HC Deb 19 April 1993 vol 223 cc119-53

Amendment made: No. 420, in page 1, line 23, at end add 'and unless Her Majesty's Government has reported to Parliament on its proposals for the co-ordination of economic policies, its role in the European Council of Finance Ministers (ECOFIN) in pursuit of the objectives of Article 2 as provided for in Articles 103 and 102a, and the work of the European Monetary Institute in preparation for Economic and Monetary Union.'.—[Mr. Andrew Smith.]

Question proposed, That the clause, as amended, stand part of the Bill.

The Financial Secretary to the Treasury (Mr. Stephen Dorrell)

This debate provides the Committee with the opportunity, if it wishes to take it, to examine the procedure provided by the treaty and the Bill for moving to stage 3. There are three elements to the arrangements, two of which are provided by the treaty and one which is provided by clause 2.

Article 109j provides for the transitional arrangements negotiated at Maastricht. The article contains four key elements, for those who wish to read it. From the Committees's point of view, the key element is the terms of the United Kingdom protocol which makes it clear that the House of Commons and the country are under no commitment to move to stage 3 unless and until the House has made a clear decision that that is what the country wishes to do.

Clause 2 gives effect to the commitment that we have given that this country is under no obligation to move to stage 3 of economic and monetary union unless the House has passed an Act of Parliament to give effect to that intention. I commend it to the Committee.

Mr. Shore

I am glad that the Committee has the opportunity to debate again what I suppose the Government regard as the jewel in their negotiating crown, the so-called opt-out protocol from stage 3 of economic and monetary union.

We have heard tonight the Financial Secretary summarise remarks that he made very late at night on Wednesday 24 March, when we sat for an unbelievably long time. Our debates lasted from about 5 pm to noon the following day. Naturally and inevitably, few hon. Members of any party attended and there was, of course, no one in the Press Gallery to pick up a word of what the debate was about.

As it happened, there were three consecutive debates which encompassed the evil heart of EMU. We debated the powers, independence and non-accountability of the European central bank; the totally unacceptable 3 per cent. of gross domestic product capping of Government borrowing requirement; and the content of stages 2 and 3 of economic and monetary union.

Those of us who participated in those debates remarked that it was monstrous that one subject should follow another, with the Financial Secretary answering as best he could all three of them, without the Committee having the chance to study the Hansard report of the Minister's comments in one debate in relation to the two others. As they were totally interlocked as debates, that was a disgraceful way of proceeding and a great loss to the Committee and to the country, thus preventing a serious and considered debate that would be reported and made known to our fellow countrymen.

Mr. Cash

Does the right hon. Gentleman recall that my right hon. Friend the Chancellor of the Exchequer—who, after all, negotiated the arrangements for the protocol—took no part in that debate? The most that we saw of him in the course of 16 hours was when he popped in for two minutes to talk about some matter or other. My right hon. Friend played no part in debating a range of issues, including white Wednesday: the so-called betrayal of trust that preceded it; the fact that we were subsequently told that there were fault lines; and the remark by my hon. Friend the Financial Secretary that we would enter the ERM when the conditions were right. In fact, only last week, at ECOFIN, Ministers said that there were no fault lines.

The Second Deputy Chairman

Order. I remind the hon. Gentleman and the Committee, not for the first time, that long interventions are to be deplored.

Mr. Shore

I recall very well the unhappy events to which the hon. Gentleman referred. I regret to say that, in the middle of that night, I noted with concern the absence of my hon. Friend the shadow Chancellor, whom I am glad to see in his place tonight and welcome. After all, my hon. Friend's powers as a future Chancellor of the Exchequer would be vigorously and seriously affected by the treaty's provisions. It is therefore helpful to have my hon. Friend present. I only wish that the Chancellor of the Exchequer also was in his place.

Our last debate took the form of the Financial Secretary doing his utmost to give reassurances. On studying his remarks, most members of the Committee will find that his reassurances failed to be reassuring.

Mr. Renton

Before the right hon. Gentleman continues, I remind him of his incarnation as Secretary of State for Economic Affairs in a Labour Government. If the then Labour Chancellor of the Exchequer had set the right hon. Gentleman the criterion of a public sector borrowing requirement of only 3 per cent. of GNP, would he not have thought that that was a reasonable criterion at which to aim?

Mr. Shore

In 1967, which is the date to which the hon. Gentleman refers, this country had less than 3 per cent. unemployed and was just returning to a balanced current balance of payments account. It did not have the vast deficit that exists today. In those circumstances, I might well have accepted with a good heart a 3 per cent. of GDP borrowing requirement.

However, when one considers this country's present situation, the fact that the Chancellor's best estimate is a borrowing requirement of 8 per cent. of GDP this year alone, looks at the miserable state of one's fellow countrymen, 3 million of whom are registered unemployed, and considers our appalling trade indebtedness and the continuing devastation of our manufacturing industry, one knows that it would be intolerable and impossible to accept any such constraint now or, I suspect, for some years ahead—unless one wanted to inflict further misery on our fellow citizens and to increase unemployment by another couple of million to squeeze the economy and purchasing power to the level necessary to bring the deficit back into balance.

We faced the Financial Secretary with the reasons for our dissatisfaction and asked him about the nature of our commitment to economic and monetary union. Far from denying it, the Financial Secretary said: we accept the commitment to economic and monetary union, to which this country has signed up several times—including in the early 1970s. He did not dispute the commitment, but he played about with the idea—frankly, we gained no reassurance from it—that, although we are committed in principle to economic and monetary union, it could be that there is some kind of economic and monetary union other than the one in the treaty which eventually we might accept and persuade our European partners to accept, too.

10.45 pm

The Financial Secretary was then asked a question which very much concerns us: does our commitment in principle to economic and monetary union and to the first two stages of economic and monetary union, which is agreed by the Financial Secretary, imply our return to the exchange rate mechanism? In reply to that question, the Financial Secretary said: It is true that it is Government policy to return to membership of the exchange rate mechanism when the Government believe that it is in this country's interest to do so. We are therefore committed to returning to the ERM. That is a policy pronouncement of the most serious kind.

The Financial Secretary of course reserves judgment about when the Government believe that it will be in the interests of this country to do so, but I am not convinced that I can see much prospect of it being in the interests of this country to rejoin, particularly if it is an exchange rate mechanism, as we know that it is, which is programmed to be the stepping stone to a permanent interrelationship of exchange rates, leading on to a single currency.

It is precisely the rigidity which has been introduced into the ERM that has made it such an appalling affliction not only upon our country but upon most of the countries of Europe. That, more than any other single cause, is the reason for high unemployment both in Britain and throughout western Europe, the political consequences of which have been obvious and devastating to the Government of France. I suspect that they will also be devastating to the Governments of Spain and Italy.

We are committed to rejoining the exchange rate mechanism, but the circumstances for doing so are undefined, except that we are told that it will be when the Government believe that it is in the interests of this country to do so. We were not reassured, therefore, by what we were told on that occasion.

The Financial Secretary sought to reassure us on another point. He said that, although we are committed to economic and monetary union, I do not accept that it is necessary or, indeed, desirable, within the principle of subsidiarity, to remove fiscal policy or wider economic policy responsibility from member states." —[Official Report, 24 March 1993; Vol. 221, c. 1042–44.] His point was that there was no equivalent commitment regarding economic policy as there was—which he accepted—in stages 1 and 2 regarding monetary policy.

That was not a happy statement, either. When we turn to what we are committed to in terms of economic policy, we find that it is a very considerable obligation. I remind the Committee of those obligations. We are committed to article 103 of the treaty, which states that Member States shall regard their economic policies as a matter of common concern". The treaty then makes the point: The Council shall, acting by a qualified majority on a recommendation from the Commission, formulate a draft for the broad guidelines of the economic policies of the Member States and of the Community". After the broad guidelines, article 103.4 says: Where it is established, under the procedure … that the economic policies of a Member State are not consistent with the broad guidelines referred to … or … risk jeopardizing the proper functioning of economic and monetary union, the Council may, acting by a qualified majority on a recommendation from the Commission, make the necessary recommendations to the Member States concerned. The Council may, acting by a qualified majority on a proposal from the Commission, decide to make its recommendations public. That is the old coercive business of collective, multilateral surveillance followed by the condemnation of any country whose economic policies are judged to be against or not consistent with those of the majority. The sins of omission or of commission are then made public and broadcast to the market, with all the uncertainties and instabilities, as a direct means by which to coerce a member state that falls out of line. That is yet another contradiction in what the Financial Secretary told us. The Financial Secretary knows well that the belief that economic policies are a matter of common concern is written into economic policy and leads to reasons why we should conform.

The Financial Secretary then said that we need not get worried about obligations to avoid excess deficit. He said that it was Government policy anyway to avoid excess deficit. Of course, However, when he was pressed a bit harder, he said that 8 per cent. of gross domestic product was not an excess deficit because the Government had judged it to be a proper deficit and that is why they had proposed it to the House. That is fine. However, if the Government are right in their judgment on the matter, an excess deficit is simply what the Government at any time decide that it is and there is no real meaning to the treaty obligation to 3 per cent. of GDP as the benchmark or to its use as the major and central means—not the sole criterion—by which to judge whether an excess deficit has been incurred.

Those are all obligations, commitments and pressures that will fall on us in stages 1 and 2. In stage 2, to which we are committed, we do not have to face the dangers of penalties and fines being imposed on us which we would face if we were in stage 3, from which the Government have got their exemption. However, the pressure is there all the time and we agreed to best endeavours. On top of all that, we know very well that how we proceed in all these matters is constantly to be reported on and invigilated by the Commission and by other European agencies.

Mr. Spearing

To put it in plain language which we in east London would understand, is my right hon. Friend saying in effect that, whereas stage 3 is rigid iron bars, this is very strong elastic, and that we might as well be in stage 3 for all practical purposes? If that is so, the great opt-out, the bit of paper that the Prime Minister came back waving from Maastricht, is not worth very much. Is that right?

Mr. Shore

My hon. Friend has got it very nearly right —[Interruption.] Very nearly. There are two crucial questions. One is whether the Government are right in saying that the legal obligations on us are less than those imposed on the other 10. That is still a matter for some argument. Many hon. Members are not satisfied that it is a lesser legal obligation than that which is imposed on the 10. In terms of political pressure and in terms of economic pressure —

Mr. Spearing

Bankers' pressure.

Mr. Shore

—and bankers' pressure, it will indeed be a continuing, powerful, public and private constraint on all the Government's activities in so far as they depart from the common guidelines set down and the common policies recommended by the European Community, not only for economic policy, but for monetary policy as well.

Mrs. Dunwoody

Can my right hon. Friend understand the attitude of a Labour leadership which finds it perfectly acceptable to abstain, if not to vote with the Government, on powers that would make it impossible for any Opposition party that formed a Government to take radical steps to improve its political, and, certainly, its economic, policies for the future?

Mr. Shore

It has all been said before, but I find it quite simply incomprehensible, not only in relation to a Labour Government. If a Conservative Government had to accept what appear to be the limitations imposed on borrowing that the treaty and its protocols proclaim, they, too, would find it totally unacceptable. As we know, the Government have recommended to the House only this year that we accept a GDP borrowing requirement of 8 per cent.

Mr. Marlow

Further to the point raised by the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), the right hon. Gentleman will be aware that the Government are putting it around among their own supporters—they dare not do it publicly, of course—that these provisions of the treaty are a load of nonsense and that they intend to prevent them from happening. But the treaty is by way of being a contract. What are the chances of the other parties to the contract letting the Government get away with presuming that the provisions of the treaty are a load of nonsense and that we shall not have to apply them in the United Kingdom?

Mr. Shore

That is one of the great dangers. We deceive ourselves—though we do not deceive others—if we think that there is no real content or danger in such treaties because they are unenforceable and simply will not work. My fear is not that we would necessarily reach economic and monetary union. Rather, I fear the damage that we shall inflict upon ourselves in our efforts to get there. Given the present condition of the British economy, that must surely be at the forefront of our minds as a really major hazard.

Very much a part of stage 2 of economic and monetary union is the whole doctrine of convergence and the criteria that are laid down for it. As part of the transitional provisions, article 109j says: The Commission and the EMI"— the European Monetary Institute— shall report to the Council on the progress made in the fulfilment by the Member States of their obligations regarding the achievement of economic and monetary union.

Mr. Spearing

Report on.

Mr. Shore

The Commission and the EMI will report on the member states' progress, presumably annually. The matters upon which they will report are the so-called convergence criteria that are laid down in the protocol referred to in article 109j and the extent to which countries are conforming to them.

Those four criteria will become very important, and may dominate future debates in the House. First, our cost of living must not be appreciably more than those of the best three performing member states—in other words, we must keep prices down. That is not a bad objective in itself, although much depends on just how serious the deflationary problems are in other countries. I would not necessarily rejoice if other European countries achieved zero inflation if the price of that was a massive increase in unemployment and a fall in output in those countries.

The second criterion relates to the Government's budgetary position. That refers to the excess deficit. We must conform to the 3 per cent. of GDP criterion—or the approach to it—as laid down in the relevant articles and in the protocol.

The third of the convergence criteria relates to the exchange rate. That must surely cause the Financial Secretary some difficulty, as, clearly, we have to be a member of the European exchange rate mechanism if we are to conform to the behaviour of the pound within the exchange rate mechanism which is laid down in article 3 of the protocol. According to that performance, the fluctuation margins must be observed for at least two years without causing severe tensions.

The last of the four criteria relates to nominal long-term interest rates which must not exceed more than 2 per cent. of the interest rates in the three best performing countries in Europe. Those are very deflationary criteria. From some of the speeches made by hon. Members on both sides of the Committee, one would have thought that the kind of protocols written into the Bill were not the kind that I have described, with their demands about monetary and inflationary criteria, but criteria relating to the achievement of full employment, a balance on current account or to output.

From the speeches that we have heard, we would suppose that all those sensible things had been written in. Not a bit of it. Instead there are the very old-fashioned, pre-Keynesian criteria and the experience that we had between the wars in terms of almost nil inflation and massive unemployment.

11 pm

I cannot see any attraction in the content of stages I and 2, to which we are committed in the treaty by our own signature, and our simply saying that there are dangers and that we must debate those matters but we are saved from the ultimate horrors of the third stage because we have not signed to firmly fixed exchange rates, a single currency, a European central bank and all the disciplines that go with that.

The safeguards are quite inadequate. There is a terrible blur between stages 1, 2 and 3 and we would be fooling ourselves and our fellow citizens and voters if we said that we were satisfied with the opt-out, however great a prize the Government claim it to be.

Mr. John Townend (Bridlington)

I welcome the Government's right to opt out of stage 3 and the single currency. However, I am concerned about whether the Government will ever take advantage of the opt-out. As I see it, for the Government to opt out of a single currency, they would have to go against their own policy, because they have made it clear time and again that it is Government policy that we should be at the centre of Europe.

If we exercise our opt-out and our colleagues in Europe move towards a single currency, how can we be at the centre of Europe when we are one of only a few who have not accepted the single currency? That worries me. I cannot help but wonder whether the opt-out was included to get the Bill through the House and receive the approval of the British public.

I am in favour of an economic Community. I was really upset when the "E" was dropped from the EEC without a by-your-leave. I am also in favour of the single market. However, I am opposed to full monetary union.

Monetary union without a single currency will not work. It will be impossible to get the various economies of the various disparate countries in the Community to converge. The ERM, as the right hon. Member for Bethnal Green and Stepney (Mr. Shore) made clear, was meant to be the forerunner of monetary union and a single currency. What a disaster that has been.

Earlier this year, we saw the effect of our being forced, by our membership of the ERM, to fix our interest rates, not at a level appropriate for the British economy, but at a level appropriate for the German economy, because the German and British economies were diverging. Therefore, we had to have interest rates at excessively high levels when this country was going deeper and deeper into recession.

It was the deepest and longest recession this century. How many jobs were lost and how many businesses went bankrupt because we were stuck in the exchange rate mechanism? I must remind hon. Members that those who said last summer that this policy was disastrous for our country were told that they were economically illiterate. Four weeks later, the Government were proudly telling us that we were out of the exchange rate mechanism and that we could fix our interest rates at appropriate levels for the British economy. Interest rates came down rapidly by four per cent.

If we were still in the exchange rate mechanism, our interest rates—like the interest rates of France—would probably be much higher. Far from seeing the green shoots of recovery, the United Kingdom would not just be in recession; it would be in economic collapse.

Mr. Ian Taylor

My hon. Friend is missing one crucial point—no country can set its interest rates for its domestic circumstances without paying attention to what is happening in other countries within an internal capital market. There are no restrictions on the movement of capital, so capital will go to the market which has the best hedge against inflation and the best real rate of return. That is precisely what is happening today in the market, although we are not in the exchange rate mechanism.

Interest rates have fallen. The currency has also fallen, and there are considerable inflationary concerns about that fall. It is a trade-off. Although there was a disequilibrium because of the problems in Germany, the reality is that the exchange rate mechanism has been a success since 1979. It is a great pity that the United Kingdom did not join it earlier.

Mr. Townend

With respect to the hon. Gentleman, that is not true. A country can fix its interest rates at a level appropriate to its economy as long as it is prepared to take the consequences on the exchange rate. If one believes in floating exchange rates, it is practical to fix interest rates to suit the United Kingdom.

Mr. Budgen

Is not my hon. Friend the Member for Esher (Mr. Taylor) falling into the trap into which so many people fall? He is saying that, because some prices are affected, it has an effect on inflation. Surely the message that was drummed home so often through the mistakes of the 1970s is that there is only one cause of inflation—an increase in the money supply. We should not confuse the cause of inflation with a relative change in prices that may occur when wages, the exchange rate or any of those factors affect some prices but not all of them.

Mr. Townend

My hon. Friend is right. If my hon. Friend the Member for Esher (Mr. Taylor) was correct, we would have the same interest rates as France. Of course that is not true. The great economic successes of the Conservative Administration were based on a floating exchange rate, monetary policy and controlling public expenditure. As soon as we moved from monetary control to an exchange rate policy, and as soon as we started giving in to every pressure group by increasing public expenditure and increasing the deficit, we got into trouble.

It is not simply the United Kingdom which has suffered through the exchange rate mechanism. We have seen what happened in Ireland, Spain and Italy. We have also seen what happened in France, which is the birthplace of the EEC. France, which is the most communautaire country in Europe, has been driven deeper into recession because it had to fix its interest rates at a level appropriate to Germany. When France has an inflation rate of something like 2 to 3 per cent. and a fairly successful economy, it is nonsense that it must have real interest rates at a record level which is creating more unemployment and driving the country into deeper recession.

Let us be honest: the whole of Europe, apart from the United Kingdom, is moving into recession as a result of the failure of Germany's economic policy. That failure is being transferred to the rest of the countries in the Community because of the exchange rate mechanism.

It would be disastrous if we had to rejoin the exchange rate mechanism. We can never be sure that in future, even if our economies start to converge with Germany, they might then start to diverge. If that happened, we would be in the same position as we were last summer.

Mr. Budgen

Will my hon. Friend give way?

Mr. Townend

I shall simply finish making this point.

The Government should have learnt the lesson from the damage which was done to our economy. They should not be afraid of upsetting our European partners. They should say honestly that they do not believe that we should go back into the exchange rate mechanism.

Mr. Budgen

I am sure that my hon. Friend will concede that there is a serious risk that either by political or by legal pressures, we shall be forced back into the ERM if the Maastricht treaty is ratified. Do we conclude from his powerful and moving oration that he proposes to vote against clause 2 stand part?

Mr. Townend

I do not know, because by voting against clause 2, I would be voting against the Government's opt-out, with which I agree. But I assure my hon. Friend that I certainly shall vote against the Third Reading of the Bill, because I believe that it would be disastrous for Britain.

If we move to a single currency, inevitably we shall move towards a federal united states of Europe.

Sir David Mitchell (Hampshire, North-West)

As only one country within the EC at present falls within the set of criteria for convergence which we have to meet, does my hon. Friend seriously suggest that there will be a sufficiently large block of countries which will fit the criteria for moving forward to stage 3 and a single currency? Is that a reality or a dream?

Mr. Townend

I agree with my hon. Friend that it is most unlikely to happen. It is interesting that many hon. Members on this side of the Committee who intend to vote for Maastricht, including many members of the Government, have said when they have tried to persuade me to vote for the Bill, "John, I don't know why you're worried, because it is never going to happen." The whole thrust of the Maastricht treaty is economic and monetary union. If economic and monetary union will not be practical in the foreseeable future, and it will be impossible to meet the criteria, why are we pressing on with this useless Bill?

I have always believed passionately in the nation state. We are an island country. While I strongly support our membership of an economic community, I am opposed to giving up our sovereignty and moving step by step towards a federal united states of Europe in which more and more decisions would be taken in Brussels, and the House of Commons would progressively be no more than a county council.

I am even more appalled—I hope to catch your eye in a later debate, Dame Janet—that we are making a major constitutional change when the British people have not had the opportunity to express their views. When every major party and its leaders support a particular policy, a general election is no way to find the view of the British people. They have no way of expressing it. The political and bureaucratic classes and big business men in Europe and Britain all seem to have been caught by the dream of a federal united states of Europe. It is strange that they think that it will work. Europe is made up of various countries with various languages and different cultures. When we look across Europe, we see that the multicultural, multilingual and multi-religious federations of the former Soviet Union and Yugoslavia are breaking up. It will never work. The whole treaty is flawed. I strongly urge hon. Members to vote against it.

Mr. Leighton

As the hon. Member for Bridlington (Mr. Townend) said, clause 2 is the essence of the Bill. It deals with economic and monetary union. It is at the heart of the centralising drive of the Bill. There is no subsidiarity in monetary policy. Short-term interest rates will be the same in Glasgow as in Naples, Berlin or Lisbon. The unaccountable central bank will be by far the most powerful institution in the Community.

Unprecedented powers will be surrendered to an autarchy of central bankers and it will be unlawful to seek to influence them. I find that prospect appalling. The fact that the Labour party is in favour of it is inexplicable. In fact, it is not only in favour, but gushingly enthusiastic about the idea.

There has been a role reversal, because the Conservatives say that they have an opt-out—I do not know how realistic that is having listened to the hon. Member for Bridlington. The Danes also say that they have an opt-out and the Germans need another vote in both Houses of their Parliament.

Mr. Rowlands

My hon. Friend just said that the Danes have an opt-out, but one of the consequences of the Edinburgh summit was their formal notification to the other Governments that they have opted out of economic and monetary union. They have already opted out.

11.15 pm
Mr. Leighton

I congratulate the Danes. The Labour party seems to have no such hesitations, because, from what I have heard, it cannot wait to get economic and monetary union. I find that inexplicable. Such behaviour is a recent aberration because it is contrary to policy over the years.

At the time of the 1975 referendum, the Harold Wilson Government issued a manifesto that was sent to every household. It stated: There was a threat to employment in Britain from the movement in the Common Market towards economic and monetary union. That Government recognised the threat. This could have forced us to accept fixed exchange rates for the pound, restricting industrial growth and so putting jobs at risk. This threat has been removed. My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) will recall that in 1978 the Labour Government published a White Paper to explain their decision not to join the European monetary system.

Those documents are history, but let us consider a more recent publication, "Meet the Challenge: Make the Change". Everything was put in the melting pot and that document contained the Labour party's definitive views. On Europe, it stated: We see the path to future progress as being one of closer and closer co-operation rather than an attempt to create a European union. The Labour party did not want European union, but we are now discussing a union treaty. It also stated: We oppose moves towards a European monetary union, which could further impede progress in this area. It also made it clear that the Labour party was against joining the exchange rate mechanism. That document contains the latest policy statement of which I am aware.

The Labour party has stood on its head on Maastricht. Its behaviour has been undignified. There is a limit to how many times it can do that, because if it changes its policy so often, can anyone believe what it says?

Mr. Budgen

Will the hon. Gentleman give way?

Mr. Leighton

I believe that the hon. Gentleman wants to help me, so I will give way.

Mr. Budgen

The hon. Gentleman should accept some reassurance from me. His party has stood on its head on a number of occasions, hut my party has stood on the fence. At least his party has taken a view about the advantages and disadvantages of the single currency, but apparently it is impossible for the Government to decide what those might be—they leave open the possibility of either going in or not. It seems that even the experience of 16 September is not conclusive for the Government; they need some other indication of what is to be in the national interest before they decide to adopt the single currency. It seems to be almost impossible to provide evidence that will enable the Government to make up their mind.

Mr. Leighton

The hon. Member for Wolverhampton, South-West (Mr. Budgen) referred to evidence, and he was right to do so as I have heard no explanation for the change in the Labour party's view.

Mrs. Dunwoody


Mr. Leighton

I do not want to keep giving way, but I shall give way to my hon. Friend as she played a leading part in Labour party councils on such matters. Therefore, I would be grateful to hear from her.

Mrs. Dunwoody

Does my hon. Friend accept that some of us no longer play a part in Labour party councils precisely because our views were clear cut and we asked questions that were found unacceptable by those who now propose to speak on behalf of the Labour party? I shall ask my hon. Friend a simple question: does not he find it deeply saddening that there has been no clear debate of the pros and cons of the movement towards the monetary system and monetary controls, either among the Labour party or the electorate? There has been a series of slippery smudges that have confused and misled, not only his constituents, but many of mine, irrespective of their political complexion. Is not that the saddest condemnation of Her Majesty's official Opposition?

Mr. Leighton

I know that my hon. Friend was a member of the national executive council for many years and represented us in European matters and, like her, I have heard of no proper explanation. I have heard of no intellectual justification for the change. Perhaps someone thought that it was a clever electoral move and a way to win votes. If that was the case, it was a mistake as we know from our private polls that at the last election there were two issues on which support for the Labour party was well behind that for the Conservative party. One of those issues was the economy and the other was Europe. Therefore, the policy did not help us.

I have searched through all the files that I have kept over the years for any justification or explanation of the change. I do not know whether my hon. Friend the Member for Oxford, East (Mr. Smith), who is having an interesting conversation with his colleague, published any articles of an intellectual nature to explain the changes. I have looked through my files and could find only one such article, which was published by my hon. Friend the Member for Islington, North, for whom I have great respect and affection. He is one of the Labour party's thinkers. In the Tribune newspaper on 10 November 1989 my hon. Friend said: No ifs or buts, it must be the ERM. That is the only intellectual case for the policy that I can find. Perhaps my hon. Friends the Members for Blackburn (Mr. Straw) and for Oxford, East published arguments —I do not know.

My hon. Friend continued: We must have currency stability". According to him, that was why we had to join the ERM. He said: ERM participation removes currency speculation from the list of the immediate worries faced by the British Government—especially a Labour Government. He continued, lyrically: Entry enables us to wrap the strength of other central banks of Europe around our currency to defend against speculation. The idea was that we would join the ERM, the pound would be put in an emergency ward and all the other central banks would wrap themselves around the currency so that we would have no more problems and speculation and would not have to worry about the pound.

Mr. Dalyell


Mr. Leighton

I shall give way to my hon. Friend, for whom I have great respect, when I have made my point.

Mr. Dalyell

It was not my hon. Friend the Member for Islington, North (Mr. Corbyn).

Mr. Leighton

I have made a mistake, so I shall give way.

Mr. Dalyell

My hon. Friend the Member for Islington, North is lyrical about many things, including rain forests, Cuba and Nicaragua, but I have not heard him being lyrical about the EC.

Mr. Leighton

I am referring to my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith), for whom I have great respect and affection, who was a predecessor of my hon. Friend the Member for Oxford, East as an Opposition spokesman. I made a mistake with the constituency, for which I apologise.

In any case, my hon. Friend said: It means that the Government can concentrate on the crucial task of rebuilding the domestic economy without having to devote time, attention and energy to defending the pound. So the ERM would take care of all the pound's problems. I know of no other intellectual justification besides this one of the view that we have adopted.

Referring to speculation, my hon. Friend said: ERM membership virtually removes that problem.

Mr. Richard Shepherd

I thought that I heard the hon. Gentleman say that the article was written in November last year, after the events of September. Have I got it wrong?

Mr. Leighton

The article appeared on 10 November 1989.

On the day the policy was announced, 15 October 1990, I said—it is recorded in HansardI prophesy that he has it wrong and that the pound will not stay at DM2.95.—[Official Report, 15 October 1990; Vol. 177, c. 936.] Exactly a year later, I said: It is always dangerous to prophesy, but I am prepared to do so and say that it will not be possible to hold the pound at DM2.95. I should have thought that those of us who got it right would be listened to now rather more carefully, but I do not think we will be. And those who got it wrong should apologise.

The ERM was a dummy run for the single currency; it was a taster. When industry was crying out for lower interest rates, those rates were 4 per cent. higher than they needed to be, to try to defend the indefensible. They tipped the country into recession, in fact. The ERM made more than another 1 million people unemployed. Growth, employment and prosperity—all were subordinated to pegging the pound in the ERM.

Yet, after all the pain, all the suffering, all the lost jobs, all the houses repossessed, and all the businesses closed down, the policy failed and we were blown out of the ERM. The Government's policy collapsed in spectacular and cataclysmic failure, but not before they threw away the country's entire foreign exchange reserves. In short, the policy ended in ignominy and humiliation.

It was not only the Government's policy that failed, however. Our policy failed, too. It was a bipartisan policy, and right up until the day before black Wednesday Labour party spokesmen were saying that there should be no realignment. So when the Government's entire economic policy collapsed, the Labour party derived no advantage from it because we had foolishly backed that policy.

The question is: have we learnt anything? It is doubtful that we have. It is difficult to know, because the people who supported the policy, who got it wrong, have not commented on its failure. They have remained silent, perhaps because of their embarrassment.

If we support the treaty, and economic and monetary union, and a single currency, we must be willing to rejoin the ERM. In other words, we must be prepared to make the same mistake all over again. Why cannot we grasp the simple truth that exchange rates must reflect economic fundamentals? If economies diverge, as those in the Community are diverging, so will their currencies. A strong currency reflects a strong economy, not the other way around. We cannot achieve a strong currency by passing a resolution to that effect, or by artificially pegging it to a nominal exchange rate. The exchange rate is no more than the price of a currency compared with that of other currencies.

If countries' economic performance or rates of inflation vary, so will the value of their currencies—their exchange rates. There have just been movements in the exchange rate between the Japanese yen and the American dollar. Problems arise if such movement is not allowed to take place, as we saw recently in east Germany. If country A links its currency to country B which has lower inflation and higher productivity, country A's currency will be continually overvalued and the currency of country B will be undervalued. A's exports become dearer, imports become cheaper, the balance of payments deficit grows, factory closures proceed apace, and there is unemployment.

Countries can join a single currency mechanism only if there is real convergence, if their economies are working in the same way and have similar rates of growth, wealth, employment, investment, productivity and labour costs. The treaty does not mention real convergence. As it is a monetarist treaty, all its criteria are monetary. It talks about fiscal deficits and Government debt, rates of inflation and about joining the narrow band of the ERM. There is hardly a word in the treaty about employment.

11.30 pm
Mr. Winnick

There is some reference to employment, but it is so small that I can understand my hon. Friend not noticing it. Does he agree that there is a great contrast between the passing, slight reference to social harmony, employment and other matters and all the details in article 104C which sets out, section by section, the penalties that will be imposed on member states if they exceed the 3 per cent? Therefore, it is clear that the treaty is a recipe for higher unemployment and more deflation. The ERM will seem insignificant compared with the hardship and misery that will result if economic and monetary union is brought about.

Mr. Leighton

That is why the convergence criteria are outrageous to a party of the left. We are about to enter stage 2, which will require budget deficits of 3 per cent. and Government debts of 60 per cent. That will mean huge cuts in public expenditure throughout the Community. Maastricht means co-ordinated deflation, just when the opposite is needed. Officially, unemployment in the Community is over 11 per cent. The average in the Community is higher than in this country, but in real terms it is much higher. Next year there will be zero growth. The European Community is the world's unemployment blackspot and it will get worse because in stage 2 we will try to reach the convergence criteria.

As I say, there will be co-ordinated deflation. That will mean great upheavals and much suffering. It will destroy several Governments. It has already destroyed the Mitterrand Government. They had 10 years in which to show what a socialist Government could do, but they have been destroyed because they linked up with the ERM. The same thing will happen to the Spanish Government. Surely the level of Government deficit should be decided by the Government of the day according to the prevailing circumstances. It is ludicrous and arrogant to lay down Government deficits in an international treaty. 1 have heard of the end of history, but this is the end of economics because the subject cannot be discussed: it is laid out in a treaty.

Who wins elections will not matter very much. It will not matter whether it is the leader of the Conservative party or the leader of the Labour party because if the Bill is passed we will know what the economic policy is to be. We all know. The deficit must not be more than 3 per cent. The Government debt must not be more than 60 per cent. Inflation must be within 1.5 per cent. of the best, and interest rates within 2 per cent. of the best, and we must have successful membership of the narrow band of the ERM. That will be policy. It will not matter whether the right hon. Member for Huntingdon (Mr. Major) or my right hon. and learned Friend the Member for Monk lands, East (Mr. Smith) wins the election. It will not matter a damn, or a row of beans. This international treaty, which is legally enforceable, will lay down the policy.

Mr. Nicholas Winterton

We come back to the fundamental reason why so many hon. Members oppose the Maastricht treaty. It is because it is a treaty of federal union, despite protocols and opts-outs, which are untested. We are being led, step by step, with a light blindfold around our eyes, down the road to a federal Europe.

Mr. Leighton

The treaty means that, at the next general election, policy cannot be affected by voting. Our democracy will be devalued and undermined and politics will become redundant, pointless.

Mr. Winterton

What about politicians?

Mr. Leighton

The politicians in the House of Commons, who have been elected, will not be allowed to influence what is happening.

Mr. Wilkinson

Will the hon. Gentleman consider this point? Perhaps we are experiencing a foretaste of what he has warned us about for the future, in as much as we have a de facto coalition Government who, on the matter of European union, are driven by an extraordinary consensus on the line laid down in the Maastricht treaty, without any reference to the wishes of the electorate.

Mr. Leighton

I was taken, earlier this evening, to hear my hon. Friend the Member for Oxford, East chiding the Paymaster General for not making a good enough case. He prompted him, telling him what he should have said, and how he should have put the case. There is a bipartisan coalition between the two Front Benches.

Mr. Winterton


Mr. Leighton

Perhaps the hon. Gentleman is right, and we should also include the hon. Members for Inverness, Nairn and Lochaber (Sir R. Johnston) and for Ross, Cromarty and Skye (Mr. Kennedy).

The matter is serious. If we have a single currency, which is the objective of the treaty, we get a single central bank which, we are told, will be independent. That is a nice word, although autonomous would also do. But independent of whom? It will be independent of us, of Parliament, of anybody who has been democratically elected. It will be beyond the reach of the ballot box. The electorates of all the countries of the Community will be stripped of their powers.

I have always understood the historic purpose of the Labour party to be to bring money under democratic control, although some may think that a Utopian idea. That was one reason why Clem Attlee nationalised the Bank of England. He saw what bankers had done in the 1930s and he thought that banking should be brought under democratic control. He must be turning in his grave, given what the party is saying at the moment.

Mr. Budgen

I am sure that I do not need to remind the hon. Gentleman that, on Second Reading of the Bill to nationalise the Bank of England, Robert Boothby voted in favour and a number of Keynesian Tories abstained because they took the view that the bank had been a major cause of the unemployment and depression in the 1930s. They believed that there should be political control of the bank.

Mr. Leighton

That is exactly right. They saw what the bankers had done before the war and people, having fought for six years, were not prepared to accept a world run by bankers. Clem Attlee nationalised the Bank of England, but we shall have to change that and say "Clem, you got it wrong". I am not prepared to do that.

If we pass the Bill, all monetary, exchange rate and budgetary policy—all the bread-and-butter issues of British politics—will be handed to institutions beyond our control. That is the opposite of what the Labour party stands for. In those circumstances, what would be the Labour party's purpose? What could it do? Why should anybody vote for it? We should be preparing ourselves for a fate similar to that of Mitterrand's socialists.

The bank's objectives are laid out in the treaty, but it does not mention unemployment. The only object of the bank—the only aim that overrides and excludes everything else—is price stability. Of course, we want low inflation, but since when has price stability been the sole or even primary aim of the Labour party? If we make price stability our only aim, we betray everything that we stand for. Any fool can reduce inflation by destroying the economy, by inducing recession, by graveyard economics and by creating mass unemployment. That is what the Government have tried to do, but even they have been forced back.

I have a briefing from the Bank of England for November 1992, which says: Had the United Kingdom remained in the ERM it is quite possible that price stability would have been achieved during next year"— that is this year. Although clearly desirable in itself, price stability attained so quickly might have intensified the problems of domestic debt deflation. The bank is saying that we could have had wonderful price stability, but that the price would have been too high, so we did not go down that road.

Although the bank says that we should not go only for price stability, the Labour party seems to agree that price stability should be the sole aim of policy. In the past, Labour's economic policy has always had four aims: low inflation; a balance of payments equilibrium; economic growth—when we were in the ERM, growth was negative; and high employment. That is what the Labour party has always believed in. It is difficult sometimes to keep all the balls in the air, but throughout the history of the Labour party it has never been our policy to give sole priority to the one aim of price stability, yet that is exactly what the treaty spells out in the clearest possible terms.

We were able to leave the exchange rate mechanism —we got it wrong. We cut interest rates by 4 per cent. and now have a more competitive pound. I understand that that is now leading to an upturn in the economy. [HON. MEMBERS: "Hear, hear!"] I hope that those hon. Members who are cheering agree that we should not have gone into it in the first place. Under EMU, we would not have been allowed to come out; we would have been locked in and that would have been that.

With separate currencies, if the economy becomes uncompetitive we get a warning signal—the balance of payments deficit—and we can take remedial action. With a single currency, that is not possible. Instead of a balance of payments deficit, there are blighted areas and unemployment and our people suffer.

What will happen if people who are suffering come to us with their grievances? What will Labour Members be able to say to them? How will we answer them? We will have to say, "We are sorry, but we gave these powers away and we cannot do anything about it." We should have to say that politics cannot be of any help or provide any remedy. I do not know how the Labour party can possibly support that. I only hope that the party that I know will come to its senses at some stage.

11.45 pm
Mr. Wilkinson

I enter the debate with some trepidation after two such distinguished speeches as those of the right hon. Member for Bethnal Green and Stepney (Mr. Shore) and the hon. Member for Newham, North-East (Mr. Leighton). Both spoke with tremendous cogency and great intellectual honesty—a quality that has made our debates distinctive, certainly in regard to those who do not support the proposed treaty on European union.

I find it extremely strange that Her Majesty's Government should will the objective of European union —and thereby the mechanistic approach set out in the treaty to achieve it—while not wholly willing the means of stage 3 unless there be first the House's approval by Act of Parliament. This is an inherent inconsistency, which may have been convenient at the time of the general election but which does not bear rational scrutiny now.

The process whereby economic and monetary union is to be achieved is inherently one of convergence. Not just earlier this evening but in previous debates we have heard eloquent descriptions of how damaging that process of convergence has been for our own economy. It has been a shameful process. I simply do not understand how our Government could, with such equanimity, tolerate the wholly unnecessary imposition of the levels of unemployment and misery on our people which characterised the two years preceding our escape from the exchange rate mechanism on 16 September. Anyone with one grain—one iota—of economic nous knew that to perpetuate a regime of high interest rates at a time of world recession was to compound that recession virtually to the point of slump.

Mr. Budgen

Is not my hon. Friend being somewhat unkind to the Government? It might have been reasonable for the Government to say, before 16 September, "There have been only three or four attempts to fix our currency to an exchange rate mechanism: each time it has given rise either to a slump or to some other major economic disaster, but none the less we want to try this experiment once more to see whether, with the finesse for which we are renowned, we can defeat the forces of the markets and the law of averages." That is a perfectly respectable argument. Once we had the good fortune to be thrown out of the ERM on 16 September, what further evidence was necessary to persuade the Government that a fixed exchange rate did not work and that a common currency would not work? The Government say that they need further argument and further persuasion to make up their mind. My hon. Friend is very fair minded. Will he explain what the Government have to make up their mind about?

Mr. Wilkinson

I may have been naive, but I thought that the Government were all too ready to make up their mind on such matters, often flying in the face of the facts. As evidence of that, I adduce the remarks of my hon. Friend the Financial Secretary to the Treasury, who in the last debate that we had on EMU told me that the policy of Her Majesty's Government was to rejoin the ERM as soon as the circumstances were right—and he gave the impression that those circumstances would be right in the not too distant future.

When I said that I found it wholly irrational that the Government should embrace the mechanistic approach to EMU contained in the treaty, I did so with good reason. Eschewing independence in monetary policy, losing full control of indirect taxation and taking part in the cohesion fund, which would export jobs from the United Kingdom and create them in our competitor countries in the south of Europe and in Ireland, were in the past—and will be to an even greater extent in the future—manifestly against our national interest. The same would be true of our embracing the treaty's disciplines on budget deficit and Government debt which, certainly in the case of budget deficit for the time being and probably for the foreseeable future, are beyond the wildest dreams of fiscal probity and discipline.

Sir Ivan Lawrence (Burton)

Is not my hon. Friend again being too harsh on the Government? Is he not aware that some very strong voices in the Government said that we should not join the ERM because they foresaw the very problems which materialised? However, British industry said that it needed stability and the advantages that it was sure that only the ERM could provide. The members of the Government who had strong doubts about the ERM agreed, saying that if that was what industry wanted, that was what they had better give it. The same voices in industry who spoke of the need to go into the ERM are now speaking of the need to ratify the treaty. Does my hon. Friend agree that they were wrong then and that they are wrong now?

Mr. Wilkinson

There is much in what my hon. and learned Friend says. I merely observe that I was struck by the Chancellor of the Exchequer's remarks in his Budget statement in which he seemed to take a perverse pride in our escape from the ERM on 16 September and virtually to claim that it was Government policy. To be candid, I do not think that the Government have received the condemnation that was rightly due. However, one could perhaps be more charitable and say that the Government held an understandable position and were seeking, once and for all, to stamp out the age old British problem of inflation and to do so by means of the artificial discipline of our membership of the ERM. They almost did so, but, as the hon. Member for Newham, North-East said, the pain was eventually too great and the medicine was on the point of killing the patient.

Mr. Marlow

Has my hon. Friend had an opportunity to read the Daily Mail today? He said that the cohesion fund would take jobs from this country and create them in Italy, Greece and Ireland. If he had read the Daily Mail today, he might ask what evidence there is that the money would produce jobs anywhere and not go into the pockets of the Mafia, corrupt officials and the IRA.

Mr. Wilkinson

The derogation of the sovereignty of our Parliament and of the British nation through its traditional democratic institutions in favour of the centralised institutions of the Community is one of the most pernicious and damning aspects of the proposed treaty on European union. There have been some eloquent descriptions of it, most notably perhaps from Paul Johnson in The Daily Telegraph today. As is so often the case, my hon. Friend gets straight to the point.

Mr. Budgen

As to why the Government cannot make up their minds on monetary union, the Danes have done so and say that they do not want any form of monetary union. Do the Danes have information that is denied to our Government, or is it that our Government intend to slide into monetary union at some future stage and just want to play for time? I cannot believe that that is true.

Mr. Nicholas Winterton

My hon. Friend is naive.

Mr. Budgen

I hope that the truth is that the Danes know something that we have not been told.

Mr. Wilkinson

I am worried that the Danes may not adequately know what is known to us and of the admission by my right hon. Friend the Minister of State, Foreign and Commonwealth Office in Committee last week that the so-called opt-outs or further opt-outs that the Danes obtained at Edinburgh have no legal effect and are not justiciable. In other words, on 18 May the Danish people will be asked essentially the same question that they were asked in the previous referendum. They believe otherwise, but on this serious matter the Danish people are being misled.

We should not be misled. We have no excuse for being misled. Only last week, an eminent body of Eurocrats examining the fault lines in the exchange rate mechanism —with the careful scrutiny that those fault lines, which so suddenly appeared on 16 September, merit—and with the wisdom of hindsight, declared that there was inherently nothing wrong with the ERM process towards economic and monetary union and concluded that, notwithstanding what happened, the Community should press on regardless to the objective of economic and monetary union.

Mr. Salmond

I understand the hon. Gentleman's point about the virtue of floating and competitive exchange rates between countries, but could not the same argument apply equally within member states? Is it not the case that at various times in the fairly recent past areas such as the north of England, Wales and Scotland suffered from an over-valued exchange rate—the national exchange rate of sterling? Can the hon. Gentleman point to any occasion when he expressed in the House the same amount of sympathy for those areas in having to battle against an over-valued exchanged rate, or when he argued for a regional policy designed to combat the consequences and to provide compensation?

Mr. Wilkinson

Yes, I can. Long before the hon. Gentleman entered the House, I was making speeches as the Member of Parliament for Bradford, West in favour of the Industry Act 1972 introduced by my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath). With the benefit of hindsight, I would not make similar arguments today—not because I now represent a London constituency but because I believe that those policies were inherently wrongheaded. I take the hon. Gentleman's remarks with the pinch of salt that they deserve because he and his party sold their souls in earlier Divisions on the Bill, and his arguments do not carry now the weight which they might previously have done.

The loss of control of our economic policy contained in the treaty, notwithstanding the opt-out in clause 2, is such as to cause a fundamental change in the relationship between our people and their Government, as well as between the House and the Government represented in the House, and the institutions of Brussels—so much so that future generations will wonder how it came to be that the generation of 1992 in the House appeared to care so little for their nation's independence, sovereignty and pride. How was it? Were they blind? Were they stupid? Were they misled? Were they ignorant? What was it?

The reason, I believe, lies in the degeneration of our parliamentary processes. We have allowed our Parliament, our House of Commons, to become suborned. It is for this reason that I do not believe that the so-called opt-out in clause 2 is worth the paper on which it is written. If the Bill goes through and the treaty is ratified, I do not think that our people will ever be able to look to the House of Commons as the true custodian of their interests and as the guardian of their liberties.

12 midnight

Our people, if they are denied a referendum, will remember how the Whip was applied, how closures came down in mid-sentence, how closures came down before Front Benchers answered any of the arguments. They will also remember that patronage, intimidation, blackmail and the denial of votes on key amendments may have secured the acquis communautaire but that they will not have secured the proper scrutiny of key legislation for the management of this economy and for the democratic governance of our country. This is why I do not believe that the so-called opt-out from stage 3 counts for very much, unless we change or ways and unless we change our processes.

I shall not vote against the clause. [HON. MEMBERS: "Why not?"' Why should I? I hope for the best, as anybody would. I place my hope in a future Parliament. It is for those who are elected to it to make sure that it does its duty. I hope that it will. I am an optimist. It is not for me to make a judgment. I cannot say that I have great optimism, but I hope most sincerely that on this point I shall be proved wrong.

Mr. Rowlands

The powerful speech of the hon. Member for Ruislip-Northwood (Mr. Wilkinson) led to him carrying the Committee, until the last minute of it. I hope that at least he will consider voting against Third Reading, as opposed to clause 2.

Mr. Wilkinson

indicated assent.

Mr. Rowlands

The hon. Gentleman made a powerful case for the way in which parliamentary power will be eroded by the Bill and for the way in which economic and democratic choice will be destroyed by it. At the centre of any democracy is political and economic debate. If we accept the principle, philosophy, objective and aim of economic and monetary union, where lies the diversity and plurality of economic choice which is at the heart of any form of democratic decision making and of any democratic process?

I notice that the rubic to the clause is "Economic and monetary union." I have not been sent here by the people of Merthyr Tydfil and Rhymney to back economic and monetary union and to back the monetarist policies that go with it which for generations have destroyed jobs in the communities that I represent. Over the years, Members of Parliament have come to this House of Commons from our communities to oppose such policies. I do not see why at this time we should support policies in treaty form which, if accepted and implemented, will be irrevocable for all time.

I was interested in the comparisons that were made. In one sense, the economic history was, I am afraid, slightly wrong. Comparison was made with the 1930s. The interesting point about the 1930s and the reason why we have drawn the wrong conclusion is that, oddly, it was Chamberlain, as Chancellor of the Exchequer, when driven off the gold standard—the 1920s equivalent of the exchange rate mechanism—who devalued the pound which led to a 2 per cent. interest rate and, for most of the country, rapid growth. Unemployment fell after Britain came off the gold standard in 1931 from 3 million to 1.5 million. The tragedy of the 1930s was that that growth and prosperity bypassed huge areas of Britain. The absence of any form of regional policy led to large-scale unemployment in regional terms.

The ironic point is that for most of the 1930s the slump was mild and short-lived for large parts of the country. The chief reason for that was that when in 1931 the Tory National Government were driven off the gold standard —the equivalent of the ERM—they were able to follow a policy of devaluation—like floating exchange rates—and interest rates were 2 per cent. That led to a sustained boom in many parts of the country. Alas, that was not the case for south Wales and for three or four other major areas. That, rather than the lesson that one or two hon. Members have drawn, is the lesson to draw, ironically, from the experience of the 1930s.

Sir Russell Johnston (Inverness, Nairn and Lochaber)

Will the hon. Gentleman bring matters a little nearer to today and tell us whether he regards the Bretton Woods experience as a disaster?

Mr. Rowlands

The Bretton Woods experience was very different from the one that we are being asked to write into the treaty. It was a completely different set of principles and arrangements.

Mr. Denzil Davies

A different kind.

Mr. Rowlands

It was of a different kind. What we do know is that, when people have tried to fix exchange rates and have then driven monetarist policies to support them, those actions have led to high rates of unemployment, and to slump and depression. For the life of me I cannot see how, as my hon. Friend the Member for Newham, North-East (Mr. Leighton) forcefully put it, the Labour party, above all, can be endorsing or supporting such processes.

Mr. Salmond

Does the hon. Gentleman agree with Lady Thatcher that, in terms of exchange rates, one cannot buck the market?

Mr. Rowlands

I rarely agree with anything that Lady Thatcher and Lord Lawson say. However, once or twice they get it right. In the case of fixed exchange rates and the experience of the ERM, those who were critics of that arrangement—a number of hon. Members on both sides were critics—have been proved right. The point was put more than forcefully by my hon. Friend the Member for Newham, North-East. Why should we listen to those who got it hopelessly wrong in the past 18 months to two years, and why should we believe that they are any more likely to get it right next time?

Mr. Geoffrey Dickens (Littleborough and Saddleworth)

How can the hon. Gentleman possibly compare the 1920s with today? We should remember that today we have automation and mechanisation. We do not see a conductor on a bus. To get out of a station, one puts in a ticket, and to get on to the train one gets a ticket out of a machine. So many jobs have been lost as a result of high technology. We do not have a labour-intensive economy—[Interruption] My point has everything to do with monetary policy. The hon. Gentleman is trying to compare unemployment in the 1920s with unemployment today. He is simply not comparing like with like.

Mr. Rowlands

I do not know whether the hon. Gentleman was here when references were made to the nature of the depression of the interwar years. I was observing that the reason why unemployment fell after 1931 in many parts of the country but not, sadly, in the part that I represent was that Britain came off the gold standard—the equivalent of coming out of the ERM—in 1931. That was one of the lessons that it was worth while to draw. The other was the need for regional policy, with which Conservative Members still disagree. I do not think that the hon. Member for Wolverhampton, South-West (Mr. Budgen) will agree with us on regional policy, although he should because the other lesson to draw from the terrible experiences of the 1930s was the problem caused by the reluctance to apply a regional policy when the general prosperity bypassed whole areas.

When there was a change in the late 1930s as a result of parliamentary and public pressure, and when there was a nascent regional policy, we saw at last the possibility of that policy improving employment problems in areas such as mine. We shall not accept going back to concepts of monetarism and fixed exchange rates, which have destroyed and not enhanced jobs in communities such as mine, both historically and recently.

How are we to believe the assurances that have been given in respect of clause 2? Are we to believe that here are the belt and braces, the buttress, of parliamentary democracy? That is what the Government claimed as they waved their piece of paper—another parallel with the 1930s, saying, "We have secured parliamentary democracy in our time; it is to be found in clause 2". Why should we believe that, given that, in accepting clause 1, we are writing into our domestic legislation here and now, irrespective of what we might do at some future date, a whole series of provisions connected with stage 3?

Let me remind the Committee of what we have written into our domestic legislation by passing that clause. Article 3a(2) states: Concurrently with the foregoing, and as provided in this Treaty … these activities shall include the irrevocable fixing of exchange rates leading to the introduction of a single currency, the ECU, and the definition and conduct of a single monetary policy and exchange rate policy. If the Bill is passed, that provision will become part of our domestic legislation, as will articles 104c(1), 105(1) and 109j. We are writing into our domestic legislation here and now a whole series of articles and paragraphs containing provisions for the third stage of monetary union.

Mr. Cash

The hon. Gentleman went through the Lobby with me a little while ago. No doubt he will have noticed that we have this evening voted to ensure that we will not be able to veto the process of any member state —and that includes us—to the third stage by 1 January 1999. Has he also noted the crucial words in clause 2: unless a draft of the notification has first been approved by Act of Parliament"? I hope that hon. Members will note that that in no way says that, when a Bill comes before Parliament at a future date, we will he able to challenge the question and the principle of economic and monetary union. It is merely a device, a con trick and a fraud. The clause does no more than to tell us that the Government will produce the draft of the notification and that the scope of the Bill will be so restricted that we shall be able to do damn all about it.

Mr. Rowlands

I was drawing the Committee's attention to the fact that, if we pass the Bill, we pass into our domestic legislation all the articles of stage 3 of monetary union. I have never understood why—unless it was a piece of political expediency designed to get the treaty through and to get agreement at Maastricht—it was necessary to introduce a Bill to incorporate the whole of the stage 3 legislation now, given that we are supposed to have the chance of opting out of it at some future date. Why in 1993 should we introduce provision after provision and detail after detail enshrining in our domestic legislation monetary union, a single currency, irrevocable exchange rates and all the rest and all the statutes of the European central bank and of the ESCB? If we pass the Bill, every article that is part of stage 3 becomes part of our domestic law.

We are being asked to believe that, at some time in the future, the Government of the day will abort the whole process. Will they suddenly say, "No" when the momentum will have carried into our domestic legislation every provision necessary to implement stage 3? Will they really pull the plug at the last minute?

We must bear in mind that the Government are arguing that they want to be at the heart of Europe. They claim that their European credit and badge of honour lie in passing the Bill and implementing the legislative requirements of the treaty. However, we are led to believe that the Government will not come before the House at some point in the future with a Bill to press the button to implement the stage 3 mechanism. If we buy that one, we are more naive than I thought we were.

12.15 am
Mr. Andrew Rowe (Mid-Kent)

The hon. Gentleman is making a rhetorical point with great fervour. However, in this Parliament and under this system of Government of which the hon. Gentleman and his colleagues are so proud, there are endless examples of legislation that is not brought into effect when it is passed, and in many cases, as political circumstances change, is not brought into effect at all. Why is this the con trick that the hon. Gentleman makes out it is?

Mr. Rowlands

In the 25 years or more that I have been in this place, I have found that there is an enormous difference between the implementation of a commencement order in domestic legislation and writing into domestic legislation an international treaty, with all its liabilities and obligations. There is a world of difference between those two processes.

It has been said that, because it is unlikely that anyone will be able to sign up to stage 3 for monetary union, we should not worry about it. However, we have been conned in the past. Everyone thought that the Single European Act would simply pave the way for a Common Market and that it was not part of the process towards political and monetary union that we are being asked to approve now. As we have been conned in the past, I am not willing to buy the legislative safeguards and provisions on offer in clause 2.

Mr. Rowe

I thank the hon. Gentleman for giving way again. The history of the world is littered with treaties that have been abrogated, have fallen into disuse or have been ignored as time progresses and political circumstances change. If the prognosis for the policies enshrined in the Maastricht treaty are half as gloomy as the hon. Gentleman and his colleagues believe, there is no prospect of its coming into serious effect.

Mr. Rowlands

I am not sure of the hon. Gentleman's criteria or standards of integrity, but I will not support a Bill or a treaty if I believe that it does not mean something or that it should not be implemented. I will not support it if I believe that, with a bit of luck, things will change and it will become irrelevant. That is not the way to legislate or to sign treaties.

As I do not agree with the objectives of the treaty or the legislation seeking to implement the treaty, and as I do not believe in the reassurances offered on clause 2, I will oppose the Bill on Third Reading.

Mr. Budgen

The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) doubted whether I would support his arguments about regional policy. However, arguments about regional policy are relevant to the discussion.

When we tell Scotland that it cannot have its own currency or devalue it or float it against the English pound and thereby put itself in a more competitive position in comparison to the English, and as we deprive Scotland of that control over its economy, we must say, "All right—we'll give you some compensation by way of a regional fund." That has a lesson for us as we consider the treaty. It is nonsense for the Government to say, "We are prepared to go into a single currency, but we are not prepared to allow a major extension of the regional and social fund".

Mr. Salmond

The hon. Gentleman, with his usual perception, has put his finger on the important point that regional policy is a compensation for our surrogate devaluation—for not having the ability to have a flexible exchange rate. Would it not be ironic if, in the review of regional policy which is under way at present, the Government were to tilt the balance even further by reorienting that regional policy towards areas which should not be looking for compensation from an overvalued exchange rate? Will the hon. Gentleman give a guarantee that he will oppose that when a measure providing for the concentration of regional policy on the south-west of England comes before the House in the next few months?

Mr. Budgen

As to the areas which require compensation, that depends simply on the question of which area might benefit from having an independent currency. For the sake of argument, it is logical and possible that, if Wales were independent, it might be the area with a strong exchange rate against the pound. Equally, it is possible that the south-east, with a freely floating pound, might be the area with an exchange range which floats downwards and becomes more competitive. I do not agree that the point made by the hon. Member for Banff and Buchan (Mr. Salmond) flows inexorably from what I am saying.

It is amazing that the Government say, "We might well go into a single currency, but we are not prepared to see the funds for the regional and social fund grow any more". The weaker economies of Europe, which have been denied the opportunity of pricing themselves into work, will inevitably ask for more money. If our Government are right in saying that the treaty is not a federal structure which will give the other countries some form of joint control over the way in which they regulate their economies and see that money which comes from central and public funds is properly administered, that will inevitably result in a great increase in the waste and fraud which is already a large feature of the life of the EEC. That may be only a small point in the argument about whether we should have a single currency.

The hon. Member for Merthyr Tydfil and Rhymney reviewed the way in which we have experimented over the past 60 years with various attempts at fixed exchange rates. He referred to the lessons which many people learnt in 1931. I suppose the next catastrophic lesson that was learnt from fixing exchange rates occurred in 1967. This Government learned a terrible lesson on 16 September. One must ask the question: what is the purpose of politics if it is not to give some form of intellectual leadership and choice to the nation?

For the sake of argument, if one goes into a pub and asks someone, "Are you in favour of the council tax?", it would be perfectly reasonable for that person to say, "I really do not know; I cannot tell—I shall have to think about it later." But if one asked the Prime Minister, "Are you in favour of the council tax?", it is not unreasonable for him to have a view about it. It is not unreasonable for him to say, "As a matter of fact, I am in favour of the council tax". Despite the occasional mistakes that we make, I suggest that an advantage of voting Conservative is that one gets the council tax.

Surely it is not a gross impertinence to say that someone who asks for guidance about the advantages of fixed exchange rates over floating exchange rates is entitled to say to the politicians, "Please could you tell me what is your view about this? I understand that there have been experiments about fixed exchange rates for some 62 years and clever people have drawn conflicting conclusions about them. But, o politician, don't we employ you to have a view about this?"

It is extraordinary that the Government's position is, "This is a frightfully difficult problem. We really do not know what our view will be about this. A lot of superior people in Europe are saying that they intend to move to a single currency. It would be grossly impertinent of us to offer a view about it. Could we please move as close as possible to a single currency? Then it is just possible that we may exercise intellectual and political leadership and tell the British people whether in our opinion entering a single currency would be to their advantage."

Mr. Cash

Does my hon. Friend accept that a book was written once upon a time on a theme similar to the one that my hon. Friend is developing? It was by a certain Samuel Smiles, who wrote about Mr. Nobody. Samuel Smiles' point of criticism was that this extraordinary person continually passed the buck because he could not make up his mind what policy he should pursue. As a result, he fell eventually into the trap of developing such a fit of political defeatism that government simply disintegrated. Does my hon. Friend agree that that could be the path on which we are now embarked?

Mr. Budgen

I find it all very difficult. We have a truly remarkable political debate in Britain. The two Front-Bench teams broadly agree that our economy should be run in subordination to the European Community. Yet marginal changes in taxation give rise to enormous certainties and a vast amount of inter-party abuse.

Mr. Marlow

Going back to where my hon. Friend was a few moments ago, I think that he has missed the point, wittily though he has put it. When one says to the Prime Minister, "Are you in favour of a fixed exchange rate or not?", the answer will not be whether he is in favour of it or not, but whether it brings us closer to the heart of Europe or not. It is not about the fixed exchange rate. Everything is related to how close it brings us to the heart of Europe.

Mr. Budgen

That may be so, but as I understand it —I may be wrong—the Danes have said that they do not want a single currency at any price. It may be that the Danes have been conned. Everyone knows how clever everyone in Europe is. The Danes have been brave enough to make it an issue of principle and to say that they do not want a single currency.

Mr. Spearing

The hon. Gentleman has mentioned two matters for which there is surely a sensible and understandable explanation. The first is the alleged difference between stages 2 and 3, which the Prime Minister suggests is a great victory for choice. Could not the two Front-Bench teams and the Cabinet be accused by the man in the street of political and constitutional fraud? Secondly, as the Minister of State, the right hon. Member for Watford (Mr. Garel-Jones), has made plain at the Dispatch Box and in written answers, there is no change in Denmark's obligations under the treaty. Nothing has been changed by the so-called decision that the Prime Minister brought back from Edinburgh. He came back waving a second piece of paper, pretending that it changed something.

Mr. Budgen

The hon. Gentleman may be right to say that the Danes have been conned. That is the opinion of many of our academic and practising lawyers, such as Martin Howe.[Interruption.] He comes from a distinguished family who have a great deal of knowledge of the workings of the Community. Given that Martin Howe's uncle, as Attorney-General, was responsible for dealing with the European Communities Act 1972 and that we, as Tories, believe in inherited ability, we should be inclined to be respectful of that man's views. The man in the pub would say that Martin Howe says that the Danes are being conned. He is a high-class lawyer, however, and he would not put it in such crude terms, but he may or may not be right.

12.30 pm
Mr. Dickens

I do not know whether my hon. Friend was in the Chamber when the right hon. Member for Stepney and Bethnal Green (Mr. Shore) made a thoughtful contribution. He spoke about the grave and great difficulties for all the European currencies in achieving convergence so that they could proceed to a single currency. He said that new members of the Common Market complicated the formula.

I believe that those convergence difficulties mean that there is not a snowball's chance in hell of a single currency. If we were to vote clause 2 down, we would be making a decision to opt out from the treaty now rather than opting out at the time when we come to consider convergence. If one signs a treaty, it is common sense to stick with it until its proposals are up for consideration. Until then, one has taken a decision.

Mr. Budgen

I am grateful to my hon. Friend for the earlier part of his intervention, because he said—I hope that I have got it right—that the proposals for convergence could never be met and that if we attempted to do so it would gravely damage the British economy. He said that that disadvantage was so plain that the Prime Minister should explain to the British people that it could never be to their advantage to opt for a single currency.

There are various certainties in British politics. It is a matter of passionate and clear certainty that if one wants to raise a bit more tax, it is obvious that it should be done by raising value added tax on fuel. That, I understand, is the Tory party's position. That is a matter of certainty and principle which can be easily fought on. It is equally obvious that, for the Labour party, if one wants to raise a bit of extra taxation, it is better done by raising income tax. If such certainties can be expressed about marginal preferences as to whether one should get a bit of extra taxation from one group or another—I would have thought that that was not capable of quite such certainty and must be a matter of marginal preference for each party —surely it is the role of politicians to offer some leadership and some guidance on great issues such as whether we should have a single currency.

Whether we should have followed a policy of rearmament before the last war was another great issue. I do not remember politicians saying to the nation, "Well, we are not terribly sure about this. This is a very, very difficult subject."

Mr. Giles Radice (Durham, North)

That is precisely what they said.

Mr. Budgen

Not all of them. The history books tell us that some of them suggested that rearmament was necessary. Some of them suggested that the balance of argument was plain and that we should do something about the problem. Some of them thought that political leadership was about doing the best that one could in evaluating the evidence, then offering some leadership.

As we have been experimenting with fixed exchange rate mechanisms for 62 years, I should not have thought that it would be asking the politicians too much to offer the nation some guidance and leadership. However, if the Tory party leadership is not prepared to offer that guidance and leadership, it inevitably leads one to the conclusion that perhaps it wants to enter the fixed exchange rate mechanism and, following that, a single currency. Otherwise, why should not the leadership offer the guidance?

Mr. Cash

Does my hon. Friend accept that one of the arguments continuously advanced in Government circles is that the whole process is unworkable? Therefore, the Government's way out is to tell us to go along with a modest treaty which does not add up to a row of beans. They forget that it takes 12 member states unanimously to ratify the treaty, and as six of them have their noses firmly in the subsidy trough, the unanimity to unravel the treaty afterwards will not exist. Does my hon. Friend agree that there is an element of deception in the way the argument is being advanced?

Mr. Budgen

I do not understand the Government's position. We understand, and have always been told, that we have a politically adroit Conservative Government who are superb at wrong-footing the Labour party. The Labour party has stood on its head 100 times and has finally reached the position where it is in favour of obtaining a single currency as soon as possible. It can now be portrayed as the great internationalist and European party.

The Whips sidle up to us saying, "Old boy, this will never come about; show some political sophistication and vote for a bit of nonsense as it will never come about; don't be so awkward and silly—for heaven's sake, learn a bit of political skill or you will never survive." I should have thought that such an adroit Government would appreciate that if the treaty was always going to be nonsense and never come about, there was no better way to make the Labour party unpopular than to play the patriotic card and say that the Labour party was now in the hands of the European enthusiasts while the Conservatives should say that theirs was a British policy, based on sound assessment of what was economically possible.

I find the position difficult to understand. I should have thought that if the Whips were right in saying that the treaty was nonsense, it was a good opportunity for the Government to say clearly that they would not have a single currency at any price at any time. They should say, "We understand the arguments; we made a terrible mistake which left us in an appallingly humiliating position on 16 September, but at least we have learnt from it." If they cannot say that, are we not left with the awful suspicion that they want to return to the ERM and a single currency as quickly as possible? And are we not left in the awful position in which the mistakes of 16 September will be repeated with horrifying consequences for the British people?

Mr. Timothy Kirkhope (Lords Commissioner to the Treasury)

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

Question put, That the Question be now put:—

The Committee proceeded to a Division—

Mr. Spearing (seated and covered)

On a point of order, Mr. Lofthouse. I do not like this headgear—it does not suit me—but I have no choice but to wear it. I believe that I am correct in saying that the spokesman for Her Majesty's Opposition did not contribute to the last debate.

The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse)

That is correct.

Mr. Spearing

Is it in order, Mr. Lofthouse, for a closure motion to be accepted when an important financial matter has not been spoken to by the Opposition spokesman—or did he not wish to speak?

The Chairman

It was certainly in order. I do not call Members who do not rise to speak.

Mr. Spearing

Thank you, Sir.

The Committee having divided: Ayes 284, Noes 248.

Division No. 239] [12.39 am
Adley, Robert Churchill, Mr
Aitken, Jonathan Clappison, James
Alexander, Richard Clarke, Rt Hon Kenneth (Ruclif)
Alison, Rt Hon Michael (Selby) Clifton-Brown, Geoffrey
Alton, David Coe, Sebastian
Amess, David Colvin, Michael
Ancram, Michael Congdon, David
Arbuthnot, James Conway, Derek
Arnold, Jacques (Gravesham) Coombs, Anthony (Wyre For'st)
Aspinwall, Jack Coombs, Simon (Swindon)
Atkinson, David (Bour' mouth E) Cope, Rt Hon Sir John
Atkinson, Peter (Hexham) Cormack, Patrick
Baker, Nicholas (Dorset North) Couchman, James
Baldry, Tony Currie, Mrs Edwina (S D' by'ire)
Banks, Matthew (Southport) Curry, David (Skipton & Ripon)
Banks, Robert (Harrogate) Dafis, Cynog
Bates, Michael Dalyell, Tam
Batiste, Spencer Davies, Quentin (Stamford)
Beith, Rt Hon A. J. Davis, David (Boothferry)
Bellingham, Henry Day, Stephen
Beresford, Sir Paul Deva, Nirj Joseph
Blackburn, Dr John G. Devlin, Tim
Booth, Hartley Dickens, Geoffrey
Boswell, Tim Dicks, Terry
Bottomley, Peter (Eltham) Dorrell, Stephen
Bottomley, Rt Hon Virginia Douglas-Hamilton, Lord James
Bowden, Andrew Dover, Den
Bowis, John Duncan, Alan
Brandreth, Gyles Dunn, Bob
Brazier, Julian Durant, Sir Anthony
Brooke, Rt Hon Peter Dykes, Hugh
Brown, M. (Brigg & Cl'thorpes) Elletson, Harold
Browning, Mrs. Angela Emery, Rt Hon Sir Peter
Bruce, Ian (S Dorset) Evans, David (Welwyn Hatfield)
Burns, Simon Evans, Jonathan (Brecon)
Burt, Alistair Evans, Nigel (Ribble Valley)
Butler, Peter Evans, Roger (Monmouth)
Butterfill, John Evennett, David
Campbell, Menzies (Fife NE) Faber, David
Carlile, Alexander (Montgomry) Fabricant, Michael
Carlisle, Kenneth (Lincoln) Fairbairn, Sir Nicholas
Carrington, Matthew Fenner, Dame Peggy
Field, Barry (Isle of Wight) Luff, Peter
Forman, Nigel Lyell, Rt Hon Sir Nicholas
Forsyth, Michael (Stirling) MacGregor, Rt Hon John
Forth, Eric MacKay, Andrew
Foster, Don (Bath) Maclean, David
Fowler, Rt Hon Sir Norman McLoughlin, Patrick
Fox, Dr Liam (Woodspring) Madel, David
Fox, Sir Marcus (Shipley) Maitland, Lady Olga
Freeman, Roger Malone, Gerald
French, Douglas Mans, Keith
Gale, Roger Marland, Paul
Gallie, Phil Marshall, John (Hendon S)
Garel-Jones, Rt Hon Tristan Marshall, Sir Michael (Arundel)
Garnier, Edward Martin, David (Portsmouth S)
Gillan, Cheryl Mawhinney, Dr Brian
Goodlad, Rt Hon Alastair Mellor, Rt Hon David
Goodson-Wickes, Dr Charles Merchant, Piers
Gorst, John Milligan, Stephen
Grant, Sir Anthony (Cambs SW) Mills, Iain
Greenway, Harry (Ealing N) Mitchell, Andrew (Gedling)
Greenway, John (Ryedale) Mitchell, Sir David (Hants NW)
Grylls, Sir Michael Monro, Sir Hector
Gummer, Rt Hon John Selwyn Montgomery, Sir Fergus
Hague, William Moss, Malcolm
Hamilton, Neil (Tatton) Needham, Richard
Hampson, Dr Keith Nelson, Anthony
Hanley, Jeremy Neubert, Sir Michael
Hannam, Sir John Newton, Rt Hon Tony
Hargreaves, Andrew Nicholls, Patrick
Harris, David Nicholson, David (Taunton)
Haselhurst, Alan Nicholson, Emma (Devon West)
Hawkins, Nick Norris, Steve
Hayes, Jerry Onslow, Rt Hon Sir Cranley
Heald, Oliver Oppenheim, Phillip
Heathcoat-Amory, David Ottaway, Richard
Hendry, Charles Page, Richard
Heseltine, Rt Hon Michael Paice, James
Hicks, Robert Patnick, Irvine
Higgins, Rt Hon Sir Terence L. Patten, Rt Hon John
Hill, James (Southampton Test) Pattie, Rt Hon Sir Geoffrey
Hogg, Rt Hon Douglas (G'tham) Pickles, Eric
Horam, John Porter, Barry (Wirral S)
Hordern, Rt Hon Sir Peter Portillo, Rt Hon Michael
Howard, Rt Hon Michael Powell, William (Corby)
Howarth, Alan (Strat'rd-on-A) Rathbone, Tim
Howell, Rt Hon David (G'dford) Redwood, John
Hughes Robert G. (Harrow W) Renton, Rt Hon Tim
Hughes, Simon (Southwark) Richards, Rod
Hunt, Rt Hon David (Wirral W) Riddick, Graham
Hunt, Sir John (Ravensbourne) Rifkind, Rt Hon. Malcolm
Hurd, Rt Hon Douglas Robathan, Andrew
Jack, Michael Roberts, Rt Hon Sir Wyn
Jackson, Robert (Wantage) Robertson, Raymond (Ab'd'n S)
Johnson Smith, Sir Geoffrey Robinson, Mark (Somerton)
Johnston, Sir Russell Roe, Mrs Marion (Broxbourne)
Jones, Gwilym (Cardiff N) Rowe, Andrew (Mid Kent)
Jones, Ieuan Wyn (Ynys Môn) Rumbold, Rt Hon Dame Angela
Jones, Nigel (Cheltenham) Ryder, Rt Hon Richard
Jopling, Rt Hon Michael Sackville, Tom
Kellett-Bowman, Dame Elaine Sainsbury, Rt Hon Tim
Kennedy, Charles (Ross, C&S) Scott, Rt Hon Nicholas
Key, Robert Shaw, David (Dover)
King, Rt Hon Tom Shaw, Sir Giles (Pudsey)
Kirkhope, Timothy Shepherd, Colin (Hereford)
Kirkwood, Archy Shersby, Michael
Knight, Mrs Angela (Erewash) Sims, Roger
Knight, Greg (Derby N) Smith, Sir Dudley (Warwick)
Knight, Dame Jill (Bir'm E'st'n) Smith, Tim (Beaconsfield)
Knox, David Soames, Nicholas
Kynoch, George (Kincardine) Speed, Sir Keith
Lait, Mrs Jacqui Spencer, Sir Derek
Lamont, Rt Hon Norman Spicer, Sir James (W Dorset)
Lang, Rt Hon Ian Spink, Dr Robert
Leigh, Edward Spring, Richard
Lennox-Boyd, Mark Sproat, Iain
Lester, Jim (Broxtowe) Squire, Robin (Hornchurch)
Lidington, David Stanley, Rt Hon Sir John
Lilley, Rt Hon Peter Steen, Anthony
Lloyd, Peter (Fareham) Stephen, Michael
Llwyd, Elfyn Stern, Michael
Stewart, Allan Wallace, James
Streeter, Gary Waller, Gary
Sumberg, David Ward, John
Sykes, John Wardle, Charles (Bexhill)
Taylor, Ian (Esher) Waterson, Nigel
Taylor, John M. (Solihull) Watts, John
Temple-Morris, Peter Wells, Bowen
Thomason, Roy Wheeler, Rt Hon Sir John
Thompson, Sir Donald (C'er V) Whitney, Ray
Thompson, Patrick (Norwich N) Whittingdale, John
Thurnham, Peter Widdecombe, Ann
Townend, John (Bridlington) Wiggin, Sir Jerry
Townsend, Cyril D. (Bexl'yh'th) Willetts, David
Tracey, Richard Wilshire, David
Tredinnick, David Wolfson, Mark
Trend, Michael Wood, Timothy
Trotter, Neville Yeo, Tim
Twinn, Dr Ian Young, Sir George (Acton)
Tyler, Paul
Viggers, Peter Tellers for the Ayes:
Waldegrave, Rt Hon William Mr. David Lightbown and
Walden, George Mr. Sydney Chapman.
Abbott, Ms Diane Cran, James
Adams, Mrs Irene Cryer, Bob
Ainger, Nick Cummings, John
Ainsworth, Robert (Cov'try NE) Cunliffe, Lawrence
Allen, Graham Cunningham, Jim (Covy SE)
Anderson, Ms Janet (Ros'dale) Cunningham, Rt Hon Dr John
Armstrong, Hilary Darling, Alistair
Austin-Walker, John Davidson, Ian
Banks, Tony (Newham NW) Davies, Rt Hon Denzil (Llanelli)
Barnes, Harry Davis, Terry (B'ham, H'dge H'l)
Barron, Kevin Denham, John
Battle, John Dewar, Donald
Bayley, Hugh Dixon, Don
Beckett, Rt Hon Margaret Dobson, Frank
Beggs, Roy Donohoe, Brian H.
Bell, Stuart Dowd, Jim
Benn, Rt Hon Tony Dunnachie, Jimmy
Bennett, Andrew F. Dunwoody, Mrs Gwyneth
Benton, Joe Eagle, Ms Angela
Bermingham, Gerald Eastham, Ken
Berry, Dr. Roger Enright, Derek
Betts, Clive Etherington, Bill
Blair, Tony Evans, John (St Helens N)
Blunkett, David Ewing, Mrs Margaret
Boateng, Paul Fatchett, Derek
Boyes, Roland Field, Frank (Birkenhead)
Bradley, Keith Fisher, Mark
Brown, Gordon (Dunfermline E) Flynn, Paul
Brown, N. (N'c'tle upon Tyne E) Foster, Rt Hon Derek
Budgen, Nicholas Foulkes, George
Burden, Richard Fraser, John
Byers, Stephen Fyfe, Maria
Caborn, Richard Galloway, George
Callaghan, Jim Gapes, Mike
Campbell, Mrs Anne (C'bridge) George, Bruce
Campbell, Ronnie (Blyth V) Gerrard, Neil
Campbell-Savours, D. N. Gilbert, Rt Hon Dr John
Canavan, Dennis Gill, Christopher
Cann, Jamie Godman, Dr Norman A.
Cash, William Godsiff, Roger
Chisholm, Malcolm Gorman, Mrs Teresa
Clapham, Michael Graham, Thomas
Clark, Dr David (South Shields) Grant, Bernie (Tottenham)
Clarke, Eric (Midlothian) Griffiths, Nigel (Edinburgh S)
Clarke, Tom (Monklands W) Griffiths, Win (Bridgend)
Clelland, David Gunnell, John
Clwyd, Mrs Ann Hain, Peter
Coffey, Ann Hall, Mike
Connarty, Michael Hanson, David
Cook, Frank (Stockton N) Hardy, Peter
Cook, Robin (Livingston) Harman, Ms Harriet
Corbett, Robin Henderson, Doug
Corbyn, Jeremy Heppell, John
Corston, Ms Jean Hill, Keith (Streatham)
Cousins, Jim Hinchliffe, David
Cox, Tom Hoey, Kate
Hogg, Norman (Cumbernauld) O'Neill, Martin
Hoon, Geoffrey Orme, Rt Hon Stanley
Howarth, George (Knowsley N) Paisley, Rev Ian
Howells, Dr. Kim (Pontypridd) Pendry, Tom
Hoyle, Doug Pickthall, Colin
Hughes, Kevin (Doncaster N) Pike, Peter L.
Hughes, Robert (Aberdeen N) Powell, Ray (Ogmore)
Hutton, John Prentice, Ms Bridget (Lew'm E)
Illsley, Eric Prentice, Gordon (Pendle)
Ingram, Adam Prescott, John
Jackson, Glenda (H'stead) Primarolo, Dawn
Jackson, Helen (Shef'ld, H) Purchase, Ken
Jamieson, David Quin, Ms Joyce
Janner, Greville Randall, Stuart
Jessel, Toby Raynsford, Nick
Jones, Barry (Alyn and D'side) Redmond, Martin
Jones, Jon Owen (Cardiff C) Reid, Dr John
Jones, Lynne (B'ham S O) Robertson, George (Hamilton)
Jones, Martyn (Clwyd, SW) Roche, Mrs. Barbara
Jowell, Tessa Rogers, Allan
Kaufman, Rt Hon Gerald Rooker, Jeff
Keen, Alan Rooney, Terry
Kennedy, Jane (Lpool Brdgn) Ross, Ernie (Dundee W)
Khabra, Piara S. Ross, William (E Londonderry)
Kilfoyle, Peter Rowlands, Ted
Knapman, Roger Salmond, Alex
Lawrence, Sir Ivan Sedgemore, Brian
Leighton, Ron Sheerman, Barry
Lewis, Terry Shore, Rt Hon Peter
Litherland, Robert Short, Clare
Livingstone, Ken Simpson, Alan
Lloyd, Tony (Stretford) Skeet, Sir Trevor
Lord, Michael Skinner, Dennis
Loyden, Eddie Smith, Andrew (Oxford E)
McAllion, John Smith, C. (Isl'ton S & F'sbury)
McAvoy, Thomas Smith, Rt Hon John (M'kl'ds E)
McCartney, Ian Smith, Llew (Blaenau Gwent)
Macdonald, Calum Soley, Clive
McFall, John Spearing, Nigel
McKelvey, William Spellar, John
McLeish, Henry Spicer, Michael (S Worcs)
McNamara, Kevin Steinberg, Gerry
McWilliam, John Stevenson, George
Madden, Max Straw, Jack
Mahon, Alice Sweeney, Walter
Mandelson, Peter Taylor, Mrs Ann (Dewsbury)
Marek, Dr John Taylor, Sir Teddy (Southend, E)
Marlow, Tony Thompson, Jack (Wansbeck)
Marshall, David (Shettleston) Turner, Dennis
Marshall, Jim (Leicester, S) Walker, Bill (N Tayside)
Martin, Michael J. (Springburn) Walley, Joan
Martlew, Eric Wardell, Gareth (Gower)
Maxton, John Wareing, Robert N
Meacher, Michael Watson, Mike
Meale, Alan Welsh, Andrew
Michael, Alun Wicks, Malcolm
Michie, Bill (Sheffield Heeley) Wilkinson, John
Milburn, Alan Williams, Rt Hon Alan (Sw'n W)
Miller, Andrew Williams, Alan W (Carmarthen)
Moonie, Dr Lewis Wilson, Brian
Morris, Rt Hon A. (Wy'nshawe) Winnick, David
Morris, Estelle (B'ham Yardley) Winterton, Mrs Ann (Congleton)
Mowlam, Marjorie Winterton, Nicholas (Macc'f'ld)
Mudie, George Wise, Audrey
Mullin, Chris Wright, Dr Tony
Murphy, Paul Young, David (Bolton SE)
Oakes, Rt Hon Gordon
O'Brien, Michael (N W'kshire) Tellers for the Noes:
O'Brien, William (Normanton) Mr. Gordon McMaster and
O'Hara, Edward Mr. Andrew Mackinlay.
Olner, William

Question accordingly agreed to.

Question put accordingly, That the clause, as amended, stand part of the Bill:—

The Committee divided: Ayes 271, Noes 55.

Division No. 240] [12.55 am
Adley, Robert Faber, David
Ainsworth, Peter (East Surrey) Fabricant, Michael
Aitken, Jonathan Fairbairn, Sir Nicholas
Alexander, Richard Fenner, Dame Peggy
Alison, Rt Hon Michael (Selby) Field, Barry (Isle of Wight)
Alton, David Fishburn, Dudley
Amess, David Forman, Nigel
Ancram, Michael Forsyth, Michael (Stirling)
Arbuthnot, James Forth, Eric
Arnold, Jacques (Gravesham) Fowler, Rt Hon Sir Norman
Aspinwall, Jack Fox, Dr Liam (Woodspring)
Atkinson, David (Bour'mouth E) Fox, Sir Marcus (Shipley)
Atkinson, Peter (Hexham) Freeman, Roger
Baker, Nicholas (Dorset North) French, Douglas
Baldry, Tony Gale, Roger
Banks, Matthew (Southport) Gallie, Phil
Banks, Robert (Harrogate) Garel-Jones, Rt Hon Tristan
Bates, Michael Garnier, Edward
Batiste, Spencer Gillan, Cheryl
Bellingham, Henry Goodlad, Rt Hon Alastair
Beresford, Sir Paul Goodson-Wickes, Dr Charles
Blackburn, Dr John G. Gorst, John
Booth, Hartley Grant, Sir Anthony (Cambs SW)
Boswell, Tim Greenway, Harry (Ealing N)
Bottomley, Peter (Eltham) Greenway, John (Ryedale)
Bottomley, Rt Hon Virginia Grylls, Sir Michael
Bowden, Andrew Gummer, Rt Hon John Selwyn
Bowis, John Hague, William
Brandreth, Gyles Hamilton, Neil (Tatton)
Brazier, Julian Hampson, Dr Keith
Brooke, Rt Hon Peter Hanley, Jeremy
Brown, M. (Brigg & Cl'thorpes) Hannam, Sir John
Browning, Mrs. Angela Hargreaves, Andrew
Bruce, Ian (S Dorset) Harris, David
Burns, Simon Haselhurst, Alan
Burt, Alistair Hawkins, Nick
Butler, Peter Hayes, Jerry
Butterfill, John Heald, Oliver
Carlisle, Kenneth (Lincoln) Heathcoat-Amory, David
Carrington, Matthew Hendry, Charles
Churchill, Mr Heseltine, Rt Hon Michael
Clappison, James Hicks, Robert
Clarke, Rt Hon Kenneth (Ruclif) Higgins, Rt Hon Sir Terence L.
Clifton-Brown, Geoffrey Hill, James (Southampton Test)
Coe, Sebastian Hogg, Rt Hon Douglas (G'tham)
Colvin, Michael Horam, John
Congdon, David Hordern, Rt Hon Sir Peter
Conway, Derek Howard, Rt Hon Michael
Coombs, Anthony (Wyre For'st) Howarth, Alan (Strat'rd-on-A)
Coombs, Simon (Swindon) Howell, Rt Hon David (G'dford)
Cope, Rt Hon Sir John Hughes Robert G. (Harrow W)
Cormack, Patrick Hunt, Rt Hon David (Wirral W)
Couchman, James Hunt, Sir John (Ravensbourne)
Currie, Mrs Edwina (S D'by'ire) Hurd, Rt Hon Douglas
Curry, David (Skipton & Ripon) Jack, Michael
Davies, Quentin (Stamford) Jackson, Robert (Wantage)
Davis, David (Boothferry) Johnson Smith, Sir Geoffrey
Day, Stephen Jones, Gwilym (Cardiff N)
Deva, Nirj Joseph Jopling, Rt Hon Michael
Devlin, Tim Kellett-Bowman, Dame Elaine
Dickens, Geoffrey Key, Robert
Dicks, Terry King, Rt Hon Tom
Dorrell, Stephen Kirkhope, Timothy
Douglas-Hamilton, Lord James Knight, Mrs Angela (Erewash)
Dover, Den Knight, Greg (Derby N)
Duncan, Alan Knight, Dame Jill (Bir'm E'st'n)
Dunn, Bob Knox, David
Durant, Sir Anthony Kynoch, George (Kincardine)
Dykes, Hugh Lait, Mrs Jacqui
Eggar, Tim Lamont, Rt Hon Norman
Elletson, Harold Lang, Rt Hon Ian
Emery, Rt Hon Sir Peter Leigh, Edward
Evans, David (Welwyn Hatfield) Lennox-Boyd, Mark
Evans, Jonathan (Brecon) Lester, Jim (Broxtowe)
Evans, Nigel (Ribble Valley) Lidington, David
Evans, Roger (Monmouth) Lilley, Rt Hon Peter
Evennett, David Lloyd, Peter (Fareham)
Luff, Peter Scott, Rt Hon Nicholas
Lyell, Rt Hon Sir Nicholas Shaw, David (Dover)
MacGregor, Rt Hon John Shaw, Sir Giles (Pudsey)
MacKay, Andrew Shepherd, Colin (Hereford)
Maclean, David Shersby, Michael
McLoughlin, Patrick Sims, Roger
Madel, David Smith, Sir Dudley (Warwick)
Maitland, Lady Olga Smith, Tim (Beaconsfield)
Malone, Gerald Soames, Nicholas
Mans, Keith Speed, Sir Keith
Marland, Paul Spencer, Sir Derek
Marshall, John (Hendon S) Spicer, Sir James (W Dorset)
Marshall, Sir Michael (Arundel) Spink, Dr Robert
Martin, David (Portsmouth S) Spring, Richard
Mawhinney, Dr Brian Sproat, Iain
Mellor, Rt Hon David Squire, Robin (Hornchurch)
Merchant, Piers Stanley, Rt Hon Sir John
Milligan, Stephen Steen, Anthony
Mills, Iain Stephen, Michael
Mitchell, Andrew (Gedling) Stern, Michael
Mitchell, Sir David (Hants NW) Stewart, Allan
Monro, Sir Hector Streeter, Gary
Montgomery, Sir Fergus Sumberg, David
Moss, Malcolm Sykes, John
Needham, Richard Taylor, Ian (Esher)
Nelson, Anthony Taylor, John M. (Solihull)
Neubert, Sir Michael Temple-Morris, Peter
Newton, Rt Hon Tony Thomason, Roy
Nicholls, Patrick Thompson, Sir Donald (C'er V)
Nicholson, David (Taunton) Thompson, Patrick (Norwich N)
Nicholson, Emma (Devon West) Thurnham, Peter
Norris, Steve Townsend, Cyril D. (Bexl'yh'th)
Onslow, Rt Hon Sir Cranley Tracey, Richard
Oppenheim, Phillip Tredinnick, David
Ottaway, Richard Trend, Michael
Page, Richard Trotter, Neville
Paice, James Twinn, Dr Ian
Paisley, Rev Ian Viggers, Peter
Patnick, Irvine Waldegrave, Rt Hon William
Patten, Rt Hon John Walden, George
Pattie, Rt Hon Sir Geoffrey Waller, Gary
Pickles, Eric Ward, John
Porter, Barry (Wirral S) Wardle, Charles (Bexhill)
Portillo, Rt Hon Michael Waterson, Nigel
Powell, William (Corby) Watts, John
Rathbone, Tim Wells, Bowen
Redwood, John Wheeler, Rt Hon Sir John
Renton, Rt Hon Tim Whitney, Ray
Richards, Rod Widdecombe, Ann
Riddick, Graham Wiggin, Sir Jerry
Rifkind, Rt Hon. Malcolm Willetts, David
Robathan, Andrew Wilshire, David
Roberts, Rt Hon Sir Wyn Wolfson, Mark
Robertson, Raymond (Ab'd'n S) Wood, Timothy
Robinson, Mark (Somerton) Yeo, Tim
Roe, Mrs Marion (Broxbourne) Young, Sir George (Acton)
Rowe, Andrew (Mid Kent)
Rumbold, Rt Hon Dame Angela Tellers for the Ayes:
Ryder, Rt Hon Richard Mr. David Lightbown, and
Sackville, Tom Mr. Sydney Chapman.
Sainsbury, Rt Hon Tim
Adams, Mrs Irene Davidson, Ian
Austin-Walker, John Foster, Don (Bath)
Barnes, Harry Galloway, George
Beith, Rt Hon A. J. Gerrard, Neil
Benn, Rt Hon Tony Godman, Dr Norman A.
Campbell, Menzies (Fife NE) Graham, Thomas
Campbell, Ronnie (Blyth V) Grant, Bernie (Tottenham)
Cann, Jamie Hall, Mike
Carlile, Alexander (Montgomry) Hughes, Kevin (Doncaster N)
Cash, William Hughes, Simon (Southwark)
Clapham, Michael Johnston, Sir Russell
Connarty, Michael Jones, Nigel (Cheltenham)
Corbyn, Jeremy Kennedy, Charles (Ross, C&S)
Cox, Tom Kennedy, Jane (Lpool Brdgn)
Cryer, Bob Kilfoyle, Peter
Cummings, John Lewis, Terry
Cunningham, Jim (Covy SE) Livingstone, Ken
Loyden, Eddie Salmond, Alex
McAllion, John Skinner, Dennis
McKelvey, William Stevenson, George
McWilliam, John Tyler, Paul
Madden, Max Wallace, James
Mahon, Alice Watson, Mike
Marshall, David (Shettleston) Welsh, Andrew
Marshall, Jim (Leicester, S) Wise, Audrey
Michie, Bill (Sheffield Heeley)
Pickthall, Colin Tellers for the Noes:
Pope, Greg Mr. Archy Kirkwood and Mrs. Margaret Ewing.
Redmond, Martin
Rooney, Terry

Question accordingly agreed to.

Clause 2, as amended, ordered to stand part of the Bill.

Mr. Spearing

On a point of order, Mr. Lofthouse. You will recall that, during the previous Division, I raised a point of order about the closure motion and the conduct of the Opposition Front Bench spokesman. I pointed out that there had been no speech from a member of the Opposition Front Bench. I inquired about the propriety of accepting a closure motion in those circumstances. You informed me that, to your knowledge or to your sight, no member of the Opposition Front Bench rose to speak. As a result, I had a few words with my hon. Friend the Member for Oxford, East (Mr. Smith)—

The First Deputy Chairman

Order. I have already ruled on that point of order, and I have nothing further to add.

I must tell the Committee that, after the debate on clause 3 stand part, I am prepared to select for separate Divisions new clauses 1 and 2, tabled in the name of the Leader of the Opposition.

Clause 3 ordered to stand part of the Bill.

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