HC Deb 09 December 1993 vol 234 cc501-91

[Relevant documents: European Community Documents Nos. 6203/93, Annual report from the Commission on the fight against fraud in 1992 and its action programme for 1993, 8366/93, Commission proposal and supplementary report on regulation 386/90, 8340/92, on Sweden's application for EC membership, 5725/93, on Finland's application for EC membership, 7839/93, on Cyprus's application for EC membership, 7838/93, on Malta's application for EC membership, and 9806/93, on the Edinburgh Growth Initiative, and the Minutes of Evidence taken before the Foreign Affairs Committee on 23rd November 1993 (HC 28-i).]

Madam Speaker

I must inform the House that I have selected the amendment in the name of the Leader of the Opposition.

Mr. Nigel Spearing (Newham, South)

On a point of order, Madam Speaker. May I draw your attention to two points relating to the motion? First, excluding a number of documents about the Budget, there are, by my count, at least eight distinct documents dealing with other matters. That is, of course, in order, although it may not be desirable for the purpose of orderly debate and scrutiny.

The second point, irrespective of the volume of material, which I believe that the hon. Member for Southend, East (Sir T. Taylor) will illustrate, concerns the question of notification of documents which are to be debated and their availability in the Vote Office. They are technically available, as they have arrived in the past 36 hours. I understand that the Government have undertaken to debate matters that are to be on the agenda of the European Council which is to start tomorrow. Unless we debate the matters that are likely to be raised then, which may place the Government in difficulties with regard to documentation, we shall not have the opportunity to influence whatever may be said there by the Prime Minister and the Foreign Secretary. If we do not have sufficient time to peruse even a few documents and determine what they are, let alone those before us, what chance is there of an orderly debate to allow us to influence the deliberations, however marginally?

I ask you, Madam Speaker, to consider those points and perhaps to give some guidance to the House, because, without improved procedures, we shall surely not be able to exercise our democratic rights in what is supposed to be a democratic Community.

Madam Speaker

I have listened carefully and with considerable sympathy to what the hon. Gentleman says about the complexity of the business before us. Indeed, I have the papers on my desk and I am familiar with the task before hon. Members in going through such documents. In particular, I am concerned that some papers mentioned by the hon. Gentleman have only recently been available to the Select Committee itself and to the House as a whole. However, as the hon. Gentleman knows, my direct responsibility as Speaker is to rule on whether today's debate is in order. I can confirm that it is.

As for the latter part of the hon. Gentleman's point, it will be for Ministers, during the course of the debate, to justify and to explain the form and timing of the motion that they have tabled and give the reasons for them.

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

I beg to move, That this House takes note of the White Paper on developments in the European Community, July to December 1992 (Cm. 2168), the White Paper on developments in the European Community, January to June 1993 (Cm. 2369), the unnumbered Explanatory Memorandum submitted by HM Treasury on 6th December 1993 on the Commission's recommendation for the broad guidelines for economic policies under Article 103(2) of the Treaty establishing the European Community, European Community Documents Nos. COM (93)700, the Commission's White Book on growth, competitiveness and employment, COM (93)545, the Commission's report to the European Council on subsidiarity, 7194/93, on reinforcing the effectiveness of the internal market, 7665/93, the Preliminary Draft Budget of the European Communities for 1994, 9303/93, the letter of amendment No. 1 to the Preliminary Draft Budget for 1994, 8012/93, the Draft Budget of the European Communities for 1994, and 9922/93, the European Parliament's proposed amendments and modifications to the Draft Budget for 1994, the unnumbered Explanatory Memorandum submitted by HM Treasury on 22nd November 1993, relating to the Council's decisions on the European Parliament's proposed amendments and modifications to the Draft Budget for 1994, the unnumbered Explanatory Memorandum submitted by HM Treasury on 2nd November 1993, relating to the revision of the Financial Perspective for 1994, and OJ C309, the Annual Report of the European Court of Auditors concerning the financial year 1992, together with the replies of the Institutions.

I am sorry not to be able to stay to the end of the debate, because I have to go to the European Council with which it is partly concerned, and that is part of the dilemma to which the hon. Member for Newham, South (Mr. Spearing) has just drawn our attention. I will deal with one of the most important papers later. My right hon. and learned Friend the Chancellor of the Exchequer will come hotfoot after me to Brussels, but he will be primed with the arguments made in the debate, which he will wind up.

This is the first main debate on Europe since the battle of Maastricht was brought to an end at the end of July. That battle, in which we all engaged for many months, was conducted at a level of debate—parliamentary gamesmanship, I suppose—which made it difficult from time to time to focus exactly on what was at stake for Britain and for Europe. Now we can do that.

Is the treaty of Maastricht, in the plain light of day, the nightmare that was described night after night through our long debates?

Mr. Bob Cryer (Bradford, South)

Yes; it is.

Mr. Hurd

A few hon. Members persist for a little longer in saying that it is, but, of course, it is not. On the contrary, the treaty and what now follows mark, I believe, a new realism. The declaration that marked the treaty's entry into force was agreed at the special European Council in October. The declaration said: Ratification has been the occasion for a true public debate on the construction of Europe, its aims and its methods. That debate has been salutary. It has revealed weaknesses. There are many to whom Europe seemed distant, anonymous and interfering. For that reason, we wish to introduce greater transparency, openness and decentralisation in our procedures. We want a Europe close to the citizen and intervening only where necessary to pursue our common interests. The unity of our action can and must be reconciled with the diversity of our traditions. Effectiveness can and must be reconciled with democracy.

A few years ago, only the British representative at the Council could have produced and uttered a paragraph of that kind. In October, it was agreed by all 12 Heads of State and Government. That is what I mean by saying not that the debate on those matters is over, but that it is beginning to move in the direction with which most people in the House would be sympathetic.

Mr. David Winnick (Walsall, North)


Mr. Hurd

I should like to get on a little bit; then I will give way to the hon. Gentleman.

For many, the dream of a European Union was pursued on the continent as if it were a holy grail. No one could define it and it was a sacrilege to question it. As Hilaire Belloc said of the microbe: Oh let us never never doubt What nobody is sure about". There was that feeling about European Union.

Now we have begun, in the treaty, to achieve a surer sense of the balance between the nations of Europe and its common institutions. We are trying to preserve what is best about sovereign nations—their history, identity, culture, pride; while overcoming what is worst—xenophobia, swollen nationalism, trade barriers, even war. No one pretends—or no one sensibly pretends—that the treaty provides a permanent answer. The debate continues; the argument moves on; but certain important principles are now established. We shall remain nation states within our common enterprise, with separate identities.

The most recent important organisation in Europe to pronounce on the treaty was the German constitutional court in Karsruhe. It put it this way in October: the Maastricht Treaty … founds an association of states with the goal of an ever-closer Union of European peoples organised as states, and not a (single) state based on a European people". So the Community is not a belt, moving us slowly and inexorably towards a super-state. Of course, there are some people who would like it to be; there are even some people in the House who would like it to be. I have just seen a rather remarkable speech that was made by the right hon. Member for Yeovil (Mr. Ashdown) this morning.

Mr. Dennis Skinner (Bolsover)

Is it a petition?

Mr. Hurd

No; it is not. It is a vision. The right hon. Gentleman has visions, rather in the same way as St. Joan had voices. He has several a day. They do him a certain amount of good between elections, but not much good at general elections. He had a vision this morning. What is more, it was a positive vision, because he told us so. As part of that vision, he wanted to see the European Parliament catch up with the Council of Ministers in power, with equal law-making rights over more issues—one could argue about that. Then he said: We want the Ministers to make decisions in public without single nation vetoes". I do not know what that means. I have not heard the right hon. Gentleman or the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy), who is to speak for the Liberal Democrats today, say that before. Do they want majority voting on everything—on immigration, and on all matters of foreign policy? Is that the policy of the Liberal Democrats, the policy which they will parade before the country in the lead-up to the elections in June?

That is almost as bad as the policy that the Leader of the Opposition signed with his own fair hand when he was attending the Socialist International in Brussels a few weeks ago.

Mr. Charles Kennedy (Ross, Cromarty and Skye)


Mr. Hurd

I am glad that the hon. Gentleman is going to speak. Before he intervenes, I trust that he is acquainted with the vision.

Mr. Kennedy

The Foreign Secretary is in no position to talk about visions, in view of the "war of attrition" speech that he delivered the last time that we debated matters European, at the end of the Maastricht process-I notice that all the old faces are back today.

As the right hon. Gentleman is beginning his speech in rather an odd way for a British Foreign Secretary, in asking questions about Labour and Liberal Democrat policy, and our links with other European parties, may I ask him about British Conservative links with the European People's party and its commitment to federalism, to which the Conservative Members of the European Parliament wish to subscribe for the forthcoming Euro-elections? Is that the Foreign Secretary's policy? It seems to be the policy of his MEPs.

Mr. Hurd

That is not the policy of the Foreign Secretary or that of the MEPs. It is a policy of the people with whom they are in alliance. That is entirely different from the Leader of the Opposition going to Brussels and subscribing personally to a policy, and from the right hon. Member for Yeovil having visions and describing them. That is an entirely different proposition—

Dr. John Cunningham (Copeland)


Mr. Hurd

I shall give way to the right hon. Gentleman in a moment; I am dealing with the hon. Member for Ross, Cromarty and Skye at the moment.

We shall be happy to debate those matters from time to time and at greater length.

Dr. Cunningham

We shall deal with the manifesto of the European People's party later—and, for that matter, the friendly attitude of M. Le Pen towards the opt-out from the social chapter, which is so far the sole province of British Ministers. Before the Foreign Secretary reads two errors about my right hon. and learned Friend the Leader of the Opposition into the record, may I correct him? First, there was no meeting of the Socialist International; he was wrong about that; it was the party of European socialists. Secondly, we signed no manifesto committing ourselves to a federal Europe.

Mr. Hurd

I do not have the Leader of the Opposition's vision in my hand now, but it was a striking and positive one. The Conservative MEPs and all our candidates will fight on a manifesto being fashioned now—a process in which I may have some part. It will be a British Conservative European manifesto. Neither the leader of the Liberal Democrats nor the leader of the Labour party will be able to make a similar claim about their independence of thought in such matters.

Sir Teddy Taylor (Southend, East)

Can we clarify the issue and put it beyond debate? Is it true that all the Conservative MEPs were present in Athens from 11 to 13 November, where astonishing proposals were drawn up, including taxation by the EC? The press were led to believe that all except one had agreed to the proposals. If we could clear up that matter we could put it back to sleep. Is it not true that the MEPs were in Athens, and approved the document?

Mr. Hurd

I advise my hon. Friend to wait and see the manifesto on which all our candidates will fight the election, and then to contrast it with the vision announced by the right hon. Member for Yeovil today, and with the European socialist document to which the right hon. and learned Member for Monklands, East (Mr. Smith) personally put his name a few weeks ago in Brussels.

Mr. Winnick


Mr. Mike Gapes (Ilford, South)


Mr. Hurd

I must make some progress, but I promised to give way to the hon. Member for Walsall, North (Mr. Winnick), and I shall do so later.

There are areas of policy for which we believe the mechanisms of Community decision making were not designed—this is the whole point. The Maastricht treaty—I ask my hon. Friend the Member for Southend, East (Sir T. Taylor) to focus on this—recognises that there are many areas of European work for which the Community mechanisms are not designed. That is why there are two pillars in the Maastricht treaty establishing intergovernmental pillars of co-operation.

But there is more than that. Even where the Community has a role, action at European level must be the exception, not the rule. That is the principle of subsidiarity now enshrined in the treaty as article 3b. I am well aware, from all the debates we had about subsidiarity, that some people, including perhaps my hon. Friend, regarded this as a bit of an ugly duckling. But I am happy to say that it is developing slowly into quite an impressive swan. [Interruption.] I shall develop that thought.

In Brussels tomorrow and on Saturday, the European Council will consider the Commission's report on subsidiarity. The report is much more impressive than one would have thought likely a year or so ago. It is a substantial call for the simplification, revision or repeal of unnecessary or over-prescriptive legislation. It is a report from the Commission which was once widely seen as the custodian of the centralising faith.

The Commission has recommended that the infamous drinking and bathing water directives need a complete overhaul. They are over-prescriptive and in some cases scientifically outdated. Hon. Members may remember the nonsense about the Community classifying carrots as fruit in a directive on jam. The Commission is now moving right away from its attempt to say what should and should not be in particular foods. Its only concern should be to ensure that safe, properly labelled products are freely traded in the Community under the single market. Food legislation needs to focus on that simple objective. [Interruption.] The right hon. Member for Copeland (Dr. Cunningham) is taking his bisque a bit—does he want to intervene again?

Dr. John Cunningham

The Foreign Secretary talked about water and water quality directives. If what he said is true, why did the Conservative manifesto for the European elections in 1989 say that the directives would apply tough new controls over the quality of drinking water, including stringent limits on levels of nitrates, and ensure that all our bathing waters meet relative European Community standards? Why did the Government promise the electors that they would implement the directives if they have now changed their mind?

Mr. Hurd

While the directives are there, we must make every effort to implement them. What we are saying is that they are excessively complicated and should be simplified. We are not the only ones saying that—the Commission is also saying that. The right hon. Gentleman has inadvertently given me the proof of my point. The argument has moved on. Whereas in 1989 it was regarded as being perfectly natural that there should be all these detailed regulations, it is not so regarded in 1993, even by the Commission. That is good news and the right hon. Gentleman should welcome it, rather than deprecate it.

The Commission's proposal affects about one quarter of all EC legislation and takes on board 16 out of the 24 suggestions put to the Commission by the British and French Governments. Some of the legislation will be scrapped altogether and some will be simplified. The Commission recognises the need to do less, to do it better and to do it with a lighter touch. We shall say that more should be done. At the summit, we shall urge that the suggestions made by the Commission, welcome in so far as they go, should be acted on by the Community immediately.

The process of subsidiarity is under way. But it is a process. It will not be completed this year and it will not be completed next year. It is a constant process of simplification, rationalisation and repeal.

Mr. Gapes

In the process of considering subsidiarity, does the Foreign Secretary agree that, the functioning of the market remains subordinate to general welfare and social justice"? Those words are taken from the draft manifesto of the European People's party and were reported in The Times yesterday. Does the Foreign Secretary agree that the functioning of the market remains subordinate?

Mr. Hurd

No. I believe that the functioning of the market is the most effective way of ensuring their prosperity. As I shall prove shortly, that is a growing view on the continent, as it is in the House. Only the British Labour party seems to lag behind, as the right hon. Member for Copeland proved again with his remarks about the social chapter. When the right hon. Gentleman started to praise the social chapter, he was in the swim and was with the fashionable current. He does not seem to know what is happening on the continent now. He does not seem to know that people on the continent are worried about competitiveness and about labour costs being heaped on employers. The right hon. Gentleman is drifting out of touch.

Mr. Derek Enright (Hemsworth)

Will the right hon. Gentleman give way?

Mr. Hurd

I must get on.

The post-war centralising tendency of Europe has been carried beyond the point of public acceptance, not just in Britain but in Denmark, France and Germany. There has been a widespread perception that what the summit said in October—the declaration of all 12 nations—was that the Community interferes too much in national affairs. If that is true, we must be more selective in the future. We must work together effectively, but on a more selective basis and in areas where there is public support for the process.

At the top of tomorrow's agenda will be the European economy.

Mr. David Howell (Guildford)

It is nice to have lists of powers that the Commission might divest or might centralise back to the nation states. Does my right hon. Friend agree that considerable input should be given to suggestions that things that should be repatriated or decentralised should come from national Governments and national legislatures? Does he support moves that could be devised to pull together lists of competences that can be removed from the centre at the suggestion of nation states and Parliaments?

Mr. Hurd

Those lists are not of competences, but of what the Community should do within those competences. Of course, the EC has to respect the competences that were laid down in the treaty. The competences will come under review probably in 1996, when another look will be taken at the treaty.

We are talking about what use the Community makes of those competences. My right hon. Friend was right to say that those procedures are not just for the Commission, and it is up to member Governments, advised by their Parliaments, to put in suggestions. That is what we and the French have done. We made 24 suggestions, of which the Commission has taken up 16. The Germans put in a list, and they were not satisfied with the response. They will be pressing for more, as we will be pressing for more.

My right hon. Friend is quite right about the procedures. Nation states make suggestions which the Commission considers and, in this case, accepts 16 out of 24.

Mr. Enright

Will the right hon. Gentleman give way?

Mr. Hurd

I am going to get on, but I have the hon. Gentleman in my sights if he persists.

At the top of tomorrow's agenda will be the economic debate, and that is as it should be. We have argued consistently that the Community should address the issues that are of real concern to the people of Europe, and not just get absorbed in institutional introspection.

Mr. Winnick

Will the right hon. Gentleman give way?

Mr. Hurd

No, I must get on.

We all now agree that the Community must turn its energies towards contributing prosperity and the creation of jobs. The Commission's paper on growth, competitiveness and employment arrived late, as was pointed out with some zest and force by my right hon. and learned Friend the Chancellor in Brussels a few days ago. That was too late, either to allow a proper and informed debate in the House or to allow the Heads of State to give it the consideration that it deserves during the next 48 hours.

We agree with a good deal of what the paper says. My right hon. and learned Friend the Chancellor will want to say more on that when he winds up, but much of the analysis is right. The Commission has moved a long way in the past year or so. It has moved well beyond the British Labour party in analysing why Europe has failed to create jobs to the same extent as the United States and Japan, let alone the new Asian competitors.

The Commission is now drawing attention to the costs of employment in Europe and contrasting those increases in costs with the relative increases in other countries. It has not yet drawn the conclusion that we should like and said to Commissioner Flynn that he and the Social Council should no longer do what the British Labour party wants them to do. That would make Europe less competitive and hinder the creation of jobs. The Commission has no longer drawn the logical conclusion of its analysis, but at least it is a good thing that it now shares the type of analysis that we have been making from these Benches for some time.

Mr. John Butcher (Coventry, South-West)

My right hon. Friend shows his customary courtesy by giving way. I fully agree with him on the issue of costs. Does he agree that the greatest distorter of costs in the recent past was the workings of a fixed exchange rate? I draw my right hon. Friend's attention to the Prime Minister's article in The Economist in which he said that he did not wish to, pursue sellotape policies—patching together the unmendable —or to play the politics of illusion—pretending that it was never broken. He was speaking about the ERM. At the coming Euro-summit, will we still oppose either official or unofficial attempts to reintroduce fixed exchange rates?

Mr. Hurd

I did not appreciate that that was an issue. I shall be surprised if anyone at the summit tries to push in the direction that my hon. Friend suggests. My right hon. and learned Friend the Chancellor may wish to comment on that. For the time being, reality has imposed a sudden silence on that area of policy.

Several hon. Members


Mr. Hurd

I have a long speech and wish to make progress but I shall give way to the hon. Member for Walsall, North (Mr. Winnick).

Mr. Winnick

The Foreign Secretary said that Maastricht is no longer an issue. Is he not aware that there is not the slightest sign that the British people are any more enthusiastic or supportive of the treaty than they were when we debated it? Mass unemployment is a curse in the Community countries and, whatever the document says and whatever good we hope that it may do, it will be constantly undermined by the deflationary criteria of the treaty itself—the issue that so many of us tried to emphasise in our debates. That type of economic convergence can only produce more unemployment, not less.

Mr. Hurd

I am sorry that I gave way to the hon. Gentleman because he is simply making speeches that he has made before. We believe in convergence. It is desirable for all member states, which form our main market, to pursue what we and the Council regard as sensible financial policies. We must not think that we can breeze our way out of recession simply by spending more, let alone by putting up trade barriers. There are differences between the two sides of the House, and that is certainly one of them. We agree with the treaty about the convergence criteria, although we do not agree that they should be compulsory. We agree with much of the White Paper's analysis but not with its prescriptions.

Mr. Christopher Gill (Ludlow)

Will my right hon. Friend give way before he moves on?

Mr. Hurd

I have moved on.

We are not attracted by the idea of the Commission's borrowing large new sums to help finance trans-European networks. Access to capital is not the problem. There is a good deal of headroom in the European Investment Bank as a result of last year's Edinburgh agreement. It is not right to encourage new borrowing at a time when the Commission has rightly stressed the need to reduce deficits, as is stated in the treaty. As I have said, the Commission is right to listen carefully to advice from the British and other Governments and from other people.

Mr. Gill

Will my right hon. Friend give way on that point?

Mr. Hurd

I should like to finish this point and then I shall give way to the hon. Member for Alyn and Deeside (Mr. Jones) who has been trying to intervene for some time.

There has been a groundswell of concern in this country and on the continent about a lack of competitiveness in Europe. A notable new voice is that of the European round table which represents leading industrials from all over Europe. In an unprecedented statement last week, it condemned the pernicious effect on employment of the EC social charter and the dangers of social regulation, which it said threatens to introduce protection levels higher than those in any member country which would hamper employment opportunities. That is what I mean when I speak about the new mood of realism in Europe.

Just a few weeks ago, the Commission toyed with plans to force companies to introduce compulsory work sharing schemes. Now the accent has moved—not totally but partly—to where it should be, on creating an environment in which companies can generate new jobs.

Mr. Barry Jones (Alyn and Deeside)

The right hon. Gentleman has emphasised matters relating to employment. What is going on in the GATT talks about the European airbus project? The right hon. Gentleman will know that more than 2,000 plane makers in my constituency make the wings for that magnificent aircraft. It appears that President Clinton has been seeking to gain advantage by telling employees in Seattle who make the Boeing airbus that our airbus, the wings for which are made in my constituency, is unfairly subsidised. Can the right hon. Gentleman assure the work force that I represent that this project is safe in the GATT round? Will he assure them that he and his Cabinet colleagues have been able to safeguard the future of this great project, which is important not only to Britain and to my constituents—

Mr. Deputy Speaker (Mr. Michael Morris)

Order. I think that the Foreign Secretary has got the question by now.

Mr. Hurd

The airbus is a fine and successful plane. In the GATT negotiations, the issue of civil aircraft is one of the two that are outstanding between the European Community and the United States. I shall close my speech in a few minutes by speaking about GATT. Commissioner Sir Leon Brittan and Mickey Kantor, the US trade representative, are seeking to solve that and to have the agreement made general by all those involved in the GATT negotiations. All the European negotiators are well aware of the importance of that project to this country and to others, not least because of what the hon. Member for Alyn and Deeside said about employment.

Mr. Gill

Will my right hon. Friend give way?

Mr. Hurd

I shall, and then I should like to move to other matters and conclude my speech.

Mr. Gill

My right hon. Friend spoke about the Government's advice to the Commission. What is their advice on fixed exchange rates—are they said to be good or bad? Before my right hon. Friend answers that, would he care to consider that when Britain was on the gold standard between 1925 and 1931, unemployment more than doubled and that that was exactly what happened during our two years' membership of the exchange rate mechanism?

Mr. Hurd

I do not think that the Commission is seeking or that we are providing advice on that theoretical matter at present. Our view about the third stage of economic and monetary union has been illustrated, defended and supported in the House many times in the past year and is well known. However, it is not an issue, as the Prime Minister said in his article in The Economist, which was quoted by my hon. Friend the Member for Coventry, South-West (Mr. Butcher).

Mr. Gordon Brown (Dunfermline, East)

I should like to ask about the detail of the Delors White Paper. Will the Foreign Secretary confirm that two of its major investment proposals are help for expediting the channel tunnel rail link and for improving water quality? What possible benefit to Britain is there to outright opposition this weekend to those proposals?

Mr. Hurd

My right hon. and learned Friend the Chancellor is going to the summit and will answer the hon. Gentleman's specific questions in his winding-up speech.

Several hon. Members


Mr. Hurd

I have a good deal of ground to cover in my own bailiwick and shall leave my right hon. and learned Friend to answer for matters that are in his.

The Maastricht treaty is not just about doing less at European level: it is also about doing more where that makes sense. An example is the common foreign and security policy. We have been co-operating with our European partners on foreign policy for years. In the treaty, that has now developed into the CFSP, the common foreign and security policy, in which we expect to play a leading role.

There are two ways of dealing with the matter, and one is purely rhetorical. One can say that it is marvellous and a new era and deal with it in purely generalised terms. I do not believe in that approach. I believe that we should tackle this brick by brick, case by case, and settle on matters that are decided unanimously in the Council of Ministers. That is what we have begun to do. Some of those matters are quite small and practical and they are immediate, such as sending parliamentary observers to the parliamentary elections in Russia on Sunday. That is action by Britain, but also on a European level, to encourage the democrats in Russia in one of the main tests of their future. We are all putting together our ideas for humanitarian aid to Bosnia. I shall not go into that in detail today.

Sir Teddy Taylor

On a point of order, Mr. Deputy Speaker. I have been here for 28 years and I have never seen hon. Members talking to people in the Box. Is that allowed? I think that it is an outrage and a scandal.

Mr. Deputy Speaker

I am grateful to the hon. Gentleman for drawing attention to the normal courtesies of the House.

Mr. Hurd

Common action on Bosnia focuses on helping the UN to maintain humanitarian supplies, increasing the level of financial and personnel support and opening Tuzla airport to humanitarian supplies. This morning, I talked with the UN High Commissioner for Refugees, Mrs. Ogata. The latest news is somewhat better and more hopeful, because convoys are getting through. That owes much to her work and to that of British troops in central Bosnia—to which Mrs. Ogata paid tribute.

No right hon. or hon. Member who has listened to debates in the House can have any illusions about how much we can do in Bosnia. We cannot impose a settlement, for a solution must be worked out by the parties concerned. Only those who are doing the fighting can stop the fighting. However, a humanitarian effort is being made and there is a reasonable case for joint action by the European Union. The same is true of monitoring elections in South Africa next April.

Those are examples of ways that we can, brick by brick —and without losing any independence of action on our part—build on the work that is done by Europe. That is true not only of my areas of interest but of those of my right hon. and learned Friend the Home Secretary—asylum, immigration, the fight against terrorism, drugs and crime. They all cross borders and we shall not deal with them effectively if we seek to do so only within these islands. We must work together, and the treaty provides a way that we can do so—not under Community institutions but by co-operation between Governments.

The first ever meeting of the Council of Interior and Justice Ministers less than a fortnight ago showed how they want to secure those priorities, which will also be discussed at the summit. In the fight against drug trafficking and cross-border crime, we shall complete by next October negotiations on the convention establishing Europol, the start of Europol drugs unit operations early in the new year, a shared approach to asylum and more practical and effective arrangements covering extradition.

My right hon. and learned Friend the Chancellor will deal with the Community's economic and monetary policy when he winds up this debate, but I will refer to a matter that my hon. Friend the Member for Southend, East and others have rightly harped on from time to time—fraud in the Community. It is a problem, and no one knows precisely how much it costs. When major problems occur within member states, they are difficult to stamp out because Community institutions do not have the power to exercise complete control over the implementation of Community policies at national level—and my hon. Friend the Member for Southend, East would not want them to have those powers.

Part of the solution is to improve Community financial management and to ensure that spending is cost effective. The treaty expands the role of the Court of Auditors because we propose that it should do so. The problem of fraud goes further and requires a more active approach, and we expect the Commission to produce ideas soon.

Mr. Gill

Will my right hon. Friend give way?

Mr. Hurd

I have already given way to my hon. Friend. Perhaps I should press on and allow other right hon. and hon. Members to enter the debate.

In a single market, too, people must believe that rules are applied firmly and fairly before they can be expected with good grace to submit themselves to new disciplines. The onus must be primarily on national Governments to develop their own enforcement systems. We support the Commission's efforts to promote fair and even enforcement across the Community. The Department of Trade and Industry's single market compliance unit under my hon. Friend the Member for Tatton (Mr. Hamilton) fights for British companies, which suffer if other member states do not apply Community legislation.

We are second only to Denmark in fulfilling our Community obligations, but we are careful not to over-regulate—as sometimes happened in the past. That is part of my hon. Friend's work, which is also concerned with the deregulation Bill mentioned in the Gracious Speech.

The Community's enlargement is one priority of British policy and will be tackled again at the summit in the next few days. Progress has been made. Negotiations are under way with four applicant countries—Austria, Sweden, Norway and Finland—and they are reaching the difficult issues, including some relating to agriculture. Scandinavian agriculture tends to be more highly protected than continental or British agriculture. We will urge the Greek presidency to keep the momentum going. We want to complete negotiations by the beginning of March 1994, so that the four applicants may enter the Community at the beginning of 1995 if that is their decision. Meeting that timetable is a tall order but it is achievable.

Mr. Andrew Faulds (Warley, East)

The right hon. Gentleman made no mention of Macedonia and recognition of that name. Would he care to do so?

Mr. Hurd

The hon. Gentleman is perfectly correct. There are many other matters on which I have not commented, and I do not want to say any more about that issue at the moment. I advise the hon. Gentleman to watch this space.

Mr. Enright

Or Cyprus?

Mr. Hurd

Or Cyprus, Kashmir or many other matters of great interest. I am not dealing with them today because it is just possible that other right hon. and hon. Members want to speak.

The GATT negotiations are the most important international activity at present, and the summit will be dominated by continuing uncertainty. It is a drama, despite its technicalities and immense length. On Tuesday, we managed with difficulty to persuade the Council to allow the Commissioner, Sir Leon Brittan, to return to Geneva to get on with the negotiations. Some wanted him to hold back while we argued about this and that, but, at the end of the morning, it was agreed that Sir Leon should return.

It was an awkward moment, because negotiations with the United States, which had continued through the night, were incomplete. Sir Leon had to report to us on audio visual, films, television and civil aircraft—on which I answered a question earlier. There was still a gap, albeit not a huge one, between Europe and the United States. When that appeared, all the Ministers felt that they had to bring out of their pockets a lot of old demands. There was a great deal about textiles, maritime transport and Mediterranean products. We even heard about the tariff on shelled almonds. We had demands of our own. We should like to do more for our textile industry and to see American tariffs on woollens lowered more than has been offered. We shall continue to pursue that point, but there comes a time—and we have reached it—when we must consider the fundamental reality of the negotiations as the clock ticks on.

Agreement comes from compromises, and they mean that particular interests must be subordinated to the general interest. In Europe and throughout the world, it is in the general interest to create jobs through more open trade. That is the essence of the negotiations.

The Heads of State and Government will be bound to discuss that issue when they debate the European economy tomorrow morning. It would be unreal to talk about President Delors's White Paper and economic and monetary matters without mentioning that uncertainty—the prospect either of a huge error that will put the world back into protectionism and a procession of trade fortresses, or of the huge prospect of success that could be gained this time next week if, after seven years, the negotiations are concluded.

The present plan is that detailed discussion within the Community will take place on Saturday afternoon or on Monday, in the Foreign Affairs Council. The French and others want to discuss matters not included in GATT, such as commercial defence instruments—the Community's machinery for dealing with unfair competition from outside, whether it be safeguards or anti-dumping.

There is the question also of agricultural spending. The Government's firm view is that agricultural spending by the Community must continue to be contained within the agricultural guidelines and own-resources ceiling agreed a year ago at Edinburgh.

The discussions among the 12 are continuing while our representative, Sir Leon Brittan, is negotiating at Geneva with Mr. Kantor, under the auspices of Peter Sutherland, the director-general of GATT. Those negotiations are going ahead in parallel. I do not know what the outcome will be, but I know that the stakes are high. I am more hopeful than I and some others were some weeks ago, but we are not there yet. It will be a huge test of the good sense of the world whether, in a week's time, we will be able to report to the House, in one way or another, that the negotiation has been successful after seven years. I do not think that there is any country round the table in Geneva that has more at stake than the open trading and worldwide trading country called Britain.

It is relevant to the sort of Europe that we want. If we can achieve a GATT agreement in the next few days, it will be a fine way of opening the new phase in the economic history of Europe. That new phase needs to be marked by reducing trade barriers and subsidies, whether in agriculture or elsewhere, and by increasing the openness of the European and world trading system.

5 pm

Dr. John Cunningham (Copeland)

I beg to move, at the end of the motion, to add 'but regrets that the approach of Her Majesty's Government to developments in the European Community has failed to advance Britain's interests.'.

In a moment of heat in July, at the end of the Maastricht debate, I recall the Foreign Secretary making a rash promise to the hon. Member for Stafford (Mr. Cash) that in future he and his colleagues would be consulted closely about European matters. I assume that the Foreign Secretary's speech was the first product of that consultation because it was disjointed and, in some places, he seemed more like a spectator of what is going on in the European Community than a player. Nowhere was that more obvious than when he talked about GATT. It would have been reassuring to the House and the country if he could have imparted some feeling that Britain is fighting for British interests, whether it is the airbus or something else, in the same way as the French are fighting for their interests during the final days of these important negotiations.

I agree with the Foreign Secretary about the importance of reaching an agreement. It is important not only for us, the rich and powerful economies, but, perhaps even more so, for the poorer nations of the world and the more than 100 countries which are desperately hanging on and hoping that we in the west can settle our differences and reach an agreement that will be beneficial to them.

It was difficult to reconcile the right hon. Gentleman's comments about the Government creating a Europe that intervenes only when necessary with what we are discussing today. The pile of documents before us does not look to me like a Europe that intervenes only when necessary.

Dame Elaine Kellett-Bowman (Lancaster)

That is the past.

Dr. Cunningham

It is not the past—it is the present and the future. Eurospeak comes in megabites rather than sound bites and we have plenty of evidence for that today. My hon. Friend the Member for Newham, South (Mr. Spearing) was right to protest to the Chair about the late arrival of documents and the reasonable inability of anyone to have read them all. On that point we can share some fellow feeling with the Chancellor of the Exchequer. We know from his own admission that he never bothers to read European documents. He does not think that it is worth his while. He confessed that he did not read the Maastricht treaty. I have not had time to read all the documents either. It is not a sensible way for us to conduct important business for huge documents of this complexity and importance to land on our desks within hours of the start of the debate.

Mr. Spearing

I am grateful to my hon. Friend for his remarks, which were about procedural issues and not necessarily to do with merit. Will he take account of the fact that the Select Committee, which is charged by the House to look at the documents and to summarise them and assess their political and legal importance, was able to look at only some of them yesterday afternoon? Therefore, the reports arrived in the House only last night or this morning, making it difficult for hon. Members even to read the reports on the reports.

Dr. Cunningham

I agree with my hon. Friend.

I begin with a different set of priorities. I am not dismissing the Foreign Secretary's priorities as less important, but I want to talk about some of the external affairs of the Community which are discussed in the documents.

The Foreign Secretary referred briefly to Bosnia. He did not tell the House—I shall give him the opportunity now —what has changed in respect of the European Community's attitudes, policies and commitments in Bosnia since the last meeting of the Foreign Affairs Council, from which there was a declaration. Has there been any additional response to the appeals of Mrs. Ogata for more aid finance? Has there been any response to the United Nations' appeal for more troops in Bosnia? Has the European Union changed its position in any way since that Council meeting and its declaration in Brussels some weeks ago?

Have the Government changed the position that the Foreign Secretary enunciated during our debate on the Queen's Speech when he hinted that they were thinking of ending all aid to Bosnia? It seems unthinkable to many of us that in the middle of a bleak and horrendous winter, with millions of people relying on international aid and hundreds of thousands of them likely to be living well below subsistence level, we should be stopping our aid to those tortured people in Bosnia and elsewhere. We believe that the European Community should be increasing aid and support for those people. Can the right hon. Gentleman tell us whether that is likely to happen?

Mr. Hurd

The right hon. Gentleman is misrepresenting me. The most important thing that has happened as a result of the latest European decisions is a fresh round of intensive negotiations. We want to see whether the Serbs will add to the amount of territory from which they are prepared to withdraw and whether the Croats will allow the Muslims to have access to the sea. Those are crucial points and there is now revived discussion—I cannot say conclusions—of a sort that there has not been for some time.

I talked to Mrs. Ogata about aid. She paid high tribute to what is happening now in central Bosnia, where, with the help of British and other troops, convoys are once again getting through. That is a big advance. It is not yet enough and we want to open Tuzla airport. Mrs. Ogata believes that she has enough resources to last until the end of the year. I told her that we would be making an additional British contribution before the end of the year.

I never said that in the near future we intend to withdraw aid or troops. We are committed for the winter. I said simply, as have others—it is a statement of fact—that in the spring we will need to take stock. Those concerned with organising the fighting and profiting from the aid should not assume that the international community will continue month after month, year on year, with the present system and the present stationing of troops. It is not realistic for them to suppose that. That is not a threat; it is simply a statement of fact for next year.

Dr. Cunningham

I take it from that that the British Government intend to increase their aid finance to the United Nations High Commissioner for Refugees. It would have been helpful if the Foreign Secretary had been able to give us a figure.

Is it reasonable to be talking about ending sanctions against Serbia when the Serbs have 40,000 troops persecuting the population of Kosovo? They have thrown out the monitors from the conference on security and co-operation in Europe. The president of Kosovo was in London this week and I assume that the Foreign Secretary, like me, had an opportunity to meet President Rugova and his Prime Minister. Was the Foreign Secretary able to give them any assurances of support from the European Union about a concerted foreign policy to bring relief to them?

I want to deal with the middle east, not least because Chairman Arafat will be in London next week.

Mr. Butcher

What about the documents?

Dr. Cunningham

From a sedentary position, the hon. Gentleman says, "What about the documents?" I can assure him that, among many other things, aid to the occupied territories is referred to in those documents. He is demonstrating that he has obviously not read the documents and is unaware of that fact.

Mr. Butcher

Will the hon. Gentleman give way?

Dr. Cunningham

I am not giving way on a sedentary intervention.

Chairman Arafat will be in London next week and will have discussions with the Foreign Secretary and, I expect, the Prime Minister. Will the Government give economic assistance to the emerging Palestinian Administration? Will the new organisation established by the Palestinians at the request of the international community—the Palestinian Economic Council for Development and Reconstruction—be assisted not only by cash but by expert help? They need consultancy and economic expert advice to enable them to use the assistance that they are seeking and will no doubt be given. I understand that they are seeking relatively small amounts to help them establish a modern management expertise within their reorganisation. I urge the right hon. Gentleman to respond positively to the request when it is made.

I was curious as to why we heard so much about the recent Maastricht treaty debates. I should have thought that the right hon. Gentleman, more than any other, would have had his fill of that. There are more important Community developments to discuss and I will turn to some of them in a moment.

As to what the Foreign Secretary had to say about manifestos, the chairman of the Conservative party has put out a brief and, in the interests of greater accuracy, we all have a copy of it. He is hardly "Storming Norman"; "boring Norman" best describes him.

Among other things, the right hon. Gentleman has the gall to talk about socialist taxes in Europe. Next year, 1994, will be the year of Tory taxes in Britain: increased VAT, increased national insurance and more income tax on people's bills. I am surprised that the chairman of the Conservative party had the nerve to include anything about taxation in his brief.

As to the right hon. Gentleman's point about the European Peoples party, this is what the chairman of the Conservative party says in his letter to Conservative Members: the European Peoples party will also meet to agree an Action Programme. We in the Conservative party are not members of the EPP. It goes on: The alliance of Conservative MEPs with the EPP"—

Mr. Hurd

Will the right hon. Gentleman give way?

Dr. Cunningham

I will in a moment. The alliance of Conservative MEPs with the EPP Parliamentary Group brings centre-right parties together". It brings them together and they are in an alliance, but of course the right hon. Gentleman adds the caveat: We are not bound by any Manifesto or declaration of the EPP". They are working together and it brings centre-right parties together, but they are pretending that they have nothing to do with them.

We all know why. The manifesto of the European People's party says: The social policy, which has as its goal the increasing prosperity of all branches of society, finds its inspiration and justification in the values which are the basis of society: justice and solidarity. It is completely committed to the social dimension in Europe and says so in several other places in its manifesto.

The Foreign Secretary was advancing the thesis throughout his speech that, in Europe, people, parties and Governments were somehow coming round to his way of thinking. The only problem with that thesis is that every Conservative party in Europe endorses this manifesto, which in turn endorses the social chapter. Chancellor Kohl's party endorses it, the French Conservatives endorse it and all the other European Conservative parties endorse it. There is a fraud at the centre of the Foreign Secretary's argument because—as has always been the case—after a year of bluster, argument and charade the only political party in Europe that supports the British Conservative party is the French fascist party of Mr. Le Pen—perhaps we should say Mr. Poison Le Pen.

Mr. Hurd

The right hon. Gentleman is trying to gallop away. He failed to quote a key sentence in the right place. He quoted it a little later because he saw that some of us had it. We are not bound by any manifesto or declaration of the EPP. The right hon. Gentleman left that sentence out and brought it in later only because he saw that we had it. That is the key question. It is the key difference between our position and that of the British Labour party in respect of the European socialists and the position of the right hon. Member for Yeovil (Mr. Ashdown), who wants to abandon all national vetoes in the Community.

As to the social chapter, when the right hon. Gentleman first made that speech it was broadly accurate. Across the continent, employers in particular are waking up to the dangers that the orthodoxy—whether social democrat or christian democrat—has imposed upon jobs in those countries. That is the way in which the debate is going and I gave evidence of that in my speech.

Dr. Cunningham

All the bluff and bluster in the world cannot disguise the almost solitary position of the British Conservative party. The right hon. Gentleman cannot name a single Government or Conservative party in Europe that shares his view. He should stop misleading the House and the British people by pretending that somehow soon Europe will cast aside a social dimension to the development of the European Community. It will not happen and it should not happen; nor do we want it to happen. The right hon. Gentleman and his right hon. and hon. Friends are the only ones who want it to happen, as all the arguments, debates and documentation make clear.

Mr. Ian Taylor (Esher)

Has the right hon. Gentleman had time to read, among all the other things he has tried to read, the contribution of the federal German Government to the Commission's White Paper? It says: Non-wage labour costs including social security contributions should be scrutinised closely since in Europe they have reached a high level in relation to wages. Social welfare expenditure, which burdens the economy as a whole, should be restrained". The German Government document is virtually identical in language to the Government's submission to the Commission. It is clear that the right hon. Gentleman simply has not followed the way the debate has gone. We now have many friends among other Governments on the continent.

Mr. Deputy Speaker

Order. I understand that hon. Members want to get deeply involved in the debate, but interventions should be short.

Dr. Cunningham

I shall not give way again if they are as long as that.

It is astonishing that that intervention comes from an hon. Member who has just voted for national insurance increases for the whole British population. He is telling us that the German Government warn against increased employment costs. He has just voted dramatically to increase employment costs and costs on employees. The Government have conned the British people. They promised in their manifesto that they would not increase national insurance charges, but it is the first thing that they did when they presented the first unified Budget—and the hon. Member for Esher voted for it. I could go on and mention VAT, increased fuel tax and sick pay—all loading extra costs on to employers, industry and commerce—and the hon. Gentleman is warning us of what the federal German Government is telling us. We do not need the warnings; we can see how the Government are loading employment costs on to employers and employees in this country.

Our partners in Europe are going ahead with the social dimension and with economic and monetary union. We have lost the European monetary institution of Frankfurt because of the Government's pig-headedness and the Tory party is now marginalised and isolated in Europe.

It is no good the Government telling us about lifting burdens. I have a copy of the review produced by their own committee of inquiry, staffed by their own civil servants. It is entitled "Review of the Implementation and Enforcement of EC Law in the United Kingdom". One of the committee's first findings is reported in paragraph 2 of the executive summary of the document, which states: We have found little evidence to support the allegation that the UK deliberately adds requirements when transposing EC law. The report contains many more interesting observations, for instance: Officials felt that there was a failure to recognise the subtleties of negotiation in Brussels and thought that as a consequence they had not achieved all that they might have done. It states delphically: Ministers should be aware of this problem. What those officials are really saying is that Ministers' pig-headed, stubborn attitude in Brussels is costing the country dear.

The report also contains a section on costs and benefits and makes recommendations. It appears that our wonderfully inept Government found themselves in the ludicrous position of almost agreeing fire safety regulations that would cost this country an additional £2 billion, because of their obstinacy. The report says: had our recommendations been in place we estimate that nearly £300,000 of effort devoted to drafting unnecessary Fire Regulations would have been involved. It continues: Ministers should be aware of the dangers of an inflexible negotiating position. We asked whether officials were content with the Ministerial steer they had been given … we encountered a significant number of instances where officials felt 'boxed in' by inflexible negotiating positions set by Ministers. They suggested that the `no, but' stance they were required to adopt in negotiations marginalised the UK. This was confirmed by UKREP in Brussels and EC Commission officials to whom we spoke.

That was said by British civil servants working for the Government. They commented, in their own report, on the ineptitude and stupidity of their own political masters, who had made a mess of things in Brussels. It is no good the Foreign Secretary shaking his head; I have the document. A copy is in the Library, so that any hon. Member can read it. I do not know whether it has been hidden away from those currently occupying the Government Front Bench —they look a little puzzled—but I advise them to get hold of a copy: it makes very interesting bedtime reading.

The idea that it is all the fault of Brussels that we have problems because of the European Community is another of the myths and false arguments erected by the Foreign Secretary and his right hon. and hon. Friends. Brussels legislation is a burden: all those socialists in the European Community, dumping all this awful legislation on us. In fact, eight of the 12 member Governments are either Conservative or Conservative-led coalitions. The reality is even worse than it appears: the Foreign Secretary cannot even get his Tory friends in Brussels to agree with him on the British position. Even with the advantage of those eight Conservative Governments, the British Government cannot secure a decent deal for the United Kingdom. Their failure and ineptitude is at the heart of the difficulties in our relationship with the Community.

Mr. Stephen Milligan (Eastleigh)

Would the right hon. Gentleman care to speculate on the words that officials might have used if the Labour party had been negotiating in Maastricht two years ago, and had carried through the strategy that it then supported—that of backing full monetary union, with no subsequent parliamentary vote at the time when it was to come into force?

Dr. Cunningham

I will not speculate on what officials might have said, but I am certain that a Labour Government would have secured a much better deal for Britain and the British people than the incompetents on the Conservative Benches.

Mr. Bernard Jenkin (Colchester, North)

Will the right hon. Gentleman give way?

Dr. Cunningham

No; I have just given way.

It is not just a question of what officials say about the impact of the Government's actions. The Equal Opportunities Commission has just commented on the changes in maternity pay and the proposals for implementing the European Community's pregnant workers directive. It states: The European Commission Pregnant Workers Directive therefore represents a welcome advance in UK maternity protection. However, the EC is concerned that the spirit of the Directive is being lost in its translation into UK legislation, an approach which we do not believe is in the best interests of women or their employers. The Commission wrote to the Secretary of State for Employment on three separate occasions during the passage of the Directive through the European Commission, urging the government to take the opportunity offered by the Directive to review UK maternity rights and introduce new framework legislation. We indicated that we would be willing to participate in the consultative process, which we recommended should be wide-ranging. Although the Commission wrote to the Secretary of State three times, its advice was not acted on. The report continues: consequently, the opportunity to eliminate the underlying problems inherent in the current scheme, and to put in place a simple, coherent and comprehensive scheme is being lost. Maternity leave and maternity pay will continue to be covered by separate legislation. That is just another practical example—but perhaps a more important one—of how the interests of British people, in this case pregnant women, are being damaged by the Government's attitude to the European Community.

The Foreign Secretary and his hon. Friend the Member for Esher (Mr. Taylor) mentioned labour and wage costs. Figures from the Organisation for Economic Co-operation and Development for 1991—the most recent that I could obtain—give the unit labour costs in manufacturing industry for various countries. If we take the United Kingdom figure as 100, the United States figure is 115, the Japanese figure 98, the German figure 124, the French figure 144 and the Italian figure 128. Apart from Japan, each of those countries has a higher figure than Britain.

Let us examine the productivity figures—again, taking the United Kingdom figure as 100. The United States figure is 175, the Japanese figure 150, the German figure 140, the French figure 139 and the Italian figure 121. Every other country has higher productivity per employee than the United Kingdom. If we examine unit labour costs—combining productivity and investment with output—we find that this country has the worst record of all, with the exception of Italy.

The real problem is not that our labour costs are higher than those of our competitors, or even that our added employment costs are higher. The problem is much more fundamental: it is lack of investment, skills and proper training. The idea that cutting labour costs, freezing wages or taking safety standards away from industry will somehow enable us to compete with Taiwan, Singapore, Korea or Hong Kong is absurd—not least because the same source reveals that, if our labour manufacturing costs are taken as 100, the Taiwan figure is 35, the Singapore and Korean figure 34 and the Hong Kong figure 27.

Who believes that it is realistic to expect us to get labour costs down to those in an advanced industrial economy? That is entirely the wrong way in which to approach the problem, as anyone with an ounce of sense, experience or knowledge of manufacturing industry will know. This is the stupid ideology of a party that has run out of ideas and almost run out of the political honesty to face up to the problems brought about by its 14 years in office.

Mr. Giles Radice (Durham, North)

On that point, the Foreign Secretary quoted the Delors report and said that it supported his arguments, but the beginning of it says just what my right hon. Friend has been saying—that there is no miracle cure, nor a drastic cut in wages and a pruning of social protection to align our costs with those of our competitors in the developing countries. The report says that it is socially unacceptable and politically untenable. Such an approach would only worsen the crisis by depressing domestic demand which also contributes to growth and the maintenance of employment. So much for the Foreign Secretary.

Dr. Cunningham

I am pleased that I allowed my hon. Friend, who is my own Member of Parliament, to make that effective intervention.

There is a plethora of evidence on labour costs. I recommend that Ministers look at the latest survey of Swedish employers, which shows that Great Britain had the fifth lowest labour costs of the 17 major industrial countries surveyed in 1992. It further shows that 72 per cent. of wage costs were wages and 28 per cent. were additional costs—the added-on costs to employment. Only in Ireland, Canada and Denmark are additional costs lower as a proportion than in the United Kingdom. That is another myth from the Tory party blown out of the water: that somehow we in Britain are pricing ourselves out of the market.

Mr. William Cash (Stafford)


Dr. Cunningham

Not at the moment.

The tragedy is that, despite all that, we do not have a good trading record—far from it.

The Chancellor of the Exchequer (Mr. Kenneth Clarke)

Will the right hon. Gentleman give way?

Dr. Cunningham

In a moment; I want to make the point because the two things are connected. Do not worry, I shall give way.

Who does not want to be efficient and more competitive? Of course everyone does. The bogus argument is that somehow, by working some trick with our employees' wages and conditions, we can bring it off. Despite that advantage—this is the point that I want to make before I allow the Chancellor to intervene—the Government manage, because of their incompetence, to sustain a trade surplus with the 10 poorest nations in the world and a trade deficit with the 10 richest nations of the world. It is an appalling record.

If we look at the OECD figures for the 17 largest—I think they are the largest—industrial nations, we have a trade deficit with every one of them in terms of visible trade.

Mr. Kenneth Clarke

The first point that I wish to put to the right hon. Gentleman is on wage costs. As he accepted with approval a quote from the White Paper, I am sure that he will accept that two themes come strongly through in the White Paper. Throughout Europe, it is necessary that wage increases should be below increases in productivity for the foreseeable future. There is also the argument in the White Paper, described under the heading of solidarity, which is how the Commission and the President usually describe it, that those in employment should accept considerable constraint in their wage increases for the foreseeable future because there are so many unemployed people.

In the forthcoming pay round in this country, if the Labour party is so instantly converted to the White Paper that appeared on Monday that it now has a policy on those issues, will the right hon. Gentleman commit the Labour party to the principles set out in the White Paper?

Dr. Cunningham

I shall come to the White Paper in a moment. [Interruption.] I shall make my own speech. If I had to rely on Conservative Members to make my speech for me, it would be a pretty shambolic affair. I shall make my own speech, if Conservative Members do not mind.

I notice that, despite the fact that the Chancellor said that he would intervene on the subject of wage costs, he did not refer to the figures that I quoted. Of course we are in favour of productivity and greater competitiveness—it would be mad to be otherwise—but the reality is that productivity and improved competitiveness should not depend on low pay. Nor should it depend on taking away health and safety safeguards.

Competitive success should bring higher, not lower pay. It should bring higher rewards for skill and endeavour, not just higher dividends, as happens now under the Government. It should not bring largely inflated salaries for directors and board members, as continues to happen under the Government—the privatised water industry is an obvious example.

Mr. Kenneth Clarke


Dr. Cunningham

I have not finished with the right hon. and learned Gentleman yet.

In 1979, 50 per cent. of profits went into dividends in this country. Internationally, even that was a high level. Under the Conservatives, the figure has risen to 70 per cent., which is disastrous for long-term investment prospects. That figure is broadly twice as high as the figure for Japan and Germany, our principal competitors.

It is in those facts and figures that we find the reasons for the real failure of Britain as a manufacturing and trading nation—not in decent protection for people at work, or in the directives of the European Community, but in the 14 years of economic and industrial failure over which the right hon. and learned Gentleman and his right hon. and hon. Friends have presided and have voted for again in the past couple of weeks.

We cannot and will not accept that the major burden of change should be borne by the weakest—the low-paid, the unwaged and the unemployed. Nor will the British people accept the increasing burdens of the incompetence of the Government being heaped on them ever more frequently. A policy to promote productivity growth should be based on enhanced training and education, improved skills and technology, effective research and development, modern and sophisticated infrastructure and a far better level of investment than the British working population have ever enjoyed under the Government.

The Chancellor of the Exchequer asked me whether I accept the broad arguments and thrust of the charter for Europe's industrial future—the report from the European round table of industrialists. Yes, I do. There is much in it with which we agree. For example, we certainly share the view that a return to more rapid and sustained economic growth should be the central target of policy. The second element of growth must be a substantial increase in investment". We share the view that: Transport, energy, financial and other costs all require similar attention. Plans exist to modernise Europe's infrastructure but there is no sense of urgency to put them into action … one is to mobilise Europe's massive scientific resources", but the Government have demobilised this country's scientific and technological effort more often than not. The second is to pay closer attention to lifelong education and training, raising the skills of everybody from young children to experienced working people. The answer to the right hon. and learned Gentleman is an emphatic yes; we share all the aims and objectives of the proposals. [Interruption.] The Conservatives are the only people whom I have heard say that they do not want to see the social chapter implemented. The right hon. and learned Gentleman mutters "UNECE"—the United Nations Economic Commission for Europe—but that is just not true. That is another of the misrepresentations that have frequently come from the Government Benches. Finally, I shall turn to the Delors paper, which is similar both in analysis and prospectus to the employers' paper to which I have just been referring. It talks about the need for greater investment and more urgency. It talks about the ability of the European Union working together to tackle the horrendous and rising levels of unemployment in Europe. It talks about the need for social cohesion and solidarity.

I would add to the paper the need for the European Union to start confronting more actively the horrendous outbreaks of racism and fascism that we are seeing, including that in this country. I am not one of those apologists for Britain who says that it is going on in France, Germany and Italy but not here. That is not true either. That is one reason why we support the appointment of a European Commissioner for racial equality. [HON. MEMBERS: "No."] Conservative Members say no, but why should we not have a commissioner with responsibility for racial equality in Europe? They should ask some of the members of the ethnic minority communities in our towns and cities. They would soon find out that they want more effective action to protect themselves and their families from the squalid abuse, intimidation and violence from which some of them suffer daily.

In the European Community now there is a real opportunity. It began, after much argument and debate, at Edinburgh in the final days of the British presidency. It was built upon at Copenhagen. It is being built upon to promote the use of information technologies, to provide basic trans-European services, to continue to create an appropriate regulatory framework, to develop training on new technologies, and to improve industrial technological performance.

Within the new package of proposals before the summit this weekend there are proposals to accelerate the financing and development of high-speed transport links between Heathrow, London and Dover. The Foreign Secretary ducked a question on that from my hon. Friend the Member for Dunfermline, East (Mr. Brown). There are proposals to help us to finance the cost of meeting the EC drinking and bathing water quality directives.

Will the Government tell the British people that they will vote against those proposals and turn down this opportunity—that appears to be the answer—all for the sake of an extra 8 billion ecu in new money? That is what is being proposed in the White Paper.

Mr. Jenkin

Will the right hon. Gentleman give way?

Dr. Cunningham

No, I am just coming to the end of my remarks.

How does that, and for that matter everything else, square with all the promises made in the Tory European election manifesto of 1989? It does not. In that the Tories specifically promised that they would ensure that all our bathing waters met relevant EC standards. In case the Foreign Secretary wants his officials to check, that is on page 47. They say that they will apply tough new controls over the quality of drinking water".

There are a few more amusing comments in the document. The Government will not be writing these things next year. They certainly will not be claiming: We have put the torch to a bonfire of controls. They certainly will not be claiming: We have put Britain's finances in order". They certainly will not be claiming: An active and whole-hearted approach to the Community has breathed new life into our partnership with our neighbours. They will not get away with any such drivel in 1994.

The vital debate for the future of Europe to which the success of Britain is inextricably linked will go on in 1994 and, as ever, the divisions in the Tory party will damage Britain's interests in Europe and the Government's redundant ideology will damage the British people.

The Opposition are committed to their European ideals and policies for Europe, which have been well established for long enough now. We will take these arguments to the people in the European elections in 1994 and I am confident that we shall win.

5.42 pm
Mr. Tristan Garel-Jones (Watford)

It is some time since I addressed the House from the Back Benches and the House will be relieved to know that I do not intend to regale it with personal experiences, anecdotes or justifications of my time in Government.

I was privileged to serve under my noble Friend Lady Thatcher for eight years. It was her leadership and faith which restored the belief in economic liberalism, not just in Britain but beyond in the wider world. It was her instinct which sensed the historic importance of perestroika and was instrumental in rallying western support for that important process. My noble Friend is entitled to take full credit for that—and, indeed, she does. I was also fortunate to serve for two and a half years under my right hon. Friend the Member for Huntingdon (Mr. Major).

The very success of the Conservative party during the past decade has wiped off the slate most of the big issues that we have debated in the House in recent years.

The cold war has become, in Sir Michael Howard's phrase, a chill peace. Socialism—and its more exuberant form of expression, communism—has been revealed as the political junk bonds of the 1980s.

As for the European Union, the subject of our debate today, at least for those who saw it as an inevitable march towards a single European state, it will never be "glad confident morning again".

But history has not ended here. If anything, it has become much more difficult and, I believe, much more hopeful. A new agenda must be set, a more matter-of-fact agenda perhaps; a new agenda with a rather low-on-rhetoric count than the one to which we have become accustomed. In my judgment, no man in Britain is better qualified to set out that agenda and take it forward than my right hon. Friend the Prime Minister.

I stand on these Benches as a volunteer, not as a conscript. Therefore, I hope that the House will believe me if, looking back on my career, I say, "Je ne regrette rien." Nor do I expect to have any regrets in the future when I give my right hon. Friend and his Administration the unswerving support that they deserve.

I want to make just two main points about the subject of our debate today: first, on the upcoming European Council itself and, then, on how the new European Union offers a prospect of a Tory agenda for Europe around which the Conservative party can unite.

I welcome the subsidiarity report that President Delors is putting forward to the European Council, to which my right hon. Friend the Foreign Secretary referred. At first glance, it would seem to open the prospect of repeal or amendment of at least 25 per cent. of the current statute book, including, in addition to those mentioned by my right hon. Friend, the acquired rights directive.

The inclusion of article 3b in the Maastricht treaty, the follow up to it by my right hon. Friend the Prime Minister during our presidency, and now this excellent report are tributes to my right hon. Friend's negotiating skills and as good an example as one can find of why the Maastricht treaty is a substantial improvement on the Single European Act.

The action plan for Home Office Ministers on interior justice matters is also extremely welcome. I shall return to that later in my remarks, but suffice it to say that our commitment to law and order in the United Kingdom is not sufficient in itself. The report provides the Government with an opportunity to take the battle for law and order into the same international arena as that in which criminals themselves operate.

It is extremely encouraging that the ECOFIN report on broad economic policy guidelines does not set out unreasonable country-specific targets for interest rates, unemployment levels and so on, but rather concentrates in a non-binding way on setting out prudent policies that seek to reduce deficits and to nudge our respective economies towards convergence.

The so-called growth paper, to which the right hon. Member for Copeland (Dr. Cunningham) referred, is clearly an attempt at a Commission bounce, and I am delighted that my right hon. and learned Friend the Chancellor and his German colleague, supported by most other Finance Ministers, have every intention of sitting on it firmly.

There must be no question of the Commission's being authorised to borrow in the markets and then lend on to finance the sort of infrastructure projects to which the right hon. Gentleman referred. Such off-budget expenditure would drive a horse and carriage through the financial perspectives agreed at Edinburgh.

The common positions agreed on South Africa and on the humanitarian aid to Bosnia are good news. I very much hope that Britain will be in the lead in pushing ahead and it will not be too long before we are able to agree common positions on the middle east process and on the so-called Balladur principle. I shall return to why I believe that the common foreign and security policy gives added value to Britain's foreign policy efforts. I hope that the House will forgive me for taking advantage of this glass of water as I am becoming ill with 'flu. It appears that the upcoming Council is one in which the agenda is increasingly sensible and pragmatic and where Britain finds herself either in the pack or leading it.

I turn to my second and more general point about Britain's future role in the new European Union. The European Community was founded by men who saw that the greatest post-war challenge was to bring about reconciliation and prosperity to the nations that were ravaged by war. They saw a united, single European state —what we call federalism—as the goal.

Britain, a late entrant, although ravaged by that war, was not humiliated by it and, therefore, we have no ghosts to bury. We have never looked to the Community as a guarantor of our liberties—we look to the House and our own constitutional history for that. That is why the whole thrust of the finalité politique is one which few of us in Britain have been able to embrace with enthusiasm. Without the idealism of Schumann, Monnet, and, if I may say so, my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath), the European Community would not have succeeded as I believe it has now done in burying those ghosts. I mean no disrespect when I say that the period that future historians will no doubt describe as "the European Community—the early years" is drawing to a close. The dogs bark and the caravan moves on.

The Maastricht treaty and the events that followed marked that turning point. The challenge—quite as great as the one that faced Schumann and Monnet—is to bring the wider European family together after the ravages of communism and to find the instruments for working together so that the wider European Union may be a bastion for democracy and an influence for good in the world. Maastricht gives us the tools to do just that.

I shall outline in shorthand a Tory agenda for Europe —based on the Maastricht treaty—which can unite us all on the Conservative Benches and unite the growing number who think as we do in our sister parties in Europe. Our first priority must be to make intergovernmentalism work. My right hon. and learned Friend the Home Secretary has rightly placed law and order high on our national agenda, but the fight against crime, drug trafficking, fraud and illegal immigration is a trans-frontier fight and we must carry that banner on a Europewide basis with exactly the same enthusiasm and commitment with which we have carried it here.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

On that point, is the right hon. Member satisfied that the arrangement into which the police forces and, above all, the security services are entering on an intergovernmental level will guarantee the protection of civil rights for all people inside the European boundaries?

Mr. Garel-Jones

I am extremely grateful to the hon. Lady for asking that question, as it leads me directly to my next point. I stress to the House that intergovernmentalism, jargon for the co-operation between member states, outside the mechanisms of what we call the Community proper and not under any jurisdiction of the European Court of Justice —any change in the law would be made in this House—is a relatively new departure. If we do not make it work and show results, the federalists will be back, eager to move the whole pillar into the single structure. I shall comment later on how the House should scrutinise that. That is a top priority for Britain and especially for Conservative Members.

The common foreign and security policy is not an entirely new concept. Like so much else, we owe it to my noble Friend Lady Thatcher and to the Single European Act. The common foreign and security policy simply takes what was called European political co-operation a stage further. Of course we must retain, and do retain, the ability to act alone, but we should not lose sight of the fact that acting together—as my right hon. Friend the Prime Minister did with such effect on the safe havens policy in northern Iraq—we can achieve an added value for our own foreign policy.

The European defence dimension is contained, outside the Union, but in the Western European Union. The WEU's relationship with NATO and with the European Union involves a good deal of theology, with which I shall not burden the House. Britain's policy is straightforward. NATO is, and must remain, the cornerstone of our defence. At the same time, we must work hard with our European allies to ensure that the WEU becomes more and more capable of reaching those parts that NATO cannot or may not wish to reach, but we must not allow well-meaning Euro-enthusiasm to blind us to the fact that NATO, and NATO alone, has the command structures, the logistical communications and lift capacity to defend the values in which we believe.

All that has relevance to current negotiations on enlargement. No one has been stauncher than Britain in advocating the admission of those EFTA countries that wish to join the Union or in defending their right as neutrals to join. As they face up to the need to adjust their neutrality to the changed world, we must make it clear to them—and discuss it with our allies, the United States—that joining the WEU is not a soft option and a sort of Euro-friendly defence package. A WEU agreement to defend Finland or Austria means nothing. Defence is an area where one jolly well should mean what one says.

I shall comment on the new priorities in the classical pillar of the Union—the Common Market itself—the first being parliamentary democracy. The treaty contains a declaration on the involvement of national Parliaments. The House needs to continue to improve the working of the excellent new Committees that scrutinise EC legislation.

We also need—the point to which the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) referred in her helpful intervention—to find a proper way, especially in home affairs and interior judicial matters, of scrutinising the intergovernmental work and to seek ways in which national Parliaments can work together in partnership with the European Parliament in the scrutiny of classical EC legislation once it has left the House. I hope that my right hon. Friend the Leader of the House—in consultation with others, because it is a non-party and general House of Commons matter—will take a lead and encourage other national Parliaments to join us.

In taking forward the enlargement negotiations, we must seek to ensure that there is no dilution in qualified majority voting, especially the way in which the blocking minority is now put together. I regard that as a matter of crucial importance. I certainly do not want to see a Union dominated by the larger member states. The present weighting is already favourable to the smaller nations. The EU is in a state of permanent negotiation. I believe that Lord Monckton said that if one wants successful negotiation, one must ensure that the lions get the lions' share.

As President Delors said on the subject of subsidiarity and the role of the Commission, the presumption from now on is that competences lie with member states, unless they are specifically transferred to the Union. Our task, as I said earlier—this is why the report of the Council is so encouraging—is to make that a reality. If we do, much of the suspicion that has rightly built up around the Commission in this country in recent years will disappear.

If the Commission takes heed of the new post-Maastricht mood, stops trying to be a 13th member state and gets on with the task of acting in the areas in which its competence is clear, using its advantage in not being a member state to broke deals and break down member states' vested interests, it will find that it has a strong ally and supporter in Britain.

The European Council—the organisation to which my right hon. Friend the Prime Minister is travelling this evening—has always seemed to me the most British institution in the Community. It is intergovernmental; it stands above the whole Union; it has no set procedures, other than those of custom and practice; and, above all, its writ runs in every corner of the Community. It can make anything happen and, importantly, it can stop anything happening. Heads of Government and Foreign Ministers meet on their own—no officials attend. I hope that I will not offend the House if I say that it is rather like the House of Commons—idiosyncratic but supreme. British Prime Ministers—Lady Thatcher and my right hon. Friend the Member for Huntingdon—have tended to do extremely well at European Council meetings. They are well briefed, hardened by battle in the House, and take a lot of tricks.

The Council should meet more often and give more guidance to the institutions of the Union. If the Prime Minister can meet his Cabinet in the United Kingdom once a week, surely he can find a more regular slot to meet his European counterparts in the Community.

I am conscious that other hon. Members want to speak, so those are just a few of the areas where there is a real Tory agenda under the new European Union. The time has come when we must stop arguing about whether we like the Union. That is like arguing about whether we like Whitehall. It exists, and we must make it work as best we can in the interests of our people and our country.

I spoke at the outset about the old agenda. There, the instincts of Conservative Members were right. We were right on defence, on the model of society, and on Europe. We now face the challenges of setting and winning the new agenda. I am as happy as anyone else on the Conservative side of the House to wallow in a nice warm bath of my own prejudices. I am happy to return to basics, because the basic instincts of the Conservative party are right.

But the new agenda that we must create is about more than giving little homilies to single mums about family values. It needs muscular thinking and involves hard decisions. My right hon. Friend the Prime Minister and his Government have the vision and courage to set that new agenda and make those choices. If my right hon. Friends have the wit and nerve to follow them, we shall win that new agenda, just as we won the old one.

6.3 pm

Mr. Peter Shore (Bethnal Green and Stepney)

The big issue in Europe today is unemployment. The European summit that meets tomorrow will undoubtedly have unemployment at the top of its agenda.

I do not apologise for not following immediately the remarks just made by the right hon. Member for Watford (Mr. Garel-Jones), who covered a considerable range of topics but did not mention the economy.

Mr. Roy Hughes (Newport, East)

I am sorry to intervene on my right hon. Friend so early in his speech, but, given that the right hon. Member for Watford (Mr. Garel-Jones) has a close association with Spain and that unemployment there is now some 22 per cent., I should have thought that he would at least have made a passing reference to unemployment.

Mr. Shore

I fully understand my hon. Friend's point and I shall discuss the extent of unemployment throughout the European Community. I shall not be tempted to cover the whole range of matters before us. Indeed, I must protest strongly, because I have never taken part in a more absurd debate than one that is triggered by a pile of documents which few of us have the strength to carry into the Chamber. I address my remarks to the business managers of this place. If the House of Commons is to be taken seriously, it is wrong to allow a debate on such a massive scatter of subjects. Not only must we discuss the European Community's budget, which is always a subject that requires intense scrutiny; not only must we discuss two of the six monthly reports of events in the European Community; not only must we discuss an immense report on fraud in the Community, which certainly deserves scrutiny; but, on top of that, we have significant papers that are going to the summit meeting that begins tomorrow and should be the major focus of our debate. It is wrong for the business managers to have planted on us such an immense mass of business that it unfocuses the debate and is difficult to make sense of in the end.

Mr. Garel-Jones

I intervene only in response to the intervention by the hon. Member for Newport, East (Mr. Hughes). It may help the hon. Gentleman to know that unemployment in Spain is not 22 per cent. but substantially more. It will not have escaped his notice that, for 10 years, Spain has had a socialist Government who follow slavishly the social policies that he and other members of the European Community advocate.

Mr. Shore

My only comment is that the Spaniards have been good Europeans. They are faithfully following the dictates of economic and monetary union and convergence, and are suffering and paying the price as a result.

Unemployment is the proper focus of this debate. The picture is bleak. According to the latest edition of Euro-Stat, September 1993, the Community now has more than 17 million unemployed, which is 10.6 per cent. of the work force. In this country, the figure in September was 10.3 per cent., which is a little below the average. On the same date, the figure was 11 per cent. for France; 11.2 per cent. for Italy; and approaching 22 per cent. for Spain. Only in West Germany was the percentage rate of unemployment in single figures.

Worse, there is every reason to believe that unemployment will increase substantially in 1994, and probably also in 1995. The general consensus is that it is likely to rise to 20 million on existing policies in the next two years. I think that we know why. In the Community as a whole this year, the growth in gross domestic product was minus 0.4 per cent. In 1994, it will not be more than about 1.8 per cent. If we look further into the figures we see that, for each of the past four years, GDP growth in the Community has been well below the productive potential of GDP in the Community countries, which is roughtly 2.7 to 3 per cent. That is well below the level at which unemployment is stable, so we shall inevitably see a great rise in the number of unemployed.

This point is worth emphasising because it may help to dispel at least two illusions. The first illusion is long lasting but, good heavens, I do not know why it has lasted so long. It is that the European Community is a great area of economic growth. Many people thought so in the 1960s and late 1950s. It has hardly been so since and certainly is not today. It has a far more worrying record of high unemployment and slow growth than Japan or the United States, our two major competing areas in the world economy.

It is also worth pointing out that, although we in Britain are rightly critical of the Government's performance on growth and unemployment, we sometimes go around as though we had an inferiority complex and appear to believe that everything would be better if only we could plunge ever deeper into the European Community. The figures do not support that argument. British rates of unemployment and growth are very close to those of the Community or even slightly better at the moment, largely because we are at a different stage of the cycle. If we are serious, the question that must be discussed here and at the European summit is what is to be done about unemployment.

In this mound of documents, three relate directly to unemployment, and I presume that will come before the Heads of Government at their meeting. The first document is the Government's Green Paper which displays its obsession with labour market flexibility and labour costs as though they were the crucial elements in maintaining competitiveness. Although the Green Paper was published in July this year, its approach and content will undoubtedly be echoed by the Prime Minister and the Chancellor of the Exchequer at tomorrow's summit.

The second relevant document is that containing the Commission's economic policy guidelines for stage 2 of economic and monetary union under the Maastricht treaty, in particular the fulfilment under article 103(2) of the Maastricht treaty of its obligation to draw up such guidelines. That is the first important step towards imposing a common economic and monetary policy on member states.

The third document is the White Paper on growth, competitiveness and employment, which became available in the Table Office only late yesterday evening. It appears to be an up-dated and fuller version of papers that have previously been before meetings of ECOFIN and other groups. It carries President Delors' peculiar personal stamp and authority and gives his analysis of the causes of unemployment and a broad outline of his thinking on how it can be combated.

I can deal with the first document quickly because it is merely a comment on the various drafts of the Community's White Paper or White Book. It is interesting because it reveals the extent to which Government thinking on competitiveness is dominated by a factor which, although important, is only one of many that affect competitiveness and productivity—namely, labour costs, whether direct wage costs or indirect social service costs. No one in his right mind would deny the importance of labour costs as an element of competitiveness, but I hope that we are far too knowledgeable to accept that those costs are or should be allowed to dominate our thinking.

My right hon. Friend the Member for Copeland (Dr. Cunningham) gave some excellent examples of real costs per unit of output which need studying if we are to be sensible in our approach to these matters. It is true that many industries, and especially services, do not enter international trade at all and do not therefore have any direct impact on international competitiveness. Of course, labour costs affect competitiveness, but surely we cannot help but entertain the part played by managerial skills, technology, product innovation, marketing and the various other elements that we know jolly well are crucial to competitiveness.

Dr. John Cunningham

My right hon. Friend makes a very important point. The chemical industry, with which I have had a long association, provides our biggest crude trade surplus of about £3 billion a year. For the chemical industry, it is the cost of raw materials and energy, rather than of labour, which imposes the biggest burden. The present Government more than any other have continued to increase the costs of energy to the chemical industry.

Mr. Shore

My right hon. Friend cites just one case but I can cite another which is perhaps even more impressive. The pharmaceutical industry employs highly skilled and highly paid people, but its labour costs are miniscule compared with the product of its expensive research and the vast markets that it has gained as a result.

An additional point, which has not yet been mentioned, is that costs are imposed on industry and firms by macro-economic policies. No one can deny that if industry is saddled with high interest rates, or if corporate enterprises are saddled with particularly high direct taxation, they will be at a competitive disadvantage.

Anyone who ignores a crucial third issue—the exchange rate—is being very unwise. Good heavens, it would be almost as foolish to be obsessed with labour costs, as some Conservative Members are, as it would be to say that one can commit oneself to a full range of labour costs and improve social services and at the same time commit oneself to a fixed exchange rate. That is one set of circumstances in which additional and indirect social or wages costs will lead to a lack of competitiveness and the loss of jobs. Nothing could be more foolish than to advocate measures such as the social chapter and at the same time commit oneself to a fixed exchange rate, let alone a single currency—so much for a relatively minor point in our discussion of unemployment.

In any discussion of the Commission's approach as set out in its two papers, we are faced with two entirely contradictory policies. The first paper deals with the economic and monetary guidelines that the Community is to pursue under the Maastricht treaty. It is clearly deflationary, and it will be put before the summit this weekend. The second paper is President Delors' White Paper or White Book and suggests the opposite—stimulating the European economy.

The two documents suggest that we are dealing with a serious case of schizophrenia. The deflationary provisions of the Maastricht treaty, especially those for EMU, were framed in 1992 by a committee of central bankers under the chairmanship of a Mr. Delors. The proposals include a massive cut in public expenditure throughout the Community, which it says will be necessary to eliminate the so-called excess borrowing requirement and which will reduce public sector borrowing to no more than 3 per cent. of gross domestic product. A further aim of that document is the creation of a European central bank whose prime purpose will be to achieve price stability and the elimination of inflation.

The same Mr. Delors now has proposals for increasing public expenditure, provided only that it is at the Community level and embraces particular projects such as information highways, new technologies and the trans-European networks favoured by Mr. Delors and the Commission. The extraordinary thing is that Mr. Delors, who is now committed to his White Book proposals to stimulate job creation, is still insisting on the meticulous observance of the EMU provisions in the Maastricht treaty.

The Commission's recommendations in the second of those documents on the broad guidelines of economic policy say that the Commission reaffirms its commitment to the EMU process and timetable as agreed in the Treaty on European Union. To this end, it will intensify its efforts at achieving economic convergence. To the same end, it will start the process of deficit reduction in the member states. It will mean reducing budget deficits to the reference value indicated in the Treaty on European Union (3 per cent. of GDP). The Community could achieve this goal by 1996–97. It is there in the very document before us and before the Heads of Government at the summit this weekend.

I notice, and so should those of my hon. Friends who have taken a more sanguine view of the Maastricht treaty, that there is no reference in that reiterated commitment to EMU stage 2 to the need for counter-recessionary policy in the middle of a vast slump. The old policy has been re-stated—the remorseless drive to a deflationary Europe. As for price stability, the key, the arch of the temple, is that a rate of inflation of no more than 2 to 3 per cent. should be reached for the Community average by 1996. Wages must not be allowed to grow. That is an interesting one—very near a statutory incomes policy, but not quite. Wages must not be allowed to grow and exchange rate stability must be maintained.

Virtually every country in the European Community —not least our own—has what the Community describes as an excess deficit or borrowing requirement. The effects now of a cross-European contraction of public expenditure and public borrowing are bound to lead to still greater unemployment. Indeed, in the case of four countries, Spain, Greece, Portugal and Ireland, the beneficiaries of the so-called cohesion fund which was set up under the Maastricht treaty, their access to that fund is now to be made conditional upon their performance in convergence under stage 2 of economic and monetary union.

Nowhere in the Commission's—President Delors'—White Paper on employment are the contradictions confronted between what he is urging now and what he is at the same time urging under stage 2 of economic and monetary union. It is a document that is more concerned with analysis, as we have heard, than with recommendations for action. It calls—I note that with satisfaction, in a sense—for the creation of 15 million new jobs by the year 2000. Excellent. Who can possibly disagree with that?

The only clear proposal that emerges, however, is that the Commission should be allowed to borrow about £20 billion and spend it during the next four years on the Commission's chosen projects. I am not quite sure about the figures—they seem to differ according to which paper one reads—but £20 billion is an impressive figure, although when one compares it to the total GDP of the European Community it is tiny indeed. It would have only a cosmetic, as opposed to a real, effect on the mass unemployment problem of the nations of the European Community. Moreover, if the Community countries obey the guidelines of the Maastricht treaty they can subscribe to the Commission's £20 billion loan only by further cutting their own public sector borrowing requirement.

Trans-European networks may be attractive but, with the doubtful exception of the channel tunnel rail link, there are more important priorities for the United Kingdom. I say that the link is "doubtful" because we know that vast planning problems have yet to be settled before the route can be finalised. We now know that there is an incompatibility between the British electrified lines and the French ones. It is almost a joke, is it not, that French trains rushing through the channel tunnel will not be able to proceed, as we are now informed, on our own southern lines? They will have to be drawn, perhaps, by diesel traction engines, but anyway that is hardly something to get too excited about, as some of my right hon. and hon. Friends may be tempted to do. I would think that, from our point of view, if any money were available to be spent on infrastructure it could best go first to the west coast main line and to the refurbishment of the London underground system, which is so near to collapse.

Amendment (a) to the Prime Minister's motion, in the name of my right hon. and hon. Friends and myself, makes clear our belief that the deflationary criteria that are enshrined in the convergence provisions for economic and monetary union in the Maastricht treaty must now be abandoned as the only way of getting back on to the high road to expansion and creation of new jobs.

Our policy for Britain is to pursue a strategy to ensure —please mark these words— that all instruments of macro-economic management, whether it concerns interest rates, the exchange rate or the levels of borrowing, will be geared to sustain growth and rising employment". I fully subscribe to those excellent words, which directly defy the provisions of the Maastricht treaty on the surrender of control by nation states of their interest rate and exchange rate policies, and which further directly repudiate the Maastricht treaty's propositions for reducing the so-called excess deficit to a mere 3 per cent. of GDP.

Those words are of course those used by my right hon. and learned Friend the Leader of the Opposition at the TUC conference in September, 12 weeks ago, and reaffirmed in his speech to the Labour party conference in October, two months ago. I am delighted that he and I are now as one in our objections to the central doctrines of the Maastricht treaty.

I understand that my hon. Friend the Member for Dunfermline, East (Mr. Brown), the shadow Chancellor —I am sorry that he is not here—is to wind up the debate. I hope—I am sure that the House will wish me well in that hope—that he will give a resounding endorsement to what my right hon. and learned Friend the Leader of the Opposition said to the TUC conference and to the Labour party conference.

Beyond that, and the use of those instruments of macroeconomic policy ourselves, I strongly recommend and urge that the other countries of Europe break with the restrictions of the Maastricht treaty and pursue sensible reflationary policies themselves.

6.26 pm
Sir Teddy Taylor (Southend, East)

It is a shame that we shall not be able to vote on amendment (c). It would have been helpful to the House and to the public in general if we could have simply recorded the fact that the debate is pointless, worthless and useless, and can have no influence on determining developments in the wide range of issues that are mentioned in the huge pile of documents. It is terribly important that people should realise that, in the House and outside.

I ask hon. Members, look at that huge pile of documents, dealing with vast expenditure! There is nothing that we can do and, no matter how we vote about anything, it is simply a waste of time. It might help the unemployed and those people who are suffering if we were to get across the simple message that no matter how they vote, no matter what they do, the power has gone. The second message that we have to get across—although it is sad to say so, when we have the always most courteous Foreign Secretary opening the debate—is that it is important that we start telling people the truth.

I heard, and all of us heard—and I am sure that he meant it—the Foreign Secretary say that we now have control of the funds; we are not going to have overspending; we cannot go across the budget. In Edinburgh, however—I have the letter here from the Agriculture Minister—even though there was a budget laid down for spending on agriculture which one could not exceed by a penny because the Foreign Secretary and civil servants would prevent us, in practice they agreed to exceed it by an extra £1 billion on the basis that that was a special reserve fund.

Mr. Iain Duncan Smith (Chingford)

Does my hon. Friend agree that half the problem with the CAP is that, although it is aimed at farmers, to help to sustain their income—that may be a laudable aim—60 per cent. of the money goes to the administration and only 40 per cent. reaches the farmers?

Sir Teddy Taylor

My hon. Friend is so right. The CAP is totally wasteful and damaging to almost every interest. I find in my constituency, and I am sure that Treasury Ministers find in theirs, that poor people have to pay more and more for their water rates because vast sums are being spent on huge machines for taking out of the water the nitrates, pesticides, and all the other things that are thrown into the ground in order to produce more and more food. We have to spend a fortune on destroying or dumping those substances.

I was at Hanningfield recently, and I wish you had been there, Mr. Deputy Speaker, to see how the Essex water company—now privatised and French-owned—is spending millions of pounds on a new procedure for taking out pesticides. I asked, "Wouldn't it be better if we didn't have all those nasty nitrates and things in the ground in the first place?" I was told, "Of course." And it is the water rate payer who foots the bill.

The right hon. Member for Bethnal Green and Stepney (Mr. Shore) told people the facts of life, and he will accept that there is little point in saying to the voters. "Those nasty Tories are putting up your water rates; Labour will not do that," when we know what is really going on. Poor people are suffering and their burdens are increasing.

Secondly, it is sad to hear all the assurances being given to try to pacify us. For example, our courteous Foreign Secretary—with sincerity, doubtless—talked about all the things that were going wrong, with people breaking the rules, and told us that the Commission would now impose fines. I have been looking at the figures, and they are frightening. The Court of Auditors report is one of the big documents that I mentioned earlier, and it shows that, although millions of pounds have been levied in fines, only 10 per cent. of them have been collected. There is a great new mechanism to sort everything out, supported with enthusiasm by the Liberal Democrats and designed, once again, by those clever Foreign Office civil servants to ensure that people do not do nasty things. Yet the fines are still to be paid; only 10 per cent. have been paid over many years.

Thirdly, we must watch carefully what is happening on the continent today. It is frightening, and I hope that: the Economic Secretary to the Treasury will answer one simple question. I have been horrified to see that the other European countries have been borrowing vaster and vaster sums of money. All of us, even those who do not have degrees in economics, know that that simply cannot go on, because there is a limited amount of money to lend—unless we start printing.

The whole message of Maastricht and of the EC is that one should not print money. Even the Leader of the House would stop us if we tried to print money in this country. Continental countries are borrowing huge sums of money this year and next. Germany is borrowing £57 billion, and we are told that France is borrowing £30 billion—although we know that that sum has now increased. Italy is borrowing £70 billion; and Belgium is the worst of all. Where will the money come from?

The Treasury in Britain is in good condition, because the currency is strong, so we are ahead of schedule. Unfortunately, the European countries will not be able to do that. I understand that some money can be borrowed domestically. In Britain about £22 billion can be obtained from the institutions. But much of the money has to come from other sources. Where will it come from?

I have been told by my friends who advise the insurance and banking firms of which I am a director that, basically, it is the Arabs and the Japanese who provide the cash. But the poor old Arabs are having a difficult time these days, because the price of oil has dropped like a stone, so they do not have so much to lend. The Japanese, too, have plenty of problems of their own, and are holding on to their money. I hope that the Minister will comment on that, because I fear that early next year, because so much money is being borrowed and there is a limited amount of money available for loan, there will be a sharp rise in interest rates on the continent. I realise that that may not happen—although I believe that all the conditions are in place—but if it does, what the blazes will we do about it?

There are now 17 million unemployed people on the continent. That is a horrendous figure. We can see the instability in Europe; it is shown by what has happened in Germany. We have seen the uncertainty and the attacks on minority groups there. In Italy—a delightful country—people voted for fascism or communism in the local government elections, not because they especially like those things but as a way of saying, "Please let us have a strong Government." With an unstable situation, and unemployment high and rising, if there is a sharp rise in interest rates, what on earth will we do about it? I fear that there is a horrible danger.

Our Ministers at the Treasury and the Foreign Office, or at least most of them—now that there has been one resignation things are much better—are decent, respectable, sincere people. But it worries me sick that we are deluding ourselves about what is happening. I have been worried about what happens to poor people and the unemployed in the EC ever since I came to the House. I have probably been considered a silly minority person, putting forward a minority view, but it makes me sick to see people made unemployed unnecessarily because of the stupid exchange rate mechanism and all that came with it.

The facts are there and we all know what they are. It makes me angry to see poor people suffering because they have not got the money to pay their electricity bills or even to buy a light bulb when I know that, even according to the Foreign Secretary, all those people are paying an extra £28 a week for the stupid CAP. Think what a boost it would be to poor people in Britain if we could say, "You can have £28 extra a week—and an extra £3 a week for the cost of membership of the EC." I have been talking about such things for a long time.

I know that Britain is now more popular in the EC. That nice chap Boris Johnson, who writes for The Daily Telegraph, says that Britain is more accepted because the Chancellor of the Exchequer has been disclosing his personal support for the goal of a single Euro-currency. That may make him more popular in Brussels, but whether it does or not, please let us face up to the possibility that something nasty may happen. We must ask ourselves what we shall do if it does.

I am afraid that we British are comforting ourselves by saying that we are the best in Europe, but we all know that we are doing well economically not because we have a brilliant Government or a brilliant Opposition, but because we had the boost of getting out of the ERM. That made our currency and our interest rates drop like stones. It is rather like having an Australian uncle who sends one £1,000 to help with one's financial hardship—it makes one feel good for a while. But that is not happening on the continent. It does not help us or the people there if we take the attitude, "We are the best in Europe and we are doing terribly well."

Will the Minister say whether he thinks that I am right in any way to say that there may be a terrible problem with a sharp rise in interest rates on the continent next year? Will he tell me what we can do about that if it happens?

It is too late for Parliament to control the legislation. Maastricht has been passed, so to that extent our power is useless, but we must think, "What about the people?" What about the poor and the unemployed of Europe, who are now in a horrendous position? What shall we in Britain do if by chance things continue to get worse, and we have the social upheavals and misery that we have seen in Europe?

Conservatives must face the facts. We cannot go on kidding ourselves about the European People's party, and saying that we are not linked with it, and have nothing to do with it. We may say that although we all sit together and work together, we do not agree on anything, but everyone knows the score. There was a meeting in Athens in 1992. The Conservative Members of the European Parliament and the members of the European People's party were there, and a great document was drawn up to say that the EC should be given powers of taxation.

We should not bother about all the talk about federalism, because a federal Europe would be better than what we have now. I do not understand why Ministers keep saying that they will fight to the death to avoid a federal Europe. If we had a federal Europe, at least some things would belong to us. However, at some stage the Conservative party will have a real problem in deciding how to carry on with our stable mates—

Mr. Cash

Would my hon. Friend care to know that the congress of that great European People's party is meeting this afternoon? Furthermore, it appears that it may publish its manifesto tomorrow. It was not so long ago that Mr. Herman, the rapporteur of the Christian Democrats, published the European Parliament's working document on a new constitution which said that if we did not go along with it all we would be expelled. Does my hon. Friend not think that that is becoming an increasingly reasonable proposition, from some people's point of view?

Sir Teddy Taylor

All I am saying is that the Government and my hon. Friends—[Interruption.] My hon. Friend the Member for Esher (Mr. Taylor) does not agree. But he is a good guy. [Laughter.] I mean that sincerely; I am not trying to be funny.

It is crucial to stop pretending that people are stupid. We cannot go into the European elections and treat people as stupid by saying that we do not really have anything to do with the European People's party; the names of the candidates simply happen to be in the same box. It will not wash. Similarly, we should not think that people are stupid when we talk about the EC. They know what is happening to unemployment on the continent. They are not daft. They know what is happening to prices which they must pay unnecessarily. They are not stupid. They can see the damage that is being inflicted by the mad EC system of everything being based on artificial prices and more money being spent.

I have been a Member for a long time. The same thing happens every time we debate a treaty. Ministers say, "Do not worry—we will get tough with the nasty Euro-guys. We will kick Mr. Delors down the stairs. Everything will be sorted out." Sadly, it is continuing—more money, more power, more waste, more extravagance, less conservatism, less control for the people and more control for the bureaucrats.

This is a pointless, useless debate and all we can do is to express our views. The crucial point is that we must appreciate that something nasty will happen early next year. If we do not wake up to it, and if we do not treat people as adults and stop pretending that they are stupid, we will have a horrible democratic mess.

6.40 pm
Mr. Charles Kennedy (Ross, Cromarty and Skye)

Although I do not share the train of thought of the hon. Member for Southend, East (Sir T. Taylor) in these matters, I certainly respect his consistency and tenacity on the issue. I shall begin by congratulating him on making a pointed, useful contribution in what he described as a "pointless, useless debate". I say that although I do not necessarily agree with his prescriptions or preferences for what should happen.

I certainly share to a degree his analysis of what has happened in terms of what both he and I agreed during debate on the Maastricht treaty. Although we voted different ways on the legislation, we agreed that there should have been a referendum so that many of the issues could have been thrashed out in public halls up and down the country to a much greater extent than ever took place. Looking at what has happened subsequently, we also agree that more openness would have been appropriate.

I also agreed with the hon. Gentleman's description of the Foreign Secretary as being a man of great courtesy. That courtesy was on display again, but the Foreign Secretary was a bit disingenuous when he switched his attentions to both Labour Members and Liberal Democrats early in his speech. I think that he realised that he was digging himself a hole because he abandoned that strategy and returned to his prepared text.

For the record, the Foreign Secretary was, in the time honoured phrase, quoting my right hon. Friend the Member for Yeovil (Mr. Ashdown) "entirely out of context". I have the text in front of me. The Foreign Secretary was quoting my right hon. Friend not simply out of context but in complete contradiction to his conclusion that there was an inescapable need for compromises and give and take at the European level. That is what any sensible pro-European people who believe we should remain within the institution of Europe would acknowledge.

The hon. Member for Southend, East put his finger on the central difficulty with his honest appraisal of the state of opinion in his party. The central difficulty for the Foreign Secretary and the Chancellor is that they are both known to be enthusiastic pro-Europeans and they know that a substantial section of their parliamentary party does not share their view. They are constantly appealing to two audiences. They are trying to be pro-European and constructive, as they want to be, and at the same time they are trying to sound sufficiently Euro-sceptical and negative so as to placate and keep some semblance of unity on their side.

We are not daft. The hon. Member for Southend, East is right. We should treat the British like sensible adults and say that there can be differences within parties as well as across parties on the European issue, rather than try to pretend that the circle can for ever be squared. Of course, the Foreign Secretary must try to square the circle because he finished the previous Session with a great speech in which he said that we should draw three lines under his party's disunity. He was referring to Tory Members. We know that the circle will not be squared. The Minister and the Government know that that will not happen and there will always be a difference of opinion. It will be a difficulty for the governing party, not least in the run up to the European elections next year.

If I had to use a phrase to sum up the Foreign Secretary's demeanour today, it would be that in politics as in so many other things, "one can choose one's friends but one cannot choose one's family". I think that that is how he feels when he looks over his shoulder and sees what he must deal with as far as European politics and his party are concerned.

Maastricht was not the end of the matter. The Economic Secretary was the personification of that only last week when he steered the relevant orders and instruments through the House. Maastricht is only another staging post along the way. Indeed, it is simply the beginning of further aspects of integration and European development. Last week we were talking about the European investment fund and the European Investment Bank. Given that we are in the festive period of the year, it may be best to say that with Maastricht we planted the tree but we will see decorations and baubles being added to it as time goes by. [Interruption.] Although I did not hear the comment from a sedentary position, I am happy to give way to the hon. Member for Chingford (Mr. Duncan Smith).

Some of us argued for the social chapter. Last week, in the short debate on European matters, it was acknowledged that we will get the social chapter through the European institutions, even if we did not sign up for it, because it would be inconsistent for individuals in the European Community to be denied rights that they could get in the other 11 member states. In due course, much of the social chapter will come to Britain in a judicial way, which further reinforces the nonsense of what the game of mirrors over the past 12 months was all about.

At least we can take heart from the fact that more of a social and political dimension to Europe is developing. Last week, we heard about it with regard to the European investment fund. It was acknowledged that in due course the fund will be an instrument for regional intervention and will assist different regions in Europe. That is the way in which many of us would like to see Europe develop.

The intervention of the right hon. Member for Guildford (Mr. Howell), who is the Chairman of the Select Committee on Foreign Affairs, was interesting and significant. He spoke about progress on subsidiarity since the passage of the Maastricht treaty and the repatriation of certain rights to member states. I have not heard the word "repatriation" used in terms of constitutional rights since the Canadians repatriated their constitution from the United Kingdom. In passing, I must say that many hon. Members, especially the Liberal Democrats, can take great heart from what happened to the Conservative Government in the Canadian general election under a first-past-the-post political system. We congratulate our fellow party in Canada.

"Repatriation" is not the right word to use in this respect. The correct word is "federalism" which is the other side of the coin of subsidiarity. Subsidiarity is all about moving away from the supranational level at Brussels and giving the decision-making capability to member states and nation states such as Wales, Scotland and England and the regions of England. That is the way in which subsidiarity should develop.

We are not talking about repatriating rights that have disappeared to Brussels. It is only in so far as making federalism work in a sense which the rest of the continent understand—taking decisions close to communities and individuals that will be affected, rather than taking decisions centrally. In other words, subsidiarity does not stop when it crosses the English channel; it should diffuse throughout the United Kingdom as well.

Mr. Cash

The hon. Gentleman referred to what happened to the Conservatives in Canada. Does he acknowledge that the beneficiary of the defeat was Bloc Québécois? In terms of his advocacy of federalism, does he appreciate that the Canadian example is the best evidence of the breaking up of a federal system? Is he endorsing an argument against the federalism which he previously advocated?

Mr. Kennedy

Although I introduced the Canadian comparison, I do not want to go too far into it. Bloc Québécois represents less of a threat to the integrity of Canada than Parti Québécois did about 15 years ago when it also controlled provincial government. However, Bloc Québécois does not control provincial government at present and is unlikely to do so after the forthcoming elections.

What was more significant about the Canadian result—the hon. Member for Stafford (Mr. Cash) should be more concerned about this—was not simply Bloc Québécois but the emergence of the new party towards the west of the country. That shows how a single party, which must fight geographically on more than one front, can be completely obliterated without too much of a collapse in its share of the vote under a first-past-the-post system. The Conservatives perhaps should be worried about that, not least one suspects in the context of next year's European elections with the Liberal Democrat, Labour and nationalist parties to worry about.

Madam Speaker

Order. This is a wide-ranging debate, but I am not aware that Canada is part of the EC.

Mr. Kennedy

Even under the welter of documents, I have not seen an accession application. I make the point to stress that there is a clear difference, not just within the House, but between the Government and other Governments in Europe as to what federalism means. It is important, as the debate rages during the coming months, for those of us who argue for federalism as a decentralising force away from the political centre to get across that case.

The second point is not one of constitutional theory, but one of direct practice as the right hon. Member for Bethnal Green and Stepney (Mr. Shore) said earlier. The political leaders of the various countries and both sides of the House also were arguing during the debates on the Maastricht treaty about details which the electorates had difficulty in following. The arguments did not seem to be in touch with what the real priorities were.

There is no doubt that the burning political priority for the European institutions on a social level must be to tackle unemployment. It is quite clear that the President of the Commission has that firmly in his sights. The credibility of individual European leaders, as much as the credibility of the European Union, is at stake to the extent that unemployment can be effectively tackled.

Although I share the priority which the right hon. Gentleman gives to the matter, I do not share his profound scepticism about the ability of EC member states to tackle it in an effective way. It is significant that one of the more perceptive critiques of the Budget last week was that the Chancellor of the Exchequer clearly hopes to be in a position where he can still meet most of the convergence criteria of the Maastricht treaty in 1996 or thereabouts, despite the fact that he has been somewhat negative about what President Delors says in that respect. That may depend on whether we make all the assumptions about the Budget—there is a lot in the Budget—and if we give every "if' the benefit of the doubt.

If one looks at the graphs of various European countries, the one which is way out of step and which is rising inexorably is that which relates to unemployment, and that must be given emphasis. Equally, the Foreign Secretary said, so must trade and not least GATT. I would enter a specific plea here. The subject has been mentioned in the debate in relation to the aircraft industry, and equally I mention it in relation to the oil sector. We want free trade internationally, but we want the single market to operate fairly without hidden subsidies or unfair competition within Europe. The Economic Secretary will be aware of the continuing anxiety within the United Kingdom about aspects of alleged—I can put it no stronger—unfair competition from other member states. The Commission must be rigorous in its efforts to police such matters. I hope that the British Government will take that message to the Council discussions this weekend. Mentioned in the welter of documentation is the issue of enlargement and of the forthcoming accessions. There is still suspicion that part of the Government's thinking, and the reason for the emphasis that they put on widening the Community during the British presidency and beyond, is that that is a way of slowing down the pace of integration and the development of the Community.

The argument must be in contrast to what Baroness Thatcher would argue. She points at the former Yugoslavia and says, "There you are—Europe cannot work. Look at the tragedy." Surely the former Yugoslavia is proof that Europe must work in a more integrated way to prevent that kind of absolute tragedy taking place within Europe's sphere of influence and its perimeter of political activity. That means enlarging the Community and taking on more countries in as realistic a time scale as is possible, while allowing for the huge economic dislocation which some countries are experiencing in the transfer from former Communist dictatorships to what they now enjoy.

I hope that we will see during the coming period the building of a Europe which is not just about politicians or Parliaments, which have tended to be the dominant influences so far, but more about the peoples of Europe. That means a more decentralised and more open Europe. It looks for some of the written guarantees for individual citizens, which are absent from this country, to be achieved and applied from a European level downwards.

6.56 pm
Mr. Ian Taylor (Esher)

The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) rightly said that this is a difficult debate because it compresses so many subjects. In fact, we are dealing with the whole question of our interests within the EC and the European Union because virtually every subject in the British political debate has a European dimension. We do in a sense rather confine the subject to an occasional debate, when we should broaden all our discussions to look at the European dimension. In that way, the House could look closely at what is happening, rather than trying to compartmentalise the EC and the European Union. That is simply no longer realistic.

Mr. Jenkin

Will my hon. Friend give way?

Mr. Taylor

I am flattered that I have provoked an intervention already.

Mr. Jenkin

I challenge my hon. Friend to try to raise Europe in every debate about every subject. He would quickly find that he incurs the disinterest of a great number of his colleagues. Is not that part of the problem with the debate?

Mr. Taylor

My hon. Friend has his own views. However, if he reflects carefully and quietly later this evening, he will be quite embarrassed by that intervention. The point I made was that, in the interests of our constituents, there are many aspects which cannot be simply resolved by debates which are confined to narrow British politics. We cannot resolve our economic or environmental problems if we look only at the United Kingdom. I will not take up the time of the House. I am sure that my hon. Friend now better understands the point that I was making.

I welcome the Commission's report, and it is an extremely timely move. Perhaps it would have been more timely had it come out a week earlier, which would have given the House more time in which to read it. That does not change the fact that the Commission is doing the job that it was asked to do by the European Council Heads of State in the summer. It has tried to do a job that focuses on some of the real problems to which many colleagues have referred.

I pay tribute to my hon. Friend the Member for Southend, East (Sir T. Taylor). He and I may not always agree on some conclusions, but there is no doubt that he has been a great champion of the examination of the European Community.

In the Community White Paper, some of the great difficulties that face us are examined. I repeat that those problems cannot be solved by any one nation alone. We cannot solve the problem of unemployment if the way of creating jobs depends on exporting to other members of the Community, let alone the world. I will leave the GATT talks aside as they are up in the air at the moment and colleagues may want to refer to them.

If one looks at two of the charts which follow page 42 in the White Paper, one may see the size of the problem of rising unemployment. The charts show rising unemployment in Europe in relation to unemployment in the United States and in Japan, and also the problems that the European Community is having in creating jobs. During the past 10 years, more jobs have been created in the public sector in the EC than in the private sector. That compares worryingly with the rate of job creation in the United States and Japan in the private sector. The problem of the EC pricing itself out of jobs is also dealt with, and that is an issue which simply cannot be ignored.

That is clearly shown in the charts contained in the Government's presentation to the Commission regarding the growth, competitiveness and employment in the EC. The document was prepared and dated from 30 July, and some of its charts are extremely worrying. For example, the table showing the rise in unit labour costs in manufacturing for the period 1980–92 illustrates the Community's difficult problems in relation to our main competitor blocs, the United States and Japan. Those are warning statistics. The question is not whether Community institutions have caused the problems but how we can influence debate in the EC so that those institutions can help us to find some solutions. Too often in the House we appear to blame the Commission, as was apparent during the debates on the Maastricht treaty. We all know our institutional structures and are aware that the Commission should not alone be blamed, because it is answerable to the Council and can be questioned by the European Parliament.

First, we must determine the Commission's remit and, secondly, we must discover how effective our Conservative Government are in arguing their corner in the Community. In recent years, one of the Government's great victories was the internal market. There is no question but that many of the other countries found our concept of an internal market, with its unrestricted movement of capital, goods and services, very difficult. They were instinctively more protectionist, but, remarkably, we won the intellectual argument and the Commission carried it through. I pay tribute to the Commission and to Jacques Delors, interestingly, for carrying through the process of the internal market in which, as good Conservatives, we strongly believe.

Until quite recently, the Government failed to understand some of the implications of the single market and to realise that we had to enter debate in some of the other areas as well. To an extent, we were confused by the nomenclature that was current in the Community about the social dimension and the social chapter. Labour Front-Bench spokesmen have also been confused about that. In that sense, it is not social, because employment, labour costs and structures are the real focus of many of the measures under that heading. For some months, we have been engaged in that debate and once again we are beginning to win the argument.

It was clear from his reply to my intervention that the right hon. Member for Copeland (Dr. Cunningham), who speaks on foreign affairs for the Labour party, had not understood how the Community had changed in terms of Labour's arguments. I shall shortly come to the Commission paper. In my intervention, I quoted the German Federal Government whose submission is full of headings and items which clearly show the worries in Germany about the rise in non-wage costs and the lack of competitiveness of German industry vis-a-vis not only those countries closest to it, such as the Czech Republic where labour costs are between a sixth and a tenth of those in Germany, but with other countries including America where several German car manufacturers are now putting plants. That means a net export of jobs from the Community.

Mr. Allan Rogers (Rhondda)

In reply to the hon. Gentleman's intervention, my right hon. Friend drew his attention to the fact that the potential increase in employment costs about which the Germans complain has already come to pass in this country. The Government are increasing national insurance contributions and other charges next week, and the hon. Gentleman voted for that. Employment costs in this country are going up: the hon. Gentleman cannot have his cake and eat it. He said that he wanted to separate social costs and employment costs. The Government are putting up employment costs by more than any other European Government. The hon. Gentleman speaks about the social chapter or contract. He should remember that eight out of 12 countries in Europe have Conservative or Conservative coalition-led Governments.

Mr. Taylor

The hon. Gentleman's intervention suffered from length, as did mine. In this country, the trend for statutory labour charges is downwards. Pages 166 and 167 of the Commission report contain tables, but, as the document is on the record, I need not read them out. The hon. Gentleman misses the point about Budget measures. There has been no increase in industry's labour costs because various Budget adjustments have compensated industry for movements in basic costs. National insurance contributions for employees may well go up, but that touches taxation policy.

I was referring, as were the German Government, to the non-wage costs to industry of employing labour. By way of a quote, I shall give another example of the way that other countries are looking, in the way that the Budget has done, at the social security burdens: The social security mechanisms, especially retirement schemes must be adjusted to such trends in good times so as to avoid undue burdens on enterprises, the workforce and beneficiaries. That could have been taken from last week's Budget, but it is taken from the German Federal Government's presentation to the Commission.

Those arguments are now being understood. Not long ago, it was believed that, somehow, international competition could be ignored and non-wage costs could be loaded on employment. That is no longer true, and that has certainly been realised by the French Government, although their process of change is slower than one might have anticipated since the centre right took over.

Those features are succinctly pulled together in a document entitled "Beating the Crisis: the Message in brief' issued by the European Round Table of Industrialists. That document was quoted earlier, and it states: Labour costs are the single major cause of falling competitiveness and rising unemployment. Work is there, but not at these prices. I urge hon. Members to read that document because it shows industrialists' concern about the social and economic effects of unemployment and proposes ways to bring about change.

It is significant that not only the German Government but our Government and others have come together to influence the Commission in its report. Of course, some items in the report cause concern, and we as Conservatives may feel less comfortable about them than Labour Members. However, the Commission is right to present its proposals about how Europe as a whole can get out of the terrible mess of unemployment of about 17 million to 20 million when there is unlikely to be a take-up of the unemployed as the Community begins to expand again, however slowly. That is simply because of changing work practices and technology. Therefore, we have to concentrate encouragement on wealth creation and smaller businesses.

If we had a longer debate we could evaluate many ideas. The industry charter presented by industrialists is extremely good for concentrating attention on what can enable industry in the EC to expand again and be competitive. We should concentrate closely, as does the Commission, on cost per unit of output. As my right hon. Friend the Secretary of State for Employment has said, every measure advanced by the Commission should have a competitiveness audit. That would be reinforced by the business men's call for a competitiveness council.

All those topics coming together show that at last the debate is spreading across the Community to find grounds on which we can create jobs by creating wealth and, once again, industrial competitiveness. That is a welcome sign. My message to my right hon. Friend the Prime Minister as he goes to the Council this weekend is, "Let us support collective action within the Community because it is important for our people to see the European Community as part of the solution of the problems that afflict us, and not solely as part of the cause."

If we can do that, we can reinspire people about the importance of the Community and about the way in which it can contribute to the well-being and protection of the interests of British people. It will also give people a much wider vision of how a strong economic Community can help those further to the east who are experiencing difficult days after their freedom from communism. We cannot do that if we are introverted; nor can we do it if we are uncompetitive, thus failing to create wealth and jobs in the Community itself.

7.9 pm

Mr. Roy Hughes (Newport, East)

I will not follow the hon. Member for Esher (Mr. Taylor), because he was merely an apologist for the EC's failures. When I made up my mind to try to catch your eye in this debate, Madam Deputy Speaker, I collected the relevant documentation from the Vote Office. I was handed a stack of documents a foot high, and thought to myself that whatever other merits the EC might have, it is certainly good at paperwork. I cannot claim to have read all those documents from cover to cover, but I readily gleaned that the EC's principal issue and overriding factor is its terrible unemployment.

Unemployment in the EC is well over 17 million and hovering close to 20 million, and it seems that the bubble of expansion has well and truly burst. The introduction to the report, "Growth, Competitiveness and Employment in the European Community", published by the Department of Employment on 30 July and submitted to the EC, states: There has been an upward trend in EC unemployment from cycle to cycle since the late 1960s and an increasing proportion of long-term unemployed people. In 1991, long-term unemployment accounted for 45 per cent. of total unemployment and that upward trend is continuing. The EC's alarming figure of 45 per cent. compares with 18 per cent. for Japan and only 6 per cent. for the United States, and it points down the road of no hope for many unemployed—particularly youngsters, so many of whom have no stake in society. Is it any wonder that they turn to crime when they should be paying taxes and meeting their social obligations?

Yesterday's Financial Times reported that Mr. Delors is calling for infrastructure investment. The Commission's paper on growth, competitiveness and employment talks of creating 15 million new jobs by the year 2000. My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore), whose expertise I hold in the highest possible regard, says that that plan is wholly incompatible with the deflationary criteria enshrined in the Maastricht treaty, and I tend to go along with that argument.

The need for infrastructure investment goes without saying. In the years that I have lived in London, I have witnessed the steady deterioration of London Underground, exemplified by power failures and the general grubbiness of its facilities. Failure to invest in British Rail has brought the neglect of rolling stock, track and even safety. The same applies to other forms of public transport. Investment in years gone by would have helped to ease congestion on our overcrowded roads.

The finance to do that was available to the Government, who enjoyed vast revenues from North sea oil. No Government in the history of this country have ever received such largesse. They also enjoyed the receipts from the sale of public enterprises. A large part of that money should have been invested in our infrastructure instead of being given away in tax concessions to the better-off in our society.

Wales, which has long experience of unemployment, could certainly do with some of the infrastructure investment suggested by Mr. Delors. The construction industry could play a major part in reducing unemployment. Housing and all manner of public works are needed throughout the country. In recent years, the Welsh coal industry has been almost wiped out, bringing hardship to families and communities. Likewise, a decade ago there were thousands of redundancies in the Welsh steel industry—although we managed to retain the two main strip mills in south Wales, at Port Talbot and at Llanwern, which is the cornerstone of Newport's economy.

Fortunately, new industries and enterprises have been attracted to Wales, but many of the new jobs that they create go to women. I am not criticising women who work, for that is a matter of individual choice and circumstances. However, it cannot be denied that male unemployment far exceeds that of women. I was vividly reminded of that fact the other evening, when I was driven home by a friend after attending a function in my constituency. We passed a large biscuit factory and saw dozens of cars turning and revving up outside. My colleague explained that we were seeing men picking up their wives at the end of the shift. That experience was a sign of the times.

Wales still has a lean and efficient steel industry which can compete in world markets—provided that there is a level playing field. There is unease among steel workers at present because Germany, Spain and particularly Italy are failing fully to participate in the planned reduction of EC steel capacity and in the abolition of subsidies.

Mr. Peter Hardy (Wentworth)

My hon. Friend is right to draw attention to the anxiety felt by steel workers. He is, of course, deeply concerned about the perceived threat to south Wales, but is he aware that in my own area a superior works is now out of production because of unfair practices in Spain and Germany, supported by those countries' Administrations?

Mr. Hughes

It is a national problem, and I used the example of south Wales because I am, of course, familiar with it.

The latest cause for concern is an incident involving an Italian company, Arc-Sipra, which manufactures corrugated steel products used in road building and infrastructure projects. Mr. Keith Brookman, the general secretary of the Iron and Steel Trades Confederation, and the Welsh officer of that union, Mr. Brian Connelly, have been in touch with me alleging that that Italian company is applying to be placed on the Department of Transport's approved list of suppliers. I tabled a question to the Secretary of State for Transport about that issue a few days ago and all I have received today is a holding answer.

That firm is 50 per cent. owned by the Italian state steel company, Ilva and the other 50 per cent. is owned by a private company called Abate. The Italian state steel company has current debts approaching £8 billion which the Italian Government are seeking to write off. Our steel trade union has experience of the company Arc-Sipra selling in France at absurdly low prices. That can be done only through the firm obtaining feedstock from Ilva at prices which reflect its huge losses.

If Arc-Sipra is allowed to go on the approved list, it could seriously affect British firms producing corrugated steel, particularly one in my constituency known as Asset International. Also, primary steel works such as Llanwern and Port Talbot, which supply the raw material, could also see their orders cut. As my hon. Friend the Member for Wentworth (Mr. Hardy) said, the same problem applies throughout the British steel industry.

That anxiety hangs over our steel industry. On 29 October, the hon. Member for Colchester, North (Mr. Jenkin) tabled a parliamentary question. He asked for a statement on the future of the iron and steel readaptation benefit. The Minister for Industry replied: The scheme was set up in 1974 since when many improvements have been made to the arrangements for helping unemployed people. ISERBS is not very effective in assisting redundant steel workers to re-enter the labour market and has not proved good value for money. Further large-scale restructuring in the United Kingdom steel industry is no longer anticipated. Redundant steel workers should henceforth be treated in the same way as most other redundant workers. ISERBS will therefore be terminated."—[Official Report, 29 October 1993; Vol. 230, c. 804.] I hope, in the interests of steel workers, that that decision is not premature.

It is one thing to talk about a single market, but the rules and provisions relating to it must be implemented and enforced consistently throughout the Community. There is certainly a need for some rigid enforcement in respect of the steel industry.

On page 40, paragraph 9.11 of the document on emphasis and development in the EC from January to June 1993, the Government point out the need to put pressure on Italy, Germany and Spain to bring them into line. If that is not done, our domestic steel industry will once again be in jeopardy.

7.24 pm
Mr. Barry Legg (Milton Keynes, South-West)

This afternoon we heard an eloquent speech from my right hon. Friend the Foreign Secretary. Once again, he put the case that we are winning the argument and winning friends in Europe. I know that my right hon. Friend is an eloquent statesman, but I doubt the power of persuasion and oratory. Very few people, no matter how open-minded they are, are swayed by speeches, rhetoric or even a well-argued case. In the lead up to the second world war, Churchill argued eloquently the case against German aggrandisement, but it was events rather than the eloquence of his case which won the day.

Europe is currently an economic black spot. For a Conservative Member, the most encouraging thing is that events and markets are moving against the Delors concept of economics. Global markets are making considerable changes in the balance of economic power. Britain has traditionally believed in free and open markets and the developments in the world economy are reinforcing the wisdom of that view.

In the United Kingdom, there was a great deal of debate and argument about our membership of the exchange rate mechanism. I believe that, during our membership, very few people were swayed by arguments or were converted either way. In the end, markets intervened. Once that happened, many converts appeared. They suddenly realised that the exchange rate mechanism was not workable. Suddenly, it was obvious that it was full of fault lines and we united behind a new economic policy, at the centre of which was a floating currency.

The effect of that on the United Kingdom economy and on confidence has been quite dramatic. Earlier this week during the debate on the Budget, my right hon. Friend the President of the Board of Trade highlighted the changes. He said: Productivity in the third quarter of 1993 was almost 5 per cent. higher than a year earlier. Industrial production is rising in the United Kingdom but falling in Germany, Japan, France and Italy. Unemployment has fallen by 137,200 since January. Exports are 3.5 per cent. higher than a year earlier. We have reduced our spending plans by £10 billion compared with those of the March Budget. Public expenditure is expected to fall as a share of national income, with the Budget returning to balance in the second half of the decade."—[Official Report, 7 December 1993;Vol. 234, c. 146.] That is quite a transformation in our economic fortunes from a year earlier.

Some argue that recovery started before we left the ERM. There may have been some bumping along the bottom, but one of the best indicators of recovery is the performance of the stock market. Its performance is part of the Government's statistics in identifying lead indicators. Since we left the ERM, the London equity market has risen by 50 per cent. That must be a reflection by the markets of what the current economic prospects are for British companies. It is quite a marked change. We now have low interest rates, low inflation, public expenditure coming under control, growing exports, and a floating currency; and we should, over the coming years, achieve above-trend growth.

The countries that remained wedded to the mechanism and the concept of convergence—about which we hear so much—are mired in recession. I am pleased that my right hon. and learned Friend the Chancellor has rejected much of the Delors spending package. I have not had a chance to analyse the costs involved, but I read in this morning's papers that the cost of the proposals, over a timescale, will be some £95 billion.

Mr. Duncan Smith

Does my hon. Friend agree that one of the more invidious points in Delors' recommendation is the off balance sheet funding that has crept in? Does he recall that at the height of the boom in 1986–87, a large number of companies indulged in that type of funding, which made the consequences of financial collapse much greater?

Mr. Legg

My hon. Friend anticipated my next point. My right hon. and learned Friend the Chancellor is setting out a programme to, in his words, deal with the problem of public borrowing once and for all. If he had signed up to the Delors' package, it would have been like some private sector finance director telling his shareholders at the annual general meeting that he had a plan to reduce gearing over five years, and then going straight round to the bank to arrange some off balance sheet finance. It would have been totally irresponsible to sign up to the package, and I welcome his decision not to do so.

I believe that the free-market philosophy of Britain will yield substantial benefits in the coming years. That success will strengthen our negotiating position and our ability to argue Britain's economic case in Europe.

The German economic miracle is over. High social costs cannot for ever be piled on top of each other, irrespective of developments in global markets. Many German business men are realising that and relocating their industries outside the European Community, either to eastern Europe or to the United States. The markets are working in favour of our argument about how a free market should develop.

Regrettably, on page 6 of the White Paper, we find that economic and monetary union is still the direction in which the Commission wishes to drive the nation states of Europe. My right hon. Friend the Prime Minister, in an article in The Economist, on 25 September, dealt with the issue very effectively. All Conservative Members should be able to embrace his words: I hope my fellow heads of Government will resist the temptation to recite the mantra of full economic and monetary union as if nothing had changed. Eminently sensible words, but, regrettably, his fellow Heads of Government did just the opposite and recited the mantra of full economic and monetary union when they met some six weeks later. That is set out in the presidency conclusions of the meeting of 29 October.

Mr. Gill

I understand my hon. Friend's frustration. He is a successful business man who has come into politics. In business, he would expect to be proactive; now he is frustrated because we only react in politics when the chips are down and there is nowhere else to go.

I share his frustration that the arguments still do not win. When we came off the gold standard in September 1931, interest rates were 6 per cent. and within a few weeks were reduced to 2 per cent. Exactly the same thing happened when we were kicked out of the exchange rate mechanism in September 1992. Interest rates on the afternoon of that day had been 15 per cent.; within three months they were 6 per cent. Why is it that politicians and Governments cannot learn from those clearly demonstrated lessons of history?

Mr. Legg

My hon. Friend makes a very sound point. One of the problems that politicians have in learning those lessons is that all too often it involves some eating of words. Churchill said that there were many times when he had to eat his words and that he always found them most nourishing. That attitude should be adopted by many politicians; they would be much more successful if they did.

My hon. Friend the Member for Ludlow (Mr. Gill) pointed out the benefits that we gained immediately we left the exchange rate mechanism. Regrettably, our partners in France have not taken the same opportunity and are still wedded to the mantra of economic and monetary union. Stage one of economic and monetary union has been an economic disaster. It resulted in attempts to defy the markets and to set interest rates that are inappropriate to domestic conditions. The consequences have been recession and unemployment, about which Opposition Members are so concerned.

Those are the lessons of stage one, and we are now headed towards stage two. Stage one ends on 31 December and on 1 January we commence stage two. The principle of pegging the currencies of medium-sized powers does not work. It does not create economic stability and does not get rid of inflation.

That lesson has not yet been learnt, and far too many hon. Members—despite the realities of the outside world —will say, "Oh well, we went in at the wrong time and at the wrong rate. If only we could have got those things right, the system would have worked." From my experience as a business man, politicians will never find the right time and rate for currencies. That role is performed by the interchange and interaction of markets. I urge politicians to set aside their desire to find the right times and rates for currencies.

Currency flexibility is helpful to economies and provides a safety valve against economic shocks. It is surprising that the Government decided to enter the exchange rate mechanism following German reunification and the rate of conversion between the ostmark and the deutschmark had been settled. Retrospectively, many politicians now say that the problems of our membership resulted from the shock of inappropriate conversion rates between the ostmark and the deutschmark—that it was the wrong rate and that it harmed the system.

Mr. Cash

Looking back to the days when we went into the ERM, we must recognise that intolerable pressures were being brought to bear on the Government to drive us into it. Some of us did go along with it, but issued the direst warning that we would eventually end up getting on to the devil's bandwagon, which is exactly what happened.

Mr. Legg

I thank my hon. Friend for his valuable comments. The point is that politicians are not able to recognise significant economic shocks even after they have happened, so how can they hope to get timing and rates right.

Mr. Ian Taylor

May I redress the balance, as one who was—and still is—a believer in stable exchange rates within the Community? Our entry into the ERM was intended as an extra plank in our anti-inflation policy. Once we had joined, the downward convergence of United Kingdom interest rates towards the German rate, in relation to the premium required for sterling as opposed to the deutschmark in the interest-rate market, represented a very satisfactory beginning.

Mr. Legg

Again, we hear a politician trying to change the evidence or the facts. Joining the ERM at that stage did not help our anti-inflation policy. We had suffered as a result of our attempts to shadow the deutschmark in the lead-up to the decision; we had suffered as a result of lowering our interest rates to try to keep down our exchange rate against the deutschmark. That helped to stoke up inflation. When we finally decided to enter the ERM, we did so at a time when the Bundesbank—quite rightly, for domestic economic reasons—was operating a policy of bearing down on inflation to deal with the excess issue of money that had taken place at the time of unification. We then adopted the interest rates of a country that was trying to stop inflation, having already dealt with it here by raising our rates to 15 per cent. That mistiming damaged both businesses and employment.

Mr. Jenkin

I hope that I shall be forgiven if I take the name of my hon. Friend the Member for Esher (Mr. Taylor) in vain. Were we not told, however, that if we left the ERM our interest rates could never become lower than the deutschmark-based rate? Is it not a key fact that, the minute we left, we were able to introduce substantially lower rates, and have continued to operate them since then? Does that not prove that we can run our own monetary policy independently?

Mr. Legg

My hon. Friend has made a very good point. I believe that my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) advanced that argument in July 1992, when he was Chancellor of the Exchequer—although he has told us subsequently that he did not believe what he was saying at the time. That is probably another argument in favour of relying on the markets rather than the words of politicians.

We have heard much about the so-called merits of convergence today. We need to consider what convergence is really about. It is not about a group of statesmen sitting down to decide what are the most prudent economic policies for individual nation states to pursue in Europe; anyone seeking prudent financial policies would come up with many differences from the convergence criteria.

Mr. Gill

My hon. Friend may wish to consider how successful this country has been in achieving convergence within the United Kingdom over the many years for which it has existed—and, indeed, the large sums that have been transferred from the richer region to the poorer.

Mr. Legg

I shall deal with that point later in my speech.

As I was saying, convergence is not about a group of politicians trying to come up with abstract, prudent financial criteria. The aim of the convergence criteria is to achieve economic and monetary union. My hon. Friend the Member for Esher (Mr. Taylor) nods. I respect his views, knowing that he understands the Maastricht treaty and supports those objectives; unfortunately, some hon. Members are not as clear on the matter as he is.

The objective, then, is economic and monetary union. Behind that objective must lie political union; a political authority must be there to decide the interest rate for the whole of Europe—perhaps from Greece to the Arctic circle, in the event of enlargement—and to decide budgetary policy for the whole of Europe. The impetus behind economic and monetary union is clearly political.

I think that it is unlikely that the ERM will be resurrected, despite the best efforts of politicians. Markets have expelled currencies from the system and I do not think that the politicians will succeed in putting it all back together. However, the concept of economic and monetary union has not been abandoned: many people, both in the House of Commons and across continental Europe, still seem to be wedded to that concept.

What, then, is the likely scenario, given that some hon. Members believe that economic and monetary union is such a good thing? It is possible that, at some future stage, if politicians feel that the European economies have moved closer together, they may decide that an overnight move to a single currency would be beneficial to Europe as a whole. No doubt they will argue that trading relationships are very close, and that the time has therefore come for a single currency. Some of us believe that that would mean the end of the nation state as we in the United Kingdom have understood it, because the ability to make basic economic decisions would be removed. Other hon. Members, however, may say that, although a single currency would represent a profound constitutional change, it is economically necessary and will produce benefits.

I believe that, even if that argument is advanced, a single currency and economic and monetary union should be rejected. I do not believe that the ultimate economic union, with a single currency, is compatible with the basic philosophies espoused by Conservative Members. It would remove the safety valve of the currency; there would not be the opportunities for mass migration that have enabled the United States to cope with economic developments; there would not even be the opportunities for the population movements that have taken place in the United Kingdom. Instead, economic disparities across Europe would increase. Prosperity would not develop evenly; massive transfer payments would have to be made across the regions. Even in a nation as united and economically coherent as the United Kingdom, with a single currency it has never been possible to abolish regional transfer payments. I am sure that Opposition Members would argue long and hard for such payments.

The pressures would be irresistible. We would have high subsidies—and, as all Conservative Members know, high subsidies lead to high taxes. We would not have a successful European economy. The importance of Europe, as an investment destination for the rest of the world, would decline; and I believe that it would continue to lose its share of world trade. I cannot envisage a successful economic scenario following economic and monetary union.

Conservative Members must continue to argue the case for free markets, liberal economic policies and the vital importance of competition between nation states. We shall never create a completely level playing field across Europe. That is impossible. There must be a role for nation states competing among themselves. That is the strategy and philosophy that we must enunciate here, and also when we come to the European elections.

I consider that the time has come to reject the whole mantra of economic and monetary union.

7.49 pm
Mr. Ieuan Wyn Jones (Ynys Môn)

For the past 25 minutes I have been wondering whether I have been listening to the main debate or a debate within a debate, almost as though I were listening to a cameo of a Shakespeare play. We have seen the Euro-sceptic wing of the Conservative party playing a game among themselves —the hon. Member for Milton Keynes, South-West (Mr. Legg) having a particular point of view, and his friends intervening to egg him on.

The trouble is that the arguments that were made by that wing of the Conservative party have passed them by. They lost that argument. They lost the votes. The hon. Gentleman believes that he has won the argument, but I can tell him that he has lost it. We are moving on in a totally different way.

In coming to the debate, I am afraid that many of us felt that we might be resurrecting the Maastricht trenches and that we would be going backwards, not forwards. Conservative Members have the same difficulty as many people in the countries of Britain have: that all the arguments about European integration and progress in the European Union are negative.

The arguments are negative because we fail through institutions in this place to have positive arguments and to understand what has been happening in Europe. Why was there the need to create the European Union? After the second world war, why was there the need for the peoples of Europe to come together? It is by working together that we solve the great problems of our age.

I did some research for the debate. I found that one of the most interesting speeches leading up to the creation of the European Community was made by Winston Churchill in Zurich in 1946. He foresaw the kind of debate that we are having today. Lady Thatcher called him in aid in some of her arguments in this place. The reality, however, was that, in 1946, albeit in opposition, Winston Churchill saw the need for Europe to come together and described it as a United States of Europe. The trouble was that the Conservative party could never buy that in government. He could say that in opposition, but when he led the Conservative Government in 1950, the establishment would not have it. He could not go that far. It took another 20 years for the House to accept accession to the European Community in 1972.

Mr. Jenkin

Can the hon. Gentleman point to the part of the text in Winston Churchill's speech in which he says that Britain should be part of a federal Europe?

Mr. Jones

I do not have the text of the speech with me, but I can tell the hon. Gentleman that, on three occasions —the hon. Gentleman can go to the Library and look for himself—in that short text, Winston Churchill referred to a kind of United States of Europe. The European Community had not been created in 1946. Nobody had mentioned the word "federalism" in 1946, but Winston Churchill understood the need for Europe to come together.

Some Labour Members hold the same views as Conservative Euro-sceptics. The problem in Britain is that the divide on Europe is so deep that the people of Britain cannot be allowed to understand the positive arguments in favour of closer integration.

Mr. Cash

Will the hon. Gentleman give way?

Mr. Jones

No. I am sorry. There is little time and many hon. Members wish to speak.

Having taken some time to tell the House that we must become more positive in our attitude to Europe, I shall concentrate on my next point. It is time for us to have openness and honesty about what European integration means. We must be clear about that. Although I disagree fundamentally with the analysis of the hon. Member for Southend, East (Sir T. Taylor), he was absolutely right when he said that we must be clear, open and honest.

Mr. Gill

Will the hon. Gentleman give way?

Mr. Jones

No. I am sorry.

European integration means that if decisions are removed from the House of Commons and go to the European stage, sovereignty in Parliament will be diminished. We should not despair about that, because if one understands the nature of sovereignty in modern Europe, one will know that decisions are taken at different levels. That is what subsidiarity is trying to tell us about.

Subsidiarity means that there is a European level where decisions are made and the hon. Member for Esher (Mr. Taylor) mentioned a number of matters that have to be taken on the European stage. How can we hope to understand the problems in our environment unless we understand the need for European and worldwide co-operation on environmental matters? How can we begin to understand the need for a proper energy policy if we do not understand the need to have a European approach to that?

There are levels at which we can take decisions in other places. The problem with subsidiarity so far as the British system of politics is concerned is that it cannot accept that decisions can sometimes take place below the level of member states. If one reads the document on subsidiarity contained in the foot-high pile that the hon. Member for Newport, East (Mr. Hughes) mentioned one sees that it mentions the need for the Community to accept that there are levels, below the levels of member states, at which decisions can be taken. There is the European level, the member state level, the regional level and the local authority level.

The problem within the British system is that no regional level is available. Therefore, the Birmingham declaration was clearly designed to save the British embarrassment about not having a regional level. It said that subsidiarity means that certain matters are decided at a European level and on other matters it is up to the member state to decide.

Another problem is that all the modern European democracies have a regional level. We shall see the problems that that causes to Britain's representatives when they attend the Committee of the Regions in Brussels in January. On the one hand, there will be the president of Catalonia, the president of the Basque region and the presidents of the German Lander, and on the other there will be local authority representatives of the United Kingdom.

The danger is that because we do not have a regional level, and because there is such a massive democratic deficit in the United Kingdom, the regional representatives in the Committee will have much more influence and power than the local authority representatives from the United Kingdom. I urge the Government to accept the need for the regional dimension in politics in Britain. We have heard that from the Liberal Democrats and I am sure that we shall hear it from the Labour Benches.

It is crucial that we meet the issue head on, because if the people of Wales, Scotland, Northern Ireland and other parts of England are to play a full part in the Europe of tomorrow, we must have representation at regional level with Parliaments in Wales and Scotland and assemblies in England and Northern Ireland so that we can have a direct input in Europe.

Mr. Gill

The whole House will not be unaware of the support that the hon. Member for Cardiff, Central (Mr. Jones) was able to give to the Conservative Government during the passage of the Maastricht treaty. Is not there a great irony in a situation in which he, with his avowedly nationalistic intentions and ambitions, is siding with the party of the union of Great Britain and Northern Ireland?

Mr. Jones

Let me make it perfectly clear to the hon. Gentleman that I supported the Maastricht treaty because I believed that that was the way in which we could move towards European integration. It happened to be that the Conservative party and many colleagues in the Labour party and Liberal Democrat party agreed with us. That was why we went through the Lobby together, to support the ideas and the principle. It is by supporting that that our kind of nationalism can best be described. We do not favour separatism and the building of borders. I do not want to see frontier posts on the A55 near Shotton or on the M4 near the Severn crossing. I accept the principle enshrined in the Single European Act of breaking down trade barriers. That is the kind of Europe that I want to see—a free Europe, but one which accepts the diversity of different languages, cultures and perspectives. That is why I supported the Maastricht treaty and I ask the hon. Gentleman to accept that.

Another vital part of the debate that has been touched on by many hon. Members is the European White Paper on growth, competitiveness and employment. I share the view that many hon. Members have expressed that because we had the document late in the day it has been difficult to make a proper analysis of the needs of economies in Britain.

But we share some aspects of the vision in the White Paper on jobs because we in Wales have suffered historically high rates of unemployment, far higher than many other parts of the United Kingdom. There are aspects of the report that we would accept. First, we need proper investment in a pan-European transport network.

When I argued that point during the Maastricht debates, many Conservative Members said that it was nonsense to invest in infrastructure projects. But if we in Wales, on the periphery of Britain and on the periphery of the European Community, are to compete in the single market, which I support, it is essential that we have the same opportunity to compete as other parts of Britain and other parts of the Community.

I concede that the great danger is that the core of the European Community will become extremely wealthy at the expense of the periphery. If we are to compete, we need proper road, rail and air links. I fully subscribe to the view contained in the White Paper that we should have transport infrastructure projects. That will do two things. In the short term, it will create jobs because people will be employed building roads, improving rail links and so on. It will also make our economy on the periphery much more competitive.

Some of the documents prepared by the Government show that about 10 per cent. of structural funds will be spent on Community initiatives. That is a good thing. Some Community initiatives aimed at improving, for example, transport infrastructure between regions such as Wales and Ireland are crucial if we are to succeed economically. We in west Wales have a fragile economic base. Links between the western seaboard of Wales and the east coast of Ireland could be improved, not only transport links but telecommunications, tourism and energy conservation—all of which are valuable. That is why the Government would be wrong to argue against some of the interventionist principles in the White Paper.

Every time I meet Conservative party members in Wales they point out to me the success of Lord Walker and the current Secretary of State for Employment as Secretary of State for Wales as a result of their interventionist policies. They came to Wales to establish a partnership between the public and private sectors. I did not agree with all the policies that they pursued. There were ideological differences between us. They did not come from the same political tradition as I did, but at least they subscribed to the view that there needs to be a proper partnership between the public and private sectors.

All that I would say to the Government is that they cannot have it both ways. They cannot point to the success of the Secretary of State for Wales in using public money to stimulate the Welsh economy and at the same time go to Europe and say that there should be no public investment. The Government should ensure that the public and private sectors, coming together in partnership, have a vital role to play in stimulating economic recovery in Wales. That is the message that I hope the Government will take to the European Council at the end of the week.

8.4 pm

Mr. William Cash (Stafford)

The problem that we face in the aftermath of the Maastricht debates is simply that the Government and the country now have to justify the signing of a document, the provisions of which have given rise to the White Paper that the Government are now rejecting.

One of the problems that we are up against is that article 103, which gives rise to the economic strategy guidelines —I shall come to defence and policy guidelines in a moment—gives Mr. Delors and others the opportunity to come forward with their socialist programme, which Opposition Members are only too delighted should be brought forward, but which we, unfortunately, have to reject. But for the fact that we had allowed the treaty to go through in the first place, we would not be placed in this dilemma.

The same applies to the article written by the Prime Minister which appeared in The Economist on 25 September 1993. I agreed with much of what he said in that article, but the problem is that a few weeks later we had the summit and the presidency conclusions which are extremely difficulty to relate to that article.

We now have another summit coming up tomorrow and I am bound to ask whether, when pressures are brought to bear in discussions over the next few days, we shall move yet further down this apparently inexorable route which has been prescribed under the treaty that we signed so recently.

I voted for the European economic area and for the single market in 1986. In 1975 I voted that we should stay in the Community. But, most emphatically, I do not believe in the kind of policies that are now permeating the Community. As my hon. Friend the Member for Esher (Mr. Taylor) said, we must consider whether our domestic policies have been sufficiently permeated by the European dimension for us to require, as I am sure all permanent secretaries do now as a first priority when devising legislation, the question to be asked: are we allowed to do this?

If a sense of defeatism has permeated our political environment during the past year or so, is that not partly because we have relinquished control over our affairs to far too great an extent? That is why I agree so much with the sentiments, but not the conclusions, of my hon. Friend the Member for Southend, East (Sir T. Taylor).

I am an optimist. I believe that we shall manage to pull this back and I sincerely hope that the Government will find the will to say the right things at the summit and, if necessary, to issue a separate communiqué. There is nothing negative in setting out the territory that has already been set out with respect, for example, to our professed opt-outs for economic and monetary union and the social chapter. There are, as we know, problems in implementation. We shall have difficulty in remaining at the heart of Europe if, as suggested by the summit that took place a few weeks ago, those objectives are re-endorsed and we sign up to the presidency conclusions. When the conclusions of the summit are produced, I suggest that we issue a separate communiqué—I hope that we do not need to do so—because there is a point at which it is essential that we learn to say no at the right time and mean it.

My hon. Friend the Member for Milton Keynes, South-West (Mr. Legg) summed up the exchange rate mechanism and gave us a superb analysis of the position. He dealt with the question of whether the recovery was running before we came out of the ERM. I have no doubt whatever that the arguments suggesting that we had are at best technical and at worst bogus. As my hon. Friend pointed out, the stock market has risen by some 50 per cent. since then and, in addition, on an entire range of criteria, it is perfectly clear that the recovery had not begun before we left the ERM. For example, the improvement in gross domestic product in the second and third quarters of 1992 was due to a temporary boost in consumer spending immediately after the general election and the end of de-stocking. It was not until the fourth quarter of 1992 that non-oil GDP at factor cost ceased to show a decline on the previous year. Manufacturing industrial output registered increases only from September 1992 and unemployment began to fall four months after our departure from the mechanism. In September 1993 we saw the first year-on-year increase in house prices since mid-1991, interest rates fell from 12 per cent.—the inescapable fact, as my hon. Friend mentioned—on black Wednesday, or white Wednesday, to 5.5 per cent. and inflation fell from 3.5 to 1.4 per cent. All those facts are entirely contrary to the Treasury warnings that without the ERM inflation would soar. We had to come out of the ERM because there was a marketplace which we had to recognise.

That message has now gone across the whole of Europe. There are Euro realists not only in this country, but in Germany—Mr. Stoibei in Bavaria—in France—Philippe Seguin, Phillipe de Villiers, Marie-France Garand and others—and in Spain and Denmark there are similar movements. Throughout Europe, in line with public opinion, there is a recognition of Euro realism which is even borne out in the White Paper prepared by the European Commission, "Growth, Competitiveness and Employment", which the Government have rejected. I do not agree with all its conclusions by any means, but there is a recognition of the need to ensure that if wage costs are too high, we shall not be as competitive in the real world.

We have to live in a highly competitive global village. Today, I have been up to my constituency in Stafford and back again because GEC Alsthom has been awarded the Queen's award for exports. It won that award because, in the aftermath of the recovery and because it is highly competitive in world markets, it has managed to produce superb, world-beating products.

We must stay out of the ERM. We must stay out of the control on economic guidelines of the kind that are prescribed by that White Paper and by article 134 of the Maastricht treaty if we are to survive as a free-trading nation across the globe. If we do not compete in real terms, we will collapse. Our economy will not be sustained and the dire warnings that my hon. Friend the Member for Southend, East gave earlier, combined with the inexorable growth of public expenditure, which is complementary to the decline of our industrial competitiveness, will drive us into the sand.

The public sector borrowing requirement rose to £50 billion because social security costs—housing benefit and mortgage repayments—and all the things that followed in the wake of the high interest rates regime that was imposed on us by ERM, not only forced public expenditure through the ceiling, but guaranteed that our base for future wealth creation went with it. Therefore, I was delighted that the Budget laid emphasis on enterprise and small businesses because we must generate the wealth creation to pay for public expenditure and at the same time ensure that we do not have unnecessary direct tax increases. We have come close to national bankruptcy, but, thank Heavens, as a result of the arguments of Euro realists throughout Europe—and also, some may think, arguments in the United Kingdom—we have now embarked on a policy that looks more realistic than it has looked for several years.

When I look at the question of further increases in public expenditure, the framework of growth initiative that emerged from the Edinburgh summit in the past year, the papers that the Select Committee on European Legislation considered a few days ago and the explanatory memorandum published on 2 December in the name of my right hon. Friend the Paymaster General, I have to ask whether it is such a good idea for us to borrow the kind of money that is set out in the White Paper. Is it such a good idea to be providing cohesion funds up to the amount that is set out? Believe it or not, the structural funds allocated between 1994 and 1999 will be no less than £108 billion. Where is that money coming from? If it is coming from the taxpayers of Germany, one can understand why they are beginning to jib at the whole concept of the European Community. If one considers Italy, a country that is virtually bankrupt, one can understand why people have fears about the direction in which the European Community is being taken. If one thinks of the taxpayers in Britain, one can understand why public opinion polls are registering so strongly in favour of the view of the Euro realists, who have been vilified for so long for nothing worse than getting it right. It is necessary for us to be realistic, but not because we want to stand on our dignity or pride. That would be absurd. We do not particularly want to be right. We want to be right only because it produces the right result, not because it makes us feel self-satisfied.

As a country, we are trapped by arrangements which we have entered into by going along with things all at the time and afterwards saying that we did not like them. That is no way to run a policy. For example, a tremendous amount has been said this evening about subsidiarity, as if, somehow, a magic wand is waved over the subject by which all will be resolved. The right hon. Member for Watford (Mr. Garel-Jones) said that around 25 per cent. of the legislation would be wafted away. I hope that he is not in the Chamber and I hope that I am quoting his words correctly.

A paper that was deposited with the European legislation committee only two days ago sets out the basis on which the Government have reported on the European Commission's document on subsidiarity. It does not look as though it will produce the results described by the right hon. Member for Watford. For example, according to the Commission, challenging the principle of the acquis communautaire must be avoided. That does not sound radical. It also says that priority in any review of the legislation is to be given to older, rather than more recent, legislation. We all know why—because so much of it has been overtaken by court cases. The review has been carried out simply to emphasise the most recent stuff, most of which we dislike.

The paper also says that re-examination should be limited to rules and regultions of a legislative nature. There is not much suggestion of a revision of policy, which is what we were looking for. I strongly suggest that hon. Members take the opportunity to study the explanatory memorandum to satisfy themselves. Furthermore, I hope that they will look at the declaration on the entry into force of the treaty on European Union, produced by the European Council on 29 October 1993. It sets out the guidelines with respect to common foreign and security policy. The hon. Member for Watford spoke optimistically about common foreign and security policy. Those guidelines say: A common defence policy, which might in time lead to a common defence, must"— I stress the word "must"— eventually be framed by the Union on the basis of its security interests. That document sets out the basis on which title 5 of the Maastricht treaty is being—not will be—implemented. I have not time to go through it all in detail but I assure hon. Members that it is well worth reading because it does not suggest that we shall act unilaterally.

Mr. Jenkin

It does not mention NATO.

Mr. Cash

As my hon. Friend says, and as I was about to mention, nowhere does it mention NATO. That is extraordinary in the light of all the assurances that we were given. We must therefore watch carefully to see how the legislation that we have just ratified works in practice.

On the voting arrangements in the Council of Ministers, a serious problem exists in how the European Community budget has been increasing. In so far as we can retain control over that through the voting arrangements, I draw hon. Members' attention to the fact that the total EC budget has increased from £30.9 billion in 1990 to £52.3 billion in 1993. It has increased by 69 per cent., while the United Kingdom is trying to cut public expenditure in its domestic politics. Administration costs in the European Community have risen by 18 per cent. between 1990 and 1993 and now stand at £2.7 billion, whereas emphasis in the United Kingdom is on deregulation.

Spending on agriculture in the Community has increased between 1990 and 1993 from £19.4 billion to £30.3 billion—I am giving the figures in pounds, not ecu —despite the MacSharry reforms and set aside. Those figures come from the statement on the 1993 Community budget.

Our contribution is said to fall and it will do so from 1994–95 to £1,350 million. But it then increases again to £2,890 million, and again in 1996–97 to £2,930 million —a total of £7,170 million. That total will not even be covered by the amount raised by putting VAT on domestic fuel and power over the next three years. The 1996–97 contribution of £2.93 billion will be greater than the combined budgets of the Foreign and Commonwealth Office and the Department of Trade and Industry, which are £1.24 billion and £1.39 billion respectively.

The cumulative net contribution to Brussels from 1991–92 to 1996–97 will be £12.14 billion. If one estimates the cost of defending sterling on white Wednesday at £4 billion, the total cost for that period will be in excess of £16 billion.

Against that background, we must ensure that we are not further out-voted in the Council of Ministers. So my final plea is that, at all costs, we ensure that we do not end up with a further increase in majority voting at our expense. The treaty has given rise to so much of the pain and suffering which I have described and which the British people have experienced. It has caused the difficulties and contradictions with which the Conservative party has had to deal, and the absurdity of the doctrines that emanate from the European Peoples party, which we shall have to sort out in the manifesto. Those all add up to one thing: let us look calmly and rationally, and support the Government in their determination to get those matters right. However, we must not allow the matter to continue rolling inexorably forwards. Like the other countries in the European Community, we must put down a marker and do something about it. We must renegotiate the Maastricht treaty.

8.26 pm
Mr. Ernie Ross (Dundee, West)

In the short time available to me, I wish to discuss two issues not covered by the Secretary of State's contribution—subsidiarity and support for the middle east peace process.

Last Friday, my hon. Friend the Member for Hamilton (Mr. Robertson), who made such a powerful impact on our debates on the Maastricht treaty, spoke in his new capacity as shadow Secretary of State for Scotland at a meeting of the Scottish Constitutional Convention in the Signet library in Edinburgh. He said: there are many in Scotland who believe that the endeavour to create the right constitutional arrangement for our country is not only a noble purpose, but a practical and sensible one as well, and it is in line with all the tides of power decentralisation alive throughout our continent today. My hon. Friend then asked the convention to look at what our continental neighbours are already doing by way of decentralising power and devolving decision making. In Spain, Belgium, Germany, and now in Italy, the regions are on the move and the new Committee of the Regions will underline that fact in the months ahead. However, as I said, the Secretary of State did not mention subsidiarity, although he did mention the constitutional court in Germany.

As the House will know, during the ratification process of the Maastricht treaty in Germany, the Bundestag and the Bundesrat demanded and obtained changes to the German constitution—the Basic Law—to grant both Chambers a greater say in the decision-making process. Paragraph 1 of the new article 23 of the Basic Law states: With a view to establishing a united Europe the Federal Republic of Germany shall participate in the development of the European Union, which is committed to democratic rule-of-law, social and federal principles as well as the principle of subsidiarity". Paragraph 6 of article 23 states: Where essentially the exclusive legislative jurisdiction of the Lander is affected by the exercise of the rights of the Federal Republic of Germany as a Member State of the European Union shall be transferred by the Federation to a representative of the Lander designated by the Bundesrat. The House will know that the presidents of the German Lander form the second Chamber in the German Parliament—the Bundesrat—and they or their representatives have for a long time exerted a greater influence in Brussels than any other regional authority leader among the EC member states. They have well established offices in Brussels from where they lobby German Ministers on the Council of Ministers, and they will no doubt play an even more significant role on the new Committee of the Regions established under the Maastricht treaty.

In Spain, new laws passed in September 1993 aim to give all the autonomous communities the same powers —with one or two exceptions—in two phases. The first is to be completed by the end of the year and the second by next summer. It will be achieved by changes to the autonomy statutes and will involve 33 areas of competence. The Government there have also agreed to give all the autonomous regions the power to spend 15 per cent. of the income tax collected in those regions. The Government of Felipe Gonzales has had to make further concessions in return for regional support in approving the rather controversial budget proposals earlier this year.

We now know that Jordi Pujol, Catalonian President since 1980 and president of the Assembly of European Regions, is to be the president of the European Union's Committee of the Regions. He has been a controversial figure in Spanish politics because of his efforts to secure more autonomy for Catalonia, and he will no doubt want to promote one of the union's concepts—that we are a Europe of regions.

In Belgium, shortly before his death at the end of July, King Baudouin signed constitutional amendments, finally approved by the Belgian Parliament on 14 July, making Belgium a federal state in which French-speaking Wallonia, Flemish-speaking Flanders and the mainly French-speaking capital Brussels would have greater autonomy. Amongst other things, responsibilities for agriculture, scientific research, external trade and social security have been given to the regions.

On 14 July, the Belgian Chamber of Deputies approved by 143 votes to 61 legislation to implement constitutional changes to create a federal state. The Bill was supported not only by the four ruling parties—the Flemish and Walloon Christian Social Democrats and the Flemish and Wallon socialist parties—but by the Flemish nationalists and the Walloon and Flemish green parties. That vote completed a long-running constitutional reform process which had begun back in 1970 and devolved further powers to the regions in three stages.

There we have it: Governments to the right and Governments to the left are applying the principle of subsidiarity as widely and as quickly as possible whereas, in the United Kingdom, we have not heard a word today from the Secretary of State about this most serious of matters. What we have had, not only today but in the debates on the Queen's Speech and at the Tory party conference, is a series of policy statements, decisions and commitments which, taken together, add up to an assault on elected, accountable government, locally and nationally, and its creeping replacement by an unelected, un-nominated and unaccountable patronage state.

I support my right hon. Friend the Member for Copeland (Dr. Cunningham) by referring briefly to the middle east peace process and the support for it contained in the documentation that we are considering. The House will be aware that Yasser Arafat, the chairman of the Palestine Liberation Organisation, will visit Britain next week as a guest of the Government. The House will also know that he will address Members of both Houses in the Grand Committee Room immediately after Prime Minister's questions next Tuesday afternoon. During the recent debate on the Queen's Speech, the Foreign Secretary said: The Government are looking at ways in which to help the Palestinians to set up the institution of self-government."—[Official Report, 1 November 1993; Vol. 233, c. 115.] My right hon. Friend the Member for Copeland supported that role. He has today been more specific in calling for not only European assistance but direct Government assistance to an organisation called PECDAR—the Palestinian Economic Council for Development and Reconstruction.

PECDAR is the critical institution for initiating the process of rehabilitation and reconstruction in Palestine. It is the institution for which all multilateral and bilateral arrangements of aid have called and which the Palestine National Authority has established. At its last meeting in Tunis on 4 and 5 December, PECDAR's board of governors resolved to establish the new institution on modern management lines to ensure efficient and quality performance. To do so, the board will need the expert assistance of professional consultant firms and expert advice on an emergency basis.

Being a new institution with limited resources, PECDAR is in need of all possible assistance to accomplish its objectives. The Government could make a significant contribution to the development of PECDAR through a financial offer to utilise the services of British firms and academic staff wherever they were needed.

When the Secretary of State has had time to reflect on the comments made by my right hon. Friend the Member for Copeland and myself, and perhaps when he meets the chairman of the PLO next Tuesday and Wednesday, I hope that he will be able to have further discussions on how that aid might be channelled to help the Palestinians.

There is one other European experience that we could usefully deploy to support the middle east peace process. One of the vital tasks is that of confidence building among the Israeli and Palestinian peoples. It is urgently needed to assure the Israelis and Palestinians of the benefits that will flow from pursuing the peace protocols as quickly as possible. I refer, of course, to a system that first saw the light of day in Europe—town twinning. It originated in Europe and it is in Europe that it has expanded most dramatically over the past 40 years.

There are at present more than 8,000 municipalities in western Europe involved in schemes ranging from villages to major cities. Of those, 88 per cent. are located in European Community member countries. The European Parliament considered the subject and in February 1988 adopted a twinning report which is now funded directly by the EC and used to pursue various objectives, one of which I am sure all hon. Members will accept. One of the cornerstones of democracy is precisely the freedom of citizens to participate in the management of affairs which most directly concern them at the grassroots level, within the individual municipalities wherever possible.

The town twinning arrangements have paid off in France. The task of reconciling France and Germany after 1945 was made much easier by the large number of twinning schemes between towns on either side of the Rhine. I suggest that we use our influence not only with local authorities in the United Kingdom but with other countries in Europe to convince European towns and cities to twin with Palestinian and Israeli towns and cities, if only to give them the experience which we have had and which the Palestinians will need as they start to run their own country for the first time in 27 years. Such a step would also give confidence to the Palestinian community, which has been living under occupation for the past 26 years.

Many in the Palestinian community believe that the peace protocols will not amount to much more than Jericho and Gaza. If we can start to establish twinning links between cities, towns and villages in Europe and towns in Palestine—towns that are identified as Palestinian—we shall be giving support and confidence to the Arab Palestinians living there by showing that the people of Europe understand that there will be a Palestinian state and that Palestinian towns are entitled to enjoy the same democratic freedoms as we do.

My suggestion would not break new ground. The first twinning of a British—or a United Kingdom—city took place in November 1980 when my town of Dundee was twinned with the Palestinian town of Nablus. There was no follow up to that until last year, when Glasgow twinned with Bethlehem. Even during those difficult periods, the contact between Dundee and Nablus gave support and confidence to the Palestinians in that region. I am sure that if we could encourage more of that, it would help the Palestinians to participate much more actively in the peace protocols that we hope for and that we are supporting in the documents today.

8.40 pm
Mr. Bernard Jenkin (Colchester, North)

This is an extraordinarily wide-ranging debate. We opened with the statesmanlike and comprehensive comments of my right hon. Friend the Foreign Secretary, and then moved on to the subject of the European People's party with the Opposition spokesman, the hon. Member for Copeland (Dr. Cunningham). Monetary union was mentioned. A Welsh Nationalist, the hon. Member for Ynys Mon (Mr. Jones), said that he supported the Maastricht treaty because it would lead to European integration. That flies in the face of what my hon. Friend the Member for Esher (Mr. Taylor) believes, which is that it will lead to a different type of integration—no doubt he supported the treaty for completely different reasons. We finished with the hon. Member for Dundee, West (Mr. Ross) speaking about Palestinian town-twinning. That raises a question about the nature of the debate and the nature of the accountability of the European Union.

Right hon. and hon. Members have already referred to the extraordinary pile of papers with which we were presented for the debate. Indeed, it is difficult to imagine how the Ministers who are answerable to the House will be able to read the debate before they sit down with their European partners at the European Council tomorrow and on Saturday. There is a disconnection; a growing problem of accountability.

In that respect, I shall refer to the speech by my right hon. Friend the Member for Watford (Mr. Garel-Jones), a thoughtful statement about the future of the European Community, in which he offered some solutions and some thoughts about how the Community was going to develop. The most interesting thing that he said was that the European Council should perhaps meet more often and more regularly.

Where does that leave the House and the role of the national Parliaments? My right hon. Friend the Member for Watford referred, it is true, to the declaration at the end of the Maastricht treaty, affirming a strengthened role for the national Parliaments, but how can the national Parliaments scrutinise the volume of legislation that emanates from the European Community, a vast quantity of which is never read in this place before it becomes law, when we are presented with it, fait accompli?

Where does that leave us as individual constituency Members? There is a growing despair throughout the country. Constituents write to Members of Parliament, who pass the letters to the Minister. With all respect to my right hon. and hon. Friends sitting on the Treasury Bench and those who serve elsewhere in the Government, the reply that we receive from the Minister somehow slightly fails to engage with the comments that were made in the initial letter. The letter goes back to the constituent and the constituent is left wondering where he should go. The Community is blamed; there is a lack of accountability. We have created a regulatory monster, which is destroying jobs up and down the country, and it is something what we need to consider. In that respect I shall address my comments to the issue of subsidiarity.

We have, of course, a Conservative agenda in the European Community and one which is gathering support on all sides of the Maastricht debate on the Conservative Benches. I am reminded of the comments that my right hon. Friend the Prime Minister set out in his article of 25 September 1993 in The Economist. He wrote: The vision of the founders of the Community was a fine one. What we have seen in the last two years is not so much a swing against Europe as a demand for a different kind of Europe. That is certainly where I stand and I believe that that is the position where others of my colleagues who opposed the Maastricht treaty stand, who have hitherto supported every piece of key legislation to do with the European Community—the referendum, entry and of course the Single European Act. To be opposed to Maastricht was not to be opposed to Europe as a place.

The Conservative agenda is gaining ground among our European partners. The emphasis on the general agreement on tariffs and trade round is welcome. I was a little tempted, at this stage in my speech, to congratulate the Prime Minister, President Clinton and the French Prime Minister, M. Balladur, on the success achieved in the GATT talks. We are witnessing the last stages of a ballet —a pas de deux between the two partners standing off, who will inevitably be able to come together at the last moment. Perhaps that is slightly premature, but that is an advance of the Conservative agenda in Europe.

The problem about advancing the arguments about competitiveness and growth is that the document that the European Community has tabled at such incredibly short notice—we should not let the lateness of that document's arrival pass without some acerbic comments—contains nothing about comprehensive deregulation and, indeed, recites the need for monetary union, for a unified Europe, not taking on board the logic of the argument so ably set out, for example, by my hon. Friend the Member for Milton Keynes, South-West (Mr. Legg).

There are gains. They are printing the graphs, for example, that demonstrate the loss of employment, the lack of competitiveness, the declining share of world trade. We are gaining ground and we should not begrudge that.

There are gains from subsidiarity. My problem with it has always been that before I came to the House subsidiarity was proclaimed as a great victory and soon after I came to the House, on 20 May 1992, the Prime Minister described the inclusion of subsidiarity as one of the great victories of the Maastricht negotiation that demonstrated that we were achieving a new turning point, away from centralisation in the European Community.

As we got more and more involved with that subject, however—never can so many trees have been felled in vain on such an obscure topic as subsidiarity—the more and more obscure became the concept of subsidiarity. By the time that the debate in Committee took place, subsidiarity had become rather a mouse. In an intervention, my right hon. Friend the Foreign Secretary made a comment on the speech that I was making and said that it was taking place outside the debate that has been taking place inside the Community for the past two years. He said: What is happening now however—I ask my hon. Friend to take my word for it—is that the different institutions are changing. That is reflected in article 3b, the Edinburgh declaration, the activities of the Commission and the sharp reduction in the number of legislative proposals coming forward. That is political fact before it is a legal obligation."—[Official Report, 8 March 1993; Vol. 220, c. 746.]

What we have in subsidiarity is not a narrow legal concept. We have a potent political force, but it is incumbent upon the Government to make subsidiarity worth much more than its technical, legal value.

In a report entitled "Commission Report on Subsidiarity" that was produced by the Commission to the European Communities in November 1993—in French, I may say; the Library provided a translation—the key phrase is that subsidiarity is not a matter of challenging the acquis communautaire: the basic principles of present policies will not be submitted to a new debate.

The key legal weakness of subsidiarity, as far as we are concerned, is that it does not provide for a net retrieval of self-government to the United Kingdom. It does not return power to the House. All we can beg for is that the Council of Ministers and the Commission should allow us to have some power back, to have it delegated back to us.

My hon. Friend the Member for Stafford (Mr. Cash)describes subsidiarity as a state of mind. It is not a limit on Community action because it limits that action only so far as Community institutions are prepared to allow it to limit themselves. If we are serious about exploiting the force that we have unleashed—the political potency of subsidiarity —we need to apply it more comprehensively. We need to implement what my right hon. Friend the Member for Shropshire, North (Mr. Biffen) referred to as the "Brixton manifesto". That would mean a Europe of nation states, with self-government. That is not merely the Europe to which my right hon. and learned Friend the Home Secretary referred—a Europe of nation states that respects those nations, "history, identity, culture and pride"—but a Europe of nation states that reflects our power, our status, our influence and our importance as self-governing democracies. I am afraid that I must tell my right hon. and learned Friend that pride is not something by which I set much constitutional store.

At the intergovernmental conference in 1996 we must insist to our European partners that the objective of moving decisions closer to the citizen is to apply subsidiarity to the objectives of the treaties themselves. We shall consider the principles of economic and monetary union, having found by then, as the Prime Minister said in his article in The Economist, that the troubles in the ERM are just a foretaste of the difficulties in moving to a full monetary union and having discovered that so much of the power moved to the centre has been misused to over-regulate, to destroy jobs, to remove the pride of the independent nation states and to create a sense of crisis between the elected representatives and the despair of the people. We shall move the powers back to the nation states. Ultimately, the European Community can govern only through the consent of the nation states. We need to remember that.

8.51 pm
Mr. George Stevenson (Stoke-on-Trent, South)

The motion asks the House to take note of many things, two of which are the preliminary draft budget for the European Community for 1994, and the letter of amendment No. 1 to that draft budget. I agree entirely with the hon. Members, especially my hon. Friends, who have said that one of the greatest challenges facing the EC is unemployment. However, another corrosive problem keeps eating away at the base of the Community—the common agricultural policy. That has hardly been mentioned in the debate, yet 34 billion ecu is to be spent on it out of a total original budget of about 69 billion ecu.

A previous Minister of Agriculture, who is now the Secretary of State for the Environment, told the House when he reported on his endeavours to reform the CAP that the deal was good for the country, good for farmers, good for consumers and good for taxpayers. However, although the right hon. Gentleman may have convinced the House to change the track, the train is still out of control.

The ink was not dry on the preliminary draft budget for 1994, which was presumably agreed by the Government, when letter of amendment No. I was written. I do not believe that that document is in the pile of papers that hon. Members have been given, but, as a result of it, the Government agreed to increase the draft budget for next year by no less than 700 million ecu. I am not a great mathematician, but that sum must knock a hole in £500 million.

At the same time that the Government were agreeing those horrendous increases, most of which go to the agriculture budget, they were cutting unemployment pay and the money for public services, and saying that we must have strong control of public expenditure. When the Chancellor of the Exchequer winds up the debate, he should explain why public expenditure has to be so tightly controlled in this country, whereas £500 million here or there for the CAP, which is clearly out of control, is okay.

I ask hon. Members, before they vote for the motion to take note of the preliminary draft budget and the letter of amendment, to consider a few examples of what we are to take note of. As I have already said, there is an increase in agriculture expenditure of about £500 billion for next year —and let us not forget that that comes on top of what is already a record agriculture budget.

Here are some examples of what the letter of amendment asks hon. Members to take note of. We are told that cereal storage should be reduced, yet it is to have an increase of about £6 million. Premiums for tobacco—I am sure that the House is concerned about those—are to increase by £4.8 million. Export refunds for cheese are to increase by £13 million, and skimmed milk powder export refunds by £34 million. Depreciation allowances for dairy produce are to increase by £39 million, and export s refunds for beef by £3.5 million. The list goes on and on. The result of all that is that we shall be asked to take note of about half a billion pounds being added to an already record common agricultural policy budget. How that will benefit taxpayers escapes me. Perhaps when the Chancellor sums up he will tell us how further spending of half a billion pounds on agricultural policy will benefit the taxpayers of the United Kingdom—but of course, benefiting the taxpayers of the United Kingdom is not exactly the Chancellor's forte at the moment; I fully understand that.

I cannot understand how the settlement equates to the assurances given to farmers, either. Perhaps we will be told that, too. The truth is that the so-called CAP reforms have turned what was a crisis into a potential disaster, certainly in financial terms.

The amendment tabled by the Leader of the Opposition says that the Government have failed to advance British intersts. I finish by saying that if we simply take note of the motion, it will be another example of how the Government are failing to advance the interests of the British people. Those interests are totally overwhelmed by Government dogma, which firmly places the United Kingdom within the margins of the European Community and keeps us enmeshed in the morass of the common agricultural policy waste.

Let me make it clear that there can be no progress unless the waste is tackled. We simply cannot have a Government saying that they are firmly in control of measures when £500 million is given willy-nilly to the common agricultural policy, which we all know is a massive waste. There must be fundamental change.

When we consider the issues in front of us today, we see that perhaps the Government's greatest failure is that they reject investment that will attack unemployment but seem to be enthusiastic and willing to pour hundreds of millions of pounds down the black hole that is the common agricultural policy.

8.58 pm
Mr. Gordon Brown (Dunfermline, East)

In this wide-ranging debate, which is taking place on the eve of the European summit, at which a paper on competitiveness, growth and jobs will be discussed, our argument is that Europe has failed to succeed in its aspirations in the past year. As my right hon. Friend the shadow Foreign Secretary said, Europe has failed to succeed in its aspirations for Yugoslavia and the protection of minority rights there, and in its aspirations for Russia and eastern Europe where the problems still remain intractable. Domestically, it has failed on recovery and the issue of unemployment.

The Government have failed not because co-operation has been too great and too extensive, but because co-operation on investment, industry and employment measures has been too little and too unambitious. Instead of promoting the co-operation that is necessary for job and growth measures, the Government should follow the examples set by Japan and the United States of expanding both demand and capacity in their economies.

The Government are engaged in their age-old trick of frustrating European initiatives, even when it is clear that greater co-operation is needed to solve the problem of long-term growth in Europe. We need co-ordinated measures on investment and jobs, as I shall explain. We need measures to build for the long term, as well as expediting the completion of a GATT agreement, not least by dealing with the problem of agricultural protectionism that is costing British families so much. My hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) referred to that agricultural protectionism.

We need a proposal for a European recovery fund and measures for starting infrastructure projects that would improve Britain's rail and communications links. A co-ordinated cut in interest rates in Europe is desirable and, indeed, necessary. We need measures to cut waste and fraud, not least in the administration of the common agricultural fund. Practical measures rather than rhetoric would be to the benefit of not only Britain but all the countries in Europe.

We should ensure—the Chancellor should realise this —that Britain takes full advantage of social, regional and other funds in Europe which are available and which could and should be taken up by the end of the year to create jobs and opportunities, especially in some of the most depressed communities in the United Kingdom.

Our argument is that the Government's ambivalence, and even the Chancellor's hostility, towards co-operation in Europe is such that even the public investment initiatives that Britain sponsored last year at the December summit—and which the Government boasted about selling to the rest of Europe—are being thwarted with cuts in public investment in the United Kingdom.

It is our contention that Britain is not only attempting to export a deregulation dogma which has not worked here and which will not work in Europe but that the whole purpose of the deregulation debate inside the Conservative party is a squalid and futile attempt—eventually it will be unsuccessful—to paper over the cracks among Tory Members to appease the Conservative right, rather than to do anything practical to achieve the sustained recovery and growth that we need.

Tomorrow, in Europe, the Government will propose measures not only because they believe that such measures will help to advance Britain or Europe. They think that simply by having something European to blame, it will help to unite what is a divided Conservative party on Europe. Our analysis of what is wrong and what needs to be done is different from that of the Government. We cannot deregulate 17 million men and women back to work in a European version of the crude market dogma that has failed in Britain. But deregulation without the implementation of the skills revolution will take us backwards rather than forwards.

In a world of global markets and the global sourcing of companies—the Pacific rim is growing at a much faster rate than the United Kingdom or any other European country; China has a growth rate of nearly 10 per cent.; and even low-wage Singapore is shifting production to low-wage China—the idea that our future lies in a low-wage, low-skill and low-investment economy is laughable. The idea that we should become the Singapore of Europe is farcical, absurd and, indeed, retrograde.

We should recognise that in a world of high technology and premium custom-built goods, where what matters is the skill and investment in the work force, we should not be taking the road of low growth, low investment and low wages. We should be looking for the road of high employment, high investment, high skills and eventually a high-wage economy.

The British problem of low competitiveness cannot be solved purely by cuts in wage costs in the vain hope of raising productivity. It must be solved by ensuring, through the sure prospect of investment, that we have the capacity and the skills to make investment work and to secure long-term growth. However, as the benefits of co-operation arise through the solution to the problem of skills in Europe, we need a programme to modernise and to expand both the capacity and the demand in the European economy.

I believe that it is possible in Europe today to expand demand by interest rate cuts and investment measures without the balance of payments constraints that we have had elsewhere. As on other issues with which the European Community must deal, we should recognise the benefits of co-operation and of doing together what we cannot do separately or on our own.

The Chancellor was suggesting on the radio today that Britain does not need to participate in such a programme for long-term, investment-led growth, and he confuses Britain's position in the economic cycle with the intrinsic strength of our economy. Let me tell him what everyone in the country knows. Britain has not done the best in the EC during the 1990s. Britain has been doing almost the worst of all our European competitors in employment, output and investment. It is precisely for those reasons that we must address the problems, not just in Britain, but together with our competitors in Europe.

Britain has suffered more permanent structural damage than almost all of our competitors in the EC. This country has, in particular, a huge investment deficit and that is why we, as much as anybody else, need many of the initiatives which will be proposed in Europe tomorrow.

Let us be clear about what has happened during the 1990s to the British economy. Our national income has fallen faster than that of almost every other country in Europe. While it has risen in Germany, France, Belgium, Denmark and most of the other countries in Europe, Britain has seen a fall in national income since the beginning of the decade. Employment has fallen by 7 per cent. in Britain, while it has risen by 7 per cent. in Luxembourg, 4 per cent. in Portugal, 7 per cent. in Spain and 2 per cent. in Denmark. [Laughter] Ministers may laugh, but Britain has had the biggest fall in employment during the 1990s.

Ministers should be ashamed that they went into the previous election with promises that the recovery would begin the day after the election. For months afterwards, unemployment rose as a result of their policies. [Interruption.] The Minister with responsibility for deregulation will be aware that unemployment in this country has risen since the beginning of the 1990s by 76 per cent., and that is unrivalled by any of the other countries in the EC.

Mr. Kenneth Clarke

With respect, the hon. Gentleman is trying to ride over perfectly well-judged interventions from my hon. and right hon. Friends. The hon. Gentleman chooses a selective period and he knows that, at the moment, this country is the only one which is enjoying growth among the major economies of western Europe. Industrial production in the latest three months is up by 3 per cent., whereas the year-on-year figures are 5 per cent. down for Germany, 3.5 per cent. down for France and 1.25 per cent. down for Italy. Britain's is the only major European economy for which anybody is forecasting significant growth next year. The hon. Gentleman makes extremely careful use of figures by choosing a rather unlikely starting date.

Mr. Brown

The latest figures show that investment, employment and manufacturing employment are still falling. [Interruption.] I will give way to the Chancellor, who can give us the figures.

Mr. Kenneth Clarke

Our position is substantially better than that of western Europe. The hon. Gentleman knows that unemployment in this country has gone down in seven of the last nine months, while it continues to rise in other western European countries. Unemployment is much worse in France than it is here, it is getting steadily worse in Germany and it is disastrously bad in Spain.

Britain is leading the way in the European Union towards recovery. We lead our partners in Europe who will begin to show the same signs of recovery in due course. The hon. Gentleman does not help his case by giving the rather extraordinary picture of Britain being in crisis while the rest of Europe is doing better. The reverse is the case.

Mr. Brown

Once again, I notice that the Chancellor, with his grasp of the facts, fails to answer my question. The latest figures show that employment in Britain is still falling and manufacturing employment is still falling.

Perhaps the Chancellor should explain why the President of the Board of Trade had to go to the Institute of Directors and explain why British competitiveness was still 25 per cent. below the standards of our main European competitors. That is after 14 years during which, the Government claim, they presided over an economic miracle.

I shall be fair to the Chancellor and look at what has happened over the 14 years of Conservative government. We have one of the lowest growth rates and manufacturing investment has fallen in real terms. Employment has risen by 0.4 per cent. in Britain, which the Chancellor claims to be the deregulated paradise of Europe, but it has risen by six times that amount in France. The Chancellor should look at the record of the Government of which he boasts he has been a member over those 14 years. I shall give way to the Chancellor to allow him to supply figures to show that manufacturing and other employment is rising.

Mr. Kenneth Clarke

The hon. Gentleman is choosing curious periods and curious selective figures. I have given him the figures for employment. He is wrong to deny that unemployment has been falling in Britain at a time when it is not falling in the rest of western Europe. He has gone back to the late 1970s, to the recession that we inherited. In the decade from 1980, economic growth was faster in the United Kingdom than in France or Germany. In the 1980s, we created well over 1 million new jobs, more than either France or Germany. Of course the hon. Gentleman will not face up to today's figures, which show that the United Kingdom is growing and is expected to grow faster next year when other economies are still in recession.

Mr. Brown

The Chancellor never read the Maastricht treaty and he clearly does not read the economic statistics supplied to him by his Treasury colleagues. He has failed to answer my direct question about employment levels or manufacturing employment. As for the record of growth, he could not give exact figures since 1979. Manufacturing growth in Britain has been 5 per cent., which means that the great economic miracle country has grown at one fifth the rate of Germany where growth was 25 per cent. America has grown by 36 per cent. and Japan has grown by 51 per cent. I shall give way once more to the Chancellor if he can deny those figures.

Mr. Kenneth Clarke

Economic growth in the United Kingdom in the 1980s was faster than in Germany or France. We created more jobs than Germany or France, but the record over the two previous decades was worse than that of our rivals. The hon. Gentleman is trying to make selective use of historical figures and that is nonsense. He is trying to claim that, at the moment, we are not recovering when we are plainly doing so faster than anywhere else in western Europe.

Mr. Brown

The Chancellor has simply proved that he will try to bluster his way through any intervention. He has not given one fact to substantiate his claims. He claims that growth during the period of Conservative government was faster than that of any other country in Europe. Since 1979, growth in Britain has been lower than that in western Germany, France or Italy, and lower than the European average. Therefore, his claims about growth, like his claims about manufacturing output and general and manufacturing employment, are wrong. He has been unable to justify his position at any point in this exchange.

The Chancellor claims to be interested in European convergence, but neither in his interventions nor in his Budget has he produced one policy measure that will achieve that. What has happened since the Government went to the Edinburgh summit and announced a new policy for which the Prime Minister claimed praise? At that December summit in 1992, the then Chancellor was not only pleading with Europe to cut interest rates all round but was taking credit for British proposals that the Community should invest out of recession, as he said Britain was doing. The Government said that Europe should follow Britain's lead of public investment.

The European communique that the Prime Minister had played a part in writing said that, as far as possible, we should switch public expenditure priorities to infrastructure, capital investment and growth that would earn a worthwhile return. It was said that that was an urgent priority throughout Europe. The Prime Minister reported to the House that member states agreed, following the pattern of our own autumn statement, to give priority to capital spending and encourage private investment".—[Official Report, 14 December 1992; Vol. 216, c. 23.] After the December summit, private investment in Britain continued to fall in 1993, and business investment has continued to fall. That package was hailed by The Times as "John Major pulls it off'. The Prime Minister was reported as saying that the heads of Government had praised the outcome of the summit, which was a boost to investment worth £24 billion. It was claimed that Europe's 17 million unemployed had reason to be grateful to the Prime Minister.

Since then, the European investment fund, with which Britain was supposed to be leading the way, came before the House only a few days ago and it is not even up and running.

Most important of all, we discovered in last week's Budget that Britain had dropped the very public investment initiatives for which the Government claim credit in the rest of Europe. There will be a 3 per cent. cut in public investment this coming year; a 3 per cent. cut the year after that; cuts in transport investment, despite the Conservative manifesto commitment that the Government would improve transport over three years; cuts in London Underground; cuts in infrastructure; cuts in the environment; and public investment cuts all round of 25 per cent. effectively as a result of Government proposals.

Mr. Kenneth Clarke

indicated dissent.

Mr. Brown

The Chancellor shakes his head, but I suppose that, once again, he will be unable to give any figures to justify his position. General Government capital expenditure will fall from £13 billion in 1993–94 to £10.7 billion in 1994–95—a drop of 18 per cent. Even the new measure that the Chancellor chose to use—public sector asset creation—will fall in real terms over the next few years. What was meant to be an anti-recessionary package is being abandoned with public expenditure cuts, and something hailed throughout Europe has led to some of the biggest public investment cuts in this country's history.

Britain has failed to support not only the European Commission's proposals but even its own proposals. I can think of nothing more reprehensible than for the Government to claim all the credit from the December summit and now to cut public investment—in the same way that they broke their promises on VAT, national insurance and everything else.

Mr. Kenneth Clarke


Mr. Brown

I will give way to the Chancellor one last time if he will give the House information, not the bluster that we have heard in the past few minutes.

Mr. Clarke

I am grateful to the hon. Gentleman for being generous with his time. His description of the follow-up to the Edinburgh facility was quite extraordinary. The new facility was set up through the European Investment Bank.

Mr. Brown

The fund.

Mr. Clarke

No. The first facility was the bank, then the fund. We were among the early ones to ratify as a result of the parliamentary vote. Under the Edinburgh facility, the United Kingdom has already borrowed 852 mecu, which is approximately £640 million, for infrastructure investment in this country. The United Kingdom is the largest borrower under the Edinburgh facility, taking advantage of the announcement that the hon. Gentleman correctly quoted.

The difficulty—I will be fair to the hon. Gentleman—is that the Commission produced the European Union bond proposal only three days ago. The hon. Gentleman totally misunderstands the point that we are arguing. We launched the Edinburgh facility, and the United Kingdom is the major user and beneficiary of that initiative, which was launched by my right hon. Friend the Prime Minister.

Mr. Brown

The Chancellor fails to say that the European Investment Bank facility has not been used up in its entirety over the year. The European investment fund was actually the new project created at Edinburgh, not the European Investment Bank—which has been going for years. The European investment fund created at Edinburgh is not yet up and running, more than 12 months after it was created. The Chancellor should apologise to the House because the initiative of the previous Chancellor is not yet up and running. It may help in the next recession, but, because of the delays, it will not be of much help in this recession.

Let us consider the other investment projects that should be sponsored by Europe and where the Chancellor has once again failed. What about the water initiative? Only a few days ago, the Chancellor went to Europe to say that we could not afford to go ahead with the water directives. He told us that we have to cut water quality standards.

What does the Delors European document say? What is it that the Chancellor is ready to reject when he goes to Europe tomorrow? It talks about the projects that could gain European finance under the proposals. It says that the projects concern water control, urban waste water treatment and renovation of water supply distribution systems. The Community could help finance some 25 billion ecus of action in this area of environmental concern over the period 1994 to 1999.

Under the new proposals from Delors, Commission help is available to boost our water quality. So why is the Chancellor saying that we have to cut water standards when he should be supporting the investment facility that could improve water standards in Britain?

The Chancellor knows very well that the cut in water quality standards is a cut in the facilities for the treatment of sewage. One in five of our beaches does not meet the European Community environmental standards and we are second bottom in the European league for meeting the higher guidance requirements for our beaches.

We know that water standards for urban waste are the second worst in Europe. We have agreed, over a period of years, by sponsoring the directive that we should do something about those standards. We have signed up to the directive and the Conservative party boasted in its manifesto that its commitment to the environment was beyond doubt. The National Consumer Council has made it clear that there is a variety of ways in which water companies could be involved in meeting the targets and we now have the means by which the Government could seek support in Europe to pay for raising the quality of our water. Given all that, why does the Chancellor want to pursue a deregulation course in Europe? I suggest that the reason is that the Chancellor wants to appease the Tory European right in a vain attempt to hold together a divided Conservative party.

The next initiative in the Delors proposals tomorrow is the channel tunnel rail link. At the Edinburgh summit the one thing that the Government boasted about as the investment project that would be going ahead was the channel tunnel. They said that the channel tunnel rail link would proceed as a "joint venture". They said that it would be an increase in infrastructure investment of £2.3 billion. Presumably, that is not to help us out of this recession, but to help us out of the next recession because the starting date has been moved backwards and backwards and is now 2003. Conservative Members should be ashamed because there is national humiliation in the fact that trains will be able to travel at 185 mph from Paris to Calais, 85 mph through the tunnel and then, at best, at 47 mph from Dover to London. [Interruption.] The Financial Secretary asks if we have heard about the French planning system, as if the French rail links from Paris to Calais have not been completed or may not even have been started. In fact, the first link was completed in the summer and the second part was completed in September. The French planning system has managed to bring about a completion while we have another 10 years to wait as a result of the Government's neglect. It is no wonder President Mitterrand is looking forward to opening the channel tunnel. As he said, two worlds will be opened up as a result of the opening of the tunnel. There will be high-speed travel at 185 mph from Paris to Calais and then there will be time for leisurely journeys from Dover to appreciate the English countryside.

Even by the year 2000, French trains will have been able to travel at 185 mph for seven years. When Britain enters the millennium, people travelling from Dover to London will be looking at building sites where the work has not been completed, and they will see quantity surveyors travelling around in their vans to plot the route. That disgraceful state of affairs has been reached as a result of the Government's failure to understand the public interest in the completion of the project. It would be the stuff of an Ealing comedy if it were not fast becoming more like an Ealing tragedy every day.

What did the Chancellor say on "The World at One" today? He said that the channel link is not being held up particularly. The original starting date for its being in use was 1997, it was then pushed back to 1998, then 2000, more recently 2002, and now people fear it will be 2003 —and the Chancellor, with his gift for accuracy, tells us that it has not been particularly held up.

What does the European Commission say about the channel tunnel rail link? It says that it should be a major priority project of Community interest; that it should be selected for a feasibility study; that it would be prepared to provide loan guarantees, and support the closing of missing links in the framework of projects of common interest. It is listed as one of the priority projects with which the Commission is prepared to go ahead, so why do the Government put up implacable resistance to projects of investment from which Britain is likely to benefit? The Foreign Secretary could not answer that question this afternoon. Britain would be a beneficiary of the investment funds made available by the Delors plan to enable projects to go ahead.

Why is that project not going ahead? Is it because there is no benefit for Britain?

Sir Teddy Taylor


Mr. Brown

The hon. Gentleman should explain to the whole of Britain why he thinks that the absence of a channel tunnel rail link from Dover to London will be of benefit to this country. People are increasingly seeing it as a national humiliation. They blame the Government for failing to invest in our infrastructure.

Sir Teddy Taylor

Will the hon. Gentleman give way?

Mr. Brown

No, I am not giving way, I have only four minutes left.

If the hon. Member for Southend, East (Sir T. Taylor) is not trying to work his passage back—he was the hon. Member who led the Conservative opposition to the Maastricht Bill—perhaps he might intervene on the Chancellor and ask him why the Government have failed so miserably in relation to winning in Europe.

The Government oppose these projects, not because the private sector is more efficient, but because they oppose the public sector in its entirety. It is becoming very sad that to win his reputation with the Conservative right the Chancellor is prepared to sacrifice what is clearly a public-interest project which we should be supporting in Europe.

The "Budget for jobs" that the Chancellor introduced last week has become a Budget for his next job. It was simply an investment in his own future. It was a Budget for doing business with the members of the 1922 Committee, who wanted huge public expenditure cuts. Now, with his ambition to take over from the Prime Minister, he goes to Europe, bangs his fists on the table and shouts, "It is our money." It is the old no, no, no approach of Lady Thatcher; it has been dusted down and is now being used by the Chancellor to promote his candidature for his party's leadership.

There has been a complete shift in the Chancellor's behaviour in relation to Europe. His visits are characterised by confrontation and clashes. Wherever he goes to negotiate—often before the starting whistle—the Chancellor provokes confrontation. He is more interested in displays of pre-match aggro—wrapped in the Union Jack and spoiling for a fight—than in the real agenda and a positive result. It is a pity that our contributions to European discussions now have all the hallmarks of the most publicised feature of English football supporters abroad. That is what has happened under the Chancellor.

The reason is that the Chancellor is looking forward to three elections next year; not just the local elections and the European elections—in which he expects the Conservative party to do badly—but the third election that will follow them, the one for the Tory leadership. Let me give the Chancellor a warning: he should not forget that, after the third election, a fourth will be necessary—an election among the British people, which the Conservative party will lose.

Finally, let us examine the Conservative party's proposals on jobs. The Conservatives admit that unemployment is a structural problem; they admit that it has been rising recession by recession; they admit that training is inadequate in Britain. The document, however, contains little more than a continuation of the crede deregulation strategy that has done nothing for Britain over the past 14 years.

If deregulation works, why did Britain have a higher unemployment rate throughout the 1980s than France, Germany and Italy—the countries that, according to the Government, are over-regulated and sclerotic? If deregulation is the answer, why has British employment growth been only 0.4 per cent. over the past 14 years, while in France it has been 3 per cent? If deregulation works, why, in the 1980s, did both the United Kingdom and the United States have a lower proportion of prime-age men in work than France, West Germany and Italy? If deregulation works, why did the President of the Board of Trade have to admit that Britain's competitiveness is 25 per cent. below that of our major European competitors?

I warn the Chancellor that there is no evidence that cutting unemployment benefit will increase employment. There is no evidence that cutting health and safety protection will mean more long-term jobs. There is no evidence that Britain's abandonment of the social chapter provisions—which were not abandoned by the rest of Europe—will mean more employment in Britain than elsewhere.

Does not the Chancellor understand that the real alternative to the deregulation policy that he pursues is investment in the skills of the people of this country, and the creation of a framework of personal security through the social chapter? To the unemployed, the Conservatives' deregulation strategy means the same as the supermarket slogan: pile'em high and sell'em cheap. We want no part of that strategy—in Britain, or on the Opposition Benches.

In the past few years, there has been a deliberate attempt to hold the Conservative party together for purely partisan purposes, at the expense of the national interest. The Conservative Government have opposed employment measures in Europe; they have opposed protection for school children working long hours; they have opposed protection for maternity rights and for jobs. Above all, they have opposed the social chapter. In all the negotiations that have taken place in Europe over the past three years, they have won no support for their position, not even from the political parties of the right.

The Conservatives have experienced 14 years of failure on growth, investment, employment and making Britain fair—14 years in which they have tried to blame everyone else, when the blame should be imposed on them. Because of that failure, they will lose the local elections, the European elections and the general election.

9.31 pm
The Chancellor of the Exchequer (Mr. Kenneth Clarke)

I have seen the hon. Member for Dunfermline, East (Mr. Brown) in autodrive before, but I have never seen him unable to stop. He went past the buffers and his argument reached a state of chaos. [Interruption.] I agree that the hon. Gentleman was generous with his time in conceding to me; unfortunately, he did not accept my correction of some of his assertions.

We should agree on the most important issues facing Europe at present: employment, growth and competitiveness. Those are the issues that we shall discuss at this weekend's summit. Britain will be at the heart of discussion of those issues in Europe and I believe that we have an extremely positive contribution to make.

The irony of the situation—which no doubt baffles anyone who listened from the Galleries to the hon. Gentleman's diatribe—is that many of my views on the European Union are not so very different from his. The same applied to the previous shadow spokesman whom I faced at the Dispatch Box. I certainly agree that Europe needs to tackle the problems involved in employment, growth and competitiveness. [Interruption.] After hearing one or two of today's speeches, I am not sure that others understand M. Delors' proposals any better than the hon. Member for Dunfermline, East; but I would forgive them all. The proposals that the hon. Gentleman defends with such passion were produced on Monday and he had not understood them by Thursday.

The hon. Gentleman is talking gobbledegook. The proposals should never have been produced at such a late stage, for he has been sadly misled. I think that I have the only proper copy of the document in the House. If the hon. Gentleman has had time to read it—I forgive him if he has not—he certainly has not understood it, as was plain from the beginning of his speech to the end. I believe that, when he has digested it and when we begin proper discussion of it on Saturday, he will begin to understand that all this stuff about our being against transport investment and not taking advantage of European facilities is nonsense. What is wrong with Europe? As should be seen both by those who favour our present arrangements for the European Union and those who are more sceptical, we need to pursue together the goals of greater competitiveness, tackling structural unemployment and improving the position of industries. We will achieve that not through ranting speeches and press releases issued on Monday in order to secure a good headline on Saturday, but through the purposeful creation of conditions that will give rise to more competitiveness, growth and jobs.

Mr. Gordon Brown

The Chancellor mentioned transport infrastructure. I would like him to answer one question: when will the channel tunnel rail link be completed?

Mr. Clarke

When the design is completed, the route settled and the private investment is introduced. It is not being held up—[Interruption.] The French built their system because they did not have the dispute that we had all over Kent and east London about where it should go. The channel tunnel rail link is not devoid of people investing in it. It will raise private finance quite straightforwardly and it does not need the new facility—the union bonds—which the hon. Member for Dunfermline, East appears to believe are the answer to a maiden's prayer, with the Commission suddenly coming in and taking it over. He has been totally misled by an out-of-a-back-pocket proposal, produced only two or three days ago.

Several hon. Members


Mr. Clarke

No. Let us try to have a sensible debate. [Interruption.] Just steady on a moment. Let us discuss the situation on public infrastructure.

The British Government are a strong supporter of the construction of what are known in Euro jargon as trans-European networks. I strongly believe that if we are to take full advantage of the single market, we must develop the networks of the kind described. It was a provision of the Maastricht treaty—I was in favour of the treaty—that such networks should be put in place.

Mr. Nigel Griffiths (Edinburgh, South)

Will the Chancellor give way?

Mr. Clarke

I shall give way when I have explained what we should be talking about.

The way in which those networks are being financed at the moment, and, in our opinion, the way in which they should be financed, is by a combination of private finance plus the facilities from the European Investment Bank, plus the European investment fund, which the House has just agreed that we should rectify, taking advantage of the Edinburgh growth initiative in which the British Government were a major participant.

Mr. Enright

Give us the dates.

Mr. Clarke

With the assistance of the European Investment Bank we are already building the Jubilee line extension—[Interruption.]—the Severn bridge project and the Manchester light railway, all of which were financed by borrowings from the European Investment Bank. [Interruption.] If Opposition Members think that all that is needed to start the high speed tunnel link tomorrow is a loan from President Delors, and if they solemnly imagine that that is remotely the difficulty, I would not put them in charge of building a garden path. I advise them to visit Kent to inquire into the background of the project and see what is being done at the moment to design it. Opposition Members have only to see one headline in the newspaper, "Money from Europe to build the channel tunnel link", and they have their Front Bench spokesman wild with excitement and believing that it can be built tomorrow.

The hon. Member for Dunfermline, East rattled through the Edinburgh initiative. That initiative built on the European Investment Bank. The Edinburgh facility was an enlargement of the borrowing from that bank.

Over the years, we have been the third-largest borrower from the European Investment Bank. In 1992, United Kingdom undertakings borrowed a total of £1, 795 million from it. Ironically, given the hon. Gentleman's case, water companies are among the major beneficiaries in this country from those European facilities. The hon. Gentleman says that he wants facts, but there was not an accurate fact in his speech from beginning to end. The large amount borrowed by the water companies is £496 million and that is continuing in 1993.

At the Edinburgh summit we announced the Edinburgh facility, an enlargement of European investment funds. I have already said that the United Kingdom has taken more advantage of that than any other member country. So far, we have borrowed approximately £640 million.

There are still outstanding moneys under the Edinburgh facility. We should be prepared to consider an extension of the European facility if anyone at the summit can demonstrate that there is a need for such an extension by citing any projects of the kinds listed which are held up anywhere for lack of funds.

The hon. Gentleman is inadvertently and passionately defending an idea that the Commission should suddenly start borrowing on its own account and issuing so-called union bonds as an additional facility for which there is no demonstrable need.

That is not even a new idea, although it is to the hon. Gentleman. The Labour party has no policy on the economy or on Europe. Therefore, last Monday it borrowed what seemed to be the Commission's latest bright idea, but I remember that in the 1970s, under a Commissioner called Ortoli, it was suggested that the European Commission should be allowed to issue bonds on its own account and start to acquire a public sector debt as if it were a Government.

Is it the Opposition's position that, at a time when all over Europe tough budgetary decisions are being taken to reduce Government borrowing, the Labour party is, overnight, in favour of allowing the Commission to increase its borrowings and start issuing bonds as if it were a Government for no demonstrable purpose?

Mr. Stevenson

Will the Chancellor give way?

Mr. Clarke

No. If I have time I might come to the hon. Gentleman's points, with which I have considerable sympathy. I have had to spend this long explaining to the hon. Member for Dunfermline, East that he is talking about fool's gold, which has fooled him completely into believing that we are resisting some lightning method of moving forward into great infrastructure projects.

If the hon. Gentleman is seriously interested in growth, employment and competitiveness, what common-sense propositions do we have to put forward, which we are putting forward and on which we are winning friends inside the European Community?

The first proposition that we are advancing is the need for economic convergence, following the Maastricht criteria, low inflation, a subject never mentioned by the Labour party, and low public borrowing, which Britain is likely to achieve at a faster rate than others. That is a key to European policy.

The Labour party in Britain would not achieve either. It is not in favour of low inflation. Its policies, announced last week, of not raising taxation, increasing public spending and borrowing more money would take them away from the convergence criteria on which every other member state is agreed.

The second proposition, never mentioned by the hon. Member for Dunfermline, East, includes open markets and free trading. It is astonishing that someone who claims to be a serious shadow Chancellor does not mention the GATT round or the trading position of the European Community—

Mr. Gordon Brown

Will the Chancellor give way?

Mr. Clarke

I shall give way to the hon. Gentleman to see whether he understands the GATT round any more than he understands European capital financing.

Mr. Brown

The Chancellor said that I had failed to mention the GATT round. He is absolutely wrong. Will he now apologise?

Mr. Clarke

If the hon. Gentleman is in favour of the GATT round, I apologise for missing his one good point in the stream of consciousness gabble that he gave to us when he completely misunderstood the purpose of the Delors White Paper. If the hon. Member for Dunfermline, East wishes to extend his knowledge of open, free-trading policies, he might agree that the Government are right to insist in Europe on completion of the single market, run on the basis of proper competition policy and a single market that steadily gets rid of state aids, which distort competition in the economy. They are right to insist on opening the markets of the European Union—following the GATT round, which I hope will be concluded successfully in the next few days—especially for the countries of eastern and central Europe. That is the second item of the positive agenda that we are pressing ahead in Europe. The first item is economic convergence, the second is open markets and free trade.

The third part of our agenda, the true European agenda, is encouraging enterprise in the EC. [Interruption.] Yes. If Opposition Members had copies of the White Paper or had read it, they would find that that idea is slowly entering the arguments of our partners.

Mr. Stevenson

Will the Chancellor give way?

Mr. Clarke

As the hon. Gentleman made one of the few speeches that contained parts with which I agreed, although I would be reckless to agree with some parts of it, I shall give way to him.

Mr. Stevenson

Will the Chancellor explain to the House how the Government are promoting enterprise when, on 15 November, the Budget Council, on which the Government are represented, unanimously agreed to another 700 million ecu of wasteful agricultural expenditure? How is that promoting enterprise?

Mr. Clarke

That was the part of the hon. Gentleman's speech with which I had some sympathy—he should join the Treasury. We have tackled that. I had considerable sympathy with the hon. Gentleman's strictures on the common agricultural policy. He was putting forward a point of view with which the Government had considerable sympathy. We tackled it at the Edinburgh summit, during the British presidency. We are quite clear, as my right hon. Friend the Foreign Secretary said when he opened the debate, that the own resources ceiling and the agricultural guideline which we set at Edinburgh must be adhered to. We have capped that agricultural spending. I agree with the hon. Gentleman that it is important to do so, because it leaves us freer to pursue the agenda, which includes encouraging enterprise.

Dame Elaine Kellett-Bowman

Will my right hon. and learned Friend give way?

Mr. Clarke

In a moment. We believe in reducing burdens on business. If Opposition Members do not believe that we are winning that argument in Europe, they should study the documents before us.

Dame Elaine Kellett-Bowman

Will my right hon. and learned Friend give way?

Mr. Clarke

I will in a second.

We are also encouraging small and medium-sized enterprises. I remember in Europe six years ago the Government were almost alone in advocating the importance of small and medium-sized enterprises. The White Paper and guidelines contain copious references to them—British policy—because we see those enterprises as the major source of new jobs in Europe in the 1990s and we are getting that into the European agenda. We would like to go further in lifting burdens and we believe that the White Paper is going in the right direction but does not go far enough. We should like to advocate an audit of existing legislation, whether it be under the social chapter or any other heading, to get rid of those useless burdens on German, French and British employers which are inhibiting the creation of new jobs. I willingly give way to my hon. Friend.

Dame Elaine Kellett-Bowman

Is not it intensely gratifying for my right hon. and learned Friend and indeed the Prime Minister that they now have German converts on the matter of competition? The German document states: Increasing regulation and the growing complexity of provisions must not be allowed to restrict unduly the creative forces and initiative of citizens of business enterprises and burden them with the costs. That is exactly what my right hon. and learned Friend has been saying and other Governments have now taken notice.

Mr. Clarke

My hon. Friend is right. She has been a Member of the European Parliament. The Labour party would be in a minority of one in the Council of Europe in advocating the nonsense that it still turns out as its policy. Time was when the economic approach of the European Commission and many of our partners came straight out of Harold Wilson's Government of the 1960s. We have now changed the climate in the rest of Europe, but the British Labour movement remains rooted in its historical past.

We go on to advocate flexible labour markets, as my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) said, a policy that is now incorporated in the White Paper. Also contained in the White Paper is our belief in modernising social protection to give affordable, well-targeted social protection schemes that increase incentives to work.

All that is in the programme of work before the House and it has all been resisted by the Opposition, who sit there fondly imagining that they are supporting the growth initiative of European Governments this weekend. As I have already described when I went over the whole question of infrastructure investment, the Opposition simply do not understand and their approach to Europe is to defend an approach to job creation that is no longer advocated by our European partners.

The hon. Member for Stoke-on-Trent, South (Mr. Stevenson) passionately defended the White Paper. Apparently, it is now the British Labour movement's policy. This second version came out on Monday. There was an earlier version—[H0N. MEMBERS: "It is the third version."] It may be the third version, but it is the second one that I have seen. The hon. Member for Copeland (Dr. Cunningham), who opened the debate, had not read a single one of the pile of documents. The explanatory memorandum of the last White Paper is in the pile. It is the only one that reached the Finance Committee. If there was a previous one, it never emerged from the Commission. If the hon. Gentleman had read it, he would know that it was quite different and, together with other Finance Ministers, I challenged it only a month or six weeks ago. Then, work sharing was the great new idea being put forward by the Commission in that White Paper.

The hon. Member for Dunfermline, East says that I go to Europe to create controversy. Yes, I challenge the fallacy that there is one lump of labour and the approach should be to ration it and share it out. I also challenge the fallacy that Europe can compete better with the Japanese and the rest of the world by working shorter hours. Hon. Members ask me to prove that we are winning the argument. The proof is here. Where is the work sharing which the Labour party would have advocated and bought a month ago? [Interruption.] They bought this one quickly enough; I am surprised that they hesitated before buying the previous one.

We now have a document that bears the stamp of this Government's policies. The work sharing has gone and the idea of union bonds has been inserted at the last moment. The hon. Member for Dunfermline, East is one of the few people in Europe who swallowed that idea hook, line and sinker on the day that it appeared. I do not think that that will go much further, either.

I do not know how the hon. Gentleman will explain to British constituents—any more than a German could explain to German constituents or a Frenchman to French constituents—when we all agree to the economic guidelines and agree that Governments should reduce the public sector deficit, as we are, and get our budgets under control, that the Commission should be allowed to borrow billions of ecu, which he would merrily spend, creating a borrowing requirement all of its own.

We are having such an influence because we are leading the way into economic recovery.

Mr. Shore

I am glad that the Chancellor has, at last, mentioned the paper on economic guidelines under the Maastricht treaty. The purport of those guidelines is precisely to bully member states—not necessarily the United Kingdom, but the other member states—into accepting the reduction of their public sector borrowing requirements as quickly as possible to 3 per cent. and, in general, into adopting the deflationary policies of economic and monetary union. Is not it a contradiction for the Commission, which still supports precisely that policy and those commitments, now to come forward in the guise of expansion in the form of Delors proposals mark 2? Is not Mr. Delors suffering from schizophrenia?

Mr. Clarke

With respect, it is no good the right hon. Gentleman telling me that—it is the hon. Member for Dunfermline, East who is showing that. I do not accept that the economic guidelines are a classic, traditional deflationary policy. It is certainly true that the Commission suggested as one of the essential macro-economic preconditions for growth and recovery that we get inflation down throughout Europe to the levels that Britain is now achieving and that we get the public sector deficits of the member states down to the levels for which we are aiming —to 3 per cent. of GDP by 1996–97. That is an objective being pursued by every other member state and, as a result of last week's Budget, we are more on course to achieve those criteria than most other member states. The British labour movement is quite alone in opposing those criteria.

The guidelines contain many additional positive suggestions for economic policy going way beyond deflationary policy, but one must begin by tightening the budgetary position, and fiscal policy where there are huge and unsustainable deficits, some of which in western Europe are much worse than ours. One must also get inflation down to a low and sustainable level. Then one must pursue the policy that I set our earlier, that of lifting the impediments from industry, getting social security spending down to affordable levels and building into the social security systems the incentives to encourage people back to work, as we are doing in this country. All those policies are commended in the better parts of the document because the Government have had a substantial input. We are resisting those parts of the old theology, of the old Europe and of the old Wilsonian recipe which keep coming back to joyous approval from the Labour party.

As I said, listening to the hon. Member for Dunfermline, Eat, if one knew nothing of the outside world, it would be impossible to imagine that we were the only major European country experiencing significant growth in 1993. It is not only I who predict that growth in Britain will improve in 1994—so do the International Monetary Fund, the European Commission and the Organisation for European Co-operation and Development. Apart from the hon. Gentleman, there is no one in Britain who does not believe that the British economy will be the fastest growing in the European Community next year. [Interruption.] There are at least 15 million unemployed people in the European Community and the number is rising. The unemployed in the rest of western Europe hope that they will experience the fall in unemployment—the growth in employment—which has already begun in this country and which needs to be strengthened and sustained.

Mr. Enright

Will the Chancellor answer one question —when will the channel link be completed?

Mr. Clarke

The channel tunnel link has to be designed —[Laughter.] We need the legislation. The routes of the high-speed trains in France are normally constructed by drawing a line on a map after no public inquiry; the lines are just built. I am sure that the finance will be readily available for the channel tunnel link. It is the height of folly for the Opposition to imagine that somehow the channel tunnel link is being held up for lack of provision suggested in the Commission's White Paper.

The Opposition know nothing at all about the design and forwarding of major construction projects; they know nothing whatever about the policies of the European Union. They have only to see the glint of money—however unreal—to believe that there must be a new source of spending one's way to growth and recovery.

As a result of the successful policies that we have pursued, which gave us higher levels of growth in the 1980s than our major European rivals, and which led to more job creation in the 1980s than in Germany or France and which are now giving us the growth and recovery that we are beginning to experience, people in Europe are listening to the British and the Conservative experience.

They are privatising, they are deregulating, they are going for competitive open markets and they will be glad that my right hon. Friends and I are going to the Council this weekend when they read of the Labour party still living in the past and believing that borrowing and spending is a solution to their problems. They could profit from reading some of those documents. They could profit more from following the Government's example on economic policy.

Question put, That the amendment be made:—

The House proceeded to a Division

Mr. David Willetts (Havant)

(seated and covered): On a point of order, Madam Speaker. I understand that there are three Labour Members in the No Lobby who are refusing to vote. I should be grateful if you could ask the Serjeant at Arms to ensure that they vote against the amendment.

Madam Speaker

If there is a delay, of course I shall ask the Serjeant at Arms to see what is happening in the No Lobby.

The House having divided: Ayes 236, Noes 297.

Division No. 23] [9.59 pm
Abbott, Ms Diane Brown, N. (N'c'tle upon Tyne E)
Adams, Mrs Irene Burden, Richard
Ainsworth, Robert (Cov'try NE) Byers, Stephen
Allen, Graham Caborn, Richard
Anderson, Donald (Swansea E) Callaghan, Jim
Anderson, Ms Janet (Ros'dale) Campbell, Mrs Anne (C'bridge)
Armstrong, Hilary Campbell, Menzies (Fife NE)
Ashton, Joe Campbell, Ronnie (Blyth V)
Austin-Walker, John Canavan, Dennis
Barnes, Harry Carlile, Alexander (Montgomry)
Bayley, Hugh Chisholm, Malcolm
Beckett, Rt Hon Margaret Clapham, Michael
Beith, Rt Hon A. J. Clark, Dr David (South Shields)
Bell, Stuart Clarke, Tom (Monklands W)
Benn, Rt Hon Tony Clelland, David
Bennett, Andrew F. Coffey, Ann
Benton, Joe Cohen, Harry
Bermingham, Gerald Connarty, Michael
Berry, Dr. Roger Corbett, Robin
Betts, Clive Corbyn, Jeremy
Blair, Tony Corston, Ms Jean
Blunkett, David Cousins, Jim
Boateng, Paul Cox, Tom
Boyes, Roland Cryer, Bob
Bradley, Keith Cummings, John
Bray, Dr Jeremy Cunliffe, Lawrence
Brown, Gordon (Dunfermline E) Cunningham, Jim (Covy SE)
Cunningham, Rt Hon Dr John Lewis, Terry
Darling, Alistair Litherland, Robert
Davidson, Ian Livingstone, Ken
Davies, Bryan (Oldham C'tral) Lloyd, Tony (Stretford)
Davies, Rt Hon Denzil (Llanelli) Loyden, Eddie
Davies, Ron (Caerphilly) McAllion, John
Davis, Terry (B'ham, H'dge H'I) McAvoy, Thomas
Denham, John Macdonald, Calum
Dewar, Donald McFall, John
Dixon, Don McKelvey, William
Dobson, Frank Mackinlay, Andrew
Donohoe, Brian H. McLeish, Henry
Dowd, Jim McMaster, Gordon
Dunnachie, Jimmy McNamara, Kevin
Dunwoody, Mrs Gwyneth McWilliam, John
Eagle, Ms Angela Madden, Max
Eastham, Ken Mandelson, Peter
Enright, Derek Marshall, David (Shettleston)
Etherington, Bill Marshall, Jim (Leicester, S)
Evans, John (St Helens N) Martlew, Eric
Fatchett, Derek Meacher, Micheal
Faulds, Andrew Meale, Alan
Field, Frank (Birkenhead) Micheal, Alun
Fisher, Mark Michie, Bill (Sheffield Heeley)
Flynn, Paul Milburn, Alan
Foster, Rt Hon Derek Miller, Andrew
Foulkes, George Mitchell, Austin (Gt Grimsby)
Fraser, John Moonie, Dr Lewis
Fyfe, Maria Morgan, Rhodri
Galloway, George Morley, Elliot
Gapes, Mike Morris, Rt Hon A. (Wy'nshawe)
Garrett, John Morris, Rt Hon J. (Aberavon)
George, Bruce Mowlam, Marjorie
Gerrard, Neil Mudie, George
Gilbert, Rt Hon Dr John Mullin, Chris
Godman, Dr Norman A. Murphy, Paul
Godsiff, Roger Oakes, Rt Hon Gordon
Golding, Mrs Llin O'Brien, Michael (N W'kshire)
Gordon, Mildred O'Hara, Edward
Gould, Bryan Olner, William
Graham, Thomas Patchett, Terry
Grant, Bernie (Tottenham) Pendry, Tom
Griffiths, Nigel (Edinburgh S) Pickthall, Colin
Griffiths, Win (Bridgend) Pike, Peter L.
Grocott, Bruce Pope, Greg
Gunnell, John Powell, Ray (Ogmore)
Hain, Peter Prentice, Ms Bridget (Lew'm E)
Hall, Mike Prentice, Gordon, (Pendle)
Hardy, Peter Prescott, John
Hattersley, Rt Hon Roy Primarolo, Dawn
Hill, Keith (Streatham) Purchase, Ken
Hinchliffe, David Quin, Ms Joyce
Hoey, Kate Radice, Gilles
Hogg, Norman (Cumbernauld) Randall, Stuart
Home Robertson, John Raynsford, Nick
Hoon, Geoffrey Redmond, Martin
Howarth, George (Knowsley N) Reid, Dr John
Howells, Dr. Kim (Pontypridd) Rendel, David
Hoyle, Doug Robertson, George (Hamilton)
Hughes, Kevin (Doncaster N) Roche, Mrs Barbara
Hughes, Roy (Newport E) Rogers, Allan
Hutton, John Rooker, Jeff
Ingram, Adam Ross, Ernie (Dundee W)
Jackson, Glenda (H'stead) Rowlands, Ted
Jackson, Helen (Shef'ld, H) Ruddock, Joan
Jamieson, David Sedgemore, Brain
Janner, Greville Sheerman, Barry
Jones, Barry (Alyn and D'side) Sheldon, Rt Hon Robert
Jones, Ieuan Wyn (Ynys Môn) Shore, Rt Hon Peter
Jones, Jon Owen (Cardiff C) Short, Clare
Jones, Martyn (Clwyd, SW) Simpson, Alan
Jowell, Tessa Skinner, Dennis
Keen, Alan Smith, Andrew (Oxford E)
Kennedy, Charles (Ross, C&S) Smith, C. (Isl'ton S & F'sbury)
Kennedy, Jane (Lpool Brdgn) Smith, Rt Hon John (M'kl'ds E)
Khabra, Piara S. Smith, Llew (Blaenau Gwent)
Kilfoyle, Peter Soley, Clive
Kinnock, Rt Hon Neil (Islwyn) Spearing, Nigel
Leighton, Ron Squire, Rachel (Dunfermline W)
Lestor, Joan (Eccles) Steel, Rt Hon Sir David
Steinberg, Gerry Wicks, Malcolm
Stevenson, George Williams, Rt Hon Alan (Sw'n W)
Stott, Roger Williams, Alan W (Carmarthen)
Strang, Dr. Gavin Wilson, Brian
Straw, Jack Winnick, David
Thompson, Jack (Wansbeck) Wise, Audrey
Tipping, Paddy Worthington, Tony
Turner, Dennis Wright, Dr Tony
Vaz, Keith Young, David (Bolton SE)
Walker, Rt Hon Sir Harold
Walley, Joan Tellers for the Noes
Wareing, Robert N Mr. Eric Illsley, and
Watson, Mike Mr. John Spellar
Ainsworth, Peter (East Surrey) Dickens, Geoffrey
Aitken, Jonathan Dorrell, Stephen
Alexander, Richard Douglas-Hamilton, Lord James
Alison, Rt Hon Michael (Selby) Dover, Den
Amess, David Duncan, Alan
Ancram, Michael Duncan-Smith, Iain
Arbuthnot, James Dunn, Bob
Arnold, Jacques (Gravesham) Durant, Sir Anthony
Arnold, Sir Thomas (Hazel Grv) Dykes, Hugh
Ashby, David Eggar, Tim
Atkinson, Peter (Hexham) Evans, David (Welwyn Hatfield)
Baker, Nicholas (Dorset North) Evans, Jonathan (Brecon)
Baldry, Tony Evans, Nigel (Ribble Valley)
Banks, Matthew (Southport) Evennett, David
Banks, Robert (Harrogate) Faber, David
Bates, Michael Fabricant, Michael
Batiste, Spencer Fenner, Dame Peggy
Bellingham, Henry Field, Barry (Isle of Wight)
Bendall, Vivian Fishburn, Dudley
Beresford, Sir Paul Forman, Nigel
Blackburn, Dr John G. Forsyth, Michael (Srirling)
Bonsor, Sir Nicholas Forth, Eric
Booth, Hartley Fowler, Rt Hon Sir Norman
Boswell, Tim Fox, Dr Liam (Woodspring)
Bottomley, Peter (Eltham) Fox, Sir Marcus (Shipley)
Bottomley, Rt Hon Virginia Freeman, Rt Hon Roger
Bowden, Andrew French, Douglas
Bowis, John Fry, Peter
Boyson, Rt Hon Sir Rhodes Gale, Roger
Brandreth, Gyles Gallie, Phill
Brazier, Julian Gardiner, Sir George
Bright, Graham Garel-Jones, Rt Hon Tristan
Brooke, Rt Hon Peter Garnier, Edward
Brown, M. (Brigg & Cl'thorpes) Gill, Christopher
Browning, Mrs. Angela Gillan, Cheryl
Bruce, Ian (S Dorset) Goodlad, Rt Hon Alastair
Burns, Simon Goodson-Wickes, Dr Charles
Burt, Alistair Gorman, Mrs Teresa
Butcher, John Gorst, John
Butler, Peter Grant, Sir A. (Cambs SW)
Butterfill, John Greenway, Harry (Ealing N)
Carlisle, John (Luton North) Greenway, John (Ryedale)
Carlisle, Kenneth (Lincoln) Griffiths, Peter (Portsmouth, N)
Carrington, Matthew Grylls, Sir Michael
Channon, Rt Hon Paul Gummer, Rt Hon John Selwyn
Clappison, James Hague, William
Clark, Dr Michael (Rochford) Hamilton, Rt Hon Archie (Epsom)
Clarke, Rt Hon Kenneth (Ruclif) Hamilton, Neil (Tatton)
Clifton-Brown, Geoffrey Hampson, Dr Keith
Coe, Sebastian Hanley, Jeremy
Colvin, Michael Hannam, Sir John
Congdon, David Hargreaves, Andrew
Conway, Derek Harris, David
Coombs, Anthony (Wyre For'st) Haselhurst, Alan
Coombs, Simon (Swindon) Hawkins, Nick
Cope, Rt Hon Sir John Hawksley, Warren
Cormack, Patrick Hayes, Jerry
Couchman, James Heald, Oliver
Cran, James Heathcoat-Amory, David
Currie, Mrs Edwina (S D'by'ire) Hendry, Charles
Curry, David (Skipton & Ripon) Heseltine, Rt Hon Michael
Davis, David (Boothferry) Hicks, Robert
Day, Stephen Higgins, Rt Hon Sir Terence L.
Deva, Nirj Joseph Hill, James (Southampton Test)
Devlin, Tim Hogg, Rt Hon Douglas (G'tham)
Horam, John Pawsey, James
Hordern, Rt Hon Sir Peter Peacock, Mrs Elizabeth
Howard, Rt Hon Michael Pickles, Eric
Howarth, Alan (Strat'rd-on-A) Porter, Barry (Wirral S)
Howell, Rt Hon David (G'dford) Portillo, Rt Hon Michael
Howell, Sir Ralph (N Norfolk) Powell, William (Corby)
Hughes Robert G. (Harrow W) Rathbone, Tim
Hunt, Rt Hon David (Wirral W) Redwood, Rt Hon John
Hunt, Sir John (Ravensbourne) Renton, Rt Hon Tim
Hunter, Andrew Richards, Rod
Jack, Michael Riddick, Graham
Jenkin, Bernard Rifkind, Rt Hon. Malcolm
Jessel, Toby Robathan, Andrew
Johnson Smith, Sir Geoffrey Roberts, Rt Hon Sir Wyn
Jones, Gwilym (Cardiff N) Robinson, Mark (Somerton)
Jones, Robert B. (W Hertfdshr) Roe, Mrs Marion (Broxbourne)
Jopling, Rt Hon Michael Rowe, Andrew (Mid Kent)
Kellett-Bowman, Dame Elaine Rumbold, Rt Hon Dame Angela
Key, Robert Ryder, Rt Hon Richard
Kilfedder, Sir James Sackville, Tom
Kirkhope, Timothy Sainsbury, Rt Hon Tim
Knapman, Roger Scott, Rt Hon Nicholas
Knight, Mrs Angela (Erewash) Shaw, David (Dover)
Knight, Greg (Derby N) Shaw, Sir Giles (Pudsey)
Knox, Sir David Shephard, Rt Hon Gillian
Kynoch, George (Kincardine) Shepherd, Colin (Hereford)
Lait, Mrs Jacqui Sheresby, Michael
Lamont, Rt Hon Norman Sims, Roger
Lang, Rt Hon Ian Smith, Sir Dudley (Warwick)
Lawrence, Sir Ivan Smith, Tim (Beaconsfield)
Legg, Barry Soames, Nicholas
Leigh, Edward Speed, Sir Keith
Lennox-Boyd, Mark Spencer, Sir Derek
Lester, Jim (Broxtowe) Spicer, Sir James (W Dorset)
Lidington, David Spicer, Michael (S Worcs)
Lilley, Rt Hon Peter Spink, Dr Robert
Lloyd, Peter (Fareham) Spring, Richard
Luff, Peter Sproat, Iain
Lyell, Rt Hon Sir Nicholas Squire, Robin (Hornchurch)
MacGregor, Rt Hon John Stanley, Rt Hon Sir John
MacKay, Andrew Steen, Anthony
Maclean, David Stephen, Michael
McLoughlin, Patrick Stern, Michael
McNair-Wilson, Sir Patrick Stewart, Allan
Madel, David Streeter, Gary
Maitland, Lady Olga Sumberg, David
Malone, Gerald Sykes, John
Mans, Keith Tapsell, Sir Peter
Marland, Paul Taylor, Ian (Esher)
Marshall, John (Hendon S) Taylor, John M. (Solihull)
Marshall, Sir Michael (Arundel) Taylor, Sir Teddy (Southend, E)
Martin, David (Portsmouth S) Temple-Morris, Peter
Mates, Michael Thomason, Roy
Mawhinney, Dr Brian Thompson, Sir Donald (C'er V)
Mayhew, Rt Hon Sir Patrick Thompson, Patrick (Norwich)
Mellor, Rt Hon David Thornton, Sir Malcolm
Merchant, Piers Thurnham, Peter
Milligan, Stephen Townend, John (Bridlington)
Mitchell, Andrew (Gedling) Townsend, Cyril D. (Bexl'yh'th)
Mitchell, Sir David (Hants NW) Tracey, Richard
Moate, Sir Roger Tredinnick, David
Monro, Sir Hector Trend, Michael
Montgomery, Sir Fergus Trotter, Neville
Moss, Malcolm Twinn, Dr Ian
Needham, Richard Vaughan, Sir Gerard
Nelson, Anthony Viggers, Peter
Neubert, Sir Michael Waldegrave, Rt Hon William
Newton, Rt Hon Tony Walden, George
Nicholls, Patrick Walker, Bill (N Tayside)
Nicholson, David (Taunton) Waller, Gary
Nicholson, Emma (Devon West) Ward, John
Norris, Steve Wardle, Charles (Bexhill)
Onslow, Rt Hon Sir Cranley Waterson, Nigel
Oppenheim, Phillip Watts, John
Ottaway, Richard Wells, Bowen
Page, Richard Wheeler, Rt Hon Sir John
Paice, James Whitney, Ray
Patnick, Irvine Whittingdale, John
Patten, Rt Hon John Widdecombe, Ann
Pattie, Rt Hon Sir Geoffrey Wiggin, Sir Jerry
Wilkinson, John Young, Rt Hon Sir George
Willetts, David
Wilshire, David Tellers for the Noes:
Wolfson, Mark Mr. David Lightbown and
Wood, Timothy Mr. Sydney Chapman
Yeo, Tim

Question accordingly negatived.

Main Question put:

The House divided: Ayes 293, Noes 232.

Division No. 24] [10.16pm
Ainsworth, Peter (East Surrey) Dover, Den
Aitken, Jonathan Duncan, Alan
Alexander, Richard Duncan-Smith, Iain
Alison, Rt Hon Michael (Selby) Dunn, Bob
Amess, David Durant, Sir Anthony
Ancram, Michael Dykes, Hugh
Arbuthnot, James Egger, Tim
Arnold, Jacques (Gravesham) Evans, David (Welwyn Hatfield)
Arnold, Sir Thomas (Hazel Grv) Evans, Jonathan (Brecon)
Ashby, David Evans, Nigel (Ribble Valley)
Atkinson, Peter (Hexham) Evennett, David
Baker, Nicholas (Dorset North) Faber, David
Baldry, Tony Fabricant, Michael
Banks, Matthew (Southport) Fenner, Dame Peggy
Banks, Robert (Harrogate) Field, Barry (Isle of Wight)
Bates, Michael Fishburn, Dudley
Batiste, Spencer Forman, Nigel
Bellingham, Henry Forsyth, Michael (Stirling)
Bendall, Vivian Forth, Eric
Beresford, Sir Paul Fowler, Rt Hon Sir Norman
Blackburn, Dr John G. Fox, Dr Liam (Woodspring)
Bonsor, Sir Nicholas Fox, Sir Marcus (Shipley)
Booth, Hartley Freeman, Rt Hon Roger
Boswell, Tim French, Douglas
Bottomley, Peter (Eltham) Fry, Peter
Bottomley, Rt Hon Virginia Gale, Roger
Bowden, Andrew Gallie, Phill
Bowis, John Gardiner, Sir George
Boyson, Rt Hon Sir Rhodes Garel-Jones, Rt Hon Tristan
Brandreth, Gyles Garnier, Edward
Brazier, Julian Gill, Christopher
Bright, Graham Gillan, Cheryl
Brooke, Rt Hon Peter Goodlad, Rt Hon Alastair
Brown, M. (Brigg & Cl'thorpes) Goodson-Wickes, Dr Charles
Browning, Mrs. Angela Gorman, Mrs Teresa
Bruce, Ian (S Dorset) Gorst, John
Burns, Simon Grant, Sir A. (Cambs SW)
Burt, Alistair Greenway, Harry (Ealing N)
Butler, Peter Greenway, John (Ryedale)
Butterfill, John Griffiths, Peter (Portsmouth)
Carlisle, John (Luton North) Grylls, Sir Michael
Carlisle, Kenneth (Lincoln) Gummer, Rt Hon John Selwyn
Carrington, Matthew Hague, William
Channon, Rt Hon Paul Hamilton, Rt Hon Archie (Epsom)
Chapman, Sydney Hamilton, Neil (Tatton)
Clappison, James Hampson, Dr Keith
Clark, Dr Michael (Rochford) Hanley, Jeremy
Clarke, Rt Hon Kenneth (Ruclif) Hannam, Sir John
Clifton-Brown, Geoffrey Hargreaves, Andrew
Coe, Sebastian Harris, David
Colvin, Michael Haselhurst, Alan
Congdon, David Hawkins, Nick
Coombs, Anthony (Wyre For'st) Hawksley, Warren
Coombs, Simon (Swindon) Hayes, Jerry
Cope, Rt Hon Sir John Heald, Oliver
Cormack, Patrick Heathcoat-Amory, David
Couchman, James Hendry, Charles
Cran, James Heseltine, Rt Hon Michael
Currie, Mrs Edwina (S D'by'ire) Hicks, Robert
Curry, David (Skipton & Ripon) Higgins, Rt Hon Sir Terence L.
Davis, David (Boothferry) Hill, James (Southampton Test)
Day, Stephen Hogg, Rt Hon Douglas (G'tham)
Deva, Nirj Joseph Horam, John
Devlin, Tim Hordern, Rt Hon Sir Peter
Dickens, Geoffrey Howard, Rt Hon Michael
Douglas-Hamilton, Lord James Howarth, Alan (Strat'rd-on-A)
Howell, Rt Hon David (G'dford) Portillo, Rt Hon Michael
Howell, Sir Ralph (N Norfolk) Rathbone, Tim
Hughes Robert G. (Harrow W) Redwood, Rt Hon John
Hunt, Rt Hon David (Wirral W) Renton, Rt Hon Tim
Hunt, Sir John (Ravensbourne) Richards, Rod
Hunter, Andrew Riddick, Graham
Jack, Michael Rifkind, Rt Hon Sir Wyn
Jenkin, Bernard Robathan, Andrew
Jessel, Toby Roberts, Rt Hon Sir Wyn
Johnson Smith, Sir Geoffrey Robinson, Mark (Somerton)
Jones, Gwilym (Cardiff N) Roe, Mrs Marion (Broxbourne)
Jones, Robert B. (W Hertfdshr) Rowe, Andrew (Mid Kent)
Jopling, Rt Hon Michael Rumbold, Rt Hon Dame Angela
Kellett-Bowman, Dame Elaine Ryder, Rt Hon Richard
Key, Robert Sackville, Tom
Kilfedder, Sir James Sainsbury, Rt Hon Tim
Kirkhope, Timothy Scott, Rt Hon Nicholas
Knapman, Roger Shaw, David (Dover)
Knight, Mrs Angela (Erewash) Shaw, Sir Giles (Pudsey)
Knight, Greg (Derby N) Shephard, Rt Hon Gillian
Knox, Sir David Shepherd, Colin (Hereford)
Kynoch, George (Kincardine) Shersby, Michael
Lait, Mrs Jacqui Sims, Roger
Lamont, Rt Hon Norman Smith, Sir Dudley (Warwick)
Lang, Rt Hon Ian Smith, Tim (Beaconsfield)
Lawrence, Sir Ivan Soames, Nicholas
Legg, Barry Speed, Sir Keith
Leigh, Edward Spencer, Sir Derek
Lennox-Boyd, Mark Spicer, Sir James (W Dorset)
Lester, Jim (Broxtowe) Spicer, Michael (S Worcs)
Lidington, David Spink, Dr Robert
Lightbown, David Spring, Richard
Lilley, Rt Hon Peter Sproat, Iain
Lloyd, Peter (Fareham) Squire, Robin (Hornchurch)
Luff, Peter Stanley, Rt Hon Sir John
Lyell, Rt Hon Sir Nicholas Steen, Anthony
MacGregor, Rt Hon John Stephen, Michael
MacKay, Andrew Stern, Michael
Maclean, David Stewart, Allan
McLoughlin, Patrick Streeter, Gary
McNair-Wilson, Sir Patrick Sumberg, David
Madel, David Sykes, John
Maitland, Lady Olga Tapsell, Sir Peter
Mans, Keith Taylor, Ian (Esher)
Marland, Paul Taylor, Rt Hon John D. (Strgfd)
Marshall, John (Hendon S) Taylor, John M. (Solihull)
Marshall, Sir Michael (Arundel) Taylor, Sir Teddy (Southend, E)
Martin, David (Portsmouth S) Temple-Morris, Peter
Mates, Michael Thomason, Roy
Mawhinney, Dr Brian Thompson, Sir Donald(C'er V)
Mayhew, Rt Hon Sir Patrick Thompson, Patrick (Norwich N)
Mellor, Rt Hon David Thornton, Sir Malcolm
Merchant, Piers Thurnham, Peter
Milligan, Stephen Townend, John (Bridlington)
Mitchell, Andrew (Gedling) Townsend, Cyril D. (Bexl'yh'th)
Mitchell, Sir David (Hants NW) Tracey, Richard
Moate, Sir Roger Tredinnick, David
Monro, Sir Hector Trend, Michael
Montgomery, Sir Fergus Trotter, Neville
Moss, Malcolm Twinn, Dr Ian
Needham, Richard Vaughan, Sir Gerard
Nelson, Anthony Viggers, Peter
Neubert, Sir Michael Waldegrave, Rt Hon William
Newton, Rt Hon Tony Walden, George
Nicholls, Patrick Walker, Bill (N Tayside)
Nicholson, David (Taunton) Waller, Gary
Nicholson, Emma (Devon West) Ward, John
Norris, Steve Wardle, Charles (Bexhill)
Onslow, Rt Hon Sir Cranley Waterson, Nigel
Oppenheim, Phillip Watts, John
Ottaway, Richard Wells, Bowen
Page, Richard Wheeler, Rt Hon Sir John
Paice, James Whitney, Ray
Patnick, Irvine Whittingdale, John
Patten, Rt Hon John Widdecombe, Ann
Pattie, Rt Hon Sir Geoffrey Wiggin, Sir Jerry
Pawsey, James Wilkinson, John
Pickles, Eric Willetts, David
Porter, Barry (Wirral S) Wilshire, David
Wolfson, Mark Tellers for the Ayes:
Yeo, Tim Mr. Timothy Wood and
Young, Rt Hon Sir George Mr. Derek Conway.
Abbott, Ms Diane Faulds, Andrew
Adams, Mrs Irene Fisher, Mark
Ainsworth, Robert (Cov'try NE) Flynn, Paul
Allen, Graham Foster, Rt Hon Derek
Anderson, Donald (Swansea E) Foulkes, George
Anderson, Ms Janet (Ros'dale) Fyfe, Maria
Armstrong, Hilary Galloway, George
Ashton, Joe Gapes, Mike
Austin-Walker, John Garrett, John
Barnes, Harry George, Bruce
Bayley, Hugh Gerrard, Neil
Beckett, Rt Hon Margaret Godman, Dr Norman A.
Beith, Rt Hon A. J. Godsiff, Roger
Bell, Stuart Golding, Mrs Llin
Benn, Rt Hon Tony Gordon, Mildred
Bennett, Andrew F. Gould, Bryan
Benton, Joe Graham, Thomas
Bermingham, Gerald Grant, Bernie (Tottenham)
Berry, Dr. Roger Griffiths, Nigel (Edinburgh S)
Betts, Clive Griffiths, Win (Bridgend)
Blair, Tony Grocott, Bruce
Blunkett, David Gunnell, John
Boateng, Paul Hain, Peter
Bradley, Keith Hall, Mike
Bray, Dr Jeremy Hardy, Peter
Brown, Gordon (Dunfermline E) Hattersley, Rt Hon Roy
Brown, N. (N'c'tle upon Tyne E) Hill, Keith (Streatham)
Burden, Richard Hinchliffe, David
Byers, Stephen Hoey, Kate
Caborn, Richard Hogg, Norman (Cumbernauld)
Callaghan, Jim Home Robertson, John
Campbell, Mrs Anne (C'bridge) Hoon, Geoffrey
Campbell, Menzies (Fife NE) Howarth, George (Knowsley)
Campbell, Ronnie (Blyth V) Howarth, George (Pontypridd)
Canavan, Dennis Hoyle, Doug
Carlile, Alexander (Montgomry) Hughes, Kevin (Doncaster N)
Chisholm, Malcolm Hughes, Roy (Newport E)
Clapham, Michael Hutton, John
Clark, Dr David (South Shields) Ingram, Adam
Clarke, Tom (Monklands W) Jackson, Glenda (H'stead)
Clelland, David Jackson, Helen (Shef'ld, H)
Coffey, Ann Jamieson, David
Cohen, Harry Janner, Grevile
Connarty, Michael Jones, Barry (Alyn and D'side)
Corbett, Robin Jones, Ieuan Wyn(Ynys Môn)
Corbyn, Jeremy Jones, Jon Owen (Cardiff C)
Corston, Ms Jean Jones, Martyn(Clwyd, SW)
Cousins, Jim Jowell, Tessa
Cox, Tom Keen, Alan
Cryer, Bob Kennedy, Charles (Ross,C&S)
Cummings, John Kennedy, Jane(Lpool Brdgn)
Cunliffe, Lawrence Khabra, Piara S.
Cunningham, Jim (Covy SE) Kilfoyle, Peter
Cunningham, Rt Hon Dr John Kinnock, Rt Hon Neil(Islwyn)
Darling, Alistair Leighton, Ron
Davidson, Ian Lestor, Joan(Eccles)
Davies, Bryan (Oldham C'tral) Lewis, Terry
Davies, Rt Hon Denzil (Llanelli) Litherland, Robert
Davies, Ron (Caerphilly) Livingstone, Ken
Davis, Terry (B'ham, H'dge H'l) Lloyd, Tony(Stretford)
Denham, John Loyden, Eddie
Dewar, Donald McAllion, John
Dixon, Don McAvoy, Thomas
Dobson, Frank Macdonald, Calum
Donohoe, Brian H. McFall, John
Dowd, Jim McKelvey, William
Dunnachie, Jimmy Mackinlay, Andrew
Dunwoody, Mrs Gwyneth McLeish, Henry
Eagle, Ms Angela McMaster, Gorton
Eastham, Ken McNamara, Kevin
Enright, Derek McWilliam, John
Etherington, Bill Madden, Max
Evans, John (St Helens N) Mandelson, Peter
Fatchett, Derek Marshall, David(Shettleston)
Marshall, Jim (Leicester, S) Ross, Ernie (Dundee W)
Martlew, Eric Rowlands, Ted
Meacher, Michael Ruddock, Joan
Meale, Alan Sedgemore, Brian
Michael, Alun Sheerman, Barry
Michie, Bill (Sheffield Heeley) Sheldon, Rt Hon Robert
Milburn, Alan Shore, Rt Hon Peter
Miller, Andrew Short, Clare
Mitchell, Austin (Gt Grimsby) Simpson, Alan
Moonie, Dr Lewis Skinner, Dennis
Morgan, Rhodri Smith, Andrew (Oxford E)
Morley, Elliot Smith, C.(Isl'ton S & F'sbury)
Morris, Rt Hon A. (Wy'nshawe) Smith, Rt Hon John (M'kl'ds E)
Morris, Rt Hon J. (Aberavon) Smith, Llew (Blaenau Gwent)
Mowlam, Marjorie Soley, Clive
Mudie, George Spearing, Nigel
Mullin, Chris Squire, Rachel (Dunfermline W)
Murphy, Paul Steel, Rt Hon Sir David
Oakes, Rt Hon Gordon Steinberg, Gerry
O'Brien, Michael (N W'kshire) Stevenson, George
O'Hara, Edward Stott, Roger
Olner, William Strang, Dr. Gavin
Patchett, Terry Straw, Jack
Pendry, Tom Thompson, Jack (Wansbeck)
Pickthall, Colin Tipping, Paddy
Pike, Peter L. Turner, Dennis
Pope, Greg Vaz, Keith
Powell, Ray (Ogmore) Walker, Rt Hon Sir Harold
Prentice, Ms Bridget (Lew'm E) Walley, Joan
Prentice, Gordon (Pendle) Wareing, Robert N
Prescott, John Watson, Mike
Primarolo, Dawn Wicks, Malcolm
Purchase, Ken Williams, Rt Hon Alan (Sw'n W)
Quin, Ms Joyce Williams, Alan w (Carmarthen)
Radice, Giles Wilson, Brian
Randall, Stuart Winnick, David
Raynsford, Nick Wise, Audrey
Redmond, Martin Worthington, Tony
Reid, Dr John Wright, Dr Tony
Rendel, David young, David (Bolton SE)
Robertson, George (Hamilton)
Roche, Mrs. Barbara Tellers for the Noes:
Rogers, Allan Mr. Eric Illsley and
Rooker, Jeff Mr. John Spellar.

Question accordingly agreed to.

Resolved, That this House takes note of the White Paper on developments in the European Community, July to December 1992 (Cm. 2168), the White Paper on developments in the European Community, January to June 1993 (Cm. 2369), the unnumbered Explanatory Memorandum submitted by HM Treasury on 6th December 1993 on the Commission's recommendation for the broad guidelines for economic policies under Article 103(2) of the Treaty establishing the European Community, European Community Documents Nos. COM (93) 700, the Commission's White Book on growth, competitiveness and employment, COM (93) 545, the Commission's report to the European Council on subsidiarity, 7194/93, on reinforcing the effectiveness of the internal market, 7665/93, the Preliminary Draft Budget of the European Communities for 1994, 9303/93, the letter of amendment No. 1 to the Preliminary Draft Budget for 1994, 8012/93, the Draft Budget of the European Communities for 1994, and 9922/93, the European Parliament's proposed amendments and modifications to the Draft Budget for 1994, the unnumbered Explanatory Memorandum submitted by HM Treasury on 22nd November 1993, relating to the Council's decisions on the European Parliament's proposed amendments and modifications to the Draft Budget for 1994, the unnumbered Explanatory Memorandum submitted by HM Treasury on 2nd November 1993, relating to the revision of the Financial Perspective for 1994, and OJ C309, the Annual Report of the European Court of Auditors concerning the financial year 1992, together with the replies of the Institutions.

Mr. Anthony Coombs (Wyre Forest)

On a point of order, Madam Speaker. I should like to seek your guidance. Is it within the voting procedures of the House for an hon. Member to be in both Lobbies during a Division? The right hon. Member for Chesterfield (Mr. Benn) was in both Lobbies during the first Division, not to rectify a vote but so that he could be first out on the subsequent vote. Is not that a gross misuse of our voting procedures? If nothing else, is not it a gross discourtesy to you as the Speaker and to us as the House of Commons?

Madam Speaker

I would prefer it if hon. Members were not over-keen, but I understand their anxiety to get through early. I understand that the Member or Members involved had already voted and were ready to vote in the second Division, on the main Question.

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