see foreign policy and internal security pillars and ask myself how well the Government have been able to keep them purely intergovernmental and how many commitments we are making that will damage British interests in the future. My major concern about the Maastricht negotiations relates to the limited majority decision making envisaged for foreign policy. I do not see how we can separate principle from practice, policy from implementation.

I beg the Foreign Secretary to look again at this issue with the utmost scepticism. I understand the intention—of wanting to try to make a conciliatory gesture—but this could be the thin end of a very dangerous wedge. The Prime Minister's formulation is that it is for the other 11 member states now to demonstrate to us in watertight treaty terms that the right of all member states to determine their own foreign policies is not being abandoned or abdicated.

I say that for another reason. I still have grave doubts as to whether it is right to go for a single currency, fixed exchange rates and the whole of that considerable abdication of political sovereignty. I recognise, however, that sovereignty, as with most other things, moves with the times. It may be considered to be a vital British interest that we are not on the outside of the single currency in five years' time. That judgment will have to be made at that time. I do not know how we can make that judgment until we have seen the texture of the decision that we are being asked to make.

One thing, however, is clear. We cannot have a single currency, a single immigration policy, a single foreign policy and a single defence policy without being a united states of Europe. If we go for a single currency because we wish to protect, above all, the position of the City of London—still the premier financial centre of Europe—and if we also concede ground on foreign policy, in terms of majority decision making, and on defence policy by creating effectively a defence community, and if we allow the Commission to issue visitors' visas, we shall be on a slippery slope. This House would then resist even more the move towards a single currency than it might otherwise have done.

That is the advantage of postponing the decision on a single currency. We should not find it easy to go for a single currency if we had already moved down the federalist route in a dangerous way on foreign and defence policies. It is in the interests of this country, therefore, to stand firmer now on foreign policy than appears to be the Government's position. Frankly, I do not believe that there should have been all this talk about a little bit of majority voting on foreign policy.

It would be better if the Government made concessions in other areas. I know that it will be difficult. Some of them may involve social policies; others may involve environmental policies on which we shall have to give ground during the next 10, 15 or 20 years. It is essential, however—if we do not want a united states of Europe to retain the right, within a co-operative framework to try to forge a consensus on foreign policy—to make our own decisions.

The treaty on foreign policy carries with it more than a commitment to co-ordinate our policies. That can lead only to a number of results. It means that Britain will no longer have a permanent presence in the Security Council in 10 or 15 years' time. It also means that there will be occasions when decisions cannot be taken, such as that taken by the former Prime Minister at Aspen, with President Bush, to put troops into Saudi Arabia. Such decisions will not be able to be made by a single Prime Minister without reference back. The present Prime Minister would be unable to come out of No. 10 Downing street and say, "We are standing by the constitution of the USSR and we condemn the coup as unconstitutional." That was quite different from what was said by President Mitterrand and Chancellor Kohl.

If we value independence in foreign policy making, let us not forget what happened in 1940. If we want to have that freedom again—to stand out against the trend and, if necessary, to be on our own—then I pray that the Government will look hard at the question of retaining the right of a single foreign policy, with the decisions made by this country alone. In that context—[Interruption.] I do not know what Labour Members are saying. All I know is that the Labour Government, who were in favour of the European Community, did not need any convincing that they were not in favour of a federalist united states of Europe. The danger is the convert being more zealous than the Pope in suddenly believing that we can abdicate on all issues of policy. If the Labour party is abdicating the right to retain foreign and defence policy in this country, it is not speaking for the country, and the Government will exploit that against it in the next general election.

7.29 pm

Mr. Alistair Burt (Bury, North)

I make no secret of my gratitude for being a member of a fortunate generation who have not been called on to fight in Europe. There are coats of arms all around the Chamber of hon. Members who gave their lives for peace in Europe. I thank those who fought for that gift and who built the lasting institutions of NATO and the European Community from the ruins of 1945. We should never forget their origins, nor the driving force among continental Europeans who suffered occupation and war on their soil. The driving force of a European structure that would end the fear of war on the continent is sometimes not fully understood in these islands.

As my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) said, the Community is a living thing. It has advanced at the pace of its peoples and must continue to do so. Maastricht is a further part of that evolution—not the end of it. Historically, it is less significant than the passing of the Single European Act in 1986.

My hopes for Maastricht are twofold. Firstly, I hope that we shall use Maastricht to reiterate our concerns about what is wrong with the European Community. The Commission is outside a sensible structure of democratic accountability and has shown a tendency to impose a Euro-synthesis at micro-level—silly proposals for the nooks and crannies of our life that antagonise the man and woman in the street.

Sadly, that insensitivity to national sympathies undermines the fundamental principles of European co-operation and has helped to build a stronger anti-European feeling in this country than is truly justified. We are right, therefore, and are acting in the best interests of the Community and this country, to seek to correct such unnecessary Commission interference by expanding the role of the European Parliament.

I hope, too, that we can convince our neighbours about the sensitivity of time. The past 45 years are but a fraction of more than 2,000 years of recorded European civilisation, yet we have achieved much. There is no need to settle the final irrevocable shape of Europe at Maastricht. Indeed, there may never be such a thing. Forcing nations together too quickly risks undermining the progress that we have made. We seem to be more alert to that than many others; hence our firm determination, which was re-emphasised by my right hon. Friend the Prime Minister this afternoon, to make subsidiarity work. That must be the right way to progress.

Secondly, I wish to see our participation at Maastricht emphasising and improving those matters on which the Community is going in the right direction. It would be a tragedy, as some have argued, to see the door closed on closer economic convergence with the prospect of a single European currency at the end of it. I do not believe that our European neighbours will hang back from this for long. They have, on the whole, run fairly successful economies since the 1950s or since their accession to the Community. They firmly believe that greater economic rigour, based, it must be said, broadly on Conservative principles, will continue that prosperity. They have some claim to know what they are doing.

Should it be proved to the satisfaction of the House that the benefits that I have described will accrue, any decision to stay outside would be of immense disadvantage to us. Foreign investors would see us not as the launch pad to Europe but as some backwater. For those whom we represent—for their employment, standards of living and the standards of their families—those should be the major guides to our thinking on Europe.

I hope that we shall make progress, along the cautious lines suggested by my right hon. Friend the Prime Minister this afternoon, on a common foreign and defence policy. The right hon. Member for Yeovil (Mr. Ashdown) was right in his analysis of Yugoslavia: nations forced together ultimately come apart. But those that come together for mutual support can and do survive.

The real genie that has emerged from the bottle of a changing Europe is nationalism. What structure can be devised to contrain the pressures and forces behind that? Are we truly prepared to offer no model of co-operating nations sinking their differences to achieve greater security, or are we prepared to live with a Europe that is increasingly fragmented, where nations' first demand on sovereignty is to equip themselves with weapons to tackle or to defend themselves from new nations on their own borders that have the same heightened state of frenzy and determination to do the same? We cannot be sanguine about the emergence of nationalism and the fragmentation of Europe. The European Community could provide a structure for people to bury their differences, not their dead.

At the end of the debate, the House will give its support for the Prime Minister carrying on playing a full part in European evolution—an evolution about which we have been too hesitant for too long. For too long, we have been hidebound by fears borne of self-selected memories and infused by a false jingoism—a vision of Europe in which Britain sees itself surrounded solely by enemies and not friends.

That is not an image of Europe that my generation sees from its experience of visiting Europe and its peoples. My generation delights in being British. Who delude themselves that the greatest attributes of our national character begin and end in this House? My generation also delights in the glory of all that is best in being European—its art, music, languages and modern-day prosperity, which are visible in European cities and all too often put ours to shame. We delight in Europe's architecture—or at least the architecture that has survived the bombing, destruction and mayhem that have been the legacy of hundreds of years of war in Europe, when the cause of nationalism has been invoked to unleash the slaughter that dragged young men from these islands to their untimely deaths.

My generation will not listen to those who will close the door on further European development. We have no blueprint for where, eventually, we or our children will go, but I know that we do not want to be isolated and alone, buffeted by currents and currency over which we have no say and no control and excluded from greater co-operation with European Conservative friends in sister parties who seek our help in building a lasting Europe.

If sovereignty is misused to mean the freedom to be poor and to miss out on economic benefits acquired by our neighbours, it is not a freedom that I seek for my constituents. The torch is passing from those who fought for peace in Europe and who nursed its early steps to those who will take it further, curbing its excesses and building on its strengths. This will be to the benefit of our nation, other European nations and the Community as a whole.

Labour Front-Bench spokemen, with their inconsistent and embarrassing record on Europe, cannot lead our people on this issue. They have neither confidence nor credibility. Only my right hon. Friends the Prime Minister and the Foreign Secretary can do that. I believe that they have a greater vision of Europe, away from the narrow, and I am proud to stand four square behind that.

7.38 pm

Mr. Chris Mullin (Sunderland, South)

In the referendum, I voted against our continued membership of the EC. I believed that, as a fundamentally undemocratic institution dedicated by its founding fathers to the free movement of capital and labour, it would be used to undermine many of the great social gains made in this country in the past 100 years. In particular, I believed that it would be used to undermine an elected British Government dedicated, as the Labour party is, to the fair distribution of wealth and power.

I also believed—and I still do—that it was then at least arguable that this country, with its vast reserves of coal, gas and oil, its huge fishing grounds and an assured supply of relatively cheap foodstuffs from the Commonwealth, stood a good chance of prospering outside the European Community. Many of us who voted against the European Community did not anticipate that we were about to embark on a 12-year period in which Britain would be ruled by a Government well to the right of that of all other members of the European Community, by a Government who had far less regard for the welfare of our least fortunate citizens and for our environment than the unelected mandarins of the European Commission.

I do not know whether it was right for Britain to join the European Community. It is early days yet, and the jury is still out. It will be for historians in another century to decide whether it was right or wrong. However, I accept that there is no going back—that, like it or not, Britain will be a member of the European Community for the foreseeable future and that we must therefore do what we can to ensure that the Community develops in a way that is beneficial to all our citizens and, indeed, to the human race as a whole. If we are to maximise our influence, we must enter into a positive dialogue with our partners and not give the impression that we are sullen and resentful.

There are several obvious benefits that we should acknowledge from the outset, the first of which is a common defence and foreign policy. I look forward to that—it does not cause me any problems, with great respect to my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) and to the right hon. Member for Plymouth, Devonport (Dr. Owen). A common foreign and defence policy would release this country from its slavish dependence on the United States, which has been the shameful hallmark of all post-war British foreign policy under Governments of both parties.

The second advantage of EC membership derives from the exchange rate mechanism, although that advantage is not unqualified. As some hon. Members have said, I accept that there are disadvantages. There is a powerful argument that, by joining the ERM, we have effectively surrendered control of our economy to the central bank. I do not know whether that is so, but I do not believe that either the central bank or the German bankers could make a bigger mess than the Treasury and our bank have done in the past two decades.

The one advantage of ERM membership is that it would no longer be possible for the Tories and their friends in the City to organise the run on sterling that traditionally accompanies the elections of a Labour Government. [Laughter.] Perhaps the Tories think that it would be, in which case I hope they will tell us, but Labour would no longer be held to ranson by speculators as it has been in the past. That is a major advantage not only for the next Labour Government but for the health of democracy in this country.

My main criticism of the European Community—and it is a large one—is that it is fundamentally undemocratic. Unelected Commissioners supported by an enormous and remote bureaucracy have arrogated to themselves powers for which they are virtually unaccountable. The European Parliament is unwieldly and cumbersome, and it is hard to see how, with its present organisation, it could be otherwise. I believe that any further power ceded to the Commissioners and to the bureaucracy in Brussels should be conditional on the introduction of democracy to EC institutions.

Those who hold power should be subject to rigorous scrutiny by those who are elected and who are, in turn, accountable to their constituents. That is a fundamental principle. I do not believe that the solution is necessarily to give more power to the European Parliament—national Parliaments might be the most effective means of holding to account those who represent our interests in Europe. It is time that we at Westminster adapted our procedures to enable proper scrutiny of what is done on our behalf by Ministers and officials who represent us in Europe.

As I said, it is too early to say whether we were right to join the European Community. I accept that, now that we are a member, we have a duty to make it work, and to do so in a positive spirit. If the EC's institutions are to command public confidence, they must demonstrate that they are concerned with more than—as the treaty of Rome implies—the merciless application of the free market.

I welcome the social charter. Indeed, I want to see it beefed up. I welcome the recent interest of EC commissioners in environmental standards, and I look forward to the day when they lay down minimum standards for the treatment of farm animals. That is a matter on which a Labour Government could take a lead. However, I equally understand that some Conservative Members of Parliament do not welcome such developments. When they signed us up into the EC without asking the British people, they thought that we were joining a rich man's club which would be exclusively preoccupied with the interests of capital. They thought that they and their friends would have the freedom to go on looting our country without reference to higher authority. It has come as a shock to many of them that the European Community has developed broader horizons. Long may it continue to do so.

I believe that the greatest test of the European Community will be the way in which it relates to what are surely the two greatest issues of our time—the survival of the planet and the benign development of the earth's resources for the benefit of all human beings, not merely for those who are fortunate enough to live within the EC. If a federal European Community becomes merely another great power which is motivated solely by self-interest and which throws its weight around accordingly, we shall have failed. I hope that we do not fail.

7.45 pm

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I shall not follow the hon. Member for Sunderland, South (Mr. Mullen), who regards the issue as a capitalist plot, because many of the capitalists among my colleagues appear to be unhappy about their own plot.

I congratulate my right hon. Friend the Prime Minister on a clear exposition of our position and on setting out his stall so clearly. When the Tory Whips put it about in the summer that they did not think that there would be any trouble about economic and monetary union but that they were worried about the political union treaty, my suspicions were immediately aroused, and they remained so. Having heard my right hon. Friend, I believe that he has a good appreciation of the ground that should properly be given at Maastricht on political union, and I shall therefore concentrate on economic and monetary union.

I wish to complain about the Commission's slogan, "One market, one money; single market, single money." One might as well say, "Single men, single beds". The two do not necessarily follow, and the same is true of the market. I believe that the purpose of the Maastricht summit is to determine the next period of Europe's evolution and that it is a vitally important event. The issues at stake are not merely what is good for Britain or for the Tory party or how to win the election—although those matters are important—but the correct future course for Europe.

We must consider the effects of a single currency not merely on ourselves but on the other 11 members. My right hon. Friend rightly insists on convergence. I agree that it is ridiculous to think of a single currency unless there is convergence, but if there is convergence, there is no need for an institutionalised single currency and an institutionalised central bank. If there is no convergence or if, once convergence has been achieved, it is followed by divergence—which is all too likely—a single currency will of course not work, because it will be put under such strain by the non-converging or the diverging member states that it will break apart.

The only remedies in the hands of the authorities are grants. If grants which have been described as "massive" or "of disproportionate size" are to be paid, those who pay them resent them and those who receive them believe them to be inadequate. The result is tension and, eventually, a move towards separatist and nationalist parties. I hardly dare say it, but we have observed such a phenomenon in Scotland as a result of the single currency between England and Scotland.

We must have convergence, and convergence can take place without any need to institutionalise it. That brings me to an issue that I wish to stress., My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) and others have said that, if we do not join the single currency, or if we do not allow one to take place at Maastricht, the other 11 will go ahead and fix it. Yes, I think that they probably will. However, they would do so outside the treaty of Rome—outside the framework.

There would be several big differences. First, any grants that are payable under the single currency from the rich to the poor, or to the people who cannot keep up or who diverge, will be paid by members of that little club, not by the people who are not part of that club. That must be right. Secondly, the countries concerned would suffer the same problems of divergence, and of how to produce the grants to compensate the least successful. Those countries will find that they have great problems in managing a single currency, because Europe is so divergent.

Thirdly, there are many examples of small countries trading highly successfully in large markets. Hong Kong has never been part of a fixed parity arrangement. Canada is another example—[Interruption.] Canada has a floating currency with the United States, although it is part of a single market in north America. There is no reason why people who tie themselves to a single currency that proves to be unhelpful should do better—in fact, they will probably do worse—than those who trade in that single market with a currency that is adjustable. It is important that the single market should be a real one.

Let us examine what is on offer in the Dutch provisional treaty for Maastricht on the economic and monetary union aspect. What is on offer is that we should be able to have an exemption, but there are four or five defects in the nature of that exemption of which the House should be aware.

First, we shall have to be subjected to the monitoring and scrutiny of our budget deficit. The right hon. Member for Bethnal Green and Stepney (Mr. Shore) and others have rightly found that objectionable in a sovereign Parliament. The ultimate remedy of discipline, such as fining us or stopping us having grants, would not be available if we had the exemption, but the whole panoply of a public rocket to the Chancellor of the Exchequer about the size of his budget deficit would be found highly embarrassing by hon. Members, and they would resent it if it ever happened.

Secondly, in the preamble to the draft treaty which concerns the principles, there are strong and unequivocal aspirations towards adopting a single currency. Under Community law, that puts a tremendous onus on us to behave in conjunction with that ultimate objective and ultimately to join. People have criticised my right hon. Friend the Member for Finchley (Mrs. Thatcher) for allowing the Single European Act to go through because of the preamble. Is not the lesson from that that we should take note of the preamble to the Dutch treaty and that we should wonder whether the preamble should be altered so that it does not apply to those who are exempt? The draft treaty brings in the full panoply of the treaty of Rome and the whole legal apparatus to enforce compliance with the preamble.

Thirdly, it would automatically fall to us to contribute to the grants, which might be massive, that have to be paid from rich to poor even if we were exempt. I stand to be corrected by the Financial Secretary if I am wrong. I believe that the grants would be paid under the structural fund, the social fund and the regional development fund to which we are already signatories and paid-up members —or paying-out members. Whatever excesses resulted from a single currency among the 11, with ourselves being exempt, bills of billions of pounds might land on us for us to subscribe to an enterprise in which we were not taking part. That cannot be right, and I hope that the Financial Secretary will deal with that point when he winds up.

The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) referred to eastern Europe. It cannot be right to say that we will build this tight, centrally controlled structure with what is really a common economic policy, run centrally from Brussels through the Economic and Finance Council and through the independent central bank, and to expect the Poles, the Hungarians, the Latvians and who knows who else, to be able suddenly to put their currencies into that system. That would delay by decades the time when we can welcome them on board.

It is not impossible to see membership for those eastern European countries in a short number of years, but if we were to proceed to the single currency described in the Dutch treaty, we should essentially make those countries second-class citizens for decades. We should confine them to taking what is handed out from Brussels, which the European Free Trade Association countries have been forced to accept. Those are the defects.

The future course of Europe will be decided at Maastricht, and important decisions will be made. We should show the type of Europe that we want. It is curious how near we are to unanimity in the House. We want a Europe open to all, we want a free trade area which is open to the world, and we want freely co-operating nation states within that system. If we were to sign up to the concept of the single currency, even if we had an exemption, we should find that we were living with a lie. We should be living with a principle with which we disagreed. That is why I hope that my right hon. Friends will bring back from Maastricht something better than what is on the table from the Dutch.

7.56 pm

Mr. Tony Benn (Chesterfield)

Three points about the debate have interested me. First, there is fundamental agreement among the three party leaders. The Prime Minister is on the eve of negotiations so he has to be cautious. The Leader of the Opposition, who hopes to take over, can be bolder. The Liberal Democrats, who are far from office, can be quite clear about their objective. There is no disagreement about the idea, that we should move from the original membership of the community through the Single European Act to something stronger.

Secondly, a degree of caution has emerged from people who, when they discussed the matter 20 years ago, were far more uncritical. Thirdly—I say this with some satisfaction —21 years after I urged a referendum, I have won the right hon. Member for Finchley (Mrs. Thatcher) and the right hon. Member for Yeovil (Mr. Ashdown) to my cause. I had to wait 21 years, but it has been worth waiting for some recognition of the fact that the people have a right to a say in their Government.

I do not want to go over old ground, because this is not a question of yes or no to the status quo; we are looking to the future. Some people genuinely believe that we shall never get social justice from the British Government, but we shall get it from Jacques Delors. They believe that a good king is better than a bad Parliament. I have never taken that view. Others believe that the change is inevitable, and that the common currency will protect us from inflation and will provide a wage policy. They believe that it will control speculation and that Britain cannot survive alone. None of those arguments persuade me because the argument has never been about sovereignty.

I do not know what a sovereign is, apart from the one that used to be in gold and the Pope who is a sovereign in the Vatican. We are talking about democracy. No nation —not even the great United States which could, for all I know, be destroyed by a nuclear weapon from a third-world country—has the power to impose its will on other countries. We are discussing whether the British people are to be allowed to elect those who make the laws under the which they are governed. The argument is nothing to do with whether we should get more maternity leave from Madame Papandreou than from Madame Thatcher. That is not the issue.

I recognise that, when the members of the three Front Benches agree, I am in a minority. My next job therefore is to explain to the people of Chesterfield what we have decided. I will say first, "My dear constituents, in future you will be governed by people whom you do not elect and cannot remove. I am sorry about it. They may give you better creches and shorter working hours but you cannot remove them."

I know that it sounds negative but I have always thought it positive to say that the important thing about democracy is that we can remove without bloodshed the people who govern us. We can get rid of a Callaghan, a Wilson or even a right hon. Lady by internal processes. We can get rid of the right hon. Member for Huntingdon (Mr. Major). But that cannot be done in the structure that is proposed. Even if one likes the policies of the people in Europe, one cannot get rid of them.

Secondly, we say to my favourite friends, the Chartists and suffragettes, "All your struggles to get control of the ballot box were a waste of time. We shall be run in future by a few white persons, as in 1832." The instrument, I might add, is the Royal Prerogative of treaty making. For the first time since 1649 the Crown makes the laws—advised, I admit, by the Prime Minister.

We must ask what will happen when people realise what we have done. We have had a marvellous debate about Europe, but none of us has discussed our relationship with the people who sent us here. Hon. Members have expressed views on Albania and the Baltic states. I have been dazzled by the knowledge of the continent of which we are all part. No one has spoken about how he or she got here and what we were sent here to do.

If people lose the power to sack their Government, one of several things happens. First, people may just slope off. Apathy could destroy democracy. When the turnout drops below 50 per cent., we are in danger.

Mr. Peter Hardy (Wentworth)

Like the United States.

Mr. Benn

As my hon. Friend says, in the United States turnouts are very low. That is partly caused by the scale of the country.

The second thing that people can do is to riot. Riot is an old-fashioned method of drawing the attention of the Government to what is wrong. It is difficult for an elected person to admit it, but the riot at Strangeways produced some prison reforms. Riot has historically played a much larger part in British politics than we are ever allowed to know.

Thirdly, nationalism can arise. Instead of blaming the treaty of Rome, people say, "It is those Germans," or, "It is the French." Nationalism is built out of frustration that people feel when they cannot get their way through the ballot box. With nationalism comes repression. I hope that it is not pessimistic—in my view it is not—to say that democracy hangs by a thread in every country of the world. Unless we can offer people a peaceful route to the resolution of injustices through the ballot box, they will not listen to a House that has blocked off that route.

There are many alternatives open to us. One hon. Member said that he was young and had not fought in the war. He looked at a new Europe. But there have been five Europes this century. There was the one run by the King, the Kaiser and the Tsar—they were all cousins, so that was very comfortable. They were all Queen Victoria's grandsons, and there was no nonsense about human rights when Queen Victoria's grandsons repressed people. Then there was the Russian revolution. Then there was the inter-war period. Then there was the Anglo-Soviet alliance. Then there was the cold war. Now we have a Boris Yeltsin who has joined the Monday Club. There have been many Europes. This is not the only Europe on offer.

I understand that my hon. Friend the Member for Sunderland, South (Mr. Mullin) is a democratic federalist, as is my hon. Friend the Member for Derbyshire, North-East (Mr. Barnes). They want an American-type constitution for Europe. It could be that our laws would hang on which way the Albanian members voted. I could not complain about that, because that is democracy, but it is unworkable. It is like trying to get an elephant to dance through a minefield, but it would be democratic.

Another way would be to have a looser, wider Europe. I have an idea for a Commonwealth of Europe. I am introducing a Bill on the subject. Europe would be rather like the British Commonwealth. We would work by consent with people. Or we could accept this ghastly proposal, which is clumsy, secretive, centralised, bureaucratic and divisive. That is how I regard the treaty of Rome. I was born a European and I will die one, but I have never put my alliance behind the treaty of Rome. I object to it. I hate being called an anti-European. How can one be anti-European when one is born in Europe? It is like saying that one is anti-British if one does not agree with the Chancellor of the Exchequer. What a lot of nonsense it is.

I ask myself why the House is ready to contemplate abandoning its duties, as I fear it is. I was elected 41 years ago this month. This Chamber has lost confidence in democracy. It believes that it must be governed by someone else. It is afraid to use the powers entrusted to it by its constituents. It has traded power for status. One gets asked to go on the telly if one is a Member of Parliament. The Chamber does not want to use its power. It has accepted the role of a spectator and joined what Bagehot called the dignified part of the constitution, leaving the Crown, under the control of the Prime Minister, to be the Executive part.

If democracy is destroyed in Britain, it will be not the communists, Trotskyists or subversives but this House which threw it away. The rights that are entrusted to us are not for us to give away. Even if I agree with everything that is proposed, I cannot hand away powers lent to me for five years by the people of Chesterfield. I just could not do it. It would be theft of public rights.

Therefore, there is only one answer. If people are determined to submit themselves to Jacques Delors, Madam Papandreou and the Council of Ministers, we must tell the people what is planned. If people vote for that, they will all have capitulated. Julius Caesar said, "We are just merging our sovereignty." So did William the Conqueror.

It is not possible to support the Government's motion. I have told the Chief Whip that I cannot support the Labour amendment. I invite the House to vote against the Government's motion and not to support a motion which purports to take us faster into a Community which cannot reflect the aspirations of those who put us here. That is not a nationalist argument, nor is it about sovereignty. It is a democratic argument, and it should be decisive in a democratic Chamber.

8.6 pm

Mr. Ian Taylor (Esher)

The right hon. Member for Chesterfield (Mr. Benn) made an extremely powerful speech. It throws up an interesting possibility which we shall not have the chance to explore. If my right hon. Friend the Member for Finchley (Mrs. Thatcher) was still in her former position and the right hon. Gentleman had not been passed over for leadership of the Labour party, perhaps we would now face the possibility of a Finchley-Chesterfield coalition.

I differ from the right hon. Member for Chesterfield on the powers of the House. Many of the powers which he attributes to the House have been taken away from us, not by our choice but as a result of changes in the world. Many decisions about monetary policy over which the House would like to have control have not been made by the House in the years that I have been here—which is few compared with the 41 years of the right hon. Member for Chesterfield.

Early in the right hon. Gentleman's career in the House, many of the powers to which he assigns great democratic importance were taken away by the process of the market and the relationship between nation states. Money now moves through the exchanges 24 hours a day. The Chancellor of the Exchequer cannot suddenly decide that British monetary policy will be such-and-such without paying any attention to what is happening elsewhere in the world. The Chancellor does not ask the House what we should do about monetary policy: he tells us what he is doing. He tells us that he might not like to take a certain step but that interest rates in America are changing, the yen is changing on the world market, the deutschmark is doing this and the French franc is doing that.

It is no good deluding ourselves that we can hang on to something that we do not have. It is much more important to seek ways of overcoming the deficiencies in our control over our national affairs. That has been best achieved by the European Community, despite its faults and the justifiable criticisms that I and many others make. It has ensured the peace of a turbulent continent and the prosperity which acted as the catalyst for the changes in eastern Europe. It was not just the defensive alliance that made that change, important though it was. It was the catalyst provided by the proof that nation states could come together and co-operate not only politically but economically.

The Community enshrines 12 nations—340 million people. It was proof that a liberal, democratic, free-market system was infinitely superior morally and in terms of performance to that which existed in the east.

The origins of the Community were political. They were an attempt to avoid what happened after the first world war as a result of the treaty of Versailles, when the French and others tried to impose stiff conditions on Germany. In a generous gesture, the French understood that they could not do so again after the second world war. They decided that they had to try to build structures which would enable Germany to recover without its recovery impinging on French security. If they were to achieve that, it could best be done through common institutions. The House made a classic mistake in the mid-1950s, because we thought that they could not achieve it. We thought that the free market was sufficient as a way for nation states to join together. We were wrong, and the price of our error was that the early character and developments in the Community were not under our control. When we eventually joined in the 1970s, we had not formulated the rules.

Quite unashamedly, the reason that I hope our Prime Minister gets the deal at Maastricht on the conditions that he has laid down, not under any conditions—that is what only the Leader of the Opposition would do—is that I do not want us to make another great error. We have a remarkable opportunity, and that is often not realised in this country. The German Government are prepared to do a deal on the deutschmark, on German foreign policy and on many other aspects of German power because they do not want Europe to return to a battle over spheres of influence. Germany does not want the changes in eastern Europe to be turned into a battleground for western European countries.

The German Government are prepared to give up something and, along with the other 10 countries, they are even prepared to say to the British, "We want you to help us formulate the rules of this club on economic and monetary union, but you do not have to commit yourselves to joining it." That is a remarkable deal. Whether we debate some of the finer points about what might happen pales into insignificance. We have the right to join later; we do not have to join now. That is a clear option and I am sure that it will be achieved. When the details come forth from Maastricht, I am sure that there will be no binding conditions on this country.

Many hon. Members who do not believe, for example, that we need fiscal harmonisation as well as monetary union could argue over the details, but the reality is that within the context of what we are achieving it is a great benefit to this country and we would be sorely wrong if we did not seize it, if we can get in the negotiations what we want.

The same is true of foreign policy. We are not being asked to give up all control over foreign policy, any more than the French would wish to give up control over their foreign policy. We are being asked to try to find common ground with our Community partners, and, if we do so, not to be held up by any one member over detail. That is a solution, albeit not yet perfect. Incidentally, it is important to me that it is not under the full weight of the treaty of Rome, but is on an intergovernmental, parallel basis, as part of a wider treaty of union. Therefore, I support what the Government are doing.

This is a terrific opportunity for us to ensure that our voice, on world affairs and on the great uncertainties that exist close to western European lands, is heard on a basis of coming together to make agreements between countries. If that can be made effective, we shall all feel that we are not only more influential but are likely to be safer.

We should view these big opportunities positively and not merely as negative encroachments on powers that we no longer have in reality. The British Government have a voice in world affairs, but clearly that is because their voice is used to influence countries which are in union with us so that when we go to the United Nations or try to seek solutions to crises we can do so as an effective, combined force. The objectives of the British Government can be better secured by encouraging other people to back us within the Community. That is the definition of a common foreign policy. It does not mean that the Foreign Secretary is tied and must silently do what someone else wants. We should be more proud of our strength of argument than that.

There is a possibility of achieving a Community which can sort out problems that, as many people in this country recognise, are no longer confined by national borders. we have achieved a remarkable development through the objectives that we set out in the Single European Act—an internal market of 340 million people, growing to 380 million with the inclusion of the EFTA countries. People can move between countries. Opportunities are opening up for companies and for people of all ages.

It is inevitable that measures flow from that which will affect the entire Community. After all, it is because of a British initiative that that has been achieved any way. The Government should be trying to ensure that decisions are taken on an enabling rather than an interventionist basis. Of course, we should oppose the imposition of controls which prevent proper competition. That would deny the basis of the success, to date, of a liberal, free-market economy. However, we should not deny the possibility of a Community level of decision-making which, by setting a framework and ensuring by subsidiarity that it is carried out by national Governments, can make Europe richer, better, environmentally safer and a better place in which to work, for all our people.

That is another goal. It is the goal that is opening up at Maastricht. We should seize that opportunity, and we are close to achieving terms of which the House would approve.

8.16 pm

Mr. Peter Hardy (Wentworth)

The hon. Member for Esher (Mr. Taylor) will forgive me if I do not follow his arguments, as the time limit applies.

I am reminded of the debates in the early 1970s, and one important speech by the late John Davies—his maiden speech shortly before he became a member of the Cabinet. He said that he had no sense of mandate about entry. There could have been no sense of mandate. That was partly because the Heath Government, when approaching the 1970 election, were well aware of the eloquent arguments that have been advanced in this debate by my right hon. Friends the Members for Chesterfield (Mr. Benn) and for Bethnal Green and Stepney (Mr. Shore). So the Heath Government played it very low profile. That may well lie at the heart of the difficulty. The matter was never faced fairly and squarely by the party which sought to be the Government to take us into the Community in the early 1970s.

I was opposed to entry and spoke against it then, as I spoke against continued membership before the referendum. I did so because of the incompetence of bureaucracy and the waste of the common agricultural policy. That dominated expenditure by about 75 per cent.—a percentage near to the figure which applies today.

That was in the 1970s, but I have to consider the situation for my constituents in 1991. In 1979, we were a great deal more properous in South Yorkshire than we are now. Britain was more prosperous. According to the Organisation for Economic Co-operation and Development, Britain was then the sixth wealthiest country in the world. In 1991, after 12 years largely dominated by the right hon. Member for Finchley, who inflicted such a long speech on the House this afternoon, we are not sixth: we have fallen below Belgium and Italy. I have watched the growth in prosperity of countries which were in front of us then and which have soared further ahead, so that the conditions and quality of life of the people there are so much greater than ours. Having led us into decline, the right hon. Member for Finchley is hardly qualified to give advice to the House or instructions to the Prime Minister.

Can my constituents afford Britain to seek to extricate itself from the Community? Can they afford Britain's failure to seize opportunities which will give us the prospect of economic growth and a degree of prosperity which has been largely thrown aside by the present Administration? That very real question looms large.

I should also tell the House that for many years I have been heavily involved in the Council of Europe, so no one can say of me, as they do of my right hon. Friend the Member for Chesterfield (Mr. Benn), that I am an anti-European. For a considerable time I described myself as an anti-market pro-European. I have also spent a great deal of time at the Western European Union. I wonder what the Government will do to secure the resources that the WEU will need and the skills that must be applied to ensure that it does not merely become a French preserve or subject to the diktats of Mr. Genscher, as seemed to be the case recently.

I want to see how Europe will react to the appalling needs in the east. One or two Members referred to the severe problem of nationalism. Among the many changes that have taken place since I entered the House in 1970 has been the growth of terror and the imposition of more and more security. The House should understand that the growth and flames of nationalism in Europe could dwarf the terrorism that we experience today in Britain and other parts of western Europe. That nationalism may run amok and engender balkanisation in Europe which would be exceedingly dangerous. Therefore, the rest of Europe must act with co-ordination and co-operation that has not yet been achieved.

If that is to be achieved, the European parliament must first make itself a great deal more efficient and competent than it was when it drove to despair members of a Council of Europe committee that I chaired who sought to co-operate. Secondly, it needs to attract attention. One of the great problems faced by the European Parliament is that the British media pay scarcely any attention to it. Indeed, political parties pay grossly inadequate attention to what goes on there.

If the European Parliament is not held to account, it will not behave accountably. It must have more attention if it is to exert proper influence on the Commissioners. Moreover, it should be prepared to speak out and it should be heard on important questions, such as RECHAR. That brings me to my final point, given the time limitation.

The Government have behaved outrageously in seeking to malign Commissioner Milian for doing his job properly and honestly. In so doing, they have deprived areas of appalling need, such as mine, of the very resources that are readily available and waiting for us. We have been denied them. That is a disgrace. Tory Members may say, "We can't sacrifice sovereignty." Let me finish with this point: how valuable was sovereignty from 1979 until now, in the days of the vast, docile majority enjoyed by this Government who have brought Britain to a greater decline than any Government this century? [HON. MEMBERS: "Rubbish."] Let me finish.

Right hon. and hon. Gentlemen knew, for example, that HMS Endurance was being withdrawn from the south Atlantic. That mistake cost £8 billion. Right hon. and hon. Gentlemen applauded the grossly unnecessary conflict and cost of the coalfield dispute in 1984–85. That also cost £8 billion. There are scores of further examples of waste and wantonness, not least the poll tax. In the end, that may have cost the right hon. Member for Finchley (Mrs. Thatcher) her job, but it will cost the British people £20 billion in grossly unnecessary administrative expenditure.

Where there is a majority that can coolly and calmly endorse the stupidity and wanton irresponsibility of this Government and troop without question through the Lobby in support of that Government, can we justly claim that Parliament is acting with wisdom in its use of that sovereignty, to which this evening so many pretentious remarks have been addressed?

8.24 pm

Mr. David Howell (Guildford)

One can tell that there are some odd currents running in this debate when the right hon. Member for Chesterfield (Mr. Benn), who was in splendid form, rejoices at the support of my right hon. Friend the Member for Finchley (Mrs. Thatcher) in his plans for a plebiscite or referendum to resolve these issues.

If a Back-Bench dimension has emerged from this afternoon's debate, in addition to the points made by the Leader of the Opposition and the excellent and comprehensive speech of my right hon. Friend the Prime Minister, it is that we should give maximum attention to what is happening in the other part of Europe. It is to remind the great policy-makers and the people lining up for the decisions at Maastricht, who seem so preoccupied, that, even since the original idea of intergovernmental conferences was conceived 18 months ago, the map of Europe has changed completely. Fundamentally new issues and priorities have emerged. New dangers have emerged. New requirements and priorities should perhaps have a higher place on the agenda than the undeniably important issues with which we have been concerned as we examine the minutiae of the Dutch draft treaty.

What has happened is indeed sobering. Perhaps we should pay more attention to the enormous rumbling dangers now developing in eastern Europe. I do not just mean in the former Soviet Union, which is looking into the abyss of disintegration, hyperinflation and the rise of the major-generals, with all the dangers that that implies, as well as the growth, possibly, of new nuclear powers; I mean also in the new democracies, about which we talk so happily—we assume that they have got rid of their Communist nomencklatura or, rather, that such people have gone into the background, changed and become capitalists—which are swimming from being closed societies to open societies. They will not—at least not without the most enormous help and attention of western Europe.

Those countries, which the previous generation fought the second world war to make free—an objective that was denied us in the moment of victory—now have the opportunity to reach the democratic shore from the shore of a closed tyranny. We seem to think that they will get there by themselves while we busy ourselves with the details of the Dutch draft treaty and other matters. That is not so. There is a great arc of instability right across southern and central Europe. Self-determination is running riot. Tiny groups and nationalities, albeit with splendid aspirations, are pitching their ambitions and expectations far too high. These are real threats to the comfortable, cosy, stability of western Europe and its separate nations. We drift at our peril into the pathetic view of the 1930s, that these are faraway countries of which we need know nothing.

In considering the issues at Maastricht, I ask the House at least to keep in mind that Europe may have greater priorities than those of resolving every detail of European political and monetary union at Maastricht. Nevertheless, those are the practical requirements on the table and we must address ourselves to them in this debate. I shall add my twopenceworth in the short time available.

I shall deal briefly with the monetary union problems and then at greater length with political union, about which we face serious and fundamental difficulties. I can deal more swiftly with European monetary union because, from listening to some of my right hon. and hon. Friends, it is difficult to know what all the fuss is about. There will never be a single currency excluding all other currencies from Lisbon to Berlin, from Reggio Calabria to Glasgow. Nor would it make practical sense to attempt a monster bank, running a single pattern of short-term interest rates, not for 340 million people, but for 400 million or 420 million people as there will be then. The area it would cover might even run into the Ukraine—who knows? Such a development will not occur.

We will, however, have a common currency. The ecu will be widely used throughout Europe for international trade transactions, and even for paying salaries. It may be used by the Russians to replace their collapsing rouble —who knows? We want to be closely concerned with the monetary developments that lead up to it. I cannot agree with some of my right hon. and hon. Friends and others who say that we should veto the whole thing. The Prime Minister is right in saying that we have to be involved in these enormous monetary developments: the hardened ecu, the frozen basket ecu, or whatever, are coming.

We need have no fears about the single currency idea. It will not happen, so we need not be involved in it. The concerns of some Members on that subject are exaggerated. That is not so with regard to political union. On that, I have a different stance. Here we seem to have deep difficulties. It is often said that with great treaties the devil is in the detail, but in this case that is not so. In this case the devil is not in the detail but in the principle. As the right hon. Member for Bethnal Green and Stepney (Mr. Shore) said, the devil is right there in the preamble, in the opening words. That is why we find the issue so difficult.

We have not come to a natural resting point in the unfolding progress towards a united states of Europe. We have come to a Y fork in the road. We have built the single market. Contrary to the suggestion of the right hon. Member for Yeovil (Mr. Ashdown), Britain led the way there, as a pioneer, but now we have come to the point where there are fundamentally different views about which way Europe should go.

Should it go towards a united states of Europe, with a strong congress at the centre and a strong executive, or should we stick to the confederal view? Do we believe the doctrine of "acquis communautaire", which means that there will be an inevitable progress towards the Community institutions growing more powerful—a one-way ratchet to greater power at the centre—or do we accept that a great confederation of nation states, with the nations delegating power to central Community institutions for specific tasks, is the right way forward? That is a fundamental divide. We are all required to stand up and be counted, to say which way we should go.

Those who would like to see a united states of Europe call in aid the founding fathers—Jean Monnet, Walter Hallstein and such people. We are told that they were all in favour of a united states of Europe, that it is all a great process, and that only spoilsports and isolationists are against it. That is not so. Jean Monnet believed that the Community should not arrogate to itself the airs and graces of a nation state; it should not try to rival the nation states. Jean Monnet and Hallstein warned against the fancy and cavalier use of the word "federal", because they knew the difficulties that it would cause.

I share the concerns of those who talk about the drift to the centre—the awful centralism which belongs to the 19th rather than the 21st century. I share the views of those who say that political reform is needed. We need a political treaty, but it should circumscribe, limit and identify the central powers of the central Community institutions, as James Madison and others wanted in the original United States of America. But that was taken away by Abraham Lincoln and by the civil war.

The sort of subsidiarity that we want delegates functions to the centre from the nation states. There may be a wider range of functions. There may be new functions, and perhaps we should take away some of the old ones. If more environmental functions are to be handled by the Community institutions, perhaps we should consider repatriating some of the functions connected with agriculture and the rural economy—the Community has not made too good a fist of those.

Let us look at the idea in terms of limited power at the centre, to be reviewed and revised from time to time in the proper confederal spirit.

Over the past decade, we led the process of building the internal market. We have been the most assiduous in accepting the regulations and directives. In Brussels, we were the most forceful on all the committees in pressing for the internal market. We pushed ahead with what we saw as the kind of Europe that we wanted—the great open market, accessible to the new nations, the EFTA nations, the new democracies, as soon as possible. That was our ideal and our dream. It remains a fine dream, and a tremendous vision of Europe. It is not the same as the vision of the centralists, of those who want to build up a stronger executive at the centre and a stronger Parliament.

When I say that the devil is not in the detail, that is what I mean. We can argue about the little movements one way or the other, but the spirit in which we do so, the broad approach and the principle on which we go to Maastricht will determine whether we have a Europe that is free and good—the kind of Europe for which we fought—or a Europe that is centralised, old-fashioned, paralysed, and inward-looking and that will ultimately betray itself.

8.36 pm

Mr. Denis Howell (Birmingham, Small Heath)

I suppose that this has been a great parliamentary occasion, but I find it extremely disappointing and in a sense unreal. There has been hardly any mention yet from either side of the House of the economic consequences of our failing to be in Europe looking after the interests of British industry, especially manufacturing industry. With great respect to all the complexities of the political points that have been made, I was brought up to believe that political progress and economic prosperity had to go hand in hand, and that concept has been missing from the debate. Too many Aunt Sallies have been raised, not least by my right hon. Friend the Member for Chesterfield (Mr. Benn), who made a magnificent speech—magnificient in its humour but also in its irrelevance. We have got to get back to earth.

The Prime Minister gave us a disappointing start. There was no vision at all in his speech. I was tempted to quote my favourite text from the Bible: Where there is no vision the people perish. If that is the sort of leadership that we shall have in Europe, the people will perish.

The right hon. Member for Finchley gave an extraordinary speech. It was a charade, a caricature of herself. My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) raised that great Aunt Sally that we could not have entered the Gulf war had we been totally in Europe. I was under the impression that the Gulf war was authorised by the United Nations, and that France and Italy sent forces to support the enterprise. So why was that ridiculous Aunt Sally suggested?

As the chairman of the Labour Movement for Europe, I find the most galling event of the debate the fact that the Foreign Secretary intervened in the speech of my right hon. Friend the Leader of the Opposition to say that, if my right hon. Friend had had his way, we would not have been in Europe in the first place. May I remind the Foreign Secretary that, had it not been for 69 of my right hon. and hon. Friends who voted for the then Government despite a three-line Whip, the Government would not have been in Europe either?

Mr. John Biffen (Shropshire, North)

How did the right hon. Gentleman vote on Second Reading of the European Communities Act?

Mr. Howell

I am sorry, but I did not catch what the right hon. Gentleman said, and as I have only 10 minutes, I hope that he will excuse me.

There are many fundamental questions of great importance that we are not tackling. Are we in Europe or are we not? According to most of the hon. Members who have spoken today, either we are not in Europe or we should not be in Europe—and that includes Members who will vote for the Government motion. Those are ludicrous propositions. Did we sign the Single European Act or did we not? Did the former Prime Minister know what she was doing?

Another question that arises from the speech of my right hon. Friend the Member for Chesterfield concerns the European Parliament. Are we saying that the electors, to whom we pay such lip service because they vote for us to come here, are removed to another planet when they vote for Members of the European Parliament? That is an extraordinary proposition. That is why I believe that the European Parliament will be given more powers.

I am worried about the situation in Europe. British industry—I have consulted the CBI, the engineering employers and the Birmingham chamber of commerce— knows perfectly well that our industrial future has to lie in one of the great trading blocs of the world—with the United States, with Japan, or with the European monetary system. Now 52 per cent. of our exports go to Europe. My right hon. Friend the Member for Chesterfield may want to change things, but despite all the criticisms that have been made, no one has said where we will be economically if we do not play our full part in Europe and sign the treaty. That question has been knocked all around the Chamber and we must answer it.

The West Midlands Engineering Employers Association put it in a nutshell when it said: We cannot hope to influence the future of Europe if we keep saying no or standing on the touchline. We must get involved in the game. The social charter is the real reason for all the hesitation and doubts expressed by Conservative Members. That charter will compel the Government to accord to British people the same rights as those that will be enjoyed by the people of Europe and which the Christian Democrats— they have turned out to be even more left-wing than the Social Democrats—the traditional friends of the Conservative party, want to implement.

The attitude adopted by the Secretary of State for Employment is nauseating. He is nauseating on the subject of the minimum wage, the limit on hours to be worked, maternity leave and pensions.

Mr. Tony Banks

He is just nauseating.

Mr. Denis Howell

Yes, that is true.

What impression does the Secretary of State for Employment create in Europe as he argues passionately that British employers cannot afford to give 14 weeks maternity leave to women working in British industry? He argues that British industry will collapse if it has to give more than 12 weeks maternity leave. If that is the state of British industry, perhaps it is time that we came out of Europe. All the right hon. and learned Gentleman is doing is promoting a sweat-shop, poverty-ridden economy for our country. His attitude is a disgrace.

The Community is right to say that we should not work more than 48 hours, but the Prime Minister and the Secretary of State for Employment are seeking to defend sweat-shop conditions. I have been president of a trade association for many years, and I know that excessive hours of overtime, when constantly worked, are a great evil. However, the Government are seeking to defend them.

We are told that we cannot have a minimum wage because that would destroy our industry and the economy. France, Spain, the Netherlands, Portugal and Luxembourg have such a minimum wage, as does the United States. Belgium, Greece, Denmark, Italy and Germany have created an acceptable minimum wage through negotiation. What on earth does British industry mean when it says that it cannot afford to pay, for example, £3.40 an hour? That is the sum recommended by my union, the General, Municipal, Boilermakers and Allied Trades Union. Its recommendation met with the overwhelming support of our people according to a recent MORI poll. We can be efficient in industry and at the same time afford to pay wages above the poverty line.

What about the scandal of pensions? I have no doubt that the European Commission and the dreaded Jacques Delors will soon say that the pensions paid in this country are a disgrace. Our pensioners are being cheated every week by the Government's decision to break the link between pensions and earnings. As a result, a single pensioner is cheated out of £17.65 a week and a married couple are cheated out of £27. The Conservative party may be proud of that, but I am sure that, in future, the Commission and the European Parliament will ensure that the link between pensions and earnings is hallowed in the United Kingdom. After all, that link has been kept in most other European countries.

The scandal about our pensions is another reason why the Government do not want to embrace the social charter, but that should be the reason for giving it overwhelming support. It is another reason why we should sign the treaty, which is in the economic interests of our manufacturing community. It will create jobs, not lose them. We should support the social charter, because it will bring social justice to the ordinary people of Britain.

8.44 pm

Mr. Tim Devlin (Stockton, South)

Like my hon. Friend the Member for Bury, North (Mr. Burt), I am a member of the youngest age group in the House. Like my hon. Friend, I want to concentrate on the future rather than the past 20 years. The arguments that were current in 1973 about our membership of the Community have been rehearsed over and over again today in the same vein.

The important thing that we must do is look ahead 20 years to the time when those of us who are, I hope, still active in politics will be asked difficult questions. We will be asked why the House diverted its attention towards those sceptics who persuaded us to shy away from an agreement at Maastricht. We will be asked why we did not see the importance of the emerging European bloc on our doorstep. We will be asked why, given the evidence of the time, when EFTA and the east European countries were queueing up to join the tighter Community that was being proposed, we allowed ourselves to be left outside.

People will ask why, given the importance of the single market to our high-volume, low-cost producers and the importance of our country—as a member of the Community—to the companies of the United States and Japan who have invested so heavily with us, we did not grab with both hands the opportunities that the Maastricht summit offered to fashion the Community to our advantage in the future.

Surely people will ask us why, in 1991, we did not recognise young people's aspirations to travel and work abroad. They will want to know why we did not appreciate the inconvenience and stupidity of having to change currency constantly as one moved from country to country in the Community. Given the history of European developments in the past 20 years, those people will also want to know why we did not learn from Britain's earlier mistake. They will want to know why we did not join the Community at its inception and fashion the very fabric of it to our advantage. We now have the opportunity to do that.

I agree with my hon. Friend the Member for Esher (Mr. Taylor) that other countries are offering to help us to use their sovereignty in a way that will benefit us in the future. It is no coincidence or mistake that it was the Conservative party that applied to take Britain into the Community, and which took Britain in. It is no coincidence that it was a Conservative Government under my right hon. Friend the Member for Finchley (Mrs. Thatcher) who signed the Single European Act and joined the exchange rate mechanism. It is not a mistake that all that happened as a result of Conservative policy, because the Conservative party has consistently been dedicated to raising the living standards and the material prosperity of our people. That is why we have consistently adopted a pro-European stance.

We are following the commitment that we gave in 1973 to ever closer union, so why are we now beginning to get cold feet? Surely the House appreciates that some problems go beyond national frontiers, particularly those affecting pollution and international trade. Our ability to negotiate a better deal for our people can only be strengthened by ever greater co-operation with other countries. Young people look forward to co-operation, and aspire to building something good for the future. They are not looking back at what happened in the past.

A question that has still not been answered at any point during the debate was asked by my hon. Friend the Member for Buckingham (Mr. Walden): what happens if the other countries go ahead without us? No one has given a satisfactory answer to that. We have heard some fine arguments about sovereignty, but sovereignty falls into two categories. First, there is legal sovereignty—the legal right to do as we please. Secondly, there is real sovereignty —the real ability to do as we wish. That is what the argument is really about.

I hope that this debate will be about the valuable contribution that Britain can make to the European community, rather than a sterile argument about whether the king's prerogatives will be taken over by the Government and given away in the face of the people. Britain has one last chance to ensure that it is part of the considerations in the emerging power block. It has a chance to influence that power bloc, democratise its institutions, correct the many faults in the present European community institutions, bring the new financial centre to London, and ensure that the bloc is a benign institution, shouldering world problems and finding aid and defence solutions to them.

The biggest mistake that we have made so far is the one that critics of the European Community so often turn against us—the fact that we were absent when the common agricultural policy was established. For all those who sit on European committees, the CAP is the main criticism that we have of the Community's work. The way in which some of the subsidies work is ludicrous, but had we been there at the beginning, we might have been able to reform it so that it could work to our advantage. It is interesting that Britain and Denmark—the two most recent members —have been in the forefront of its reform.

Under the Administration of my right hon. Friend the Member for Finchley, Britain regained her pre-eminence in world affairs. However, we have a long and enduring experience of wider responsibility in the world. We have taken on UN commitments to Kuwait and initiated efforts on behalf of the Kurds. Even now, a former Member of this House leads the European peace efforts in Yugoslavia, a conflict into which the European Community has been drawn because of its geographical position and economic strength. As yet, it does not have the power to solve it.

In the 1990s, we approach a new world in which the old cold war of the two super-powers has given way to three emerging super-power economic blocs: North America, South-East Asia and Europe. Some issues can be tackled only at a European level. They include the control of inflation and the provision of sound economies, because we have such interrelated and interacting economies. They also include the control of environmental pollution, and we could benefit greatly through co-operating further on defence and foreign policy.

Britain could have much more clout with the combined power of our neighbours than as an individual country. I believe that the British people look forward to greater development within the Community because they want the material benefits that that may bring. Naturally, they are worried that the Queen's head may disappear from our currency, but if we had economic and monetary union, as we have with Scotland, nothing would stop us providing different notes, even with a different name, provided that they had fixed values that were easily exchangeable.

Although people are concerned about the democratic deficit, their biggest worry is that they will not have the power to remove unelected bureaucrats in Europe. Therefore, they need the democratic powers and the rights of the European Parliament to be developed to ensure that those who are elected can be called to account.

I do not approach this question thinking only about how we shall hand ancient privileges over to foreigners. Like many people who promote the European Community in this country, I promote it because I see enormous financial, economic and environmental advantages for our country. It is essential, therefore, that the Prime Minister should sign an agreement in Maastricht. I strongly urge him to do so, if he can reach a sensible and reasonable compromise. I do not for one minute believe that we shall hand over everything that this country has ever stood for in terms of its independence. Rather, I see the process as continuing way into the future—a process in which Britain must play a leading and important part.

8.57 pm

Mr. Ron Leighton (Newham, North-East)

As a good European, I attended a conference of Anglo-German parliamentarians earlier this year in Germany. A British Conservative MP—a great Euro-enthusiast—addressed the conference on what he called "the British problem". He explained the British problem to the Germans by saying that the British people had been lied to—they had not been told the truth about what used to be called the Common Market and is now called the European Community. He said that there was no full-hearted consent originally and that the 1972 White Paper presented by the right hon.

Member for Old Bexley and Sidcup (Mr. Heath) explained that essential sovereignty would not be eroded. He said that in 1975 we had a referendum in which it was suggested that it was an economic and trade rather than a political matter.

He referred to the fact that the Government of the day distributed a manifesto to every household in the land. It said, first, that no decision could be taken in Brussels without the consent of a British Minister who would be answerable to the British Parliament—in other words, no political union. Secondly, it said that there had been a threat of economic and monetary union which threatened to bring unemployment, but that that had been removed and therefore people could vote in the referendum knowing that there would be no economic or monetary union.

It was suggested sotto voce that that could be a matter for our grandchildren. It is not a matter for our grandchildren or even our children, but it is to be decided in a fortnight's time. We are now told that, having been lied to over the years, the British people now have the prospect of political union, and they react against it and shy away. That is because they were told that it would not happen. A Conservative Member explained to our German colleagues that that was the reason for the "British problem".

At each stage of the story, Britain has been the odd man out. Why is it always the odd man out? It is because our system is one of parliamentary self-government, which is incompatible with the European Community system. We have been asked to give that up and to go over to the European Community system, with the European Court and majority voting—the shoe is pinching all the time. The Commission make us do things that we do not want to do and stops us doing what we want to.

Our former colleague, Sir Leon Brittan, is a far more powerful man now than when he was a Cabinet Minister and now tells us what we can do with Rover. Value added tax has been put on spectacles and surgical boots, which we would never have dreamed of doing. I heard it being suggested to the Minister that we should reduce value added tax in relation to the Royal Society for Prevention of Cruelty to Children. She said that the European Community would not allow us to do so. The Community even tells us through which fields we are to put our roads. All that is resented by Parliament and our people.

The current proposition is that we should go further. As Mr. Delors explained—my hon. Friend the Member for East Lothian (Mr. Home Robertson) and others will be interested in this—the suggestion is that 80 per cent. of our economic, social and political affairs should be decided in Brussels. Who wants that? [HON. MEMBERS: "We do."] Who wants that apart from a few wildly unrepresentative fanatics? The British people do not want it.

Mr. Derek Enright (Hemsworth)

How does my hon. Friend know that?

Mr. Leighton

The public opinion polls showed that three quarters of the British people do not want it.

We have had discussion about the word "federal". I know it is a word that can mean various things, but we must ask why some continental politicians refer to the word "federal" at every opportunity. It is because they want a super-state. The British people have not been told the truth about that. Some people say that "federalism" means devolving power downwards to the people, which sounds good. They are trying to kid us again.

To use the jargon, federalism means extending the competence of the Euro-institutions to defence, foreign, immigration and asylum, social, and economic policies —the bread and butter issues of our politics are to be removed from this Parliament and transferred to Brussels. The power is not being devolved downwards, but up to the centre. That is the truth which the people of this country must face. If that is what one or two of my extremist fanatical friends and the people of this country want, so be it, but, that will destroy our democracy.

How does one define a democracy? The more I think about it, the more I believe that it is a political unit in which the minority accept the verdict. If the Conservative party wins a general election, I am upset and I don't like it, but I am willing to accept the result because I accept the verdict of the people. I think to myself that I can serve in opposition, make my case and perhaps win the next election, so I accept the result. However, if decisions are to be made in Brussels by alien institutions whose representatives are not elected by us and by people who we cannot remove, and those decisions damage my constituents, am I supposed to accept that? I do not think that we shall.

With my colleague, the hon. Member for Glasgow, Govan (Mr. Sillars), in mind, I say that such a process will break up the United Kingdom. If the decisions are all to be made in Brussels, why should the Scots send Members of Parliament to Westminster? It would be a waste of their time to come down here, because the decisions will not be taken here, but in Brussels. The process constitutes a national threat because it will break up the United Kingdom.

Economic matters including interest and exchange rates, monetary and fiscal policy, budgetary policy, are all at the heart of Government and all are to be decided by a central bank, which will be the most important institution. The treaty states that Governments will undertake not to seek to influence the central bank. It states that they will even undertake not to influence their national central banks, which means rule by bankers. I did not become a Labour Member of Parliament to hand over all power to bankers. Clem Attlee nationalised the Bank of England because he did not think that we should have rule by central bankers.

The other idea is that we should have a single currency. If there is a single currency and economies get out of line, they cannot be adjusted by movements of the exchange rate, which is the normal way—so what happens? Countries will become blighted and depressed regions, with mass unemployment. I did not become a Labour Member of Parliament or the Chairman of the Select Committee on Employment to work for policies that would lead to chronic mass unemployment. Why should we agree to anything of that sort?

If we have a Labour Government after the next general election—obviously that is the result that I want—they will need the tools to do the job. That Administration will need to control interest rates, exchange rates and budgetary policy. If we go along with the present approach we shall have unilateral economic disarmament and many crucial matters will be decided elsewhere. If so, what is the point of having this Parliament? What is the point of having the Labour party? What is the point of having elections? These matters—[Interruption.] The hon. Member for Derbyshire, South (Mrs. Currie), who is making expansive gestures, may be in favour of the consequences that I have described, but I do not think that the British people share her view.

All the evidence is that the British people think that we have handed over enough power to Brussels already. The British people do not want new treaties that will hand over the power that remains. It would be dangerous to foist upon the British people that which is being proposed, and the hon. Member for Derbyshire, South has no right to do so. None of us has a mandate to abandon the powers of Parliament, which are the powers of the people. We are the custodians of the rights and powers of the people, and we must hand them on to our successors.

Mrs. Edwina Currie (Derbyshire, South)

Will the hon. Gentleman give way?

Mr. Leighton

No. I do not have time to give way.

I resent the bullying to which we are subjected. We are told, "We are forced to have this whether we want it or not." There is all this talk about a train—"The train is going, we don't know where it is going to, but we must get on. If we do not board it, we shall be punished. There is no choice. We can't use our intelligence or our free will. If we do that, we shall be punished."

How will we be punished? At present, we pay into the budget £2.4 billion more than we obtain from it. Will we be told, "We won't accept your contributions to the budget"? Is that being suggested? A huge trade deficit has been foisted upon us, so will we be told, "We won't trade with you. We won't let you buy our goods"? Under the common agricultural policy, we have to pay higher prices for our food. Will we be told, "We won't let you buy our food"?

We have the right and the power to make our own choices and to act on our own free will. We must have, of course, the closest possible relations with the other European countries, but these must be based on a different model. We want an association of self-governing countries who co-operate for the common good. We now have the chance to bring in the countries of Eastern Europe, but our response to the collapse of communism has been completely inadequate. We have been presented with a great opportunity but we shall not be able to take advantage of it by means of economic and monetary union.

The House will be aware of what the deutschmark did in East Germany, as it then was. Is it thought that Romania and Bulgaria will be able to enter the European Community on that basis? We are keeping the countries of eastern Europe out of the EC by removing the political barrier and erecting an economic barrier.

I agree with those who have said that we do not have the power to embark on such a huge constitutional change without consulting the people. The rights of Parliament are the rights of the people, and the people must be consulted. That process having taken place, the people must decide. If all the parties are split, if even the Campaign Group in the Labour party is split, how are the people to be consulted? There is only one way to do that, and that is by means of a plebiscite. By that means we shall be able to put the issue before the British people and let them decide.

Several Hon. Members

rose—

Mr. Deputy Speaker (Sir Paul Dean)

Order. It will be evident to right hon. and hon. Members on both sides of the House that there are many who wish to speak in the debate today and tomorrow. The Chair can no longer impose a limit of 10 minutes on speeches, but I hope that those who are called to speak will feel that it is appropriate to volunteer no more than 10 minutes in their speeches.

9.8 pm

Mr. Tony Favell (Stockport)

I am glad to follow the hon. Member for Newham, North-East (Mr. Leighton), because I agree with virtually every single word that he has just said. This is probably the first time that that has happened but, if the debate continues long enough, and I think that it will go on for some time yet, it will certainly not be the last. Like the hon. Gentleman, I believe that Britain now stands at a crossroads. The right hon. Member for Plymouth, Devonport (Dr. Owen) said that we are now at the Rubicon, and I believe that we are.

For a long time now I have been labouring under the delusion that the EC is about free trade. I voted yes.

Mr. Devlin

indicated dissent.

Mr. Favell

My hon. Friend the Member for Stockton, South (Mr. Devlin) shakes his head. He probably rumbled long ago that the EC is not just about free trade and that it is what it is now apparently about—setting up a federal state. I am glad that today's debate has taken the wraps off so that we can all see what the EC is set for.

As Chancellor Kohl said throughout last year, the EC is about creating a united states of Europe. He has said all along that Germany wants the political unification of Europe and that for him German reunification and European unity are two sides of the same coin.

Until recently, even the leaders in The Times said that surely the Germans, French, Spanish, Italians, Danes, Dutch and so on would not give up their independence; surely they are not prepared to turn themselves into some kind of European super-state. But now it is clear for all to see. Mr. Delors has said so today.

This is a federal treaty. Mr. Delors seems to tell my right hon Friend the Prime Minister, just as he did my right hon. Friend the Member for Finchley (Mrs. Thatcher), who made a marvellous speech today, that what he says goes. In fact, he rejoiced when my right hon. Friend the Member for Finchley went, because she failed to recognise that the EC was all about the setting up of a federal state. He made no secret of it. Soon after my right hon. Friend went, Mr. Delors said that our present Prime Minister had better be careful or the rug might be pulled from under him. It is clear for all to see.

I agree with the hon. Member for Newham, North-East that this ultimate step should not be made without the wholehearted consent of the British people. That is a phrase that we have heard before, but this time it refers to the wholehearted consent of the British people to Britain no longer being a self-governing country as we understand it. Majority voting on foreign affairs, security, immigration, health, education, culture leading to a single federal state. After 900 years of independent history, that step should not and cannot be made without the wholehearted consent expressed by plebiscite of the British people.

Because I have made no secret of the fact that I am in favour of a referendum—indeed, I have pushed for it—some have suggested that I do not have faith in my right hon. Friend the Prime Minister. There is no better man to negotiate. I do not expect the hon. Member for Newham, North-East to agree, but there is no better man than he to negotiate. But much as I like, respect and admire him, I do not believe that one man should decide the nation's fate forever. That is what will happen if Conservative Members say that we trust the Prime Minister to sign or not sign as he decides when he goes to Maastricht, on 9 and 10 December. Not even Henry VIII would have made such a decision without the people behind him. That is why there must be a referendum.

When the Prime Minister returns from Maastricht, he must put the package to the people and let the people decide. That is what the Danes intend to do and that has taken the heat out of the argument there. The Danish people will have that right. There is no earthly reason why the British people also should not have it. I believe that the British people would say no. The people who are most vehemently opposed to a referendum are those federalists who fear that the British people would say no. They fear the answer. I do not fear the answer—and even if the British people said yes, I would abide by their decision. At least they will have been asked first.

It is our duty to do that. We have no mandate to give away the government of this country to others. Some people may have rumbled some years ago what the Community was about, but I did not. I know now, but many people outside the House did not know either. I believe that there should be a referendum. We have been failing the people who elected us, we have no mandate to give away the government of this country, and I will now give other right hon. and hon. Members an opportunity to speak.

9.15 pm

Mr. Calum Macdonald (Western Isles)

I believe that I am the first Scot to be called to speak this evening, and I hope that my remarks will give a Scottish perspective to the debate, much of which has proceeded on a false premise. That was particularly so of the remarks by my right hon. Friends the Members for Chesterfield (Mr. Benn) and for Bethnal Green and Stepney (Mr. Shore). I admired the fluency and power of their speeches, but their basic assumptions were wrong. In so far as they and other right hon. and hon. Members defended the notion of national sovereignty and the powers and privileges of our national Parliament, they defended something that does not exist.

I refer not to the powers and privileges that, as other hon. Members pointed out, have constantly been eroded —which makes a good argument for trying to recover some of that real power by mixing our sovereignty with other countries. I refer to the non-fact of a national Parliament. This House is not a national Parliament but a multinational Parliament. It is the Parliament of our United Kingdom, representing nation states that were previously independent and sovereign, and which enjoyed self-government but relinquished it.

If the arguments in defence of a British Parliament made by my right hon. Friends the Members for Bethnal Green and Stepney and for Chesterfield had been heard by the members of the Scottish Parliament that existed in 1707, this British Parliament would never have come into existence. In that sense, my right hon. Friends' arguments were self-defeating. If one pursues the notion of national sovereignty, which advocates self-government, that is an argument for the break-up of Britain, not by mixing the present British Parliament into a higher federal union, but by breaking it up into the separate components of Great Britain.

It is ironic that those in Britain and in the House who are fighting a desperate rearguard action against the European Community fail to recognise European union as the logical successor of, and the greatest possible compliment to, the success of the British union—which can serve as the model for the European union of the future.

I am a unionist in both the British and the European sense, because in principle I favour the establishment of the broadest possible political community. I believe also in the principle of subsidiarity, not just within a new united Europe but within the existing United Kingdom as well. I find it odd that Conservative Members who advocate the principle of subsidiarity in Europe deny it within the United Kingdom, when they deny the possibility of devolution to Scotland.

There is no conflict between the principles of unionism and of subsidiarity. They are the two sides of the same federalist coin, and are entirely consistent. What is inconsistent and illogical is the curious muddle into which some hon. Members have got themselves in the course of tonight's debate.

As I have said, some Conservative defenders of subsidiarity advocate political devolution in Europe while denying it in the United Kingdom. The Scottish National party—its members have yet to speak tonight, but no doubt we shall hear from them—support separatism and sovereign independence from the English, but favour ever closer union with the Germans and the French, thus reducing their philosophy to simple anti-English prejudice. That is an illogical position, born of political opportunism.

Two lessons can be learned from the union of Great Britain if, as I suggest, we take that union as the logical and historical precedent for European union. The first is that there is no risk whatever of a loss of national identity, other than the loss of identity that follows naturally from the greater influence of commerce and trade within the Community. That bogey is dragged out time and time again.

Even after 300 years of political, economic and monetary union, it is still easier to distinguish an Englishman from a Scotsman—on the basis of accent, name or even manner—than it is to distinguish a Serb from a Croat. That is despite the fact that the union of Great Britain is much more rigid and centralised than the proposed European union. In the British union, differences have not only survived but flourished, and I believe that, in a European union, national differences would flourish to the same extent.

The second lesson is that we should not replicate the centralised nature of the British union. The EC is now rightly moving towards a different model—a federal structure that would allow the institutions of the centre to deal with responsibilities that are rightly drawn into the centre. I refer to such macro-issues as monetary policy, environmental policy, trade and, ultimately, foreign affairs and defence.

It showed either inconsistency or a simple failure to understand the case for the right hon. Member for Plymouth, Devonport (Dr. Owen) to advocate the notion of a common foreign policy, while opposing the idea of institutions that would make such a policy effective. That is a recipe for the muddle against which so many people have warned us. If we are to avoid the muddle of the Gulf war and the contentions of the Yugoslav crisis, we must develop institutions that will allow us to overcome such differences.

Those who pretend that we are not moving towards a framework that will allow the Community to counter common decisions on foreign and defence policy are living in a dream world. Even after 1992—quite apart from the treaties that we are discussing—the single market and European competition policies will impose pressures for national Governments to achieve greater convergence on defence procurement. Once that happens, pressures will be imposed for them to reach greater convergence on defence policy in general.

Mr. David Winnick (Walsall, North)

Will my hon. Friend give way?

Mr. MacDonald

I cannot do so if I am to abide by the 10-minute recommendation.

Those, then, are the macro-issues that should be left at the centre. At national and regional level, we can deal with domestic issues such as schools, health care, social services and local transport. Striking such a balance will avoid the constitutional stresses and strains that in recent years have afflicted the United Kingdom in particular. The treaties will embody that federalist approach—for that, in principle, is what it is, even if the word itself cannot be used because of the childish objections of British negotiators.

The treaties will begin the necessary task of making Community structures at the centre more directly accountable to European citizens, by extending and strengthening the powers of the European Parliament. That is extremely important. Eventually, this process will rightly lead to the Commission becoming more directly accountable to the electorates across Europe, not just indirectly accountable, as it is now, to the European Parliament and the European Council.

By extending the competence of the British union, in line with that federalist principle of subsidiarity and by making the union more democratic and accountable to its citizens, the European Community can begin to forge a union that will, in time, be as great a success as the British union has been.

In forging that union, Europe has a particularly great advantage, in that no country can dominate that union in the way that England has inevitably dominated the United Kingdom, or Russia has inevitably dominated the Soviet Union. That is the answer to the point made by my right hon. Friend the Member for Chesterfield. He raised the fear that union would lead to a rise of resentment, and thus to nationalism. The European union can be a genuine partnership of equals. It is one to which Britain must belong if it is to secure prosperity and influence in the future and also if it is to be true to its own multinational unionist past.

9.26 pm

Mr. Terence L. Higgins (Worthing)

I greatly welcome the motion in the name of the Prime Minister and his right hon. Friends. I shall support it when it comes to the vote. I very much welcome also the opening paragraphs of my right hon. Friend's speech, in which he made it absolutely clear that he, together with the Foreign Secretary and the Chancellor of the Exchequer, would do their utmost to seek a negotiated settlement on this issue that was the best possible deal available. I do not believe that we could have a better team to try to achieve that deal.

My right hon. Friend went on to say that if, none the less, he felt that that deal was not satisfactory, either from the point of view of the United Kingdom or from the point of view of the Community as a whole, he would not go ahead and sign it. I think that we can have confidence that that will be so, although each of us will also have to decide whether we think that the best deal that has been negotiated is acceptable to us.

I very much hope that that deal will be one where we do not have to go for the so-called opt-in/opt-out clause. If we go down that route, we shall not only not have a full role in the further negotiations but, under the draft treaty as it stands, we shall be specifically precluded from participating in a number of important decisions. That opt-in/opt-out clause is very limited in its scope. Therefore, I hope that my right hon. Friend will be successful in negotiating an arrangement that is acceptable without the use of that clause.

As for the referendum—or, I should say, referendums, because the plural of "referendum" is "referendums", not "referenda"—let me say very clearly that I am totally opposed to referendums in any shape or form. I believe profoundly, as the Prime Minister has made absolutely clear, that this is a representative parliamentary democracy. We are not here, in Edmund Burke's words, as delegates. If one has a referendum, there is a danger that one comes here as a delegate. If there is one thing that is absolutely clear, it is that this issue is of immense complexity and least of all suitable for a referendum.

I pointed out in the debate on the Queen's Speech that if one asked one's constituents, "What is the difference between a common currency and a single currency?", they would be unable to say, yet that is a crucial distinction. I issued a press release to that effect. The chief reporter on my local paper asked me whether I could tell her the difference between a common currency and a single currency, which seemed to me to make the point. We are responsible for considering these complex issues and making the decision on behalf of our constituents.

I have not been able to obtain the edition of Dicey referring to a referendum from which my right hon. Friend the Member for Finchley (Mrs. Thatcher) was quoting, but if it is argued that, if all political parties take the same view of a particular issue, the electorate do not have a choice and a referendum should be held, a rather difficult technical problem arises. What happens as a result of a referendum? Will all the political parties say, "We shall accept the referendum and not what all of us believe"? I understand from Dicey that a referendum would not constitutionally bind the following Government, so such a referendum is not the escape route that my right hon. Friend the Member for Finchley suggested. It is our responsibility, as representatives of our constituents, to make a decision on this matter.

Mr. George Robertson (Hamilton)

I agree with all the arguments that the right hon. Gentleman has advanced. He quoted the Prime Minister in aid of his argument. Is he as surprised as I was to learn that No. 10 Downing street has been briefing the press to the effect that the Prime Minister has not ruled out the possibility of a referendum in some future Parliament?

Mr. Higgins

I cannot comment on No. 10 briefings. I am clear about what my hon. Friend the Prime Minister said today, at Question Time yesterday and in the leadership campaign a year ago. Like me, he believes in representative parliamentary democracy and is against referendums. I have no doubt whatsoever about that.

The right hon. Member for Chesterfield (Mr. Benn) sought to say that the electorate have lost faith in democracy. It is not the electorate who have lost faith in democracy but people such as the right hon. Gentleman and other hon. Members who feel they have to resort to a referendum rather than carry out their true duty.

Mr. John Browne (Winchester)

Will my right hon. Friend give way?

Mr. Higgins

I cannot. I wish to stick to the timetable, because I believe that Privy Councillors should seek to do so.

The draft treaty contains dates for the achievement of a single currency, but the crucial aspect is whether the necessary convergence has been achieved before that takes place. I have not time, I fear, to go into detail on the issue of a single currency, but it is absolutely clear that a single currency is not a reason why one should opt for the control of fiscal deficits and seek to undermine the fundamental control of money, taxation and public expenditure, which has been the basis of our power since the time of Simon de Montfort. It is important to stress that a single currency does not require the control of deficits.

I shall not go into detail on article 104B, although it is fundamental to the issue. The editor of The Times has been more than generous in allowing me to advance my views on that point. However, I want to deal with a point that my right hon. Friend the Prime Minister made this afternoon. The wording of paragraph (1) of article 104B is crucial. It says: Member States shall avoid excessive Government deficits. The protocol explains what that means and other paragraphs state that the decision on whether a deficit is excessive shall be determined by the Commission in carrying out an investigation and then by the Council of Ministers.

The impression has got around—for example, in the speech of my right hon. Friend the Member for Finchley —that this is somehow only a question of surveillance. That is not true. The article says quite clearly: Member States shall avoid excessive Government deficits. I therefore very much welcome the statement of my right hon. Friend the Prime Minister that that paragraph must be amended, because I have no doubt that we shall be entering into a binding agreement if we sign the treaty as drafted.

The fact that article 104B contains a paragraph which states not only that the penalties specified do not apply in stage 2, but that the existing sanctions in the treaty as a whole will not apply in stage 2, leads to the bizarre situation where one part of the article states clearly, "You shall not do it," but provision is made in other parts of the article to make that unenforceable. We should not doubt that, if we signed the treaty as drafted, article 104B would be binding and we would have agreed not to have an "excessive deficit". That strikes at the basis of control over public expenditure.

We are short of time and I am anxious to keep within the limit, so I shall deal with the crucial distinction between an agreement being binding and being enforceable. It is clear that when our Parliament signs an agreement in the European Community we abide by it. We have a better record than any other country of implementing what we have signed. I am becoming very concerned about the way in which that works in practice, because it is apparent that other countries in the Community have a different philosophy. Often they do not implement the proposals in the intended manner.

The Confederation of British Industry has recently criticised the Department of Trade and Industry. I am worried about the way in which that Department, for example, is implementing proposals imposed on us by the Community, although they are not being implemented in other countries. This is to our competitive disadvantage. It is tremendously important that when we implement such proposals the timing of the implementation should be related to that of the other countries in the Community. At present, the Department of Trade and Industry is too concerned with regulation and not enough with protecting our interests.

It is very important that my right hon. Friend the Prime Minister should now negotiate as toughly as possible. I believe that he will achieve the best possible deal but, having done that, he and we must consider whether we can accept it. I have not the slightest doubt that we as representatives of our constituents must take the decision in this House. To try to pass off the responsibility in the form of a referendum is wholly abhorrent to me and, I hope, to the House as a whole.

9.37 pm

Mr. Denzil Davies (Llanelli)

rose—

Mr. Jonathan Aitken (Thanet, South)

On a point of order, Madam Deputy Speaker. You had been in the Chair for only a few seconds when an Opposition spokesman made an important intervention. He made the rather surprising announcement that No. 10 Downing street had tonight given a briefing to the effect that a referendum had not been ruled out and, therefore, I suppose, might be ruled in. That is relevant to the debate and to the amendment in the name of my right hon. Friend the Member for Chingford (Mr. Tebbit), myself and other hon. Friends.

If that announcement is correct, we should be told, because it has an important bearing on our proceedings. We have here no lesser personages than the Minister of State, Treasury and the Foreign Secretary's Parliamentary Private Secretary. The announcement might be merely one of the late night fantasies to which the the Opposition are prone, but we need to know whether such an announcement—[Interruption.]

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. Let us hear the hon. Gentleman.

Mr. Aitken

I seek your guidance, Madam Deputy Speaker, before the proceedings continue. Can we have a statement from the Government to clarify what has or has not been said?

Madam Deputy Speaker

The House has heard what the hon. Gentleman has to say. Since I was a mini Back Bencher, I have always believed that any announcement of such a nature should be made first to this House. Those on the Government Front Bench have heard what the hon. Gentleman has said and what the Chair has had to say. I hope that they have taken that message to heart.

Mr. Winnick

rose—

Madam Deputy Speaker

Order. The House is now using very valuable time. There can be no further points of order. I have made the Chair's position quite clear.

Mr. Denzil Davies

I take it that my voluntary 10 minutes runs from now, Madam Deputy Speaker.

The amendments to the treaty of Rome on economic and monetary union, which mean a single currency and an unelected European central bank, go to the heart of our parliamentary democracy, as others have said. The amendments add up to a substantial transfer of control over money from a democratically elected Government and Parliament to an unelected committee of European bankers. When the spirit of the age and the spirit of Europe are for more democracy, better democracy and deeper democracy, the Government have been asked—indeed, encouraged by some—to act completely contrary to that spirit of the age.

I find it perplexing that so many groups in Britain today demand—rightly—better British democracy and criticise our democracy, yet many of those people are prepared to acquiesce in the transfer of power which will diminish the British democracy that they apparently want to enhance and improve. It seems that peoples and parliaments are not to be trusted with money; money has to be taken out of the democratic process and out of the democratic powers.

Over the ages, the European elite have often sought to entrench certain principles and rights in fundamental documents and fundamental laws. They do that basically to keep those rights and principles away from the people. Medieval theologians sought to make all human law conform to the higher law—the higher jus naturale. The divine right of kings was apparently not to be challenged by Parliaments or by people. Even Lenin, if one can call him a member of the European elite, tried to entrench the dictatorship of the proletariat and to put it out of reach of democracy and of popular control. I am told that some sections of the loony right in the United States even speak about something called the "law of the marketplace". Even that is now a kind of law to which all other laws must conform.

At least the medieval theologians sought to entrench rather uplifting moral and religious principles, but we are being asked to entrench for ever, if the amendments to the treaty go ahead, the little theorems and little equations of economic theory, such as money supply, price stability, currency management and percentages of gross national product—and we have heard about 3 per cent. public sector debt ratios. All those rather simplistic and fashionable theorems and equations of economics are to be entrenched for ever in the new, amended treaty of Rome.

Governments, including ours, will then have to conform. If they do not conform to the provisions about excessive budget deficits, for example, they will be fined and punished. They will be charge-capped like recalcitrant local authorities under the poll tax provisions. All that will be under the control of bankers who will be the high priests of the mysteries of money. They will make all the decisions that will affect the lives of ordinary people.

I have a confession to make. I believe that price stability is quite a good thing. I do not really accept the argument that devaluation is a panacea for all the problems of British industry. I believe that Government borrowing should be controlled. In my day, I was a bit of a monetarist. However, tenets of economic theory are not absolute. They change with fashion. To attempt to entrench them in treaties which are outside the control of a democratic Parliament is ridiculous.

Sometimes it is necessary to trade inflation against unemployment. Sometimes it is necessary to realign the currency either upwards or downwards to protect industrial capacity. Sometimes it is necessary for the Government to borrow for investment and to redress grievances. Sometimes in a recession it is necessary to have budget deficits—large ones and perhaps even so-called excessive ones.

I do not know what the amendments to the treaty of Rome do to the Keynesians. I think that they are dished. They have had it, because they will not be allowed to have cyclical deficits, which are the basis of the philosophies and theories of John Maynard Keynes. I read nothing in The Guardian about the amendments to the treaty. I am surprised. I do not know where the Keynesians are. Where are the 300 Keynesians who like to write letters to The Times and The Guardian? I should have thought that they would be out demonstrating against the proposed amendments, which would entrench monetarism.

In their amendment, my right hon. and hon. Friends rightly urge the Government to work for several aims with which all Opposition Members agree. The amendment also talks about "social cohesion". I am not sure what that means, but there is a danger that, by transferring to unelected bankers the power to control money, we shall create a problem in respect of social cohesion. The precedents of the 1920s and 1930s in respect of social cohesion are not good. I do not understand the argument, but many people argue that the gold standard was far more flexible than what is proposed in the amendments to the treaty.

On re-reading my right hon. Friends' amendment, I was glad to see that we have dropped the silly idea that ECOFIN could control the European central bank. Even the Prime Minister floated that idea some time ago. I believe that it was thought up by some cynical French politicians—they do not come any more cynical than that —who thought that they could sell to the French electorate the idea of a central bank similar to the German Bundesbank by pretending that the animal called ECOFIN could control it. My right hon. Friends do not pretend that in their amendment.

The Opposition motion refers to ECOFIN as a "counterpart" to the European central bank. When I read it, I thought at first that it was a misprint for "counterweight". But it was not. When I looked up "counterpart" in a dictionary, I found that it was merely an opposite part to a part. Of course, the opposite part cannot control the part to which it is opposite.

We shall have a European central bank which is far more independent than even the Bundesbank. At least the Bundesbank has a Government breathing down its neck. We saw that when the governor of the Bundesbank had to agree to exchange one westmark for one eastmark. But there will be no Government watching over the European central bank. There will be only 12 Finance Ministers rushing back and forth to Brussels, checking plane and train timetables and rushing back to the House of Commons—often, if we have a hung Parliament—to make sure that the Government do not fall.

At least our motion is clear. We have accepted a single currency and everything that goes with it in terms of a central bank and control over Government expenditure. I am sorry that we have done so. It is an historic break with the tradition and beliefs of the party of which I am a member. I disagree with that move, but it is a fact, and one which we must all recognise.

As I said at the beginning of my speech—the Prime Minister said it, too—the economic and monetary union proposals are amendments to the treaty of Rome. When the United Kingdom acceded to the treaty of Rome, we accepted a large burden. The large burden was that, in terms of international law and sovereignty, we could not withdraw from that treaty without the consent of the other 11 members. But as lawyers always say, if there is a burden there is a benefit. The counterpart of the burden is the benefit that we do not have to agree to changes either. We can prevent the other 11 countries from making changes as the counterpart of the burden in that treaty.

Perhaps it is a forlorn hope, but I hope that one of these days—perhaps even at Maastricht—a British Government will finally have the courage and conviction to say, "Sorry, this is nonsense. Most people know and believe it is nonsense. We are not going to agree to these changes, because people outside the House and most hon. Members believe that they do not make any sense and will diminish our democracy."

9.50 pm

Mr. John Biffen (Shropshire, North)

Like many other hon. Members, the right hon. Member for Llanelli (Mr. Davies) has spoken of the Maastricht proposals and the philosophical challenge that they represent. I should like to think that a debate is now being undertaken in every other parliamentary assembly in the European Community with the candour and commitment that the House is showing. The fact that we are having this debate underlines that we are good Europeans because we view these issues with great seriousness and believe that they have considerable import for the Community's development, as it stands and in relation to a wider setting.

Mr. Tony Banks

rose—

Mr. Biffen

I shall not give way. Allow me to get under way. Many other hon. Members would like to speak and many hon. Members would like me to speak briefly, even more than they would like to listen to the hon. Gentleman's witty intervention.

If one looks back on the Community, one sees that one aspect of its economic development has been successful and has certainly been enforceable—the negative but highly productive policy of dismantling tariff barriers. The common external tariff was secured and internal tariff barriers eliminated, and there was little concern about the efficacy with which that was conducted. However, when the Community has had to deal with more positive economic operations, the story is quite different.

I take the example of the common agricultural policy, not because it is almost the institutional Aunt Sally, but because it has been in operation from the beginning of the Community and there has been a recurring commitment for its reform, which has failed.

What I find fascinating about the current state of the CAP are, first, the figures prepared by Mr. Anthony Rosen, an agricultural journalist, who approaches these matters with a robust pen, I admit. He has identified that, of current Community spending on agriculture in the Community, £18 billion comes from national aid and £24 billion comes from the CAP. I am not disparaging national aid, although I find it extraordinary that when I asked the Ministry of Agriculture, Fisheries and Food for its assessment—I did not wish merely to take a journalist's figures—its answer was: The Government does not keep comprehensive details of the national subsidies and other state aids available to farmers in other Member States, since to do so would not be a cost-effective use of resources. Again, I do not disparage Whitehall's reaction, but one immediately sees the problem. In a major area of economic policy, there is a national and a Community element. The Court of Auditors tells us that there is considerable fraud. I accept that that is in no sense a continental European characteristic—it is inherent in the policy, however and wherever it is applied. However, if that situation exists, we ought to stop and consider the best framework to establish for future economic co-operation which involves the positive involvement of Community decisions.

If we are to transfer responsibility for energy, the environment, health and social security—the list is ambitious—we must at least reflect on what we think are likely to be the consequences. Many of my hon. Friends are worried about the actual transfer, and I acknowledge that anxiety. What concerns me is the total volume of public spending. There will be, not just a transfer, but more spending because there will be one further layer of government. If I may trivialise my argument, it will be local government reform writ large.

Those circumstances require the most careful consideration by both sides of the House—by the Conservatives because we have an anxiety about levels of public spending anyway, and by the Left because public spending is a most sensitive item of policy. It should be under clear, identifiable, political control. We are drifting towards, not some great tyrannical community, like a huge, effective leviathan, but a great lumbering spender of money without appropriate political direction. Nothing that I see in prospect at Maastricht persuades me that that fundamental problem is being addressed. It is being accepted.

Nevertheless, I do not disparage the idea of having Maastricht. From time to time there must be a major stocktaking in the European Community. As my right hon. Friend the Member for Guildford (Mr. Howell) and many others on both sides of the House have pointed out, the most extraordinary development over the past couple of years has been the disintegration of the Soviet Union. A number of Warsaw pact countries, such as Hungary, Poland and Czechoslovakia, are already developing a relationship with the west. I am sure that that trend will be carried further east to incorporate central Europe and, eventually, whatever pattern of states evolves from the decayed Soviet Union.

If there is to be an attempt to reassess the Community and redesign its objectives—we should have a new Messina in order to take stock of these challenges and then design a new European structure—that is what we should be considering. Obviously, that cannot be secured speedily. The situation in the successor states to the Soviet Union is still completely in flux. The situation in central European countries needs patient handling. Nevertheless, priorities are beginning to rebuild themselves. There is need for a political agreement, some military agreement as well as some economic agreement that can be phased in over time. That will provide the framework of a wider Europe, which is the real challenge. It is the challenge to which Maastricht is almost wholly irrelevant.

Given that situation, we must think of what institutions we need to anticipate that wider Europe which not only challenges us, but is unavoidable. I have no doubt about the words of President de Gaulle at his press conference in September 1960—after all, he had talked of a Europe from the Atlantic to the Urals—when he said: What are the realities of Europe? What are the pillars on which it can be built? The truth is that those pillars are the States of Europe … States each of which, indeed, has its own genius, history and language, its own sorrows, glories and ambitions, but States that are the only entities with the right to give orders and the power to be obeyed. Those words are clear and relevant.

Then, in good faith and good nature, I consult the Order Paper, and read the Government motion, the Opposition amendment, the amendment of the Liberal Democrats—they are all about 20 lines long. I cannot think of another such extraordinary situation in which an issue of principle evokes such a response. That leads me to believe that there is an attempt to sidestep the profound central issue of principle. That issue is that Maastricht, by a fast route, a slow route or almost any other route, is not relevant to the real challenge before us. Reflecting thus, I feel that my course must be to vote against the Government motion.

10 pm

Mr. Jim Sillars (Glasgow, Govan)

It is always a pleasure to listen to the right hon. Member for Shropshire, North (Mr. Biffen), but because of lack of time hon. Members will understand if I do not follow up many of the controversial things that he said.

I look at Europe from a different perspective. I am a member of a party that urges Scottish independence and full member status for the Scottish nation within the European Community. We do so because we believe that the union of the United Kingdom is unequal, that the Scots are politically frustrated within its framework, and that we are more likely to find within the union of the European Community the equality necessary to alleviate our present frustration.

There will be seven small states in the Community which, while accounting for 16 per cent. of the population, will wield 37 per cent. of the votes in the Council of Ministers. On the "Analysis" programme on BBC radio 4 on 19 September, the Danish Prime Minister was asked about his country's position on loss of sovereignty. He replied: I feel today a lot more powerful than a Danish Prime Minister would have felt years ago. Why? … We have influence, and we have a lot more influence than is fair, considering that we are such a small nation". I have never understood the logic of people who argue against Scotland being a member state of the Community, as are Denmark and Ireland. We would have far greater power and influence over the European matters that affect us, and would have considerable sovereignty on domestic affairs—matters peculiar to Scotland.

I do not approach the debate simply from the point of view of Scottish self-interest. We approach the European Community in the context of Europe as a whole, both west and east. To the Scottish National party, Europe after the cold war seems to be divided into three zones. There is a zone of turmoil—consisting of the Soviet Union, Yugoslavia, Romania and Albania—a zone of considerable economic difficulty—comprising Hungary, Poland and Czechoslovakia—and a zone of stability—that is the European Community and the EFTA countries surrounding it—of which the European Community is probably the most important part.

Whatever criticisms we may have, compared with the rest of Europe the European Community has been successful both politically and economically. The continuation of the Community's solidarity and integration is extremely important for dealing with the problems in the zones of difficulty and turmoil. That is why we welcome whatever impetus might come from Maastricht and elsewhere towards closer union between the member states of the Community. Therefore, any criticism that we make of the draft treaties is done in a constructive spirit in the hope that Europe, when it moves closer towards unity, will do so effectively and with the maximum sensitivity.

Earlier, an hon. Member said that Maastricht was the rubicon, but that is a matter of opinion. I do not believe that we crossed the rubicon in 1972 when we signed the treaty of accession, or in 1975. I believe that this state crossed the rubicon when we signed the single market agreement. There is a paradox associated with the liberalisation inherent in the single market, because one needs a great deal of regulation to ensure a level playing field for everyone. As the need for regulation develops within the Community, there will be more unity and joint action. That will lead to great pressure, principally from the business community, to produce for that single market a single monetary policy, a central European central bank and, ultimately, a single currency. There is logic in that theoretical argument.

I greatly doubt whether, at the end of 1996, the convergence of eight countries will be sufficient to allow them to move to a single currency. It is interesting that there are break points every two years after 1996 in the draft EMU treaty. Those breaks will enable member states to re-examine the situation to see whether they can move towards that single currency.

I was fascinated by the speech of the right hon. Member for Finchley (Mrs. Thatcher). She discussed what would happen if eight former separate currencies, or perhaps 11, moved to a single currency. The right hon. Lady asked whether sterling, if disengaged from that single currency, would shadow it, or float free from it. She also asked why, if sterling shadowed the single currency, it should not be part of that single currency in the first place.

The right hon. Lady then said, however, that she would vote for the Government motion. That is a triumph of loyalty over logic, because the whole tenor of her speech was that one cannot sign the draft treaty because if we do, ultimately, no matter what one says about an opt-out, we will be part of the single currency anyway. She believes that everyone will face catastrophe thereafter.

I was also rather disturbed by the speech from the right hon. and learned Member for Surrey, East (Sir G. Howe), who made a cogent argument for greater unity and commonality in decision making within the Community. However, on 13 November he wrote an article in the Financial Times in which he said that, if one extended the competence of the Community to social affairs, it would be "a bridge too far". Why? If we are to liberalise capital movements and the free flow of capital goods and services, surely working people should be entitled to defend themselves by taking central action throughout the Community under the social charter. The Conservative party cannot have it both ways. If it is all right to have the liberalisation of capital, it is okay to mobilise working people to defend their interests.

We are in favour of greater unity. How we forge that unity is an important principle that will no doubt he dodged at Maastricht. Some argue that it should be forged on a federal basis. That means a contract between states which join an organisation which, theoretically, divides the power between them. Let us consider what has happened in the 19 existing federations. There is a great tendency for the centre to take power unto itself, principally because it makes the great decisions about war, peace and security. It therefore becomes the most powerful part of the federation, no matter what the constitutional theory might be.

We are not in favour of federalism, because we do not believe that that is the right framework by which to try to govern about 350 million people. If the Community extends to between 24 and 30 states, we will be talking about 450 million people. The federal basis would not be sensitive enough to the needs of all those people.

We prefer the confederal system, where ultimate political and legal supremacy rests with the constituent members—the sovereign states. The central institutions are subordinate to them and the legislative body consists of member state delegates who decide upon common policies. That is a reasonable description of a Community which would be sui juris but which would be based on a confederal model.

We do not want any departure from the legal basis of the Community, which means that sovereign, independent states—as recognised in international law—agree through international treaties to pool a certain amount of their sovereignty, but only that amount which they are willing to give to central institutions. The Community will not depart from that.

I understand that, in December 1992, which is after the general election, the European Council will hold a summit in Edinburgh. As the Scottish National party expects to win the mandate for independence at the next general election—[Laughter.] Hon. Members may laugh now, but they will laugh on the other side of their faces after the general election. We look forward to hosting that summit in Edinburgh.

10.10 pm

Mr. Christopher Gill (Ludlow)

Many eminent commentators have said that the political union treaty is more important than the economic treaty. I entirely reject that view, as any realist would. A realist would understand that ultimate power and authority rest with he who holds the purse strings. It is ridiculous to believe that we can have an independent defence or foreign policy if we do not control our own money.

For example, does anyone seriously believe that the Falklands campaign could have been fought if economic and monetary union had been in place in 1983, or that we could have gone to war in the Gulf in support of our United States allies if a single currency had been in force last year? Some would say that such freedom of action is impossible only if we do not control our own fiscal policy, but all the evidence points to the fact that the European Community wants ultimately to do just that—control our fiscal policy.

To paraphrase the words of my right hon. Friend the Member for Finchley (Mrs. Thatcher), if we give the European Community an inch it will take a mile. I must warn hon. Members that talking up the importance of political union and talking down the importance of economic and monetary union is simply a device to get hon. Members through the eye of the proverbial needle, whence there would be no return.

Other commentators point out that there is no danger in signing the treaty at Maastricht because of the opt-out clause, which would allow exemption from a single currency. However, that opt-out is sustainable only if it is continuously and vigorously defended. The sword of Damocles would hang over us for ever and a day until, perhaps by the process of attrition, the House accepted the principle of a single currency. If it did not happen in that way, the arithmetic shows that this or any successor Government could introduce a single currency on a whipped vote. Alternatively, on a free vote, all Liberal Members, the majority of Labour Members and a sufficient number of Conservative Members would ensure that a single currency reached the statute book.

I invite hon. Members to search their hearts and ask whether it will ever be any easier than in the vote tomorrow night to express their candid view on a single currency. They should have no doubt that the adoption of the draft treaty proposals means nothing less than the full acceptance of a commitment to a single currency. Tomorrow night's vote is not a vote of confidence; subsequent votes may be.

The principle of a single currency is wrong and the Government should be prepared to walk away from the conference table. The British people will neither forgive nor forget the party that fudges this issue. To the electorate, one is either for or against the single currency; there are no shades in between.

What effect will a single currency have on hon. Members? I represent an agricultural constituency, and farmers there say to me, "Your Government do not have a policy for British agriculture," to which I reply, "As long as we embrace the common agricultural policy, we cannot have a domestic or national policy. The common agricultural policy has to be my Government's policy." I hear what those farmers say, and my right hon. Friend the Minister of Agriculture, Fisheries and Food perhaps agrees with what they say, but without the support of the other countries in the Community, he is relatively powerless to satisfy those farmers.

Let us consider the position of other Ministers, particularly the Chancellor of the Exchequer, were we to have a single currency. There would be but one effective Chancellor of the Exchequer, and he or she would not be at No. 11 Downing street. My right hon. Friend the Chancellor would find himself in the same hapless position as our current Agriculture Minister—he would have all the responsibility without the authority to discharge it. That is a classic formula for disaster, and disastrous it would be, not just for the House and the parties represented in it, but also for the members of those respective parties.

When the British people discover that one party is no different from any other in the sense that, if elected to government, each would bear the responsibility for our nation's affairs without the authority to deliver people's natural and legitimate aspirations, the electorate will reject the entire body politic as we know it. The events of eastern Europe should be a warning to us all. The people of eastern Europe and Russia have not rejected federalism because their central Governments satisfied their aspirations. On the contrary, they have decisively rejected federalism because it denied them their aspirations.

What is the man in the street entitled to conclude when he sees the break-up of federalism in eastern Europe and Russia, and tiny countries such as Latvia, with a population of only 2.5 million, rejecting the eastern-style single currency of the rouble area and coming to this country with a request to the royal mint to mint their own sovereign currency? The man in the street might conclude that his country's politicians were either myopic or out of touch with the people. He might ask whether anyone had given him a satisfactory answer to the question that he might reasonably ask about what benefits he would derive from a single currency. I am speaking of tangible benefits, not abstract ones, which satisfy nobody and pay no bills.

It is not enough to say that we might miss the train or be left behind. How much is that worth on a balance sheet, when the other side of the sheet shows ever-increasing movements of funds from the United Kingdom to southern Europe, which is what would happen? One has only to consider the United Kingdom experience. In the United Kingdom, which for a long time has enjoyed political and economic union complete with a single currency, there has been a substantial and continuing movement of funds from the one richer country to the three poorer countries.

I am tempted to say now, particularly to those Opposition Members representing the regions of our nation, that charity begins at home. I say that because the prospect for the regions of Scotland, Wales and Ireland is that they will no longer be competing with each other for the British taxpayer's money, but competing in the greater Community against the countries of southern Europe—Greece, southern Italy, southern Spain and Portugal. If they believe that in that arena they will do better than they are doing now, they will believe anything.

In the Community that we are putting together, poorer nations must learn to maximise the potential for their prosperity from the market opportunities that are opening up to them, and not by beggaring their neighbours.

Whatever treaty obligations are entered into at this stage, the Government must carry the British people with them. To ignore public opinion, especially in pursuit of abstract idealism, is the height of arrogance and political folly. Never must we underestimate the ability of the British people to stand up to bullies, to defend principle and, if necessary, to stand alone. For all our sakes, let us do what is right for Britain by rejecting now, just as did the peoples of eastern Europe, federalism and the single currency.

10.20 pm

Ms. Joyce Quin (Gateshead, East)

I am sure that, as parliamentarians, we are all greatly influenced in our views by different levels of loyalties—to our constituents, to our party, to our region, whatever part of the United Kingdom we come from, to the United Kingdom and, if we believe in an evolving European Community, to what we think are the best interests of the Community as a whole. Indeed, we should look wider than that, to the rest of Europe and to the world beyond.

I shall seek to evaluate the Maastricht proposals in the light of these different levels of loyalty to help me to decide whether what is on offer is worth supporting. I have never thought that the EC was intrinsically or automatically good or bad, as much depends on the effect of what is decided on our constituents and, indeed, on the people of Europe as a whole. As a result, I have regretted the frequent over-simplification that often takes place in European Community debates. Indeed, the oversimplification that is involved in the labels pro and anti-European is often unhelpful. I am not convinced that the new labels of Euro-sceptics and Euro-federalists are much more helpful, for "federalism" seems to be a misused and contested term. In my view, federalism, while having an element of union, is based very much on the principle of decentralisation.

The term "subsidiarity" has been used during the debate. The Prime Minister seemed to describe the concept as denoting national versus European decision-making levels. To me, subsidiarity means taking decisions at the most appropriate level, whether it be European, national, regional or local. All levels of decision taking have an important part to play in our political process.

The over-simplification of the issues was part and parcel of a Gallup poll that took place last weekend. I and many other Labour Members were contacted and asked many over-simplified questions about our views on the European Community issue. I did not know at the time who had commissioned the poll, but I learned afterwards that it was the Conservative party. I strongly resent having my views sought in such an underhand way. I much prefer expressing my views publicly in the House to my constituents and others.

The main reason for many Opposition Members feeling more warmly towards the European Community now than they did in the past is the record of the Community in the past few years and the contrast between what has happened elsewhere in the Community and what we have seen take place in Britain. I believe that we have fallen badly behind in the three important areas of economic development, social policies and, sadly, the quality of our democracy.

On economic development, we have failed to pursue the policies of partnership between Government and industry which are commonplace elsewhere in Europe and which involve not only management but trade unions and workers' representatives in a much more positive way than anything that has happened under this Government. We have fallen badly behind in terms of investment. We have higher interest rates, and recently we have also had rapidly rising unemployment compared with the rest of the EC.

On social policies, our record has been appalling: on that, I agree strongly with the points made by my right hon. Friend the Leader of the Opposition and by my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell), who has just come into the Chamber, who strongly criticised the Government's record on social policies.

It is clear that there are two different views in the House of what a large market should be all about. There is the Government's view, which seems to see a large market as an end in itself, and there is the view expressed by my right hon. Friend, which sees a large market as successful only if it improves the quality of life of our citizens.

The British people understand what is happening in the EC, and they understand that the Government have stood out against other Governments in blocking positive measures which would have benefited our citizens.

Three questions about the social dimension should be addressed to the Government. First, is it fair that bad employers should effectively be subsidised by the state? In the absence of a minimum wage, many of our constituents earn such low wages that they have to resort to state benefits on top. Why should the state subsidise bad employers in that way?

Secondly, how do other countries that have a minimum wage and a better employment rights structure manage to cope so well? Thirdly, have the Government forgotten that, in the preamble to the treaty of Rome, which they say they support, there is a commitment to the constant improvement in living and working conditions of the people of Europe? For me, a key test will be how far the social provisions can be incorporated into the Maastricht agreement. That is important, and I am glad that the Opposition's motion makes it so clear.

Unfortunately, the only thing that seems to unite Conservative Members in this debate is their refusal to accept the social charter and the social measures which many of us feel are so important.

The final element to which I wish to refer is the quality of our democracy, which has exercised the minds of many hon. Members today. In the past 12 years, we have become one of the most centralised states in the EC, which I greatly regret. I am dismayed that so little has been done to decentralise, when so many other EC countries have clearly felt the benefits, both economic and political, of taking the decentralised route.

One of the Maastricht proposals is the proposal to create a body to represent the regions of the EC. I recently asked the Prime Minister about that, and was rather surprised to receive the answer that the Government supported proposals in the intergovernmental conference for a new consultative body to represent the regions at Community level. I hope that, when the Minister replies, he will tell me how that representation will be decided. Will all the regions be represented as well as the nations of the United Kingdom? Can we be assured that those regional representatives will reflect the political majority in those regions and will not simply be Government nominees, as we have seen in so many quangos and regional bodies that have been set up in recent years?

The Maastricht summit gives us great opportunities for economic, social and democratic reform. However, the Prime Minister is not capable of obtaining a deal which will be to the benefit of the British people. He cannot have it both ways. He cannot claim on the one hand to be at the heart of Europe and at the same time want to be on the periphery of Europe and seem to want us to go at a slower speed than anyone else. That is an inconsistent position.

If the Prime Minister really wants to help the British people, he should use Maastricht to give us a system which will promote balanced regional economic development throughout the United Kingdom, attack some of the social ills and divisions which beset British society at present and, finally, enhance not detract from the quality of British democracy.

10.29 pm

Mr. Churchill (Davyhulme)

I strenuously reject the suggestion of the hon. Member for Gateshead, East (Ms. Quin) that my right hon. Friend the Prime Minister is not the best person to negotiate on behalf of Britain at the forthcoming summit. I believe that the House will overwhelmingly register its confidence in his abilities in that role.

This remarkable and fine debate has thrown up some strange bedfellows, including the right hon. Member for Chesterfield (Mr. Benn) and my right hon. Friend the Member for Finchley (Mrs. Thatcher)—who found common ground on the question of a referendum.

In the 20 years since the House voted to accede to the European Community—which is now the destination of no less than 52 per cent. of Britain's exports—it has become a major factor in world trade and international power-broking. It has more than fulfilled its founding fathers' two objectives: to rebuild the economy of a shattered Europe, and to bury the hatchet between France and Germany and so bind together the nations of Europe that they would never go to war again.

Those substantial achievements are already on the record. We are now on the verge of a new, exciting, and long-overdue step—the creation of a single European market. That has already been agreed, and it will be in place by the end of next year. In a typically British way, we have failed to take the credit that is due to us for that achievement, which had its origins in the Kangaroo group of Members of the European Parliament founded by the late Basil de Ferranti specifically to break down the trade barriers that existed in Europe at a time when none of the other major Community partners wanted to know anything about it. They rested secure behind their trade barriers, and it was above all a British initiative that led to the creation of the single European market.

After advancing at a snail's pace for many years, we suddenly find ourselves invited to participate in a Gadarene rush towards economic and political union. I have always believed in the cause of European unity. It was the issue that first brought me into active politics as long ago as 1964. I believe still that Britain's place is at the heart of Europe, although every time that puffed-up functionary, M. Delors, vouchsafes a little more of his vision of a centralised, bureaucratic, and socialist Europe, I confess that I have my doubts.

For one who claims to be the champion of European unity, M. Delors is its worst advocate, having a unique capacity to raise the hackles of the British people. That said, let no one doubt Europe's importance to Britain. Once the channel tunnel is built, from my Manchester constituency alone, seven freight trains a night will leave Trafford Park for Europe.

Nor should we underestimate the importance of Britain to Europe, for we have much to contribute and not just to the agricultural fund. Some half a million of our sons lie in Flanders fields—our sacrifice against tyranny in Europe. And today we have a contribution to make in terms of our history of free trade, our outward-looking attitude to the world, and the weight of our tradition of parliamentary and democratic government stretching back over the centuries—something unmatched by any of our partners, for some of whom the very concept of democracy is of recent origin.

We stand on the brink of two momentous decisions at Maastricht. We are invited to sign up for, on the one hand, economic and monetary union and, on the other, political union. I agree with everything that my right hon. Friend the Prime Minister said today, and I wish him every success at Maastricht. I have little doubt, however, that, despite Britain's reservations, our partners will move forward to economic and monetary union, and to the creation of a single currency. It will be difficult, if not impossible, for Britain to stand aloof from that process without unacceptable damage being done to our economic interests. I happen to believe that the fears that have been voiced on that account are exaggerated.

I do not accept that the proposal represents a major surrender of sovereignty. Just as the dominions of Canada, Australia and New Zealand were able to conduct their own economic policies while belonging to the sterling area —having their own Chancellors of the Exchequer operating their own fiscal policies, and raising their own tax revenues—so Britain will retain a wide freedom of action, while enjoying the benefit of belonging to a currency and economy underpinned by what will undoubtedly be the strongest currency in the world.

But political union is a different matter. Thanks to our parliamentary system and the stability that it has given us, the British people have been spared the horrors of revolution, civil war and invasion for more than 300 years. In that we are unique. Our Parliament has prevailed in the face of fascism, Marxism and communism, where others succumbed.

Mr. Butterfill

And socialism.

Mr. Churchill

Indeed.

That, undoubtedly, is why the British people hold this Parliament—if not its Members—in such affection. But woe betide the Government, or the Members of this House, who sell our Parliament for a mess of European pottage. The British people will not accept the relegation of the mother of Parliaments to the level of the legislature of the state of Nevada; but that is what is on offer to us if we go down the path of full political union. The House must retain control of those aspects of our national life that are properly dealt with here: above all, we must retain responsibility for key decisions about foreign policy and defence, and the issues of war and peace.

I have every confidence that my right hon. Friend will not sell the pass on those vital issues, and that, if need be, he will indeed exercise our veto. To paraphrase Canning, however, it is time to call into being eastern Europe to redress the balance of western Europe. In the present circumstances, it is more important to widen the Community—to include the nations of EFTA and the new democracies of eastern Europe—than to deepen the political union among the Twelve.

I do not believe that those countries will be half as eager to abandon their new-found sovereignty so soon after regaining it. That is the path that we must pursue, with vigour and determination. We must build a free and democratic Europe, from the Baltic to the Mediterranean and from the Atlantic to the Urals: a Europe that will, however, respect the essential sovereignty of national Parliaments, and not trample them underfoot.

Mr. Butterfill

On a point of order, Madam Deputy Speaker. I am concerned about the welfare of certain hon. Members who, I know, would not voluntarily be absent from the Chamber, and who I fear may be detained elsewhere against their will. I refer, of course, to the Liberal Democrats, who I know would be here if they could.

Madam Deputy Speaker

I think that the hon. Gentleman is being facetious during time that is very precious to the House. To my mind, his is a bogus point of order.

10.38 pm

Mr. Doug Hoyle (Warrington, North)

I have never been fanatical about Europe, but I accept that we are now in Europe.

I was amazed by the performance of the right hon. Member for Finchley (Mrs. Thatcher). The speech by the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) was remarkable. We shall no doubt hear another remarkable speech from the right hon. Member for Chingford (Mr. Tebbit). Both right hon. Members seem now to be very anti-Common Market, yet they were in the Cabinet when all the moves were being made that led to the passing of the Single European Act and to the creation of the single European market.

One would not have imagined, listening to the speech of the right hon. Member for Finchley, that she was the Prime Minister throughout that period and that it was she who took us along that road. What she told us today was completely different from what she did when she was Prime Minister. She took us into the exchange rate mechanism at the wrong rate and at the wrong time. She did so for political reasons, in the hope of retaining her post as Prime Minister. She failed.

It is difficult to believe that the former Prime Minister and her right hon. Friends, who were with her when they agreed to the single European market, never imagined that there would be demands for a single European currency or for a single European bank. If they did not, they must have been completely naive, which I do not believe for one moment. Neither the right hon. Member for Finchley, nor her colleagues who supported her, can escape from their responsibility.

Whether we like it or not, to all intents and purposes there is already a single European currency and a single European bank—the deutschmark and the Bundesbank. We read today that the market is strengthening and that, if the Germans put up their interest rates, we shall do the same, which is the complete opposite of what the Conservatives want. However, that move will be dictated to us. What we should therefore be asking ourselves is whether we can derive any benefits from the position in which we find ourselves.

We must ensure that this central bank is controlled not by bankers but by politicians, in the interests of people. However, the Conservatives are completely against that. They are also completely against any improvement in social conditions for ordinary people. They are against people being given information about the company that they work for. When Leyland Trucks was privatised, Daf in Holland, and the trade unions there, knew a great deal more about it than we did. They were told at midday. They had already been made well aware of it. I do not see why employees should not have information on their work or why they should work dreadfully long hours.

I should like Norway, Finland and Sweden to join the EC—they would certainly give it a new dimension. I have no doubt that eastern European countries and the Soviet Union will join.

Mr. Rhodri Morgan (Cardiff, West)

What about the vodka made in Warrington?

Mr. Hoyle

And very good vodka it is.

Europe must become wider and more democratic. The problem is that the Conservative party has negotiated nothing and accepted everything. I was amazed to hear a Conservative Member say, "We put into effect everything that happens in the market." The problem has often been that the Government have been absent from the negotiating table.

I hope that Europe will be a major issue in the forthcoming general election, when no doubt we shall see the return of a Labour Government.

10.46 pm

Mr. Ray Whitney (Wycombe)

The hon. Member for Warrington, North (Mr. Hoyle) said that he would prefer a central bank run by politicians. With all respect to him, if that central bank were run by his party, I would have the gravest apprehension about the state of the currency for which it was responsible.

Some years ago, a prominent European leader set out in extremely clear terms the future agenda for the European Community and pointed out that it would be crucial to heighten the consciousness among our citizens of what unites us"; that the development of the European Community was not just a matter of a trading bloc but a question of creating a series of new policies to promote the economic, social and political growth of the Community; and that that meant giving greater depth to the Community in both its internal and external activities. Those were the words of my right hon. Friend the Member for Finchley (Mrs. Thatcher) in a memorandum to her fellow Heads of Government in 1984. She was right then, and I believe that those views are right now.

We are debating the deepening of the internal and external mechanisms of the Community, which will be the subject of Maastricht. The need to achieve more depth to those mechanisms is greater because the pressures on the European Community to make itself a presence in the world are so much stronger and the opportunities to do so are much greater because of the collapse and the changes in the Soviet Union and eastern Europe. The world consists of the three key blocs of the Americas, Japan and the Pacific and western Europe.

The question is, are we, as my right hon. Friend the Prime Minister says, to be at the heart of the Community? There can be little doubt that, if we are not, we shall be in serious trouble—and not only in economic terms. Our impact in terms of policies and our security would be seriously diminished or, indeed, irrelevant. We are all concerned about the national interest. I urge all right hon. and hon. Members who are hostile to or deeply suspicious of the direction that the European Community is taking to consider how the national interest would be served if Britain were completely out of step.

Let us consider especially the single currency. The tone of the debate has suggested that the single currency will arrive the day after tomorrow, but that is manifestly not the case. There are serious problems involved in harnessing a system that could incorporate, for example, Germany and Greece at the two extremes. Hon. Members have spoken about the huge problems to be overcome, such as divergence. Such a problem is much greater for those countries than for Britain. We could live more easily with the problems that will undoubtedly arise with a single currency than could Germany or Greece and Portugal.

I urge right hon. and hon. Members who have serious doubts about the single currency or when it may come —who knows whether it might be in four or five years? —to consider Britain's interests as a trading nation and what the leaders of business and industry in Britain have said. For example, Lord Alexander, the chairman of National Westminster bank, said that greater currency integration was a compelling impetus for this country. The Governor of the Bank of England stressed the importance of stability of currencies to this country.

I must tell my right hon. and hon. Friends who have doubts about the arrival of a single currency that there would be serious consequences for Britain if we were left out. The champagne corks would be popping in Frankfurt and Paris because of the damage caused to the City of London, which earns us about £4.5 billion every year. One of my hon. Friends said that we could become like Switzerland, but we cannot. That option is not open to us.

There are immense problems with the two conferences, but they are not difficult only for the United Kingdom. Yes, we are significantly different for reasons of geography, culture and history from the other 11 members, but their divergences are also important. It is not only the United Kingdom that has problems, and we are not alone in having to make concessions and compromises.

Some of my right hon. and hon. Friends have not given sufficient credit to the immense achievements already made by our negotiating team under the leadership of my right hon. Friend the Prime Minister. We have yet to see what the team finally brings home when the Maastricht negotiations have been concluded, but it deserves sincere congratulations.

Many hon. Members have severe doubts about Britain's continuing collaboration in the move to closer union—none of us know what that will mean in the future —but it is an objective to which nearly all Conservative Members of Parliament have signed up through successive general elections and through various steps that our party has taken and of which it is rightly proud. We must continue to press for closer union.

People are beginning to say that we have gone on the wrong track. We must ask what the other 11 countries are doing. The European Free Trade Association countries, such as Sweden and Austria, want to join the European Community and are not content with EFTA. The countries of eastern Europe are knocking on the door of the European Community. Are those countries misguided? Are they mad? Are they all socialist? Are they all drunk? Why do they want to be ruled by faceless, unelected bureaucrats from Brussels? The answer must be that they have a point. There must be something about the ever closer union to which we have been attached for so long.

I urge my right hon. and hon. Friends who are doubting Thomases not to be afraid. The French are not frightened of losing their Frenchness by having a positive role in Britain. My right hon. Friend the Member for Woking (Mr. Onslow) suggested that there would be dangers in a British defence force being sent into military action against the wishes of the House. Of course that would be unthinkable, and it would be equally unthinkable for the French. That fear is a bogey with which we must not frighten ourselves. I urge my hon. Friends not to talk themselves into an unreal situation.

There are challenges and difficulties, but I am certain that we can get over them under the skilful leadership that has already been demonstrated. I warmly applaud what has been achieved by my right hon. Friends in the Government, and I shall have great pleasure tomorrow night in supporting them in the Lobby.

10.56 pm

Mr. Stuart Bell (Middlesbrough)

It is a pleasure to follow the hon. Member for Wycombe (Mr. Whitney). I hope that he will excuse me for not following his arguments because of the time limit.

I begin in a sense where the Prime Minister left off this afternoon. He did not rise to any great heights in his speech. We should be grateful to him for giving us some detail about the Government's negotiating position in Maastricht, although he did not tarry long on the subjects of economic convergence or the social charter. He did not tell us, for example, whether he thought that the Government believed in real or nominal economic convergence. It is a fact that we can get our inflation rate down to the German inflation rate, but the Germans have a 2 per cent. growth in their economy, whereas we have a recession. That is hardly a recipe for economic success.

The Prime Minister should have told the House whether he believed in real economic convergence. To find a definition of real economic convergence, one has to look at the Opposition amendment. It refers to "high levels of employment" and "sustainable non-inflationary growth".

In my view and in the view of many banks whose reports I have read, convergence involves growth of about 2 per cent. a year. Convergence consists of a balanced regional and national economic development" and of "social cohesion". The Prime Minister did not linger long on the social charter. The right hon. Member for Woking (Mr. Onslow) was rather churlish in his intervention in the speech of my right hon. Friend the Leader of the Opposition. It was clearly a bogus intervention, which ended up as a mini-speech. It was clearly intended to distract the Leader of the Opposition from his speech, which had vision and commitment. If Conservative Members had listened to that speech in the manner of a debate worthy of a parliamentary occasion, they would have understood the approach that has been developed by the Labour party. They would have been surprised that we have developed a positive approach to Europe whereas the Government are on the defensive.

It was left to my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell) to draw the attention of the House to the social charter, on which I should like to ask the Prime Minister a series of questions. Does he believe in freedom of movement within the Community? Does he believe in social protection? Does he believe in vocational training? Does he believe in protection of children and adolescents? Does he believe in the protection of elderly and disabled persons? Of course he does. I would not claim that he does not. So why does he not sign the social charter? Why does he not reverse the decision of his predecessor in Strasbourg?

Mr. Andrew Hargreaves (Birmingham, Small Green)

Will the hon. Gentleman give way?

Mr. Bell

I shall not give way, in view of the time.

We heard a remarkable intervention from the former Prime Minister which showed how quickly one can go rusty in the House of Commons and how bereft one can be of the parliamentary crib provided by the civil servants. The Prime Minister talked of swinging handbags and hardened cricket bats.

Mr. Morgan

The former Prime Minister.

Mr. Bell

The former Prime Minister—I fall into the same trap every time, and I shall come to the reason for that in a moment.

Of course, they do not play cricket in Europe and people do not understand that language. Her speech was incoherent in its contradictions. Her remarks on a referendum for a single currency were remarkable from a person who was Prime Minister for 12 years.

We heard an interesting intervention from the right hon. Member for Worthing (Mr. Higgins). He described parliamentary democracy and representative democracy, and ended by saying that he was gratified that the Prime Minister took the same view as him of a referendum. Tonight we heard on the nine o'clock news that briefings had been issued from No. 10 Downing street that a referendum was not ruled out. That may be the smack of firm government.

There was an interesting article recently in The Independent by John Pienaar, referring to the former Prime Minister's intention to speak in today's debate. The article said that if the present Prime Minister were to oppose the former Prime Minister—we must get our definitions right— one minister said. 'The party would roll over her. It just does. That is the way the beast operates.' The beast does not operate like that at No. 10 Downing street.

I am reminded of the exchanges between Lord Home when he was Prime Minister and Lord Wilson when he was Leader of the Opposition. Some interesting and kind words were said by General de Gaulle about Britain. The right hon. Member for Shropshire, North (Mr. Biffen), who is not in his place, referred to General de Gaulle. When those kind remarks were made, Harold Wilson said of the Prime Minister, "He rolls on his back like a spaniel."

Today, the former Prime Minister made a speech and now the whole of Downing street is running from one end of the corridor to another saying that a referendum is not ruled out. That is hardly the smack of firm government. If the Prime Minister wishes to have a strong hand when he goes to Maastricht, he is going the wrong way about it. He gives the impression that he is not entirely clear about what he seeks to achieve.

The hon. Member for Stockport (Mr. Favell) asked whether one believed in a strong internal market or a federal Europe, or whether there was nothing in between. That dilemma has not been resolved in my mind or that of the Prime Minister. The Prime Minister made much of his internal market. A new Europe that is built on an internal market with no collective provision is a Europe doomed to failure. There can be no successful economic union for the citizens of Britain or Europe if there is no social dimension.

If, in years to come, we end up with a breakdown in law and order, barricaded in our homes, what good will be an internal market which happens to be economically successful? We would be living the life in the fictional account of life in New York, "The Bonfire of the Vanities" —extreme wealth and extreme deprivation. That will not be a successful Europe. Basing oneself on economics alone and a naked capitalism without the social dimension will be doomed to failure.

We have heard a great deal about a new Europe. My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) talked of a new European order. The Evening Standard tonight spoke of the plain-speaking guide to a new Europe. In our national executive document dealing with monetary union, we also spoke about a new Europe. We are discussing not a federal Europe or a free trade area, but a new Europe. This new Europe, as the right hon. Member for Guildford (Mr. Howell) said, quoting Jean Monnet, should not be a Europe that gives itself the airs and graces of a nation state.

People such as Jean Monnet had a vision of a Europe free from war, and they had that vision, not for themselves, but for their grandchildren. They wanted them to live in a world and a Europe at peace. That is what they have achieved.

There is a saying in the republic of Ireland, "On the day, one will do the right thing." I am sure that, when the Prime Minister gets to Maastricht, he will do the right thing on the day. At that conference, he will sign documents that will lead not to a federal Europe but to the new Europe to which I have referred. It will be an interdependent Europe, based on the autonomy of nation states, linked through common institutions. It will not be a federal Europe, but it will be a new Europe all the same.

In the past, there have been people who looked to the future and to the future of their children and grandchildren, and that is what we should be doing. We should set aside all the shibboleths, myths and fantasies that we have heard in the debate and get to the truth, which is a new Europe for our children and grandchildren —a Europe that is positive, outward-looking and economically strong, but has the social dimension that will make life worth living for future generations.

11.5 pm

Mr. John Butterfill (Bournemouth, West)

My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) did the House a great service by reminding us of the past of the European Community, its origins and the tremendously brave aspirations associated with its founding. It is important for us to remember what an enormous contribution the Community has made to peace and stability, not merely in western Europe but throughout the world, and to give adequate weight to that perspective. Nevertheless, we must be practical. In considering further economic and political union, we must decide whether benefits are to be gained for this country by proceeding further down that path.

If we think about economic and monetary union and our present position in the Community, we realise that we are inextricably tied to Europe. When we joined in 1973, only 26.4 per cent. of our exports went to the Community. The Library tells me that the figure is now 53.3 per cent. Germany is our biggest trading partner.

Unless we were to change our existing policies radically, there is no way that we can resile from being inextricably tied up with the EC. That view is shared by the business community in this country. Let us consider the representations made to hon. Members before this debate by the Confederation of British Industry, the Institute of Directors, the City and all our major companies. They are telling us that we must proceed further with economic and monetary union.

Some of our colleagues are uncertain about monetary union and are worried that going further down that path may lead to a loss of sovereignty. I ask them to consider that, in reality, we are being asked to behave responsibly: to eliminate budget deficits; to live within our means; and, to introduce convergence within the economies in the Community. All that is thoroughly desirable. Many hon. Members who have apprehensions would not disagree that that is a correct economic policy to pursue. They say that if we are forced into a straightjacket we will lose our sovereignty. Sovereignty to do what? To spend more than we can afford, to fritter away our national assets or to behave irresponsibly? I do not think any Member of this House would wish to retain that sort of sovereignty. Therefore, we have nothing to fear from economic and monetary union.

My right hon. Friend the Prime Minister has been busy negotiating on the ultimate aspect of that, which is a single currency. It is arguable whether in the foreseeable future we shall reach the necessary degree of convergence to achieve it. Even if we reach a point where the majority of member states feel that a single currency is a viable proposition, we will still have an option. The Prime Minister has negotiated that we may then opt in. I was puzzled earlier when the Leader of the Opposition said that he did not understand the difference between opting in and opting out. Once upon a time, Labour Members were most concerned about the difference between opting in and opting out.

This is a matter on which Parliament must ultimately decide. It should not be the subject of a referendum. First, the complexity of the issue makes it almost impossible to frame an adequate question for a referendum. Even if that could be overcome, we are concerned with the sovereignty of this House. Those who say that we would lose sovereignty must accept that a referendum would deny the sovereignty of this House. That is a contradiction in terms.

Mr. John Browne

Will my hon. Friend give way?

Mr. Butterfill

No, I must proceed.

I now come to political union. We can do many things together in Europe, either within or without the treaties. There are many advantages to be gained in co-operating with other member states to ensure that we do not behave in a way which damages each other's environment. Several hon. Members have rightly raised anxieties about the implementation of existing treaties. The enforcement of what we have already decided to do and the creation of a true single market is a legitimate concern of the EC. Policing, drugs, crime and terrorism are all areas where we could and should co-operate, either within or without the treaties.

At the same time, we must not bind the Community into such a tight form that it will exclude the future membership of the countries of eastern Europe and of the European Free Trade Association. It is essential to decide what should and what should not be within the competence of the Community. If we are to give people confidence that the Community should be given greater powers, it is absolutely vital that we define the whole principle of subsidiarity.

I do not believe that the definition proposed in the draft treaty should be acceptable to hon. Members. I offer them the definition that on 2 November The Economist suggested was appropriate: All laws will be made at national or lower level except where flows across frontiers of goods, services, money, people and pollution make Community law indispensable. That seems an admirable definition of what should constitute subsidiarity. It would give the general public as well as hon. Members confidence that we would not be subject to creeping encroachment of powers by the Commission. There is a legitimate suspicion that that has already occurred.

We must also decide what should not be within the competence of the Community. If we follow the definition provided by The Economist, there are certain matters that should always remain the subject of local or national control—for example, health, education and transport, except where that relates to inter-Community transport. We should retain control over social issues, such as the number of hours worked and rates of pay. There should be no minimum wages for us, let alone restrictions on part-time workers, worker directors and all the rest of the claptrap that we have had from Madam Papandreou.

We should say a firm no to the proposals to extend Community competence to social affairs, but we should agree to increase the powers of the European Parliament. It should be empowered to control the activities of the Commission and it should have the right to initiate legislation in certain matters which are subject to unanimity voting—not majority voting—in the Council of Ministers. That would reassure those who are concerned about this issue.

Subsidiarity should be strictly defined in the treaty and it should not be subject to definition by the European Court of Justice in the event of disputes. I do not believe that 12 non-elected judges should have the competence to decide on something of vital national importance to a member state. We should consider seriously the suggestion made by some hon. Members, the Gaullists and the Irish, for a second chamber—a senate, composed of members of national Parliaments. They could decide on subsidiarity disputes. I accept that that chamber could do other things as well, but its primary role should be as an arbitrator. Such a body would be much more sensitive to the concerns of member states than non-elected judges in the European Court of Justice.

There is much more that I would like to say, but time prevents me from doing so. We need to have a vision of a much more united Europe, but that should not be accompanied by a great give-away of power.

I am concerned about the Opposition's new enthusiasm for everything European. They believe that that means that they can get socialism through by the back door, but all it means is that they have become Mr. Delors' poodle.

The Liberal party—I am sorry to see that, once again, it is not represented in the Chamber——

Mr. Terry Lewis (Worsley)

It is past its bedtime.

Mr. Butterfill

I am sorry about that. The right hon. Member for Yeovil (Mr. Ashdown) has adopted the puppy-dog tendency: he and his party roll over to have their tummies tickled every time they are invited to do so by a bureaucrat in Brussels.

11.17 pm

Mr. George Robertson (Hamilton)

This will be a marathon debate by modern standards, but it will not be as lengthy as the five-day debate in 1971 on the decision to enter the EC. However, that was before my time.

Today's important debate centres on a crucial issue facing the country. One major change from the circumstances of 1971 is the sheer speed and scale of current events. Today, nothing is set in stone. Every day old certainties disappear. We must not allow ourselves to believe that the decisions taken today represent the last word. The processes may be irreversible, but their direction will not be marked out easily. We are in that process now—at its heart—directing, not following it. That is what the debate should be about.

It is right that those who have doubts about British entry into any political, monetary or economic union and what signing up to that union would mean should have the opportunity to spell them out. Those who are hostile or opposed to such union should have the opportunity to tell the people about the pitfalls, risks and constraints involved in signing up for more progress towards a European central bank and, eventually, a single currency. They have done so in this debate and will continue to do so tomorrow. For some of them, it will become a lifetime's crusade as self-motivating as that of the well-known gent who patrols Oxford street in sandwich boards proclaiming that society's ills come from the fact that protein breeds excess passion.

This is a democracy and opponents of political, economic and monetary union can have their say and outline their case. The right hon. Members for Finchley (Mrs. Thatcher), for Cirencester and Tewkesbury (Mr. Ridley), for Chingford (Mr. Tebbit) and for Blaby (Mr. Lawson) have all made it clear that they are opposed to the principle of a single currency and a European central bank. But precisely where the Prime Minister stands on that principle is still not clear. Although he was asked this afternoon, no answer was forthcoming.

But—it is an important "but"—in British democratic terms, those who parade the downsides so eloquently and in such detail and relish cataloguing the doom on which we are about to embark have a duty to their fellow country men and women: they must spell out the alternative. If they seek to persuade the electorate that a magical, unrestrained alternative world is out there ready for us to join and continue to preach that, if we opt out of this dangerous foreign adventure, national independence of action—genuine independent sovereignty in political and economic policy— will be available to us, and if they continue to ignore and contradict the relentless and far from recent process of interlocking economies, money markets and political decisions and their effects, they offer only an illusion, a grotesque fiction, of a future for Britain in the world today.

Opponents should say where we will be and who will be our partners and allies if we use the Government's famous opt-out or opt-in clause in four or five years' time. Who will be with us then in Europe's second or third division? Certainly not the Americans, because, despite the applause rippling across the Atlantic from the lecture halls of Memphis and Chicago to the theme of "Atlantic economic communities", Mr. Bush and Mr. Baker have heaped praise on the new European thirst for integration.

I deeply regret that the right hon. Member for Finchley is not present. She said so much this afternoon about the importance of the voice of this place. I hesitate to say that this is the second time that I have wound up a debate in which the right hon. Member for Finchley made a dramatic impact, and it is the second time that she has missed the winding up. I just hope that it is nothing personal. I hope that someone will remind her that it is discourteous to the House to miss wind-up speeches. I hope that she will read my speech in Hansard.

In her absence, the right hon. Lady may care to reflect on the words of James Baker, the United States Secretary of State, who said earlier this year: The European Community has achieved history's most intense and comprehensive voluntary evolution of governing authority above the national level. That was risky stuff for the right hon. Member for Finchley and pretty risky stuff for the Government. He went on: Thus, the architects of a united Europe have adopted the principle of `subsidiarity', something like American 'federalism'—that is, the devolution of responsibility to the lowest level of government capable of performing it effectively. Clearly the American Secretary of State has not been paid to listen to the right hon. Member for Finchley as she trudges around every town in the mid-west for larger and larger fees.

It is surely time that we in Britain faced up to the fact that, whether we like it or loathe it, we are part of the inexorable process of integration, and we must either join it or bump along behind it. If there are any doubters left who wonder whether we as a country can follow the policies we want, they should look at Austria and Sweden. Those are two proud and prosperous nation states that are both part of the European Free Trade Association, both long-standing neutral countries and both with applications in to join the European Community. If they ever suffered the illusion of being independent of the EC's influence, they do so no longer.

The newly elected right-wing Prime Minister of Sweden, Mr Carl Bildt, stated the obvious when he said on Monday that Sweden was determined to converge its economy with the best performing economies of the emerging EMU in all respects considered crucial to the functioning of that Union. Sweden wants to sign up, as do the rest of the countries in EFTA and beyond in increasing numbers.

Those countries include the nations of central and eastern Europe, which have escaped communism but now see the EC as the model of the sort of economic building blocks that will give their democracies a guaranteed and assured future. All those countries have understood one overriding message: the European Community is the only show in town, and one has to be in it to shape and influence it, and the only alternative is to stand on the fringes and be run by it.

If any other doubters remain, they should look at France—a nation which is every bit as nationalistic as the right hon. Member for Chingford and which has absolutely no intention of conceding even a fragment of its precious national identity. However, it is still enthusiastic to join what we are told is an identity-crushing, centralising nation state. Why is that? The truth is mundane but revealing.

It is not explained merely by the easy theories related to Germany, although we would be wise not to ignore or underestimate the importance of the way other people look at European integration in relation to Germany. I found it offensive when the Chairman of the 1922 Committee earlier today suggested that the process was merely a method for France to tie up Germany, and asked why France did not pay for the binding rope instead of the rest of us. We in Europe are at a time when the apprehensions of Germany's neighbours—which have good historical reasons for being apprehensive—coincide with Germany's sincere wish to reassure them and the world that it is serious about integration, Europe, and being a good partner in a collective future for the continent. Who can say if this time will ever return?

In Britain, with a carelessness that has often bordered on recklessness, the Government have dismissed the importance of Germany's desire to be enfolded in the European embrace. Luckily for us, others have been much more wise.

Mr. Cash

Has it occurred to the hon. Gentleman that it is not impossible that the consequences of monetary union could be to hand over the key of the legal structure of the EC to those countries obviously dominated by Germany?

Mr. Robertson

I am reminded of the words of our good friend, Gregor Mackenzie, who in a legendary intervention once said to the hon. Member for Moray (Mrs. Ewing) that the only thing that the hon. Lady and he had in common was that neither of them knew what she was talking about. I feel in precisely the same position, and am beginning to realise why the Tory Whips turned out so many people the other night in order to place the right hon. Member for Sutton Coldfield (Sir N. Fowler) in a position which has meant that he has had to sit through all this debate. That is the man who retired from the Cabinet to see more of his family. He is now afflicted with 10-hour debates on Europe. There is a prize!

The French are not ceding sovereignty to Europe. Instead, they are trying to get some back. They are not surrendering their identity, their institutions and their statehood. They are wrenching back a little of what has already gone to the Bundesbank, to Frankfurt and to the driving, dominating and strongest economy in Europe. They recognise what so many of the doubters in the United Kingdom will not face, which is that the choices for them and for Britain are shared sovereignty or no sovereignty, shared influence in Europe or no influence in Europe, and shared power or no power at all. Those are the choices, but I do not know how they would be set out on a referendum ballot paper. Unfortunately, we do not have with us this evening the right hon. Member for Yeovil (Mr. Ashdown), the leader of the Liberal Democrats.

Mr. Morgan

Not unfortunately.

Mr. Robertson

Or fortunately, as the case may be. The right hon. Gentleman may be concocting more instant policy. I do not expect my good friend, the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), to defend the amazing new idea about a referendum that has come from his party, which used to be so in favour of Europe. It strikes me that never has so much been changed by so few for so little.

Mrs. Currie

The hon. Gentleman knows that I agree with much of what he has said. I am not frightened of the change in his party's policy. I wonder, however, whether he is frightened about some people who are closer to home. What is his view as a Scot of the philosophy and policy of many of his compatriots, especially those who are supporters of the Labour party, who would much prefer Scotland to be dealing directly with Europe? Is he in favour of that policy?

Mr. Robertson

Why should we not deal directly with Europe? Why should a Scottish Parliament, which will be set up by the future Labour Government, not deal directly with Europe? If it is good enough for the federal German Lander, surely it is good enough for Scotland and for other parts of the United Kingdom. If I give way to the hon. Lady in future, I hope that she will not damage my future career by suggesting that she agrees with me.

This has been a remarkable debate. Perhaps it was made amazing after the contribution this afternoon of the former Prime Minister, the right hon. Member for Finchley. When she made allusions to "her" Government and "her" Foreign Secretary, the Government's position appeared to change. The Prime Minister, who earlier had been resolute—almost absolute—in his condemnation of a referendum, allowed his spokespeople in Downing street this evening to clarify the constitutional issue. It is, of course, possible that a referendum could take place in a future Parliament.

Mr. Favell

Will the hon. Gentleman give way?

Mr. Robertson

I think that I have given way too often already.

Mr. Favell

The hon. Gentleman has not given way to me.

Mr. Robertson

I have not, and I have no intention of doing so. A man with the hon. Gentleman's sense of timing could perhaps resume his seat for a little longer.

The choice is that of shared power or no power. It is a simple choice, but it is not an empty one. The power that we share is in our own tomorrow too. It is within institutions that we can participate to preserve our best and to leave the rest in the Community. It is a shared influence to mould Europe in our style and our way for our people, and also for the people of Europe. Britain now has to decide its place in the inevitable, unavoidable and inescapable new Europe in which we now live. The Government know that it is all unavoidable too.

The right hon. Member for Blaby, who will no doubt put in a star performance tomorrow, set out the issue with his usual blunt frankness last week in the Evening Standard——

Mr. Cash

Appeaser.

Mr. Robertson

The hon. Gentleman has allowed failure to go to his head. It would be wise to say it. When there was talk about a single currency, there was no talk about William Cash.

The former Chancellor, the right hon. Member for Blaby, was quoted in the Evening Standard this week as saying: In these circumstances a crude 'No' to the EMU Treaty would be pointless, since it would not stop the others from proceeding with a separate treaty without us, using the EMS agreement as a precedent. His predecessor as Chancellor, the right hon. and learned Member for Surrey, East (Sir G. Howe), also said that this afternoon.

But the real problem for the nation is that the Government do not have the vaguest clue about what they really want from Europe. That is why the Government's motion talks about preserving the right of Parliament to decide at a future date whether to adopt a single currency". Strangely, it does not say one word about the imposition of a single currency, which was the slogan so regularly used by the Government to protect any lack of policy.

Of course, that never did make any sense anyway. since nothing can be imposed upon any Government or people, but it served for a moment or two to hide the cracks in the Conservative party. But that was until the right hon. and learned Member for Surrey, East, who at least had the decency to apologise for being absent for this part of the debate, blew the gaffe in last Tuesday's Financial Times, as he did this afternoon, when he said: Mr. Major, understandably, has maintained our stand against the 'imposition' of a single currency. But that, in a way, never was the central question. Too true, it was not, but it is a pretty late confession to come now.

We know—of course we know—that the Government will sign up to the EMU treaty on 10 December. It is just that we do not know, and we have not been told, why they are going to do it and what the consequences will be. We have an opt-out clause which, as my right hon. Friend the Leader of the Opposition said, will simply create instability and uncertainty in industry and put a brake on inward investment. If they can get away with it, they have no intention of using it at all and we will be in the EMU without even a whimper.

But even at this stage, on the brink of signing the treaty, the Government cannot summon the guts to tell the people the cost and benefits of it or how Britain can measure up to it lest they irritate the flat earthers on the Benches behind them. Given the feebleness of the economy and the glaring absence of any plans to make Britain strong again, it is small wonder that they have now turned with renewed paranoia to the political union IGC.

By no stretch of the imagination is the political union IGC a blueprint for a European super-state. The British people are too intelligent to believe that kind of kidology anyway. They know that a single European market cannot be created by a process of majority voting on a huge range of industrial, commercial and business decisions and then go on to start to create a monetary union with a European central bank and one currency and then say that we do not need to develop institutions to deal with the new set-up.

That is what the rather ill-named political union IGC is all about—a step-by-step development of political institutions which will keep the Community democratic, accountable and effective. It will have, first, to be a wider Community with new members from EFTA and ultimately from central and eastern Europe as well.

Mr. Cash

Ultimately.

Mr. Robertson

Of course, ultimately. It has to be ultimately. They could not come in tomorrow, and they would not want to come in tomorrow on those terms. But the Government have still not said an official word about the application from Austria, which was submitted formally a year ago.

It will have to be a more democratic Community, where the powers already ceded by national Parliaments will be accountable not only to Ministers sitting and voting in secret, but to directly elected representatives of the people in the European Parliament. A veto on Council decisions taken by majority vote reinforces and does not detract at all from the say of national Parliaments.

The European Parliament must also have the power to bring the European Commission to account. We know that the Prime Minister agrees, but there has hardly been a word said about how that will happen, and it is not even mentioned in the Government's motion. It will also have to be a more balanced Community in which the social dimension involving people is given the same priority as creating a borderless market place.

Alone among all the 11 other Governments—left-wing, right-wing, centre of the road—the British Government stand opposed to the social charter and the legislation that would make it meaningful. That point was strongly made by my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell), and by my hon. Friend the Member for Middlesbrough (Mr. Bell). Can anyone explain why it was not selling out to Brussels when the Government surrendered the veto on hundreds of single market laws, but that somehow it is an affront to national interests to eliminate the veto on social and environmental affairs?

It must also be an outward-looking Community, conscious of its responsibilities to its neighbours in the east, whose economic and social instability is now the main threat to our own security; and of the countries of the southern hemisphere, which look to our rich trading bloc to relieve their infinitely greater economic plight.

It must be a fairer Community, based on subsidiarity —a word that means decisions being taken at the lowest appropriate level—including locally and regionally, as well as nationally and European. It must be a Europe in which its social partners are intimately involved in how programmes are to be implemented.

That political agenda for the new Europe is not copyright, and it is not in any way sinister. It is not new, but Labour helped to create it. We will soon be able to implement it.

11.41 pm

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

The hon. Member for Hamilton (Mr. Robertson) ended his speech on a fine, rousing note, but we heard from him a not unfamiliar tale. This is the eighth debate on this great subject in which I have taken part in the past two and a half years, and in many of them, I have been sitting opposite the hon. Member for Hamilton.

During that time, I have held a number of different jobs, reflecting the flexible approach to the labour market that my party has—but the hon. Member for Hamilton has been in the same job. He spent the earlier part as Labour's token pro-European, and over the years he has become gradually more cheerful, as he has seen his party catch up with him at breakneck speed. It now seems to have overtaken him—that is, if one could penetrate the remarks of the Leader of the Opposition at the beginning of the debate—but judging by the sound of the speeches by many Labour Members that followed, the message had not penetrated to most of them. No one has persuaded them of the breakneck rush to full-blown union for which the hon. Member for Hamilton has argued for some time, and for which the Leader of the Opposition argues now, somewhat incoherently.

Most of Labour's Back Benchers still live in the days of outright opposition to the Single European Act, when so many members of the shadow Cabinet and other Opposition Front-Bench spokesmen voted in straightforward opposition to that important step forward in European integration. The Government took that step, and the legislation went through Parliament, but Labour —which now claims to be so pro-European—opposed it outright.

The hon. Member for Hamilton addressed the issue of a referendum, and I am sorry that I missed his earlier point of order on that aspect. Perhaps I can make the position clear. It ought to be perfectly clear, and I am surprised that the hon. Member for Hamilton made such a fuss about it.

As my right hon. Friend the Prime Minister made perfectly clear, the Government do not intend to hold a referendum on the outcome of the Maastricht negotiations. That, indeed, was not the proposition advanced by my right hon. Friend the Member for Finchley (Mrs. Thatcher): she proposed a referendum in 1996. Surely it is not particularly startling to suggest that this Government, and this Parliament, cannot decide on such an issue now. It is not a matter to be resolved now; I personally see no need to do so, and neither does my right hon. Friend the Prime Minister.

Until Opposition Members lowered the tone slightly, this was an important debate, and it is important for us to take it seriously.

Mr. David Shaw (Dover)

My constituents are very worried about the profound changes faced by a number of customs clearance agents and freight forwarders in the constituency—perhaps 2,000—as a result of alterations to the Single European Act, and the single market proposals. Can my hon. Friend confirm that the Government will continue, at European meetings, to do all in their power to ensure that the effect of those changes is eased for my constituents? Can he also confirm that the Government will continue to examine ways in which their effect can be mitigated to help those working in the industry?

Mr. Maude

My hon. Friend has pressed that cause tenaciously and to great effect, and my hon. Friend the Minister of State, Treasury has listened carefully to what he has said. We recognise that the changes will have an impact on customs agents and freight forwarders, and the Government have been consulting their representatives closely.

Important contributions have been made to today's debate from both sides of the House: by, for instance, my right hon. Friend the Member for Finchley; my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe); the right hon. Members for Plymouth, Devonport (Dr. Owen), for Bethnal Green and Stepney (Mr. Shore) and for Chesterfield (Mr. Benn); my right hon. Friends the Members for Woking (Mr. Onslow) and for Worthing (Mr. Higgins); the right hon. Member for Llanelli (Mr. Davies); and my right hon. Friends the Members for Shropshire, North (Mr. Biffen) and for Guildford (Mr. Howell). It has been an extremely important and serious debate; and the theme that has emerged has supported the view expressed by my right hon. Friend the Prime Minister that, in these negotiations that matter so much to the House of Commons, we should negotiate hard and positively and seek to build a better Europe.

That means being able to read the fine print—something that the Labour party has been remarkably reluctant to do as it has bashed around Europe signing every Euro-declaration that it can find, and then seeking to deny the terms of what it has signed. It also means—as my right hon. Friend pointed out—being ready to say no as well as yes.

Since the IGCs were set up, we have established our own objectives, many of which are being met. One of those objectives was to ensure that the Community emerged from the negotiations as a better organisation—a more effective and efficient body. We all know that it is by no means a perfectly functioning organisation at present. The measures that we have set out have not been given much high-profile media attention, because they are not particularly glamorous or especially controversial; none the less they are important, and there are good prospects that, if agreement can be reached in December, it will include serious and substantial reforms that are profoundly in the interests of the Community, and greatly to the benefit of Britain as a serious and law-abiding member state of that Community.

Mr. Dalyell

Will the Minister address himself to the question asked by my hon. Friend the Member for Wentworth (Mr. Hardy)—and by me, twice—about additionality and attribution? It matters to a great many of our constituents.

Bruce Millan is usually right about these matters; he has had 25 years' experience. In his considered opinion, the Community lawyers are right; and you can bet your boots that we are not going to get the money. That matters to a heck of a lot of people.

Mr. Maude

It matters quite a lot to me as well, because my constituency is one of those affected. I hope that the hon. Gentleman will go to Brussels and urge his colleague, Bruce Milian, to stop withholding money that is properly due to the British people. If he can use his well-known persuasive powers in that direction, he will, for once, do something useful. I hope that he will do that.

I referred to our proposals for securing much better implementation and much better compliance with European Community law and for entrenching, as we hope we can, the principle of subsidiarity in a way that binds, and also to our proposals for much better financial management and accountability within the European Community. If we can achieve all those objectives—we are hopeful that we can—we shall have a Community that respects the same standards of efficiency and value for money as the British Government have for many years.

We want, as a result of this Government's initiative and persuasion in the intergovernmental conferences, a Community that will take better decisions and that will carry them out better. Our proposals are sensible, practical, perhaps workaday and unromantic, but rather important if the Community is to command respect.

My right hon. Friend the Chancellor of the Exchequer will talk at greater length tomorrow about economic and monetary union, but the draft treaty, as has been made clear, divides the economic and monetary union process into two very clear and separate compartments—stage two and stage three. The draft treaty lists the articles that apply in stage two and those that apply in stage three. They involve very different institutional arrangements and different allocations of responsibility between the Community and national Governments. In particular, there is a sharp distinction when it comes to monetary policy. In stage two, monetary policy will be a national responsibility. We argued that that. We prevailed.

There must be no confusion of responsibilities. Interest rates in the United Kingdom must continue to be set in the United Kingdom. There will be a degree of co-ordination of monetary policies, just as there is now, both within the Community and in other bodies such as the Group of Seven. The governors of the central banks of the Twelve will continue to meet to discuss matters of common concern and, where appropriate, to issue opinions.

My right hon. Friend the Chancellor of the Exchequer will no doubt continue to discuss monetary matters with his Finance Minister colleagues in the Council of Ministers, but at the end of the day he alone will be responsible in stage two for monetary policy decisions in the United Kingdom—and responsible to this House.

In other areas of economic policy, there will also be co-ordination. The Finance Ministers will discuss economic developments in the Community and in the member states. The process of convergence will be fostered by multilateral surveillance of member states' economic policies, as happens now.

Some hon. Members have suggested that stage two might bring a host of new commitments and new obligations for the Government and that their freedom of action would thus be undermined. That is not so. In stage two, member states would have to submit to the Community multi-annual convergence programmes. They have already agreed to do so. In stage two, the Economic and Finance Council will be able to comment publicly on the economic performance of a particular member state. It can already do so. Only last week, ECOFIN considered a report on economic policy in Italy.

In stage two, the Council will be able to make specific recommendations to particular member states. Under the Council decision on convergence, agreed unanimously early in 1990, the Council can already make such recommendations. The Council's recommendations are not and will not be binding on a member state. The right of this House to determine fiscal policy would not be affected. The power to make recommendations has existed since 1974. It is not an innovation.

It has been suggested that, in stage two, member states would be forced to curb their fiscal policies so as to avoid running an excessive deficit. The relevant text of the treaty and the related protocol are still under negotiation, but as the text stands, no provisions would allow the Council to enforce changes in fiscal policy on member states.

We should be clear about what is envisaged. The treaty provides for the Community to examine the budgetary positions of member states whose deficits appear to be excessive and to decide whether a deficit is such as to be regarded as a gross error of policy. The Council can then issue policy recommendations. That is as far as it can go under stage two. That, again, is not new; it already has this power.

Mr. Denzil Davies

Who decides whether the deficits are excessive, and are there any definitions of "excessive"?

Mr. Maude

There are no definitions under stage two. The decision is made by the Council. The protocol sets out some reference values, which are still subject to negotiation, but only for member states that participate in stage three. The Council's power to issue policy recommendations under stage two has been in existence since the convergence decision in 1974. The right hon. Member for Llanelli (Mr. Davies) may have played some part in that decision. He is shaking his head and pleading not guilty, but he may know something about its origins.

Under stage three, the Council will have no greater power over member states that have exemption status. The latest draft treaty gives the Council power to instruct a member state participating in stage three to reduce its deficit and to impose sanctions if it does not do so. As my right hon. Friend the Prime Minister said earlier, we believe that the most effective sanctions are imposed by the market, and we shall continue to argue that in the IGC.

Some hon. Members have argued that the distinction between stages two and three cannot be maintained. They fear either that we are committed to move to stage three or that, irrespective of the provision in the treaty allowing us a free choice, we would none the less be obliged to move. We are still negotiating, but let it be perfectly clear that we shall not accept a text that involves such a commitment. The reference to a single currency in the opening articles of the draft treaty is explicitly qualified by the reference to the procedures set out therein, and those procedures include the right to opt for exemption status. If the procedures are acceptable—we are clear that they must be—the opening articles are also acceptable.

It has been suggested that, once we had accepted stage two, there would be intense and irresistible pressure to move to stage three. That has been described as the "slippery slope" argument. I was interested in the argument of my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), that, if convergence is achieved, a single currency is not necessary. That may be true, and it might affect the balance of advantage and disadvantage, but it does not need to be resolved at this stage.

The hon. Member for Banff and Buchan (Mr. Salmond) asked what would happen to the pound if the United Kingdom were exempt from stage three. The answer is straightforward: the exchange-rate mechanism would continue, run by the enlarged chamber of governors, and all currencies that were not in stage three could remain in the exchange-rate mechanism or outside it, depending on what they chose. That applies equally to eastern European states that become members of the European Community in the meantime. There are no provisions in the treaty that would exclude them from taking part in it.

When my right hon. Friend the Prime Minister opened the debate, he made it clear that he had sensed right the mood of the House and of the British people. They want the Government to be in the heart of Europe, negotiating positively and effectively not only for British interests but for a better Europe. That means a Europe in which national Governments retain the power to make proposals and in which national Parliaments retain their powers.

How different that is from the Labour party's position—it wants to lead according to the principle which states that where others go must be right. That is like the motto of the famous French revolutionary leader who said, "I am their leader; I must follow them."

How little the Opposition have thought about the issue. They want to commit themselves to a single currency and to deny a future Parliament or Government the power to make a vital decision. They say that they want real convergence and decisions in the treaty for which no one else in the Community has argued at any stage. They continue to argue for what no one else is prepared to offer and they are wholly isolated in a fantasy world. They claim to be nearer than us to the European consensus, but they are as far from reality as they ever were.

It being Twelve o'clock, the debate stood adjourned, pursuant to Order [19 November.]

Debate to be resumed this day.