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Amendment proposed [11 March]: No. 32, in page 1, line 9, after 'II', insert
'(except Article 171 on page 46 of Cm 1934 relating to the European Court of Justice.)'.—[Mr. John Morris.]
§ Question again proposed, That the amendment be made.
§ The Chairman of Ways and Means (Mr. Michael Morris)I remind the Committee that we are also considering the following amendments: No. 228, in page 1, line 9, after 'II', insert 'except Article 172'.
No. 329, in page 1, line 9, after 'II', insert
'(except Article 168a on page 46 of Cm 1934)'.No. 330, in page 1, line 9, after 'II', insert'(except Article 171 on page 46 of Cm 1934)'.No. 331, in page 1, line 9, after 'II', insert'(except Article 172 on page 46 of Cm 1934)'.No. 411, in page 1, line 9, after 'III', insert'(except Articles 32, 32(d) and 33 on pages 64 and 65 of Cm 1934).'.No. 416, in page 1, line 9, after 'IV', insert'(except Articles 137, 140a, 143 and 146 on pages 73 and 74 of Cm 1934).'.No. 152, in page 1, line 10, after '1992', insert'but not Article 143 in Title IV thereof.
§ Mr. Nigel Spearing (Newham, South)On a point of order, Mr. Morris. I apologise for not giving you notice of this point of order. Will you enlighten the Committee and me about the content of amendment No. 456, which relates to the function of the European Court of Justice? We are now discussing the group of amendments in relation to article K.3(2)(c) and its application to articles L to S of the treaty.
I appreciate that article K and articles L to S are part of the alleged intergovernmental section of the treaty, which may not have direct and immediate legislative effect, but I think that you will agree that in article K.3(2)(c)—consequential on a convention which could be before the House at a future date—the jurisdiction of the European Court of Justice does apply. As the amendment has not been selected, will it be possible to refer to this aspect of the European Court of Justice in the debate, or would it be more appropriate to table the amendment again, in another form, at a later stage of the Bill?
§ The ChairmanIf the hon. Gentleman catches my eye, I am sure that he is ingenious enough to incorporate the matter in this debate.
§ Mr. Geoffrey Hoon (Ashfield)There has been a good deal of discussion lately about the Government's timetable for the progress of the Bill. They are clearly speeding up because on a previous occasion it took me three weeks to move from the beginning of one speech to the conclusion of another. This speech has taken a mere 13 days from when I began it to when I hope to finish.
930 On that occasion, 13 days ago, I invited the Attorney-General to explain how he sees the jurisdiction of the European Court of Justice in the light of Britain's opt-out on the protocol on social policy. If other member states go ahead and legislate under the protocol—as legally they are entitled to do—what effect will that have on the case law and precedents of the European Court of Justice? Will it mean that there are two separate legal systems of case law in the European Community for the European Court of Justice: one for the 12 member states that will include the United Kingdom, and another—concerned particularly with social policy—for the other 11 member states that will have passed directives and established cases under that process?
Ultimately, that is a matter for the European Court of Justice, but there is a matter which affects courts in the United Kingdom because, under the European Communities Act 1972, they are bound by decisions of the European Court of Justice. Which series of precedents would the United Kingdom courts be bound by?
§ Mr. David Winnick (Walsall, North)My hon. Friend prefaced his remarks with a reference to the last time that he spoke. Although we may have different views about the Bill, does he agree that it is important that there should he careful deliberation in Committee of the amendment, any future amendments and new clauses? Is my hon. Friend aware that some people believe that the Government are determined to push the debate through the night—either through the entire night, thereby possibly destroying the next day's business, or very late—and that it all depends on support from the Liberals and the nationalists?
§ The ChairmanOrder. That has absolutely nothing to do with the amendment.
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§ Mr. HoonI was referring to United Kingdom courts. If they are bound to follow the decisions of the European Court of Justice, how will they know which series of precedents to follow? Will they follow decisions taken under social protocol directives, where cases have been decided by the European Court of Justice or the other 11 member states, or will they follow the series of cases established by the Twelve? That is a point for the jurisdiction of the European Court of Justice and, as a consequence, for United Kingdom courts. If the Attorney-General intends to sum up, I should be grateful if he would give some thought to the matter so that we can consider it afresh.
§ The Minister of State, Foreign and Commonwealth Office (Mr. Tristan Garel-Jones)I may be able to help the hon. Gentleman at this stage of the Committee's deliberations. He will agree that the protocol is quite clear that Acts adopted by the Council under it shall not be applicable to the United Kingdom. It therefore follows that any judgment that the European Court of Justice may give on such an Act would not be applicable to the United Kingdom. Any measure under the social protocol will not be Community law as such because its basis will be not the Community treaties but the agreement of 11 which flows from the protocol itself.
§ Mr. HoonI am grateful to the Minister for that reply, but I am not sure that it entirely deals with the problem. I was referring to the situation that arises when cases go all 931 the way to the European Court of Justice. They are not minor cases but, as the Minister will agree, are usually landmark decisions where the court is not merely considering the intention of a particular directive. The protocol allows European Community institutions to be used to interpret case law in that way and, presumably, therefore allows the European Court of Justice to be involved. In those circumstances, when the court gives a decision, it is not merely giving a decision on one directive made under the protocol but will be reviewing the relevant cases in that domain.
Many of those cases will have been decided by the court when the United Kingdom was participating fully in the process of European Community law. Under the protocol, with the United Kingdom on one side—as the Minister said, that is the strict wording of the protocol—when the court has made a decision, it will have to be decided whether the United Kingdom courts and the European Court of Justice itself will follow it. I accept the strict wording of the protocol—the Minister was absolutely right to that extent—but I am more concerned about what the effect will be in terms of precedent.
It would be useful if the Attorney-General would comment. It would be curious if there were one set of cases which bound only 11 member states, because they had to do with a directive passed under the protocol on social policy, and another set of cases which included the United Kingdom. That is a point of legal confusion with which the Government must deal.
§ Mr. Calum Macdonald (Western Isles)Although the Minister is correct about the wording of the protocol, surely the protocol itself is part of the treaty of Rome in that it is annexed to the treaty of Maastricht. Any proposal annexed to a treaty that becomes part of the treaty of Rome itself becomes an integral part of the treaty of Rome. The Minister cannot say that it is simply intergovernmental because it is part of the treaty of Rome.
§ Mr. Garel-JonesI think that the Committee will recognise that something else flows from the protocol—the agreement among the 11. That is an intergovernmental agreement. That is where any decisions that the 11 may choose to make would be taken, and it is outside the treaty.
§ Sir Teddy Taylor (Southend, East)Does the hon. Gentleman agree that, far from having resolved the problem, the Minister of State may have created a new problem? In the event of a decision to eliminate the protocol from British law, but not from the treaty, so that it is not a Community obligation for the agreement of the 11, would it not be wholly illegal for the Government to seek to make payments of one twelfth of the cost of the protocol? Then we would be in a terrible mess, which only our courts could resolve. That would take a long time.
Has the Minister of State not raised an issue about which we should all think carefully? If the protocol is removed from British law, there should be no obligation to make payments for a Community obligation, for the simple reason that, as the Minister of State said, there is no Community obligation but an obligation of the agreement of the 11.
§ Mr. HoonI am grateful for that observation. I suspect that the proper answer is that, when we have an opportunity, as we hope we shall, for a further debate on the implications of the social protocol, it may be possible to deal with that point.
§ Sir Teddy TaylorIt is over: it has already happened.
§ Mr. John Morris (Aberavon)A most important point has been raised in all seriousness. Perhaps the Minister, or the Attorney-General, would clarify the matter. Would such payments be ultra vires?
§ Sir Teddy TaylorAnswer.
§ Mr. HoonAgain, that is not a matter for me, but perhaps the Minister would like to try to answer.
§ Mr. Garel-JonesI shall try to assist the Committee. I do not know whether the right hon. and learned Member for Aberavon (Mr. Morris) was in the Chamber at the time, but the important question raised by my hon. Friend the Member for Southend, East (Sir T. Taylor) was dealt with on a previous occasion by my right hon. and learned Friend the Attorney-General.
§ Mr. HoonPerhaps I may leave that point now, and make some progress on what I was saying about institutional arrangements for the European Court of Justice.
§ Mr. Tony Marlow (Northampton, North)The hon. Member for Ashfield (Mr. Hoon) brings a great deal of skill and experience to our debates, and I am always interested in what he has to say, but is not the debate somewhat academic? I have just come back from Brussels, having visited the Commission, the European Parliament and other institutions, and I detected a gung-ho feeling there. People are concerned about ratification, but if and when the treaty is ratified they intend to go at full speed ahead—on the social chapter, among other things. They will say, "We want everybody to do it; we do not want those burdens to fall only on us. We want everybody to share in the glories, or the burdens, of the social chapter." The social protocol excludes the United Kingdom, so they will look for other ways to include us, via other routes through the treaty. Do not articles 2 and 3 of the treaty suggest that the European Court will be sympathetic to that approach, and that the protocol itself is therefore not a matter of great relevance? People will get what they want through other means, and the court will help them.
§ Mr. HoonThat is certainly a possibility, and I shall develop that argument briefly later. Yes, the other 11 member states would like the United Kingdom to be fully part of that process—and the institutional difficulties that I have touched upon concerning the European Court of Justice arise equally in relation to the European Parliament, where there are moves to exclude British Members from participating in debates on social protocol questions. Clearly, that will create the institutional confusion across the Community about which I am now complaining in the context of the European Court of Justice.
§ Mr. Nicholas Budgen (Wolverhampton, South-West)If there is a strong political element in the European Court 933 of Justice, does not the hon. Gentleman consider it likely that the Commission will make suggestions to the court so that legal rights may be created to force the social chapter upon the United Kingdom by the back door? May not pressure also be brought to bear on the United Kingdom to conform more readily to the convergence criteria and the various other mechanisms that may ultimately lead to a single currency?
§ Mr. HoonI am tempted to agree with the hon. Gentleman's conclusion, although I do not accept his premise, which was to suggest that the European Court of Justice is not independent of political pressures. I do not believe that the court would be likely to respond to an invitation from the Commission in the way that the hon. Gentleman suggests.
§ Mr. Garel-JonesI hope that I can assist the Committee. I think that I agree with the point that the hon. Gentleman is making. It is a mistake to assume that the European Court of Justice is bent upon bringing forward political judgments that are favourable to the centralising process.
As was made clear in an earlier debate, it is my contention, and that of the Government, that the position is changing. Only yesterday, the European Court of Justice issued a significant opinion on external competence. The Commission had argued that it had exclusive competence to negotiate in International Labour Organisation conventions. The court was of the opinion that that was a matter of mixed competence, in which member states have an important part to play. That illustrates the changed mood that the Maastricht treaty has brought about, not just in the court but throughout the Community.
§ Mr. HoonI am grateful to the Minister.
I was about to say that there was an inevitable tendency, however one interprets the political approach of the European Court of Justice, for it to become involved in institutional questions. In effect, it sits as a sort of supreme court for the European Community, and therefore from time to time has to resolve such delicate institutional issues. I intended to mention the external relations case and cases concerned with the legal basis of directives. Those matters might previously have been resolved between Governments at the political level. The European Court of Justice inevitably finds itself caught up in political, institutional and constitutional debates.
The court set out how it views its own responsibility. It described the European Community as
a community based on the rule of lawwitha complete system of legal remedies and procedures designed to commit the Court of Justice to review the legality of measures adopted by the institutions.Clearly, the court sees itself as being at the centre of that institutional debate.
§ Mr. WinnickI think that we agree that the role of the European Court of Justice is along the lines that my hon. Friend has suggested. That being so, if the Maastricht treaty is ratified, will not a time come—perhaps not too long afterwards—when the European Court of Justice may be asked to decide on cases brought by employees in the United Kingdom, who will argue that, if other countries have the social chapter, there is no reason why people in this country should not benefit from it? I shall not go into the rights and wrongs of the matter now; they 934 will be decided later, and it will not be for us to decide them. We should not, therefore, reach the conclusion that the Government believe obvious, which is that, if the treaty goes ahead, the social chapter will not apply in Britain, because the European Court of Justice may decide otherwise.
§ Mr. HoonThat is a possibility, and that will turn upon the way in which the court views the effectiveness of the opt-out on social policy.
An interesting case that is relevant to the whole question of the institutional responsibilities of the court was the ruling of the court on the EC-EFTA agreement. In looking at the structure proposed by the Commission and agreed by the Council of Ministers for the European economic area, the European Court of Justice took a quite different legal view from the political conclusions reached by the Commission and the Council. It said that the new treaty was clearly incompatible with the existing Community legal structure and was therefore unconstitutional.
The court was mainly concerned at that stage about the creation of a proposed EFTA court because it saw a potential rivalry between its competence and jurisdiction within the Community and the competence and jurisdiction of the proposed court to supervise the structure of the economic area.
What the court was concerned to do—this is significant—was to maintain a single and coherent jurisdiction. That was part of its reason for rejecting the approach agreed by the Commission and the Counci. If that is the case in terms of coherence, does it not follow from what I have been saying that the court might similarly be concerned about the lack of coherence created by the United Kingdom's opt-out on the social chapter? It seems to create some of the same difficulties from the point of view of a single structure for the European Community in the context of its legal system.
There are two potentially conflicting systems in operation, and while I accept the accuracy of the Minister's quotation from the social protocol, he could equally have quoted, in relation to the EC-EFTA agreement case, the decision that he and his colleagues in the Council of Ministers reached. The Court of Justice rejected that political conclusion and said that it was inconsistent with the structure that had been established.
An area in which the Maastricht treaty makes significant improvements is the ability of the European Parliament to bring proceedings before the court. That Parliament has faced difficulties in the past in asserting its institutional rights before the European Court of Justice. Although its vital institutional interests have been affected by certain court decisions, it has not always had the right to argue its case before the court.
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The Maastricht treaty significantly improves the position for the Parliament in that article 173 allows it to bring a legal challenge before the court
for the purpose of protecting its prerogatives.The importance of that lies in the fact that it permits a democratically elected institution to assert its institutional rights against other European Community institutions. Similarly, article 175, as revised by the treaty, improves the position of the Parliament by allowing it greater scope to bring actions before the court.935 Those changes are to be welcomed and I hope that hon. Members, whatever their views about the general institutional arrangements, will support a situation which gives a democratically elected institution the right to participate in court cases on an equal basis with the European Commission and the Council.
§ Mr. Iain Duncan-Smith (Chingford)It is always a pleasure to speak following the hon. Member for Ashfield (Mr. Hoon). We have discussed at length many issues about the European Court of Justice, on many of which we hold similar opinions.
I am concerned with amendments 329, 411, 416, 32 and 330, which relate to probably the most misunderstood part of the Community. When we started to discuss this group of amendments, the right hon. and learned Member for Aberavon (Mr. Morris) invited the Minister to comment on the philosophy of the European Court, and asked whether it was an interpretative and innovative court leading to centralisation. Those questions must be answered, and the Minister has not fully answered them. I shall demonstrate that the European Court of Justice is an innovative court, has drawn to itself greater powers, has enhanced the powers of the other Community institutions and, in so doing, has hastened what I believe is a movement towards centralisation.
When the Community's originators first set up the Court of Justice, their model was clearly the Conseil d'Etat of France. The choice of the Conseil d'Etat was no accident. Indeed, it was a significant act because it set the type and style of legal process for the Community. The importance of that role model needs explaining because the Conseil d'Etat has two distinct roles. It is both legal adviser to the Government and the supreme administrative law court, with competence to rule on any legal matter linked to, or arising from, administrative acts.
The consultation process of the Conseil d'Etat is compulsory in respect of Government measures and ordinances, and its opinions influence legislation. Its statements are never made public unless the Government so desire—we already begin to see some features of the court weaving their way through what is happening—so that the Conseil d'Etat has the ability to shape the direction of new legislation. Further, its anual report focuses on legislative reforms which it deems necessary and in the public interest. So there is a clear relationship between the Executive and that organisation. That is not surprising, because I note that, every year, the vice-president of the Conseil d'Etat presents the President of the Republic with new year's greetings on behalf of the civil service.
The role model for the European Court is a primary part of France's administration. I make those points clearly in discussing the power of the court to clarify how the court views its relationship with Community institutions and Community law, which is now being amended by the treaty of European union.
The originators of the European Economic Community ensured that the central ethos of the court would be more political than is the case in our common law law courts. That is reflected in appointments to the court. The treaties require that judges and advocates general should be chosen from
persons whose independence is beyond doubt and who possess the qualifications required for appointment to the highest judicial offices in their respective countries or who are jurisconsults of recognised competence".936 It is significant that the independence of candidates is the paramount consideration, while professional qualifications and judicial experience are secondary. It is telling that, in the court of first instance, to which amendments Nos. 329, 411 and 416 apply, the criteria for judges' appointments is less rigorous even than that for the justices of the court.There are great examples of judges not possessing any formal legal qualifications. Intriguingly, only a minority of appointees have had any judicial experience in their own countries. The majority come from different careers while holding merely formal legal qualifications. It is important to note that several judges have held ministerial posts in their own countries and that several others have been senior civil servants. Only three of the present judges have had judicial experience—[Interruption.] The present representative from the United Kingdom is not one of them.
Clearly, that range of previous experience goes well beyond purely legal qualifications and encourages the view that judges should rule on economic, social, administrative, fiscal and—of course, more and more—political issues within Community law. That the court has a clear conception of its role is evident when one looks at statements made by the courts advocates general.
The other evening, my right hon. Friend the Minister of State played down the role of the advocates general in the European Court. We are mistaken in doing that, because the advocates general are fully recognised as the court's external voice, and their opinions have proved an important element in the court's development. Seldom has the court disagreed with the advocates' opinion. As one authority put it:
taken as a whole the opinionsof the advocates generalare as much a product of Community view, and of the esprit de corps which characterises the Court as a whole, as are the judgments themselves.That was given by J. Neville Brown, who wrote "The Court of Justice at the European Community".By way of explanation, I shall cite a few examples of the esprit de corps of Community sentiment and where it leads. Advocate General Lagrange's opinion in the de Geus v. Bosch case was:
the Court must not be defeated by obscurities or contradictions in the wording of the text for the real meaning can be deduced from the context or the spirit of the text".Thus, the court is competent, by reference to the "spirit" of the treaty, to fill those gaps. Such teleological interpretation has become an accepted practice in the European Court. In filling the gaps, the court de facto takes a legislative role. It makes law. I refer hon. Members to my earlier comments on the Conseil d'Etat. That is another linkage.The European Court of Justice has a powerful role in establishing the direction in which Community law evolves. Furthermore, the court has no doubt as to which direction this legislation should take. Advocate General Roemer said:
The European treaties are nothing but a partial implementation of a grand general programme dominated by the idea of complete integration of the European States.When we look at the court's judgments, it is plain to see that, in filling the legislative role, the court advances the cause of European nationhood. As Lasok and Bridge said:reference to the spirit or aims of the Treaties enables the Court to fill the gaps in the system and so to 'up-date' the text.937In doing so, the Court has consciously acted not only as the Constitutional Court of the Community but also as an architect of European integration.The court has not been a protector of nation states' powers, as has been suggested previously. Nor has there been any change in the court's perception of its role. Progression of the European Court is slow at times, and is one of incremental revision.
§ Mr. Garel-JonesWould my hon. Friend care to comment on the opinion on international labour organisations which was issued by the European Court only yesterday? If nothing else, I think that it gainsays the point, and shows that, at least recently—certainly since the agreement in Maastricht—the European Court of Justice is increasingly sensitive to and taking account of the position of member states.
§ Mr. Duncan-SmithYes. That is an important point to make. I shall come to it further on in my speech. I talk continually about the fact that the European Court of Justice never moves back on its judgments but always moves forwards, sometimes at a slower pace, sometimes at a faster pace. It takes into consideration what is going on in a general sense politically, but the process is always the same.
§ Mr. BudgenThe irony of the Minister of State's interruption is that it completely demolishes his point that the European Court of Justice is an independent, apolitical court. All he said was that observations of a political nature had been made throughout the Maastricht process, and that the court now took account of those political views. It is a political court, even though he happens to approve of the political pressures which are now being applied to the court.
§ Mr. Duncan-SmithMy hon. Friend summarises that point well. It stands on its own.
§ Mr. Garel-JonesI shall not respond to the point made by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen).
§ Mr. BudgenWhy not?
§ Mr. Garel-JonesBecause I am answering the speech of the person who has caught your eye, Mr. Morris, not interventions. My hon. Friend the Member for Chingford (Mr. Duncan-Smith) says that the European Court of Justice always moves forwards. What about the case that I quoted to him the last time that he made a rather distinguished speech to the Committee? The national insurance case moved exactly in the direction that he and I would wish to see.
§ Mr. Duncan-SmithMy right hon. Friend raises a case which was referred to on the last occasion, and on the occasion before that on which we debated the matter. I shall deal with that case in due course, if he will bear with me.
The danger is that, if one views the court at only a single point, it may appear no longer to be driven by the dictates of unification. However, if the Committee considers the progression of the court's judgments over time, all becomes clear. At times, the court appears to stop and consolidate its gains before the next advance, but advance it will. By so doing, it gives great power to the Community institutions.
938 The titanium dioxide case in 1991, in which the European Parliament supported the Commission versus the Council, was a clear example of how the court increases the powers of the Commission and the European Parliament at the expense of the nation states. In effect, when contention as to the basis of voting procedures arises, the qualified majority process is preferred to unanimous voting. That calls into question Ministers' assurances that qualified majority voting will be extended only to those areas to which we agree that it should.
I wish to show the Court's incremental revision. If we examine four cases taken from a period of more than 25 years, it becomes clear that the Court has progressively expanded the domain of Community law. It moves forward, then consolidates, only to move forward again.
§ Mr. Garel-JonesWe are resuming a debate that we have had before. I have conceded that, in the early stages of the Community's development, the European Court of Justice took what I have referred to as several centripetal decisions. I think that I quoted to my hon. Friend in the Committee's last debate on these matters several cases in the past 12 months.
I do not claim that they represent a complete turnaround. Indeed, it is not for me to anticipate the decisions that the European Court of Justice might take any more than the decisions of the British courts. However, those cases began to move in the opposite direction to the one which my hon. Friend contends that the court always moves in. I should be grateful if the cases which my hon. Friend quoted to the House were moderately recent ones. We are all well aware of cases which took place 10 and 15 years ago.
§ Mr. Duncan-SmithMy right hon. Friend makes an interesting point. I have said, and I repeat, that I shall come to those cases. I am referring to a period of 25 years which brings us up to the present. I seek to show that the present is still involved as much as the past. I do not seek to avoid what my right hon. Friend asks me to do.
§ Mr. Garel-JonesThe point that I am seeking to make to my hon. Friend is not that I dispute that decisions 10, 15 and 20 years ago have tended to be centripetal in their thrust, but that, in recent years, and particularly in the light of skilful negotiation by the Prime Minister at Maastricht on article 3b and so forth, a climate is now being created as a result of which a significant number of recent court judgments show sensitivity to the rights of member states which are both important and encouraging.
§ Mr. Duncan-SmithIf the Minister bears with me, I shall try to point out the reasons why I take a different view.
§ Sir Teddy TaylorBefore the Minister of State gets carried away by his optimism, will my hon. Friend invite him to speak to the British fishermen who were absolutely appalled at the fairly recent case in which our merchant shipping legislation was torn apart by the court and Spanish fishermen had to be treated as British for national quota purposes? Does my hon. Friend notice that, whenever such a point is raised, the Minister of State always finds an excuse to talk to someone else? Is this not real stuff, affecting real people? Will the Minister stop being carried away by false optimism?
§ Mr. Duncan-SmithAs usual, my hon. Friend makes a powerful point which stands on its own: I cannot elaborate on it. He is absolutely right: these things affect real people and the judgments of the European Court have a major effect on individuals.
§ Mr. MarlowSo that my hon. Friend can make a decent spread, there are a few points that—
§ The ChairmanOrder. The hon. Gentleman may make one short intervention.
§ Mr. MarlowThat was my intention, Mr. Morris, but other hon. Gentlemen have already raised points, and if those points are aggregated to the one that I am about to make, they become a few points.
Is it possible that my right hon. Friend the Minister of State is being a little naive? To a certain extent, do not Europe and the court work as a ratchet? My right hon. Friend said that the European courts have made favourable decisions in terms of nation states in the past 12 months, but during the past 12 months we have been considering the ratification of the treaty. Once the treaty is ratified, bingo—off they go again.
§ Mr. Duncan-SmithMy hon. Friend makes his point in his characteristic way. I am not sure about bingo, but I am pretty sure about the European Court of Justice. If my right hon. Friend the Minister will bear with me, I hope to cover these points.
I mentioned the historic Van Gend en Loos case previously. It was a landmark of Community law, because it was where the Court first enunciated that the treaties created a new legal order.
§ Mr. Garel-JonesWhat was the date of the case?
§ Mr. Duncan-SmithI shall provide the date in a moment. The case established that the treaties created a new legal order based on the principle that Community law produces
direct effects and creates individual rights".The date of the case was 1963.From this beginning, the court has taken progressively more expansive views of the principle of direct effect. In the van Duyn ruling of 1974, the court stated that individuals may invoke Community directives before national courts.
In its 1976 ruling, in the Defrenne case, the court applied the principle of direct effect to article 119 on sex equality. It found that the principle of equal pay for men and women laid down in the article was one of the Community's foundations and so had direct effect. It went on to say that national courts
have a duty to ensure the protection of the rights which that provision vests in individuals".After the 1976 Defrenne ruling, the court paused, consolidating the gains made. Interestingly, in 1978, after Gabrielle Defrenne initiated yet another case, the court indicated that the interpretation of article 119 could not be expanded to the point that it would seem as prescribing equality in respect of all working conditions. Specifically, the court ruled that article 119 did not require identical retirement ages for men and women, even though this would result in differences in pension entitlement.940 If an observer of the court had looked at the Defrenne ruling in 1978, he or she might have been tempted to say as my right hon. Friend said recently,
that we are now in a new climate and that thatcentralisingtendency is being arrested."—[Official Report, 27 January 1993; Vol. 217, c. 1061.]In doing so, the observer would be focusing too closely on the immediate circumstances and not on the court's long-term progression.If we come forward 12 years to the Barber case of 1990, here the court has reversed the 1978 ruling. The court found in the Barber case that
it is contrary toarticle 119to impose an age condition which differs according to sex for the purpose of entitlement to a pension under a private occupational scheme, even if the difference between the pensionable age for men and that for women is based on the one provided for by the national statutory scheme.That was in 1990.
§ Mr. Garel-Jonesrose—
§ Mr. Duncan-SmithPerhaps I can just finish this point.
In the 1978 decision, the court was simply holding its ground. It was in no way reversing itself. The court may pause for periods, but it does not retrace its steps, so there is a progression—slow, slow, quick, quick, slow.
§ Mr. Garel-JonesIt will not have escaped the notice of the Committee—I hasten to say that I do not use this to dismiss my hon. Friend's point—that, of the cases that my hon. Friend has quoted, one predates Britain's entry into the Community, two predate the Single European Act and one follows on from it. I am not using this to dismiss my hon. Friend's arguments, because I accept that the thrust of the court has been centripetal for a substantial period. But then my hon. Friend goes on, as the "killer" argument, as it were, to quote the Barber judgment, and again it will not have escaped the notice of the Committee that a protocol in the Maastricht treaty reverses that judgment.
That does two things. It emphasises that it is member states which sign the treaties and, in reversing the Barber judgment in the protocol, it gives us reason to believe—although I cannot anticipate decisions of the European Court—that it will have a significant influence on other judgments that we expect shortly in this area.
§ Mr. Duncan-SmithMy right hon. Friend raises a point to which I am just about to come, so if he will bear with me I will deal with it now.
The court can afford to take a long view, and will gradually expand the scope of Community law in just the way that it has in the Barber decision. It is impossible for anyone to deny that the Barber case is a significant advance in the reach of Community law. Consternation about its effects for the pension industry has been so acute that, as my right hon. Friend has pointed out, a specific protocol concerning article 119 had to be added to the Maastricht treaty to limit the industry's exposure to retroactive claims. This protocol is nothing more than a rearguard action, designed to contain the damage inflicted by the court's Barber ruling.
§ Mr. Garel-Jonesrose—
§ Mr. Duncan-SmithI would like to make just a little progress before I give way again.
941 The example of incremental revision that I have just given is not an isolated instance of how the court will expand especially the Commission's powers at the expense of the nation states. Such progression in the court's rulings is an on-going phenomenon, since, in pursuit of its own agenda, the Commission regularly invites the court to revisit and reinterpret the treaty base and the large body of existing Community directives and regulations.
We are in the midst of one such example. As a result of a number of court interpretations of the directive on the transfer of undertakings, United Kingdom law was found by the Commission to be no longer compliant with the original directive. In 1981, when Parliament passed the Transfer of Undertakings (Protection of Employment) Regulations into law, in compliance with the original directive, Ministers did not anticipate how much more widely the scope of this directive would be interpreted.
The Commission's recent action taken against the United Kingdom shows how the Community institutions, working in tandem, can force us to adopt statutes against our will—like clause 62 of the Trade Union Reform and Employment Rights Bill.
§ Mr. HoonI do not want to tempt the hon. Member into misleading the Committee, but the transfer of undertakings directive was passed by a Labour Government, and was not properly translated into United Kingdom law in 1981 by a Conservative Government. That is really the difference. The British Government participated in the process of agreeing the directive, and it is that which the hon. Gentleman ought to concentrate on, rather than trying to wriggle out of the obligation created by the directive. In the way that he has presented it, he has given a very jaundiced view of the process.
§ Mr. Duncan-SmithThe hon. Gentleman, as usual, makes an important point. I was going to come on to that, because I was about to point out that it was initiated in 1977.
§ The ChairmanMight I suggest to the hon. Gentleman that he should not give way so often but should get on with his arguments, as he would clearly anticipate most interventions?
§ Mr. Duncan-SmithI shall endeavour to follow your guidance, Mr. Morris.
That case is intriguing, because it demonstrates clearly how a policy initiated in 1977 is binding on subsequent Conservative Administrations, causing severe problems for Conservative Governments.
I was disappointed that my right hon. Friend the Minister of State mentioned the same three cases—which I said that I would deal with—that he produced on 27 January as an example of the European Court of Justice's new-found appreciation for the rights of nation states. Those cases do not support the thesis. At best, they demostrate the court marking time, and at worst incremental revision.
The case of the Commission v. Belgium—Wallonian sludge—was particularly obscure. At most, the ruling was ambiguous. The court was highly critical of the Wallonian decree and refrained from ruling against Belgium only because it found conflicting treaty objectives of environmental protection to support the decree. Belgium 942 was no clear victor; it is important to note that each party had to bear its costs at the end of the case, which says more loudly than words what the court felt about it.
The Sunday trading case that the Minister mentioned is a perfect example of incremental revision expanding the court's powers. In the Stoke-on-Trent judgment, the court revised its previous Torfaen verdict that questions of proportionality should be left to the national courts, and ruled that the European Court had the power and the duty to rule on issues of proportionality—a form of incremental revision.
§ Mr. Bernard Jenkin (Colchester, North)The most important aspect of the Torfaen case is that it was strongly qualified by the words
in the present state of Community law.That would seem to emphasise that the court sees the development of Community law as an on-going process from which competences are never returned to the member states.
§ Mr. Duncan-SmithMy hon. Friend has elaborated on my argument, and I am grateful.
In the Equal Opportunities Commission v. Secretary of State for Social Security—
§ Sir Teddy TaylorBefore he leaves the subject of duty, will my hon. Friend ask the Minister of State, who is so optimistic of the court, to answer the question why, when the Government were presented with five infraction proceedings relating to the transfer of undertakings regulations, they caved in on four without taking them to the court? The only issue left is whether there is a registered trade union or merely workers' representatives.
If the Minister is so sure that things are going nicely on national interests, why did the Government cave in to four of the five Commission demands without putting up a fight? Perhaps he should get advice from the civil service, from the Government or from anyone else. If he is so confident, why did the Government cave in, as the demands were way ahead of the view of the acquired rights directive held by the Conservative Government in 1981, and the previous Labour Government in 1971?
§ Mr. Duncan-SmithAs usual, my hon. Friend makes a powerful intervention.
§ Sir Teddy TaylorWhy does the Minister not intervene?
§ The ChairmanOrder. The hon. Gentleman is interrupting the speech of the hon. Member for Chingford (Mr. Duncan-Smith), and the Committee wishes to listen.
§ Mr. Duncan-SmithGuided by you, Mr. Morris, I know that my right hon. Friend the Minister has heard that intervention clearly, and I leave it to his judgment to decide at which point he prefers to answer.
I feel that the case that I was discussing before the intervention was an example of the court marking time. It does not like derogations and never has. At best, it sees them as temporary and transitional means. However, that case followed closely on the Barber case, and just as the court was not willing to make that additional leap in the 1978 Defrenne ruling so soon after the significant advance made in the 1976 case, in the EOC-NICs case I believe that the court is biding its time before its next move in that area. Obviously, that is a personal view of the court's exact political involvement in and view of the Community. It is the same pattern—slow, slow, quick, quick, slow.
943 4.45 pm
There needs to be a positive effort to reform the court. Before we allow it to expand its competence in the way envisaged by the articles under consideration, we must have some controls on the European court and, as the court has clearly stated in Costa v. ENEL:
The transfer by the States from their domestic legal system to the Community legal system of the rights and obligations arising under the Treaty carries with it a permanent limitation of their sovereign rights, against which a subsequent unilateral act incompatible with the concept of the Community cannot prevail.Obviously, my right hon. and learned Friend the Attorney-General appreciates that. I refer back to his comments on 22 February, when he pointed out the supremacy of Community law.National rights will be jeopardised if the court continues to expand its competence unchecked, and if it is permitted to legislate by filling in the gaps left by the treaties and secondary Community legislation.
Maastricht only creates more gaps. A few weeks ago in the Committee, I tried to point out one such gap arising from Maastricht's new social provisions. Other hon. Members have indicated other ways, especially my hon. Friend the Member for Colchester, North (Mr. Jenkin) in his recent comments on subsidiarity.
In his comments on 27 January, my right hon. Friend the Minister of State said that the European Court of Justice was
like the Supreme Court in the United States."—[Official Report, 27 January 1993; Vol. 217, c. 1057.]That is very interesting. Apart from wondering whether that is accepted by the Government—
§ Mr. Garel-JonesI think that I can anticipate my hon. Friend's argument. I made it clear that the Supreme Court in the United States is the supreme court of a single national federal state, which is not what the European Community is or will become. I was seeking to argue that the judgments of courts of that type are cyclical and are influenced by the society that surrounds them. My hon. Friend says that it is a case of quick, quick, slow but it will not have escaped his notice that those are the steps of the waltz, and that one can move forwards and backwards when dancing a waltz.
§ Mr. Duncan-SmithI am grateful to my right hon. Friend for clarifying his earlier statesments, but I shall not get involved in that dance as I was never very good in the ballroom.
We therefore require an institutional mechanism to alow us to review Community laws and regulations created by the European court in the manner that I have described.
A comparison has been made with the United States Supreme Court, but the European Court does not have similar constitutional checks and balances to temper its power. Article 55 of the French constitution is an example of such a mechanism. Unlike Britain—where, under the terms of article 3(2) of the European Communities Act 1972, Community law may be directly referred to in our courts—in France a judge may not directly invoke the primacy of Community law but must reason indirectly, via article 55, to dismiss statute law which conflicts with treaty obligations.
Article 55 is the sole channel for Community law in France, giving the French constitutional court the competence 944
to carry out a direct review of Community law in cases where Community legislation can be fitted into the category of France's 'international commitments'".Such reviews analyse not the legitimacy of Community law, but its compatibility with domestic law.Such a system for review is what Britain lacks and most definitely needs. In the short term, to ensure that we retain immediate control of our constitution, I propose that we should adopt the solutions set out by Martin Howe in a recent pamphlet called "Europe and the Constitution after Maastricht".
First, we ought to lay down procedures to be followed when conflicts between Community law and Acts of Parliament arise. Secondly, we must have an express list of protected matters, which no Community law should, under the law of the United Kingdom, be allowed to affect. Thirdly, we should be armed with reserve powers, exercisable by Order in Council, to render specific decisions or acts of the Community institutions of no effect in the United Kingdom in areas which are essential to our national interest and independence.
Those changes would help, but I seek a total reform of the European Court of Justice. In my maiden speech, I suggested that we needed a long-term solution, such as a constitutional court, which would be placed above the Community to take an impartial position on questions which affect the competence of nation states.
The opportunity to reform the court arose at Maastricht, but was not seized. Maastricht advances the power of the court, giving it room for interpretation in so many areas, not least in the social field and convergence criteria, with all the attendant costs.
Ministers' assurances carry little weight when the powers of the European Court are examined closely. How can we believe Ministers when they seek to reassure the House about the interpretation of articles 2 and 3 on social policy, and that we shall not be forced into the restrictive social practices undertaken by the other 11? It will be for the court, not for Ministers, to decide.
How can we accept the assurances of Ministers about our commitment to the second and third stages of the convergence criteria? Again, it will be the court, not they, that ultimately decides. How can we accept from Ministers reassurances about subsidiarity? As my hon. Friend the Member for Colchester, North pointed out, the court will define and make decisions on subsidiarity.
The European Court is now an immensely powerful institution, which I believe to be beyond the control of this or any other nation state. Far from concentrating on this fact at Maastricht and in subsequent debates, we have allowed ourselves to be sidetracked and have even enhanced the court's powers. As we have seen in case after case, ultimate judgment lies with the European Court of Justice, which will seek to hasten the march towards a central unitary European state. The court holds the greatest threat to those who wish to see Europe move in the opposite direction. Maastricht is simply an invitation to continue down the road to a unitary state.
§ The ChairmanMr. Budgen.
§ Mr. BudgenI did not anticipate being called at this stage.
§ The ChairmanIf the hon. Gentleman does not wish to speak, he does not have to do so.
§ Mr. BudgenI do, Mr. Morris.
§ The ChairmanIn that case, the hon. Gentleman should get on with his speech.
§ Mr. BudgenI was merely explaining my unusual reluctance to participate in a debate.
The question that has been raised is whether we can trust the European Court. Whether one can trust a court depends upon whether one believes that it is free of political influences. We have just heard an extremely helpful, very learned, extremely well-researched and longish speech from my hon. Friend the Member for Chingford (Mr. Duncan-Smith). My hon. Friend re viewed the court's activities over a considerable period and confirmed our fear that what we have here is an example of what my noble Friend Lady Thatcher used to describe as the ratchet effect. The former Prime Minister did not for a moment pretend that the ratchet moved forward at the same pace all the time. This ratchet is very well maintained by an extremely large bureaucracy staffed by a very large number of extremely intelligent—and, incidentally, extremely well paid—people. That being the case, it was to be expected that it would be operated very intelligently. No doubt the same was said of the inquisition when it was doing its work.
§ Mr. Michael Spicer (Worcestershire, South)Does my hon. Friend agree that the Maastricht treaty contains the French words "acquis communautaire", which describe the ratchet precisely?
§ Mr. BudgenOf course that is true.
My hon. Friend the Member for Chingford is very helpful in the way in which he investigates the background of Community thought regarding the setting up of something that is half a supreme court and half an administrative court. However, he does not emphasise the essential difference between, on the one hand, the French idea of justice and the French idea of the supremacy of the power of the state and, on the other hand, our adversarial system, which is based on disputes between private individuals and, most of all, upon the extremely limited role given to the courts of this country.
For all their grandeur and for all their necessary importance, our courts and judges are but narrow technicians. They are not legislators. It is not their job to talk, for instance, about the moral or political climate. Their job is to look carefully and in detail at provisions and determine their effect on a particular dispute between individuals. Only in the French system are wider political considerations allowed to be brought into play.
I suggest that on this occasion the Government are best condemned from their own mouths. At the last sitting of this Committee my right hon. Friend the Minister of State made for the first time a point that he has made several times today. He said:
Although it would be wrong and inappropriate for me to try to anticipate specific judgments, I believe that there is some evidence that the climate created by the Maastricht negotiations has brought about change."—[Official Report, 11 March 1993; Vol. 220, c. 1182.]That reference is to changes in the judgments of the European Court. This afternoon, my right hon. Friend said—I may be wrong about this, but I did make a note—that the judgments of the court had been influenced by the skilful negotiation of the Prime Minister at Maastricht.946 Let us pause for a moment and decide what is the present status, in Community law, of the Maastricht negotiations. The treaty has not been ratified by all the countries of the Community. It is merely in a preliminary state. It is just as much in a preliminary state as, for instance, Conservative party conference discussions about the criminal law might be. One might even give the treaty a more elevated role by giving as an example the fact that the provisions of a Bill are not binding on the Law Lords before it has been passed by Parliament.
The Minister says that this is not a political court and that it is free of political interference, but he then has the impertinence to say that we have influenced it by our political activity. He says that this is a splendid, independent body, totally impervious to political activity, but that it is watching the political activities of the Prime Minister and doing what my right hon. Friend wants. By way of commendation of these proposals, my right hon. Friend says that this is a court influenced by mood. Our courts are not influenced by mood; they are bound by precedent and statute. They are bound by an extremely narrow interpretation of their duties; they are not bound by mood.
Let me present an argument about mood. There is no doubt that at the time of the Birmingham bombings there was in the country a mood that it would be right for certain persons to be convicted and even hanged—although there was no hanging—as quickly as possible. Would it have been right for the Court of Appeal to take the view that it should operate on the basis of the mood of the country, which was that the rules of evidence which protect suspected persons should be disregarded? At that time people would have been entirely in favour of allowing police officers to fabricate evidence, on the ground that the police knew perfectly well that these people had committed the offences, although, unfortunately, the necessary evidence was not available. But, of course, that is not what was done, because our courts are not bound by mood. Nor, indeed, are they influenced in any way by what politicians say.
Let me give another example. If it is right to say that this court should be influenced by what happened at Maastricht, what would be said were the Lord Chief Justice, dealing with the sentence for a rapist, to say that he had noted with interest and approval the exciting views of my hon. Friend the Member for Billericay (Mrs. Gorman), who has elegantly suggested that such people's goolies should be cut off?
The Lord Chief Justice says, "There is no legislation on the issue, but I am influenced by the political mood of the moment, so I shall order that their goolies be cut off." That is exactly the disgraceful argument that my right hon. Friend the Minister of State advances when he says that the court is not a political body, but it is being influenced by political views of which he approves.
There can be no trust in the institution. If, today, it is being influenced by the political views of the Prime Minister—views that are in no way encompassed by European legislation and in no way bound by European precedent—it is just as likely to be influenced by other forms of political pressure next week when those pressures will seem stronger. It is a political court to which we are giving extra power. We are allowing it to fine people. As my right hon. Friend the Minister of State said, we are 947 allowing it to decide the fines in the light of the advice offered to it by a political body—the Commission. That is very dangerous.
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We must understand that our British tradition is to give a court extremely limited powers and leave the process of legislation to our sovereign Parliament. The answers given by my right hon. Friend the Minister of State when he so naively commended the way in which the court was now being influenced by political views of which he approved clearly showed that my right hon. Friend has condemned the court to be known by all the world as a political court, and a court that we cannot trust.
§ Mr. SpearingThe previous two speeches, which have been constitutional, not party political, in tone, have illustrated the extent to which the European Court of Justice is already superior in many ranges of legislation and statute to the high court of Parliament and even the House of Lords in its judicial function along the Corridor. Today we are being invited to discuss the further extension of those powers. I endorse some aspects of the speeches of the hon. Members for Wolverhampton, South-West (Mr. Budgen) and for Chingford (Mr. Duncan-Smith). The powers belong to a court that is different from the institution of which people in this country automatically think when confronted with the word "court".
The court will be a quasi—if not a full—constitutional court in terms of interpreting titles II, III and IV of the treaty of Rome. Therefore, in some respects, the court to which we are now voluntarily—and possibly irrevocably—sending our powers will be comparable to the Federal Court of the United States. As has been said, the European Court has political angles that do not apply to any of the courts in the United Kingdom.
The preambles of treaties should be taken into account when interpreting the wording of those treaties. Whereas, in this country, if case law is made through a judgment and we then find that it is unworkable—it may have been the right judgment for a specific case, but present complications in relation to another case—the Government can introduce a Bill. Hopefully, that Bill will not be politically contentious and the legislation can be set right, either in that parliamentary Session or the next one. That process will not be possible in future in relation to any matter over which the European Court of Justice has power.
The court's range of opinion is much greater than may at first appear. The hon. Member for Chingford cited some recent cases that are well known, including the Barber case and the Cassis de Dijon case. However, people may not be aware of the following aspects—although I think that some statistics appeared in Hansard not long ago. Where a matter of interpretation in the British domestic court—I use the phrase advisedly—falls within the sphere of Community law, magistrates, justices or their Lordships have to obtain an opinion from the European Court of Justice in Luxembourg. That fact is not always immediately visible. I do not know whether, when he replies, the Attorney-General will tell us whether it is made known at the time that a further opinion has to be taken, 948 but I doubt whether it is, as I understand that the number of references is already sizeable and will grow. I understand that to be the position today.
The treaty contains further powers, some of which seem mild at present. Articles 126 and 127 on training and education come within the formal upgraded treaty of Rome, as does the issue of health in article 129. I know that article 129 involves co-operation in health matters to ensure that the resources for public health are dealt with effectively and efficiently. But no doubt at some stage an issue will arise where the interpretation of the articles on health and education will come before the European Court of Justice. We know about the famous subsidiarity. Such matters will not fall entirely within the powers of the treaty, which requires subsidiarity to be illuminated, but they will come within the powers of the court—or at least have the potential to do so.
I wish to refer to the powers of the court other than those that fall under titles II, III and IV. The Foreign Secretary and the Prime Minister have made great play of the fact that the power of the European Community will not be as centripetal as it has been. Time and time again they have said that we have stopped the expansion of centralist forces. They claim that we have rolled back those forces in that, whereas the treaty that the Dutch placed before the Community in 1991 had a complete institutional hold, we inserted into that—by our skilful talks at Maastricht—intergovernmental provisions out-side the power of the treaty. I think that the Foreign Secretary and the Prime Minister may have been over-optimistic, as there are more than 50 references to Community institutions inside the the so-called union pillars.
I shall concentrate on those references to the power of the court of justice in relation to home and judicial affairs. Those issues are mentioned in article K. The treaty also includes articles relating to institutions other than the European Court of Justice which deal with foreign and security matters. The title covering foreign and security issues contains no fewer than 22 references to Community institutions.
I wish to talk about further powers that the House of Commons may allow the European Court of Justice. Title VI, article K3.2.(c) sounds as though it is a small matter and indeed it is in small print. However, I am sure that the Attorney-General knows—he has made it clear in correspondence—that article K3.2.(c) gives power of adjudication to the European Court of Justice where a convention has been agreed between the member states. The convention can relate to any of the issues contained in article K.1 which deal with co-operation in the spheres of justice and home affairs.
I am well aware that the convention need not occur. The treaty contains the power to create the conventions, although they are not yet created.
Article K3.2(c) states:
without prejudice to Article 220 of the Treaty establishing the European Community, draw up conventions which it shall recommend to Member States for adoption in accordance with their respective constitutional requirements.Unless otherwise provided by such conventions, measures implementing them shall be adopted within the Council by a majority of two-thirds of the High Contracting Parties.The "Council" means the Council of the Community, acting no doubt in its extended intergovernmental role. The article continues: 949Such conventions may stipulate that the Court of Justice shall have jurisdiction to interpret their provisions and to rule on any disputes regarding their application, in accordance with such arrangements as they may lay down.I understand, as I think the whole Committee understands, that before such a convention can be adopted it has to come back to this Parliament for approval under, as the treaty says, "respective constitutional requirements."So far we have not had a full definition of what shall be the United Kingdom's constitutional requirements. Perhaps the Attorney-General will refer to that. That phrase appears three or four times in the treaty and it is fundamental. It will also apply to further amendments and there is no guarantee that the treaty will not be further amended before 1996. Who knows, there may be need for a further adjustment and the treaty may come back for further constitutional debate and agreement.
I hope that such a constitutional provision would be defined by an Act of Parliament. Would it be appropriate for a convention concerning home and judicial affairs related to the domestic arrangements of the United Kingdom to be dealt with other than by an Act of Parliament or a change to existing legislation, which would require a small Act of Parliament? What is the scope and probability of what the conventions would contain? They are listed in article K1.
One of the features of the reportage of these debates has been the feeling that we are going through the treaty line by line. To some extent we are doing that in so far as procedures allow, and there is a feeling that it is all terribly boring. It is said that people outside cannot understand the debate and that the Committee is following arcane procedures. I have a horrible feeling that in future when the European Court of Justice makes a ruling, as it did in relation to VAT on construction, people will say, "When did Parliament agree to that?"
The so-called Trevi arrangements clearly intend that there shall be conventions and those conventions will affect the matters set out in article K1, which talks about:
1. asylum policy;2. rules governing the crossing by persons of the external borders of the Member States and the exercise of controls thereon;".One cannot get much more basic than that about border control.3. immigration policy and policy regarding nationals of third countries;I shall not quote the subsections, but they relate to conditions of entry, conditions of residence and the combating of unauthorised immigration.4. combating drug addiction in so far as this is not covered by 7 to 9;5. combating fraud on an international scale in so far as it is not covered by 7 to 9;6. judicial co-operation in civil matters;8. customs co-operation;9. police co-operation for the purposes of preventing and combating terrorism, unlawful drug trafficking and other serious forms of international crime, including if necessary certain aspects of customs co-operation, in connection with the organisation of a Union-wide system for exchanging information within a European Police Office (Europol).I have read those into the record because it is unlikely that United Kingdom citizens are fully aware of some of the treaty's contents. I am worried that this title is presently excluded from the Bill. However, the powers of the European Court of Justice are not. As we know, that court is one of the foundation and fundamental institutions of the European Community and, according to the Foreign 950 Secretary and the Prime Minister, it is the inner trunk that is supported by the outer pillars. One of the outer pillars, title VI, has the European Court of Justice.5.15 pm
I have written to the Foreign Secretary about the matter and he kindly wrote to me on 17 March. His letter clarifies the matter, but is rather surprising. I asked him about article K3.2(c) being outside the institutions of the Community and suggested that his claims and that of the Prime Minister about the supports of the edifice were a little exaggerated.
§ Mr. Andrew Rowe (Mid-Kent)I am listening with great attention to the hon. Gentleman. He gives the impression that, if the general public understood that some international issues were included in one form or another in the treaty, they would instantly repudiate it. Surely the reverse is the truth. Just as the international law of the sea is justiciable in an international court, a whole range of international problems that are growing in intensity require international treatment. Many of my constituents would be exceedingly relieved if problems such as international terrorism could be dealt with in that way.
§ Mr. SpearingI am grateful to the hon. Gentleman for intervening on that issue. His intervention illustrates the theme of the arguments of many hon. Members, that the real content of the treaty of European union—which is the correct title of the treaty—is not as well known as it should be. It is not, and the Government, despite issuing a few publications, do not want it to be better known.
The Minister of State, Foreign and Commonwealth Office enters the Committee at just the right moment. He knows that I and my hon. Friends, including my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore), and some Conservative Members support a private Member's Bill called the European Union (Public Information) Bill. It sets out a statutory procedure, which may get more publicity later, by which hon. Members will know what is in the Bill that is before the Committee.
I shall not stray too far from the subject of the debate, but one of the matters contained in our Bill, if the Government allow it to got through—they have objected to it on 15 or 16 Fridays—
§ The ChairmanOrder. Perhaps the hon. Gentleman was not clear about what I said earlier. The matter that he is discussing is out of order. Perhaps he will return to discussing the European Court of Justice about which he was making an interesting contribution.
§ Mr. SpearingI was questioned by the hon. Member For Mid-Kent (Mr. Rowe) and—
§ The ChairmanOrder. The hon. Gentleman is an experienced member of the Committee and should not be tempted to go down that route.
§ Mr. SpearingI shall return to the correspondence from the Home Secretary.
§ Sir Teddy TaylorBefore the constituents of my hon. Friend the Member for Mid-Kent (Mr. Rowe) get too excited and optimistic about this great new opportunity, would the hon. Member for Newham (Mr. Spearing) remind him and the Committee that under article L, which 951 we are discussing, a common foreign and security policy and justice and home affairs are excluded from the jurisdiction of the court?
§ Mr. SpearingSome of those matters might have been cleared up if the Government had not taken the action that they did.
§ Mr. RoweOn a point of order, Mr. Morris. I would not want it recorded that I was tempting the hon. Member for Newham, South (Mr. Spearing) down the route that he chose when he answered my question, because my question was rather different.
§ The ChairmanThat is firmly on the record and clearly the hon. Member for Newham, South (Mr. Spearing) did not hear the hon. Gentleman's intervention with sufficient clarity. Either way, perhaps we may return to the subject of the European Court of Justice.
§ Mr. SpearingIn his letter to me dated 17 March, the Minister of State wrote:
As for the potential role of the European Court of Justice under Article K.3(2)(c), you misunderstood the jurisdiction the Court might be given. It would not be the jurisdiction it now has under EEC treaties, nor would its rulings be binding in Community law. It would be ad hoc jurisdiction, conferred and regulated by a member state convention outside the EC framework to interpret that convention and to settle disputes on it. This is exactly the present position on the convention on mutual recognition and enforcements of judgments among the member states agreed in 1968 pursuant to article 220 of the Treaty of Rome. The European Court of Justice rulings on the 1968 convention are given force in UK law not by the European Communities Act but by the 1982 Civil Jurisdiction Act.That may be news to some of us. I have no doubt that the lawyers among us, including my right hon. Friend the Member for Llanelli (Mr. Davies), may be familiar with that matter.It is interesting to learn that the European Court of Justice has vires and power in the United Kingdom by Acts of Parliament other than the European Communities Act 1972 and other matters relating directly to it.
That information may be important. No doubt the Attorney-General will confirm when he replies that that which is written into the home affairs article that I just quoted and the power of the European Court of Justice is given dual authenticity by the treaty itself—which is not particularly the concern of the House—by direct legislation and another Act of Parliament.
I put down a marker now because if such a convention comes before the House in due course—which I hope will require another Act—we should have a full explanation, because we would then be putting ourselves under direct European Court jurisdiction on important matters that are claimed to be intergovernmental. Those matters, and others to which the hon. Member for Mid-Kent (Mr. Rowe) referred, are best dealt with in that way, rather than within the rigidities of the European Community as originally established, its central institutions, or the Act of European union that is now being debated.
§ Mr. Timothy Kirkhope (Lords Commissioner to the Treasury)rose in his place and claimed to move, That the Question be now put.
§ Question put, That the Question be now put:—
§ The Committee divided: Ayes 278, Noes 221.
955| Division No. 201] | [5.23 pm |
| AYES | |
| Adley, Robert | Evennett, David |
| Ainsworth, Peter (East Surrey) | Faber, David |
| Aitken, Jonathan | Fabricant, Michael |
| Alexander, Richard | Fairbairn, Sir Nicholas |
| Allason, Rupert (Torbay) | Fenner, Dame Peggy |
| Amess, David | Field, Barry (Isle of Wight) |
| Ancram, Michael | Forman, Nigel |
| Arbuthnot, James | Forsyth, Michael (Stirling) |
| Arnold, Jacques (Gravesham) | Forth, Eric |
| Arnold, Sir Thomas (Hazel Grv) | Foster, Don (Bath) |
| Ashby, David | Fowler, Rt Hon Sir Norman |
| Ashdown, Rt Hon Paddy | Fox, Dr Liam (Woodspring) |
| Atkinson, Peter (Hexham) | Freeman, Roger |
| Baker, Nicholas (Dorset North) | Gale, Roger |
| Baldry, Tony | Gallie, Phil |
| Banks, Matthew (Southport) | Garel-Jones, Rt Hon Tristan |
| Banks, Robert (Harrogate) | Garnier, Edward |
| Bates, Michael | Gillan, Cheryl |
| Batiste, Spencer | Goodlad, Rt Hon Alastair |
| Bellingham, Henry | Goodson-Wickes, Dr Charles |
| Beresford, Sir Paul | Grant, Sir Anthony (Cambs SW) |
| Blackburn, Dr John G. | Greenway, Harry (Ealing N) |
| Booth, Hartley | Greenway, John (Ryedale) |
| Boswell, Tim | Griffiths, Peter (Portsmouth, N) |
| Bottomley, Peter (Eltham) | Grylls, Sir Michael |
| Bottomley, Rt Hon Virginia | Gummer, Rt Hon John Selwyn |
| Bowden, Andrew | Hague, William |
| Bowis, John | Hamilton, Rt Hon Archie (Epsom) |
| Brandreth, Gyles | Hamilton, Neil (Tatton) |
| Brazier, Julian | Hampson, Dr Keith |
| Bright, Graham | Hanley, Jeremy |
| Brooke, Rt Hon Peter | Hannam, Sir John |
| Brown, M. (Brigg & Cl'thorpes) | Hargreaves, Andrew |
| Browning, Mrs. Angela | Harris, David |
| Bruce, Ian (S Dorset) | Haselhurst, Alan |
| Bruce, Malcolm (Gordon) | Hawkins, Nick |
| Burns, Simon | Hayes, Jerry |
| Burt, Alistair | Heald, Oliver |
| Butterfill, John | Heath, Rt Hon Sir Edward |
| Carlile, Alexander (Montgomry) | Heathcoat-Amory, David |
| Carlisle, Kenneth (Lincoln) | Hendry, Charles |
| Carrington, Matthew | Heseltine, Rt Hon Michael |
| Channon, Rt Hon Paul | Hicks, Robert |
| Chapman, Sydney | Higgins, Rt Hon Sir Terence L. |
| Churchill, Mr | Hill, James (Southampton Test) |
| Clark, Dr Michael (Rochford) | Hogg, Rt Hon Douglas (G'tham) |
| Clarke, Rt Hon Kenneth (Ruclif) | Horam, John |
| Clifton-Brown, Geoffrey | Hordern, Rt Hon Sir Peter |
| Coe, Sebastian | Howard, Rt Hon Michael |
| Colvin, Michael | Howarth, Alan (Strat'rd-on-A) |
| Congdon, David | Howell, Rt Hon David (G'dford) |
| Conway, Derek | Hughes Robert G. (Harrow W) |
| Coombs, Anthony (Wyre For'st) | Hunt, Rt Hon David (Wirral W) |
| Coombs, Simon (Swindon) | Hunt, Sir John (Ravensbourne) |
| Cope, Rt Hon Sir John | Hunter, Andrew |
| Cormack, Patrick | Jack, Michael |
| Couchman, James | Jackson, Robert (Wantage) |
| Currie, Mrs Edwina (S D'by'ire) | Johnson Smith, Sir Geoffrey |
| Curry, David (Skipton & Ripon) | Johnston, Sir Russell |
| Dafis, Cynog | Jones, Gwilym (Cardiff N) |
| Davis, David (Boothferry) | Jones, Ieuan Wyn (Ynys Môn) |
| Day, Stephen | Jopling, Rt Hon Michael |
| Deva, Nirj Joseph | Kellett-Bowman, Dame Elaine |
| Dickens, Geoffrey | Kennedy, Charles (Ross,C&S) |
| Dorrell, Stephen | Key, Robert |
| Douglas-Hamilton, Lord James | Kilfedder, Sir James |
| Dover, Den | King, Rt Hon Tom |
| Duncan, Alan | Kirkhope, Timothy |
| Dunn, Bob | Kirkwood, Archy |
| Durant, Sir Anthony | Knight, Mrs Angela (Erewash) |
| Dykes, Hugh | Knight, Greg (Derby N) |
| Eggar, Tim | Knight, Dame Jill (Bir'm E'st'n) |
| Elletson, Harold | Knox, David |
| Emery, Rt Hon Sir Peter | Kynoch, George (Kincardine) |
| Evans, David (Welwyn Hatfield) | Lait, Mrs Jacqui |
| Evans, Jonathan (Brecon) | Lamont, Rt Hon Norman |
| Evans, Roger (Monmouth) | Lang, Rt Hon Ian |
| Leigh, Edward | Rowe, Andrew (Mid Kent) |
| Lennox-Boyd, Mark | Rumbold, Rt Hon Dame Angela |
| Lester, Jim (Broxtowe) | Ryder, Rt Hon Richard |
| Lidington, David | Sackville, Tom |
| Lilley, Rt Hon Peter | Sainsbury, Rt Hon Tim |
| Lloyd, Peter (Fareham) | Scott, Rt Hon Nicholas |
| Llwyd, Elfyn | Shaw, David (Dover) |
| Luff, Peter | Shaw, Sir Giles (Pudsey) |
| Lyell, Rt Hon Sir Nicholas | Shephard, Rt Hon Gillian |
| Lynne, Ms Liz | Shepherd, Colin (Hereford) |
| MacGregor, Rt Hon John | Shersby, Michael |
| MacKay, Andrew | Soames, Nicholas |
| Maclean, David | Spencer, Sir Derek |
| Maclennan, Robert | Spicer, Sir James (W Dorset) |
| McLoughlin, Patrick | Spink, Dr Robert |
| Madel, David | Spring, Richard |
| Maitland, Lady Olga | Sproat, Iain |
| Major, Rt Hon John | Squire, Robin (Hornchurch) |
| Malone, Gerald | Stanley, Rt Hon Sir John |
| Mans, Keith | Steel, Rt Hon Sir David |
| Marland, Paul | Steen, Anthony |
| Marshall, John (Hendon S) | Stephen, Michael |
| Marshall, Sir Michael (Arundel) | Stern, Michael |
| Martin, David (Portsmouth S) | Stewart, Allan |
| Mawhinney, Dr Brian | Streeter, Gary |
| Mayhew, Rt Hon Sir Patrick | Sumberg, David |
| Mellor, Rt Hon David | Sykes, John |
| Merchant, Piers | Taylor, Ian (Esher) |
| Michie, Mrs Ray (Argyll Bute) | Taylor, John M. (Solihull) |
| Milligan, Stephen | Temple-Morris, Peter |
| Mills, Iain | Thomason, Roy |
| Mitchell, Andrew (Gedling) | Thompson, Sir Donald (C'er V) |
| Mitchell, Sir David (Hants NW) | Thompson, Patrick (Norwich N) |
| Monro, Sir Hector | Thornton, Sir Malcolm |
| Montgomery, Sir Fergus | Thurnham, Peter |
| Moss, Malcolm | Townsend, Cyril D. (Bexl'yh'th) |
| Needham, Richard | Tracey, Richard |
| Nelson, Anthony | Tredinnick, David |
| Neubert, Sir Michael | Twinn, Dr Ian |
| Newton, Rt Hon Tony | Tyler, Paul |
| Nicholls, Patrick | Vaughan, Sir Gerard |
| Nicholson, David (Taunton) | Viggers, Peter |
| Nicholson, Emma (Devon West) | Waldegrave, Rt Hon William |
| Norris, Steve | Walden, George |
| Onslow, Rt Hon Sir Cranley | Wallace, James |
| Oppenheim, Phillip | Waller, Gary |
| Ottaway, Richard | Waterson, Nigel |
| Page, Richard | Watts, John |
| Paice, James | Wells, Bowen |
| Patten, Rt Hon John | Wheeler, Rt Hon Sir John |
| Peacock, Mrs Elizabeth | Whitney, Ray |
| Pickles, Eric | Whittingdale, John |
| Porter, Barry (Wirral S) | Widdecombe, Ann |
| Portillo, Rt Hon Michael | Wiggin, Sir Jerry |
| Powell, William (Corby) | Wigley, Dafydd |
| Rathbone, Tim | Willetts, David |
| Redwood, John | Wolfson, Mark |
| Renton, Rt Hon Tim | Wood, Timothy |
| Richards, Rod | Yeo, Tim |
| Riddick, Graham | Young, Sir George (Acton) |
| Robathan, Andrew | |
| Roberts, Rt Hon Sir Wyn | Tellers for the Ayes: |
| Robertson, Raymond (Ab'd'n S) | Mr. David Lightbown and |
| Robinson, Mark (Somerton) | Mr. Irvine Patnick. |
| NOES | |
| Abbott, Ms Diane | Bell, Stuart |
| Adams, Mrs Irene | Benn, Rt Hon Tony |
| Ainger, Nick | Bennett, Andrew F. |
| Ainsworth, Robert (Cov'try NE) | Benton, Joe |
| Allason, Rupert (Torbay) | Bermingham, Gerald |
| Anderson, Donald (Swansea E) | Berry, Dr. Roger |
| Anderson, Ms Janet (Ros'dale) | Betts, Clive |
| Armstrong, Hilary | Blair, Tony |
| Banks, Tony (Newham NW) | Blunkett, David |
| Barnes, Harry | Boyce, Jimmy |
| Barron, Kevin | Boyes, Roland |
| Battle, John | Bradley, Keith |
| Beckett, Rt Hon Margaret | Bray, Dr Jeremy |
| Beggs, Roy | Brown, Gordon (Dunfermline E) |
| Brown, N. (N'c'tle upon Tyne E) | Illsley, Eric |
| Burden, Richard | Ingram, Adam |
| Byers, Stephen | Jackson, Glenda (H'stead) |
| Caborn, Richard | Jackson, Helen (Shef'ld, H) |
| Callaghan, Jim | Jamieson, David |
| Campbell, Mrs Anne (C'bridge) | Janner, Greville |
| Campbell-Savours, D. N. | Jones, Jon Owen (Cardiff C) |
| Canavan, Dennis | Jones, Lynne (B'ham S O) |
| Cann, Jamie | Jones, Martyn (Clwyd, SW) |
| Chisholm, Malcolm | Kaufman, Rt Hon Gerald |
| Clapham, Michael | Keen, Alan |
| Clark, Dr David (South Shields) | Kennedy, Jane (Lpool Brdgn) |
| Clarke, Eric (Midlothian) | Khabra, Piara S. |
| Clarke, Tom (Monklands W) | Kilfoyle, Peter |
| Clelland, David | Kinnock, Rt Hon Neil (Islwyn) |
| Clwyd, Mrs Ann | Leighton, Ron |
| Cohen, Harry | Litherland, Robert |
| Connarty, Michael | Livingstone, Ken |
| Cook, Frank (Stockton N) | Lloyd, Tony (Stretford) |
| Cook, Robin (Livingston) | Loyden, Eddie |
| Corbett, Robin | McAllion, John |
| Corbyn, Jeremy | McAvoy, Thomas |
| Corston, Ms Jean | McCartney, Ian |
| Cousins, Jim | McCrea, Rev William |
| Cryer, Bob | Macdonald, Calum |
| Cummings, John | McKelvey, William |
| Cunliffe, Lawrence | Mackinlay, Andrew |
| Cunningham, Jim (Covy SE) | McMaster, Gordon |
| Cunningham, Rt Hon Dr John | McNamara, Kevin |
| Darling, Alistair | McWilliam, John |
| Davies, Bryan (Oldham C'tral) | Madden, Max |
| Davies, Rt Hon Denzil (Llanelli) | Maginnis, Ken |
| Davies, Ron (Caerphilly) | Mahon, Alice |
| Davis, Terry (B'ham, H'dge H'l) | Mandelson, Peter |
| Denham, John | Marek, Dr John |
| Dewar, Donald | Marshall, David (Shettleston) |
| Dixon, Don | Marshall, Jim (Leicester, S) |
| Dobson, Frank | Martlew, Eric |
| Donohoe, Brian H. | Maxton, John |
| Dowd, Jim | Meacher, Michael |
| Dunwoody, Mrs Gwyneth | Michael, Alun |
| Eagle, Ms Angela | Michie, Bill (Sheffield Heeley) |
| Eastham, Ken | Milburn, Alan |
| Evans, John (St Helens N) | Miller, Andrew |
| Fatchett, Derek | Mitchell, Austin (Gt Grimsby) |
| Field, Frank (Birkenhead) | Moonie, Dr Lewis |
| Fisher, Mark | Morgan, Rhodri |
| Flynn, Paul | Morley, Elliot |
| Foster, Rt Hon Derek | Morris, Rt Hon A. (Wy'nshawe) |
| Foulkes, George | Morris, Estelle (B'ham Yardley) |
| Fraser, John | Morris, Rt Hon J. (Aberavon) |
| Fyfe, Maria | Mowlam, Marjorie |
| Gapes, Mike | Mullin, Chris |
| Garrett, John | Oakes, Rt Hon Gordon |
| Gerrard, Neil | O'Brien, Michael (N W'kshire) |
| Godman, Dr Norman A. | O'Brien, William (Normanton) |
| Godsiff, Roger | O'Hara, Edward |
| Golding, Mrs Llin | Olner, William |
| Gordon, Mildred | Orme, Rt Hon Stanley |
| Grant, Bernie (Tottenham) | Parry, Robert |
| Griffiths, Nigel (Edinburgh S) | Pendry, Tom |
| Griffiths, Win (Bridgend) | Pickthall, Colin |
| Gunnell, John | Pike, Peter L. |
| Hain, Peter | Pope, Greg |
| Hanson, David | Powell, Ray (Ogmore) |
| Harvey, Nick | Prentice, Ms Bridget (Lew'm E) |
| Hattersley, Rt Hon Roy | Prentice, Gordon (Pendle) |
| Henderson, Doug | Prescott, John |
| Heppell, John | Primarolo, Dawn |
| Hill, Keith (Streatham) | Purchase, Ken |
| Hinchliffe, David | Quin, Ms Joyce |
| Hoey, Kate | Raynsford, Nick |
| Hogg, Norman (Cumbernauld) | Reid, Dr John |
| Hoon, Geoffrey | Robertson, George (Hamilton) |
| Howarth, George (Knowsley N) | Robinson, Peter (Belfast E) |
| Howells, Dr. Kim (Pontypridd) | Roche, Mrs. Barbara |
| Hughes, Kevin (Doncaster N) | Rogers, Allan |
| Hughes, Robert (Aberdeen N) | Rooney, Terry |
| Hughes, Roy (Newport E) | Ross, Ernie (Dundee W) |
| Hutton, John | Rowlands, Ted |
| Ruddock, Joan | Taylor, Mrs Ann (Dewsbury) |
| Sheerman, Barry | Trimble, David |
| Sheldon, Rt Hon Robert | Walker, Rt Hon Sir Harold |
| Shore, Rt Hon Peter | Walley, Joan |
| Short, Clare | Wardell, Gareth (Gower) |
| Simpson, Alan | Wareing, Robert N |
| Skinner, Dennis | Watson, Mike |
| Smith, Andrew (Oxford E) | Wicks, Malcolm |
| Smith, C. (Isl'ton S & F'sbury) | Williams, Rt Hon Alan (Sw'n W) |
| Smith, Rt Hon John (M'kl'ds E) | Williams, Alan W (Carmarthen) |
| Smith, Llew (Blaenau Gwent) | Wilson, Brian |
| Snape, Peter | Winnick, David |
| Soley, Clive | Worthington, Tony |
| Spearing, Nigel | Wright, Dr Tony |
| Steinberg, Gerry | |
| Stevenson, George | Tellers for the Noes: |
| Stott, Roger | Mr. Alan Meale and |
| Strang, Dr. Gavin | Mr. Dennis Turner. |
| Straw, Jack |
§ Question accordingly agreed to.
§ Question put accordingly, That the amendment be made:—
§ The Committee divided: Ayes 56, Noes 279.
957| Division No. 202] | [5.35 pm |
| AYES | |
| Adams, Mrs Irene | Loyden, Eddie |
| Allason, Rupert (Torbay) | McAllion, John |
| Barnes, Harry | McAvoy, Thomas |
| Benn, Rt Hon Tony | McCrea, Rev William |
| Bennett, Andrew F. | Madden, Max |
| Callaghan, Jim | Mahon, Alice |
| Canavan, Dennis | Marshall, David (Shettleston) |
| Cann, Jamie | Marshall, Jim (Leicester, S) |
| Chisholm, Malcolm | Michie, Bill (Sheffield Healey) |
| Connarty, Michael | Mitchell, Austin (Gt Grimsby) |
| Corbyn, Jeremy | Olner, William |
| Cummings, John | Parry, Robert |
| Davies, Rt Hon Denzil (Llanelli) | Pickthall, Colin |
| Davis, Terry (B'ham, H'dge H'l) | Purchase, Ken |
| Dunwoody, Mrs Gwyneth | Robinson, Peter (Belfast E) |
| Etherington, Bill | Rowlands, Ted |
| Field, Frank (Birkenhead) | Shore, Rt Hon Peter |
| Gerrard, Neil | Simpson, Alan |
| Godman, Dr Norman A. | Smith, Llew (Blaenau Gwent) |
| Gordon, Mildred | Snape, Peter |
| Hanson, David | Spearing, Nigel |
| Harvey, Nick | Steinberg, Gerry |
| Hinchliffe, David | Taylor, Sir Teddy (Southend, E) |
| Howarth, George (Knowsley N) | Trimble, David |
| Hughes, Roy (Newport E) | Vaz, Keith |
| Jones, Martyn (Clwyd, SW) | Winnick, David |
| Kinnock, Rt Hon Neil (Islwyn) | |
| Leighton, Ron | Tellers for the Ayes: |
| Litherland, Robert | Mr. Bob Cryer and |
| Livingstone, Ken | Mr. Dennis Skinner. |
| NOES | |
| Adley, Robert | Booth, Hartley |
| Ainsworth, Peter (East Surrey) | Boswell, Tim |
| Aitken, Jonathan | Bottomley, Peter (Eltham) |
| Alexander, Richard | Bottomley, Rt Hon Virginia |
| Allason, Rupert (Torbay) | Bowden, Andrew |
| Amess, David | Bowis, John |
| Ancram, Michael | Brandreth, Gyles |
| Arbuthnot, James | Brazier, Julian |
| Arnold, Jacques (Gravesham) | Bright, Graham |
| Arnold, Sir Thomas (Hazel Grv) | Brooke, Rt Hon Peter |
| Ashby, David | Brown, M. (Brigg & Cl'thorpes) |
| Ashdown, Rt Hon Paddy | Browning, Mrs. Angela |
| Atkinson, Peter (Hexham) | Bruce, Ian (S Dorset) |
| Baldry, Tony | Bruce, Malcolm (Gordon) |
| Banks, Matthew (Southport) | Burns, Simon |
| Banks, Robert (Harrogate) | Burt, Alistair |
| Bates, Michael | Butterfill, John |
| Batiste, Spencer | Carlile, Alexander (Montgomry) |
| Bellingham, Henry | Carlisle, Kenneth (Lincoln) |
| Beresford, Sir Paul | Carrington, Matthew |
| Blackburn, Dr John G. | Channon, Rt Hon Paul |
| Chapman, Sydney | Hordern, Rt Hon Sir Peter |
| Churchill, Mr | Howard, Rt Hon Michael |
| Clarke, Rt Hon Kenneth (Ruclif) | Howarth, Alan (Strat'rd-on-A) |
| Clifton-Brown, Geoffrey | Howell, Rt Hon David (G'dford) |
| Coe, Sebastian | Hughes Robert G. (Harrow W) |
| Colvin, Michael | Hunt, Rt Hon David (Wirral W) |
| Congdon, David | Hunt, Sir John (Ravensbourne) |
| Conway, Derek | Hunter, Andrew |
| Coombs, Anthony (Wyre For'st) | Jack, Michael |
| Coombs, Simon (Swindon) | Jackson, Robert (Wantage) |
| Cope, Rt Hon Sir John | Johnson Smith, Sir Geoffrey |
| Cormack, Patrick | Johnston, Sir Russell |
| Couchman, James | Jones, Gwilym (Cardiff N) |
| Currie, Mrs Edwina (S D'by'ire) | Jones, Ieuan Wyn (Ynys Môn) |
| Curry, David (Skipton & Ripon) | Jopling, Rt Hon Michael |
| Dafis, Cynog | Kellett-Bowman, Dame Elaine |
| Davis, David (Boothferry) | Kennedy, Charles (Ross,C&S) |
| Day, Stephen | Key, Robert |
| Devlin, Tim | Kilfedder, Sir James |
| Dickens, Geoffrey | King, Rt Hon Tom |
| Dorrell, Stephen | Kirkhope, Timothy |
| Douglas-Hamilton, Lord James | Kirkwood, Archy |
| Dover, Den | Knight, Mrs Angela (Erewash) |
| Duncan, Alan | Knight, Greg (Derby N) |
| Dunn, Bob | Knight, Dame Jill (Bir'm E'st'n) |
| Durant, Sir Anthony | Knox, David |
| Dykes, Hugh | Kynoch, George (Kincardine) |
| Eggar, Tim | Lait, Mrs Jacqui |
| Elletson, Harold | Lamont, Rt Hon Norman |
| Emery, Rt Hon Sir Peter | Lang, Rt Hon Ian |
| Evans, David (Welwyn Hatfield) | Leigh, Edward |
| Evans, Jonathan (Brecon) | Lennox-Boyd, Mark |
| Evans, Roger (Monmouth) | Lester, Jim (Broxtowe) |
| Evennett, David | Lidington, David |
| Faber, David | Lightbown, David |
| Fabricant, Michael | Lilley, Rt Hon Peter |
| Fairbairn, Sir Nicholas | Lloyd, Peter (Fareham) |
| Fenner, Dame Peggy | Llwyd, Elfyn |
| Field, Barry (Isle of Wight) | Luff, Peter |
| Forman, Nigel | Lyell, Rt Hon Sir Nicholas |
| Forsyth, Michael (Stirling) | Lynne, Ms Liz |
| Forth, Eric | MacGregor, Rt Hon John |
| Foster, Don (Bath) | Maclean, David |
| Fowler, Rt Hon Sir Norman | Maclennan, Robert |
| Fox, Dr Liam (Woodspring) | McLoughlin, Patrick |
| Freeman, Roger | Madel, David |
| Gale, Roger | Maitland, Lady Olga |
| Gallie, Phil | Major, Rt Hon John |
| Garel-Jones, Rt Hon Tristan | Malone, Gerald |
| Garnier, Edward | Mans, Keith |
| Gillan, Cheryl | Marland, Paul |
| Goodlad, Rt Hon Alastair | Marshall, John (Hendon S) |
| Goodson-Wickes, Dr Charles | Marshall, Sir Michael (Arundel) |
| Gorst, John | Martin, David (Portsmouth S) |
| Grant, Sir Anthony (Cambs SW) | Mawhinney, Dr Brian |
| Greenway, Harry (Ealing N) | Mayhew, Rt Hon Sir Patrick |
| Greenway, John (Ryedale) | Mellor, Rt Hon David |
| Grylls, Sir Michael | Merchant, Piers |
| Gummer, Rt Hon John Selwyn | Michie, Mrs Ray (Argyll Bute) |
| Hague, William | Milligan, Stephen |
| Hamilton, Rt Hon Archie (Epsom) | Mills, Iain |
| Hamilton, Neil (Tatton) | Mitchell, Andrew (Gedling) |
| Hampson, Dr Keith | Mitchell, Sir David (Hants NW) |
| Hanley, Jeremy | Monro, Sir Hector |
| Hannam, Sir John | Montgomery, Sir Fergus |
| Hargreaves, Andrew | Moss, Malcolm |
| Harris, David | Needham, Richard |
| Haselhurst, Alan | Nelson, Anthony |
| Hawkins, Nick | Neubert, Sir Michael |
| Hayes, Jerry | Newton, Rt Hon Tony |
| Heald, Oliver | Nicholls, Patrick |
| Heath, Rt Hon Sir Edward | Nicholson, David (Taunton) |
| Heathcoat-Amory, David | Nicholson, Emma (Devon West) |
| Hendry, Charles | Norris, Steve |
| Heseltine, Rt Hon Michael | Onslow, Rt Hon Sir Cranley |
| Hicks, Robert | Oppenheim, Phillip |
| Higgins, Rt Hon Sir Terence L. | Ottaway, Richard |
| Hill, James (Southampton Test) | Page, Richard |
| Hogg, Rt Hon Douglas (G'tham) | Paice, James |
| Horam, John | Patnick, Irvine |
| Patten, Rt Hon John | Sumberg, David |
| Pawsey, James | Sykes, John |
| Peacock, Mrs Elizabeth | Taylor, Ian (Esher) |
| Pickles, Eric | Taylor, John M. (Solihull) |
| Porter, Barry (Wirral S) | Taylor, Matthew (Truro) |
| Portillo, Rt Hon Michael | Temple-Morris, Peter |
| Powell, William (Corby) | Thomason, Roy |
| Rathbone, Tim | Thompson, Sir Donald (C'er V) |
| Redwood, John | Thompson, Patrick (Norwich N) |
| Renton, Rt Hon Tim | Thornton, Sir Malcolm |
| Richards, Rod | Thurnham, Peter |
| Riddick, Graham | Townsend, Cyril D. (Bexl'yh'th) |
| Robathan, Andrew | Tracey, Richard |
| Roberts, Rt Hon Sir Wyn | Tredinnick, David |
| Robertson, Raymond (Ab'd'n S) | Twinn, Dr Ian |
| Robinson, Mark (Somerton) | Tyler, Paul |
| Rowe, Andrew (Mid Kent) | Vaughan, Sir Gerard |
| Rumbold, Rt Hon Dame Angela | Viggers, Peter |
| Ryder, Rt Hon Richard | Waldegrave, Rt Hon William |
| Sackville, Tom | Walden, George |
| Sainsbury, Rt Hon Tim | Wallace, James |
| Scott, Rt Hon Nicholas | Waller, Gary |
| Shaw, David (Dover) | Wardle, Charles (Bexhill) |
| Shaw, Sir Giles (Pudsey) | Waterson, Nigel |
| Shephard, Rt Hon Gillian | Watts, John |
| Shepherd, Colin (Hereford) | Wells, Bowen |
| Shersby, Michael | Wheeler, Rt Hon Sir John |
| Soames, Nicholas | Whitney, Ray |
| Spencer, Sir Derek | Widdecombe, Ann |
| Spicer, Sir James (W Dorset) | Wiggin, Sir Jerry |
| Spink, Dr Robert | Wigley, Dafydd |
| Spring, Richard | Willetts, David |
| Sproat, Iain | Wolfson, Mark |
| Squire, Robin (Hornchurch) | Wood, Timothy |
| Stanley, Rt Hon Sir John | Yeo, Tim |
| Steel, Rt Hon Sir David | Young, Sir George (Acton) |
| Steen, Anthony | |
| Stephen, Michael | Tellers for the Noes: |
| Stern, Michael | Mr. Nicholas Baker and |
| Stewart, Allan | Mr. Andrew MacKay. |
| Streeter, Gary |
§ Question accordingly negatived.
§ Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)On a point of order, Mr. Morris. I seek your guidance. We are about to embark on a debate of a group of nearly 50 amendments. You and the hon. Members who have been present during the Committee stage will remember that there was considerable confusion about the character and nature of amendment No. 27. In a statement, the Foreign Secretary said:
In summary, the Law Officers consider that, while incorporation of the protocol in domestic law is desirable, it is not necessary for ratification or implementation of the Maastricht treaty."—[Official Report, 15 February 1993; Vol. 219, c. 27.]We desperately need your advice, Mr. Morris, or possibly that of a Minister through you, as to which of the 50 amendments, which cover a number of protocols and articles, fall into the "desirable" category and which fall into the "necessary" category for ratification. Otherwise, we shall not know the level of seriousness that we are to give to each amendment. The Committee was caught completely by surprise when it found that amendment No. 27 was desirable but not necessary for ratification. May we have some advice and information as to which amendment falls into which category?
§ The ChairmanFirst, that is not a matter for the Chair. Secondly, we have not started yet, so no one can rule on anything until the procedure is under way.
958 Without further ado, we shall consider the European system of central banks and national banking arrangements. We lead with amendment No. 36, with which we shall consider the others listed on the selection paper. I call Mr. Andrew Smith.
§ Mr. Andrew Smith (Oxford, East)rose—
§ Mr. Peter Hain (Neath)On a point of order, Mr. Morris.
§ The ChairmanI hope that this is a new point of order and not the same one that we have just had.
§ Mr. HainIt is, Mr. Morris. I wonder whether—[Interruption.] It certainly is a new point of order. I wonder whether, with your indulgence, Mr. Morris, the Attorney-General could give a ruling on whether amendment No. 36, if carried, would actually —
§ The ChairmanOrder. The hon. Gentleman is anticipating. The amendment has not even been moved yet.
§ Mr. Andrew SmithI beg to move amendment No. 36, in page 1, line 9, after 'II', insert
'(except Article 107 on page 22 of Cm 1934)'.
§ The ChairmanWith this, it will be convenient also to discuss the following: Amendment No. 84, in page 1, line 9, after 'II', insert
'(with the exception of those Articles and Protocols set out in Schedule [Monetary Policy and the establishment of the European System of Central Banks]).'.Amendment No. 86, in page 1, line 9, after 'II', insert'(other than Article 108a)'.Amendment No. 87, in page 1, line 9, after 'II', insert'(other than Article 108)'.Amendment No. 101, in page 1, line 9, after 'II', insert'(except Article 106 on page 22 of Cm 1934 which relates to the European Central Bank)'.Amendment No. 197, in page 1, line 9, after 'II', insert'except Article 4a on page 11 of Cm 1934'.Amendment No. 325, in page 1, line 9, after 'II', insert'(except Article 105 on page 21 of Cm 1934)'.Amendment No. 326, in page 1, line 9, after 'II', insert'(except Article 105a on page 21 of Cm 1934)'.Amendment No. 327, in page 1, line 9, after 'II', insert'(except Article 108 on page 22 of Cm 1934)'.Amendment No. 328, in page 1, line 9, after 'II', insert'(except Article 109 on page 23 of Cm 1934)'.Amendment No. 372, in page 1, line 9, after 'II', insert'except Article 104 as referred to in Article in G on page 19 of Command Paper number 1934'.Amendment No. 373, in page 1, line 9, after 'II', insert'except Article 104a as referred to in Article G on page 19 of Command Paper number 1934'.Amendment No. 374, in page 1, line 9, after 'II', insert'except Article 104b as referred to in Article G on page 19 of Command Paper number 1934'.Amendment No. 375, in page 1, line 9, after 'II', insert'except Article 105a as referred to in Article G on page 21 of Command Paper number 1934'.Amendment No. 376, in page 1, line 9, after 'II', insert'except Article 109 as referred to in Article G on page 23 of Command Paper number 1934'.Amendment No. 377, in page 1, line 9, after 'II', insert'except Article 109a as referred to in Article G on page 23 of Command Paper number 1934'.Amendment No. 378, in page 1, line 9, after 'II', insert'except Article 109b as referred to in Article G on page 24 of Command Paper number 1934'.Amendment No. 379, in page 1, line 9, after 'II', insert 959'except Article 109d as referred to in Article G on page 25 of Command Paper number 1934'.Amendment No. 408, in page 1, line 9, after 'II', insert'(except Article 30 of Protocol 3 on the Statute of the European System of Central Banks and the European Central Bank on pages 97 and 98 of Cm 1934).'.Amendment No. 49, in page 1, line 10, after '1992', insert'but not Article 105 in Title II thereof'.Amendment No. 50, in page 1, line 10, after '1992', insert'but not Article 107 in Title II thereof'.Amendment No. 59, in page 1, line 10, after '1992', insert'but not the Protocol on the statute of the European System of central banks and of the European Central Bank.'.Amendment No. 253, in page 1, line 10, after '1992', insert'but not Article 37 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 254, in page 1, line 10, after '1992', insert'but not Article 42 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 255, in page 1, line 10, after '1992', insert'but not Article 31.1 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 256, in page 1, line 10, after '1992', insert'but not Article 34.1 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 257, in page 1, line 10, after '1992', insert'but not Article 29 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 258, in page 1, line 10, after '1992', insert'but not Article 30 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank".Amendment No. 259, in page 1, line 10, after '1992', insert'but not Article 21.1 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 260, in page 1, line 10, after '1992', insert'but not Article 28.3 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 261, in page 1, line 10, after '1992', insert'but not Article 18.2 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 262, in page 1, line 10, after '1992', insert'but not Article 19.1 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 263, in page 1, line 10, after '1992', insert'but not Article 14.4 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 264, in page 1, line 10, after '1992', insert 960'but not Article 16 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 265, in page 1, line 10, after '1992', insert'but not Article 14.2 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 266, in page 1, line 10, after '1992', insert'but not Article 14.3 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 267, in page 1, line 10, after '1992', insert'but not Article 10.2 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 268, in page 1, line 10, after '1992', insert'but not Article 12.1 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 269, in page 1, line 10, after '1992', insert'but not Article 7 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 270, in page 1, line 10, after '1992', insert'but not Article 6.2 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 271, in page 1, line 10, after '1992', insert'but not Article 2 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 272, in page 1, line 10, after '1992', insert'but not Article 5.3 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank'.Amendment No. 441, in page 1, line 10, after '1992', insert'but not the Protocol on France on page 117 of Cm. 1934'.Amendment No. 442, in page 1, line 10, after '1992', insert'but not the Protocol on Portugal on page 114 of Cm. 1934'.New clause 1—Annual Report by Bank of England—.—'In implementing Article 108 of Title II of the Treaty on European Union, and ensuring compatibility of the statutes of the national central bank, Her Majesty's Government shall, by order, make provision for the Governor of the Bank of England to make an annual report to Parliament, which shall be subject to approval by a Resolution of the Commons House of Parliament.'.New clause 58—Accountability of European Central Bank—' .In implementing the provisions of Article 108 of Title II of the Treaty on European Union, the Commons House of Parliament shall consider annually the European Central Bank report provided for in Article 109b(3) on the activities of the European System of Central Banks and on the monetary policy of both the previous and current year.'.Amendment No. 85, new schedule:—'MONETARY POLICY AND THE ESTABLISHMENT OF THE EUROPEAN SYSTEM OF CENTRAL BANKS
- (1) Article 105.
- (2) Article 105a.
- (3) Article 106.
- (4) Article 107.
- (5) Article 109a.
- (6) Article 109b.
- (7) Protocol on the Statute of European System of Central Banks and of the European Central Bank.'.
§ Mr. SmithLet me make it clear that amendment No. 36, as with similar amendments tabled in other groups, is a probing amendment, and it is not our intention to press it to a vote. However, new clause 1 and new clause 58, which we have also tabled, are also in the group, and 961 they relate to the important questions of the accountability of the Bank of England and of the European central bank. We intend to press those to a vote.
I make it clear at the outset that the Labour party's views on the issues before us are set in the context of the vital importance of two requirements: first, that the provisions of article 2 of the treaty set the goals of the Community, and that the economic institutions of the Community are obliged to put those goals into effect; and, secondly, that ECOFIN—the Council of European Finance Ministers—must be strengthened not only as the proper political counterweight to the system of central banks but as an effective co-ordinator of Community policies for jobs and sustainable growth. An important complaint about the Government's record is that during their presidency of the Community they took no initiative to give ECOFIN that enhanced role.
§ Sir Teddy TaylorWill the hon. Gentleman make it clear that new clause 1 is a joke, because it simply says that there should be an annual report? That will have no impact, and there will be no power, because we shall simply talk about the annual report. The issue behind amendment No. 36 is whether a central bank should be democratically accountable. As a member of the Labour party and a friend of democracy, surely the hon. Gentleman should support an amendment saying that a central bank that will run our economy should be democratically accountable in some way. Was that not Labour party policy?
§ Mr. SmithI well understand the hon. Gentleman's lack of confidence in the Conservatives' custodianship of accountability and democracy. I shall take no lectures from him or from any other Conservative Member on those issues. New clause 1 would not merely require an annual report to be submitted to the House, but would provide the opportunity for a vote on it. That would give the House a form of accountability that is not available to it now. Therefore, it would strengthen rather than weaken accountability.
§ Mr. Tony Benn (Chesterfield)It is correct that there is no annual report, but my hon. Friend will know that under the Bank of England Act 1946, passed by a very right-wing Labour Chancellor, Hugh Dalton, the Bank of England became publicly owned, the Treasury could give instructions to the Bank of England on any matter that it wished for which accountability existed, and the bank could give instructions to any other bank that it wished—and the Treasury defined what a bank was. There could be no clearer example of governmental and parliamentary accountability for the Bank of England. Am I right in supposing that that is what the Front-Bench spokesmen wish to abandon?
§ Mr. SmithLater in my speech I shall deal with the 1946 Act. Indeed, I intended to quote what Hugh Dalton said on Second Reading of that Act. In the light of my right hon. Friend's characterisation of Hugh Dalton, I might reconsider that intention—but the point that I was making still stands good: the House would receive a report that it does not now receive, and would have the opportunity to vote, which it does not now have.
§ Mr. William Cash (Stafford)The hon. Gentleman's new clause refers to
ensuring compatibility of the statutes of the national central bank.In the light of the protocol on the European Monetary Institute stage 2, let alone stage 3, is the hon. Gentleman saying that he expects section 4 of the Bank of England Act 1946 to be repealed? In other words, does he want an independent central bank in this country? If so, how does he relate that to the concession that he has already made, in that there will be no arrangements for the central bank in Europe to be accountable?
§ Mr. SmithI shall deal with those issues in a moment, but it is clear to me that if the House of Commons, and Britain, want to honour the terms of the Maastricht treaty, those matters must be examined. There can be no doubt about that, but it would be premature to prejudge now precisely what form of amendment would be necessary to ensure compatibility between our statutes and the treaty.
§ Mr. Marlowrose—
§ Mr. SmithI should like to make a little more progress, if I may.
In debating the group of amendments and, to some extent, the two groups that will follow, the Committee is engaged in that most precarious of activities against which politicians are wisely cautioned—answering hypothetical questions. That is so, because—
§ Mr. Austin Mitchell (Great Grimsby)Will my hon. Friend give way?
§ Mr. SmithI shall give way in a moment.
We have to answer hypothetical questions because none of us can be sure whether the European central bank and its associated system will be established under the Bill—or rather, under the treaty—whether economic and monetary union will proceed and, if it does, whether that will happen precisely according to the timetable and provisions of the Maastricht treaty. The terms of such a move to stage 3 would in any case have to be placed before Parliament in future. Indeed, our amendment No. 35, which will be dealt with in the later group of amendments concerning European monetary union, is an attempt to set the circumstances in which that could happen.
It is interesting that the German Parliament incorporated a similar provision during its deliberations approving the Maastricht treaty.
§ Mr. Austin Mitchellrose—
§ Mr. MitchellI am grateful to my hon. Friend; he has been most generous in giving way.
Surely the question is not hypothetical. It is no use saying that we shall have to consider such matters later. The treaty is specific:
When exercising the powers and carrying out the tasks and duties conferred upon them by this Treaty and the statute of the ESCB, neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Community institutions or bodies, from any government of a Member State or from any other body.We shall not be able to give instructions to the Bank of England on the lines of the 1946 Act. It will therefore have to be changed.
§ Mr. SmithI take my hon. Friend's point, but let me repeat that what is in the Bill is conditional on certain things happening before progress towards economic and monetary union can proceed. Indeed, our amendments set further conditions to be satisfied before progress to the third stage of economic and monetary union can take place. Those amendments were designed precisely to meet the concerns expressed within the Labour party and beyond.
§ Mr. RowlandsI apologise for interrupting my hon. Friend again, but he cannot make that case. There is a specific and clear commitment in article 14.2 of the protocol on the statutes of the bank:
The statutes of the national central banks shall, in particular, provide that the term of office of a Governor of a national central bank shall be no less than 5 years";and article 14.1 says that the statutes of the national bank must becompatible with this Treaty and this Statute.In other words, if we pass the treaty we shall bind for the future the terms and character of any national bank that we may have.
§ Mr. SmithWe should be binding the future of the central bank only if we proceeded to economic and monetary union, and that depends on conditions yet to be assessed by the Committee and upon which the Committee will have a further opportunity for debate.
§ 6 pm
§ Mr. CashOn a point of order, Mr. Lofthouse. I am sure that the hon. Gentleman in no way seeks to mislead the Committee, but, under article 8 of the protocol relating to the European Monetary Institute, no instructions may be given or sought by the Governor of the Bank of England. If the hon. Gentleman confuses matters by continually referring to stage 3 when stage 2 contains those provisions, the Committee could be seriously misled.
§ The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse)I hope that the hon. Gentleman will not confuse the occupant of the Chair by raising points of order that are not points of order.
§ Mr. SmithThe hon. Member for Stafford (Mr. Cash) has not been slow to contribute to the Committee's proceedings in the past, and I am sure that he will have an opportunity later to make those points—quite possibly at some length.
As regards the United Kingdom, that conditionality arises from the treaty; from the challenges to and weaknesses within the exchange rate mechanism; and also from the Government's deliberate decision to seek to buy peace in their own ranks—unsuccessfully, as we have seen—by trying to face both ways at once, on the issue of economic and monetary union as on so much else.
Although at one level that strategy might seem quite clever, enabling us, the Government have argued, to retain a right to a voice in the shaping of the system while leaving until later any decision whether to take part in that system, at other levels it is deeply flawed. First, it leaves the Government with apparently nothing to say on the important question of the principle of participation in economic and monetary union for Europe—surely one of the most important political decisions of our times.
Secondly, the Government's very agnosticism encourages those who would see some viability in Europe 964 developing on a multi-speed basis—a Europe of several divisions in which Britain was not in the top division. I believe that such speculation is dangerous not only for Europe but for Britain. As a consequence of the Government's economic failures, people are coming to believe that Britain is not capable of first-division status. Let me make it clear that the Labour party does not find acceptable any prospect for closer European co-operation and integration that does not have Britain firmly in the first division.
There is a real danger that some of our Community partners will finally lose patience with the Tories' two-faced foot dragging and decide that some of the Twelve should push on alone with economic and monetary union. That would be a serious blow. It would make Britain a less attractive place in which to invest, thereby jeopardising still more jobs. It would threaten Britain's position as a leading international financial centre. Most serious of all, it would once again leave the United Kingdom in the position of having at some future date to apply to join a union that others had taken the lead in establishing and has therefore had the decisive influence in shaping.
Already, with the United Kingdom opt-outs in the Maastricht treaty, Britain's inability to stay within the ERM and the underlying weakness of the British economy, the United Kingdom is being marginalised and is losing opportunities to shape important events. The Government's position on the European system of central banks and the position of the Bank of England could well reinforce those already very damaging signals, locking Britain out and depriving us of the influence that we need over the evolution of Community monetary policy. As with other aspects of the Bill, the choice facing us is not between influence through the pooling of sovereignty on the one hand and influence outside that pooling on the other; it is a choice between influence through the Community and precious little influence at all.
On the question of the status of the central banks, it is clear that the European central bank would need to be independent in its day-to-day organisations.
§ Sir Teddy TaylorWhy?
§ Mr. SmithFor reasons that I am about to explain. Without the establishment of a European Government and a European Finance Ministry—the apparatus of the European super-state to which we are not committed and to which Conservative Members who intervene from a sedentary position are wholeheartedly opposed—there is no political institution under whose day-to-day control it would be practical to place the bank, even if such a prospect were acceptable to our European partners, which plainly it is not.
§ Mr. Ken Livingstone (Brent, East)So you are going to leave it to the bankers?
§ Mr. LivingstoneWhat my hon. Friend is saying is absolutely true. There is no political structure to oversee the bank, so the powers will go to an unelected committee of bankers—not even a committee of bankers in which each nation has a vote of equal weight. The votes are weighted to reflect GDP, so our vote will be one of the smallest per head of population in the Community. Who will take vital political decisions affecting the parity of the 965 new European currency against the dollar and the yen and determine our interest rates? I agree with everything that my hon. Friend says, but will he now tell us whether he is happy to leave it to the bankers?
§ Mr. SmithMy hon. Friend is wrong on the last point, because article 109 of the treaty specifically provides that the Council of Finance Ministers shall set exchange rates of the European currencies against currencies outside the Community and, what is more, that the decision of the Council in that respect shall be binding on the banking system. Far from the bankers having control over the politicians, as my hon. Friend suggests, it will be the other way round.
I said that there was not a political institution to exercise day-to-day control over a European central bank. The question of having and building up the role of an institution that can set the economic policy framework within which the bank has to operate—and to which, in my view, it ought to be accountable—as well as setting the external exchange rate of the Community currencies is quite another matter.
In that respect, it is important to ensure that, as a counterpart to the position of the European central bank, European economic policy co-ordination under article 103 is more effectively exercised jointly by the member states, through an enhanced role for ECOFIN. We address those matters in amendment No. 420, which falls in a subsequent group. In relation to an evaluation of the provisions of the treaty dealing with the central bank, it is important that ECOFIN should be strengthened.
§ Mr. Ron Leighton (Newham, North-East)My hon. Friend is right in saying that it is the Council that will have control over the exchange rate of the ECU. The same arrangements will apply as with the Bundesbank. The Bundesbank does not control the exchange rate of the mark. That is why it allows the strange arrangement with east Germany. The Bundesbank is responsible for the internal value of the mark. The central bank would be a bank based on the model of the Bundesbank, which has an extremely large measure of independence and autonomy.
§ Mr. SmithMy hon. Friend confirms that the Bundesbank—which I agree has, to a large extent, been taken as a model for the banking arrangements in the treaty—operates within a politically determined context of economic policy. On important issues such as the exchange rate and the parity between the deutschmark and the ostmark, it was the Government and the accountable politicians whose view prevailed and not that of the bank. My point was that ECOFIN needed to be strengthened.
§ Mr. BennMy hon. Friend and I and every hon. Member may well be candidates in a general election. Suppose that the arrangements go through. What can my hon. Friend say about the economic policy of his party—or any party—that could conceivably be implemented if that party were elected, given that the decisions will be taken not by elected people but by the bank and ECOFIN, which may reflect quite different opinions which could not in any way be influenced by a change of Government in any one country?
§ Mr. SmithWhat I would say, and what I am sure the Labour party would say, is that, in government, we would be using our influence in Europe to press for co-ordinated 966 policies for economic expansion and jobs so that the Community became an engine of recovery and not an instrument of deflation.
In returning to the question of the status of the central bank, I should make clear Labour's first key demand. It is that the European central bank must be established through public ownership and that the Bank of England must remain in public ownership. There can be no question, as some have suggested there might be, of the bank being privatised.
§ Mr. SmithI must make progress.
When Hugh Dalton, the then Labour Chancellor of the Exchequer, moved the Second Reading of the measure which nationalised the Bank of England, he said that there were two key arguments to support it. He said:
The first is that this Bill in effect brings the law into relation with the facts as they have gradually evolved over the years… The second line of argument is even more important. It is that by this Bill we ensure a smooth and efficient growth of our financial banking system in order to meet the new needs for the future"—[Official Report, 29 October 1945; Vol. 415, c. 46.]We now best promote the needs of the Community and of the United Kingdom for an effective central banking system by holding faith with the principles that Hugh Dalton set out 48 years ago. The bank must remain in public ownership and it must be made clear, contrary to what some have supposed, that privatisation is not an option. It would be neither in the public interest nor in the interests of the effective discharge of the responsibilities of a modern central bank.
§ Sir Peter Tapsell (East Lindsey)The hon. Gentleman speaks of the need for the Bank of England to be in public ownership after the arrangements come into effect. What would be the point of the British people owning a Bank of England which would be just a provincial branch of the European central bank?
§ Mr. SmithPrecisely so that the body follows objectives which are in the public interest, determined within a democratically accountable political context, rather than pursuing the interests of private shareholders; and I shall say more about the legal status of the bank.
Our second key concern is with accountability, which, while it is not the same as the day-to-day control of the bank, remains important. Indeed, this examination of the issues provides us with an opportunity to take a radical look at the functions and organisation of the central banking system to ensure that they serve the people and the needs of the future.
We on the Opposition Benches have made it clear that we believe there is a strong case for examining the separation of the responsibilities that the bank has for monetary matters from its role in supervising financial institutions. Now is the time to consider going further in making the bank more accountable and representative, for example, of regional, industrial and employment needs.
Our new clause 59 called for precisely such reform of the membership of the governing council of the bank in the context of the Bill. Sadly, it has not been selected for debate. But our proposal in new clause 1, which has been selected, would be a big step forward in making the bank more accountable. There would be a report to Parliament, a debate and a vote. There would be more accountability directly to hon. Members. Further, there would be 967 transparency in relations between the bank and the Government of the day, which would open up decision-taking in economic policy, with benefits in terms of public scrutiny and confidence.
§ Mr. MarlowThe hon. Gentleman explained the purposes of new clause 1 and said that we would debate it and vote on it. Has he considered the position if the vote goes in favour of the new clause? What would be the result here and in Europe? What would it do for European legislation? The hon. Gentleman said that we want to be in the first division if there is a two-speed Europe. That must mean our currency being something like the franc fort, as it has been under socialist France. That has resulted in the socialists getting less than 18 per cent. of the vote in the general election there. Is that what the hon. Gentleman wants for his party in this country?
§ Mr. SmithI should have thought, following President Clinton's remarks last night, that the hon. Gentleman would have hesitated before suggesting interfering in the elections of other countries. I should also have thought that a vote in this House which rejected the report of the Governor of the Bank of England or the report on the European system of central banks would be taken very seriously indeed. The hon. Gentleman should not minimise the influence that we could have via that route.
Our next area of concern is the relationship between the European central bank and the system of central banks and the politically determined framework for economic policy in the Community. In particular, we are concerned that ECOFIN should operate as a politically accountable counterpart of any European central bank. It is important to appreciate that the treaty as drafted gives ECOFIN a role in monetary policy.
For example, as I pointed out to my hon. Friend the Member for Brent, East (Mr. Livingstone), under article 109, the responsibility for exchange rate policy rests with the Council. That applies to exchange rate system agreements in relation to non-Community currencies and in the negotiation of such agreements which, as that article makes clear, are binding on the European central bank.
In the medium term, ECOFIN sets the economic framework for monetary policy, for example, through its responsibilities for the broad guidelines of economic policy and for multilateral surveillance under article 103. We want ECOFIN to be strengthened in its role and resources, and to have a permanent secretariat, a subject to which we shall return on a later group of amendments dealing with the transitional second and third stages of EMU. But in terms of monetary policy, it is clearly desirable that any European central bank should report to ECOFIN. That is the sort of issue that should be considered further when the intergovernmental conference takes place in 1996.
§ Mr. Peter Shore (Bethnal Green and Stepney)My hon. Friend is placing enormous importance on ECOFIN and the powers that a revised ECOFIN might have. Why, if that is on the agenda of the European Community, have no powers been vested in ECOFIN, other than the one which the treaty mentions and my hon. Friend quoted, which is the power to decide the external exchange rate value of the ecu? Why has no other power been given to 968 ECOFIN? Is it because all the other member states do not agree that it should be in the treaty in that way, or is it simply that my hon. Friend is indulging in wishful thinking?
§ Mr. SmithI am not indulging in wishful thinking. I have argued that the powers should be strengthened, but my right hon. Friend should not underestimate the importance of the responsibilities that ECOFIN has under the treaty. As I said, those responsibilities apply not merely to the determination of the external exchange rate, important though that is for the conduct of monetary policy, but also to multilateral surveillance and the co-ordination of the economic policies of the member states. That, too, is of central importance, and we want it enhanced so as to provide effective co-ordinated European action for sustainable growth and jobs and for the realisation of the other tasks and targets for the Community as set out in article 2.
§ Mr. Nigel Forman (Carshalton and Wallington)This is my first intervention in the Maastricht debate. There is advantage in at least half the argument that the hon. Gentleman is adducing—namely, his argument in favour of a degree of statutory accountability to the House of Commons for a future central bank in this country. That would at least ensure a degree of open accountability to this Parliament, as is the case in Washington and the Federal Reserve to Congress, unlike the present position, which has lasted since the Bank of England Act 1946, with closed accountability to the Chancellor of the Exchequer of the day. The hon. Gentleman is right in that part of his argument.
§ Mr. SmithI have said that there would be increased transparency in relations between the bank and the Government and, for that matter, between the bank and the House of Commons.
As for enhancing the powers of ECOFIN, we note that the Foreign Secretary was recently reported to be scouting around for ideas for Britain to submit to the intergovernmental conference to be held before the end of 1996. We generously donate the proposal that the powers of ECOFIN be substantially enhanced. I hope that the Foreign Secretary will carry the proposal forward and acknowledge its genesis.
In debating this matter, it is important that we do not react as a House of Commons or, more widely, as a country with the rancid conservatism of old institutions resisting change, rather than engaging constructively in the possibilities of change. As Will Hutton, the economics editor of The Guardian, said at a meeting on this subject, one of the specific difficulties which many in Britain, and especially in England, have with the concept of an independent central bank is grappling with the concept of pluralism in political and economic institutions.
We need to recognise that there can be democratically determined public institutions working within a framework of law which have an obligation to pursue defined objectives of public interest in ways which are accountable but which are free from day-to-day control of the Government, if never dissociated from their influence and the wider policy framework. If we are to progress to economic and monetary union in Europe, this is the light in which we must judge the status of the central bank and the Bank of England.
§ Mr. Denzil Davies (Llanelli)My hon. Friend talked about the day-to-day activities of a central bank. By "day-to-day", he means the fixing of interest rates. Is he saying that it is preferable that that should be done solely by bankers or, ultimately, by the Chancellor of the Exchequer and the Prime Minister, as it is in Britain at present?
§ Mr. SmithFirst, day-to-day control, even of short-term interest rates, will inevitably be influenced by the policy on the external value of the exchange rate, which, as the treaty makes clear, is a matter for the politically accountable ECOFIN. The second point is how much long-term freedom Britain will have to set interest rates within the context of an increasingly powerful European economic union.
If we are to progress to economic and monetary union in Europe, the light in which we must judge the status of the central bank and the Bank of England is that which recognises the possibilities of genuine pluralism within accountable institutions that serve the public interest.
The challenges before us with regard to this part of the Bill present an opportunity for reform—to make it not so much a Bank of England, but rather more a bank for Britain, just as we would expect the European central bank to serve the interests of the Community as a whole with regard to the goals of article 2 of the treaty and within a framework of democratically co-ordinated economic policy. Those are our aims. I commend new clause 1 and new clause 58 to the Committee.
§ Sir Peter TapsellI have always thought that one of the redeeming features of the Rome treaty is that it did not seek to regulate financial matters. That has permitted the enormous increase in the volume of international financial business which has taken place in the City of London during the 35 years that I have worked in those markets, and has enabled that increase to take place without being hindered in any way by Brussels.
It is difficult to believe that during the 1970s—broadly speaking, a period of great weakness for the British economy and British manufacturing industry—the Eurodollar and Euroyen markets were established in the City of London. To this day, the City of London has remained the capital of those vast markets, which earn an enormous amount of foreign exchange for the United Kingdom and give us influence in the world which perhaps we do not achieve in many other respects. It is difficult to believe that, if we had been subject to interventions from Brussels and the Commission in the 1970s and subsequently, and if a European central bank had been in place which was anxious to develop financial centres in different parts of Europe, that degree of success could have been achieved by the City of London.
The continental financial centres have always been intensely jealous of London's primacy and will certainly use the provisions of the Maastricht treaty to reduce it. Perhaps it is worth noting that, before 1973, when we entered the Common Market, we had a surplus in our trade with the then six countries of the European Economic Community which has since turned into a massive deficit. During that same period, the European financial primacy of the City of London steadily increased. The contrast is striking between the industrial position where we have been increasingly the subject of European 970 provisions and the financial position where we have been free to pursue our traditional policies of trading with the world.
In contrast with the Rome treaty and the Single European Act, financial provisions lie at the heart of the Maastricht treaty. Its core is economic and monetary union. The engine of such union is to be the European central bank. As fiscal and monetary policies should march together in any properly conducted economic policy, economic and monetary union which is operated by a European central bank will take away from those nation states which make up the European union the freedom to issue their own currency, to choose their own interest rates, exchange rates, the level of their money supply and the level of their public expenditure and to decide the level of their own taxation.
In other words, European and monetary union will remove all the characteristics, of sovereignty which characterise a proud and independent nation, and which still to this day give to the British one of the few binding characteristics of discipline that entitle us to call ourselves a great nation. All that will be put at risk. The European central bank, together with the Commission, will have the exclusive right to exercise all the powers throughout Europe to which I have referred and the sole power to print money and control the currency which the British will use.
Effectively, the European central bank will become the most powerful economic, and therefore political, institution in the Community—indeed, in the whole free world. With 12 or more Ministers of Finance to play off against one another, any skilful president of the European central bank will be in a more powerful position that Mr. Delors has ever been. As the directors of the bank will be explicitly, deliberately and absolutely unelected, unaccountable and unassailable, I do not know what the hon. Member for Oxford, East (Mr. Smith) meant when he said that we will have to be careful in those circumstances to ensure that the Bank of England remains in public ownership. It will not matter two hoots who owns the Bank of England or, indeed, whether there is a Bank of England in the circumstances laid down by the Maastricht treaty.
The hon. Member for Great Grimsby (Mr. Mitchell) read out article 107 on a point of order before the debate. At the risk of boring the Committee I should like again to put on the record in my speech just what article 107 says. The words of article 107 are perfectly clear. A child of 16 could understand them. I am rather bored with people telling me not to bother to take the words of the treaty seriously.
I am rather bored with Ministers, retired ambassadors and grandees in the City taking me on one side and saying in a patronising way, "Can't you be a little more sophisticated in your approach to the Maastricht treaty? We all understand that the treaty is a nonsense. It is absolutely unworkable. It will never take effect. But, my boy"—I am getting somewhat elderly to be addressed in that way, but that is the tone of voice—" if we vote against the Maastricht treaty, we shall lose all our influence in Europe. Therefore, you must vote for this ludicrous, unworkable treaty. Don't let's worry about the wording of it." 971 Ministers who sign contracts and treaties without worrying about the wording will be in some danger of being thought to have wined and dined a little too frequently with their Italian counterparts.
§ Mr. Giles Radice (Durham, North)When did the hon. Gentleman last dine with an Italian Minister?
§ Sir Peter TapsellI have not dined with an Italian Minister for some months. The last time was with the then Foreign Minister of Italy, who is now being prosecuted for corruption.
§ Sir Ivan Lawrence (Burton)I hesitate to interrupt my hon. Friend's flow, but does he agree that the warning that we shall lose influence if we do not sign up to the Maastricht treaty is exactly the same as the warning that will be given in 1997 when we refuse to sign up to the single currency, the central bank and central economic control? The same argument will hold. If we do not do it, we shall lose influence in Europe. That is not what the Government have in mind to do. There is an illogicality about their actions.
§ Sir Peter TapsellI agree with my hon. and learned Friend. If I might make a party political point on behalf of the Conservative party, I have never been able to understand the political thinking that, although we have theoretically opted out of the single European currency and economic and monetary union until 1996, we shall seize the nettle in 1996 on the eve of the next general election. When we do that, Lord Cardigan at Balaclava will look like a cunning strategic manoeuvrer by comparison with the Conservative party. The Whips alone will be asked to charge the guns.
Article 107 is the governing paragraph. There are an immense number of selected articles, paragraphs and protocols. I am not an expert on the treaty like many of my hon. Friends. I have been referred to several other subsections but it seems to me that article 107 is clear. It says:
When exercising the powers and carrying out the tasks and duties conferred upon them by this Treaty and the Statute of the ESCB, neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Community institutions or bodies"—
§ Sir Ivan LawrenceShall.
§ Sir Peter TapsellIndeed, shall—
from any government of a Member State, or from any other body. The Community institutions and bodies and the governments of the Member states undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the ECB or of the national central banks in the performance of their tasks.
§ Mr. WinnickWill the hon. Gentleman give way?
§ Mr. LeightonWill the hon. Gentleman give way?
§ Sir Peter TapsellI shall draw two conclusions from article 107, and then I shall give way.
First, the words seem perfectly clear. Secondly, new clause 1 and new clause 58 drive a coach and horses through article 107. With respect, I slightly differ on the new clauses we are debating from my hon. Friends the 972 Members for Southend, East (Sir T. Taylor) and for Stafford (Mr. Cash), who made the point a few moments ago about these Labour amendments.
I shall deal with the provisions of the Federal and Reserve Board and the Bundesbank later. I am rather more familiar with them than with the treaty. However, the fact remains that we shall not be allowed to influence the European central bank in any way. Any body or individual which sought to do so could presumably be summoned before the European Court and punished by a fine.
§ Mr. WinnickA few moments ago, the hon. Gentleman said that it did not make any difference whether the Bank of England existed under the proposed arrangements. Would not the same apply to the House of Commons? If such power is to be transferred, as undoubtedly it will be, what will be left to the House of Commons?
The hon. Gentleman read out article 107. Monetary policy will be decided in the way in which article 107 makes clear. The House could debate various matters in a county council way, but on major financial and monetary policies, power will have been transferred. Therefore, not merely the Bank of England but our parliamentary and democratic institutions are at stake.
§ Sir Peter TapsellI agree with the hon. Gentleman, who represents a part of England which I contested in my first by-election almost 40 years ago. He speaks with admirable black country good sense. May I add that one of the reasons why these debates take so long is that we all seem to prompt each other with helpful remarks. While I entirely agree with both the interventions that I have taken so far, they only delayed my speech. They echoed things that I intended to say rather less gracefully in my own speech. So if I am not to speak at inordinate length, I should be grateful to be allowed to put the anti-Maastricht case unassisted by my friends.
§ Mr. LeightonI hope that I shall not take the hon. Gentleman away from his speech. He read out article 107, which says that the institutions must not seek to influence the central bank. Does he understand that to include the famous ECOFIN?
§ Sir Peter TapsellThe hon. Member for Oxford, East quoted article 109. It says that the Council would have to be unanimous in acting on anything to do with the external exchange rate. I see the Financial Secretary shaking his head. I am not a lawyer. In any case, lawyers never seem to agree about anything in the treaty. If we have a single currency, it is difficult to envisage 12, 15 or 18 Finance Ministers agreeing on the correct external exchange rate for us all. In the past 18 months, we in Britain wanted a different external exchange rate from that which Germany wanted. I simply cannot envisage all the Ministers agreeing.
I shall press on with my speech now. I have quoted article 107. We are expressly forbidden by the treaty from ever seeking to influence the decisions taken by a group of unelected foreigners. Those decisions will have the most profound impact on the welfare, prosperity, employment and wealth of our constituents.
It is incomprehensible to me how the Labour party can have become sympathetic to the treaty. I have always been accused of being a left-wing Tory. I am proud of that. One of my characteristics throughout my political life has been 973 my passionate concern to maintain the highest possible level of employment. I thought that the White Paper of 1944 which laid down a full employment policy and a target for unemployment of 3 per cent., and which was agreed by all the parties at the time, set the correct aim. It may be difficult to achieve, but it is the correct aim.
It is absolutely certain that, if we enter into the arrangements for a single central bank and a single currency, the system will be banker-dominated, and levels of unemployment throughout Europe will for ever be much higher than most of us in Britain would want to see. Those on the Labour Front Bench must understand that, in supporting the financial provisions of the Maastricht treaty, they are voting for permanent high unemployment in Britain. I am not making a party political point; it is my profound conviction that that is the certain consequence of the policy. I do not deny that it may have other advantages in terms of future inflation and so on, but I am absolutely certain that it will lead to permanent high unemployment in Britain.
§ Mr. Clive Betts (Sheffield, Attercliffe)Is the hon. Gentleman saying that there is any realistic possibility for Britain as an independent nation outside the European Community achieving the full employment that he seeks as an objective? Is he saying that the alternative is to be outside the European Community in order to have any realistic chance of achieving those objectives?
§ Sir Peter TapsellI am not suggesting that we should leave the European Community. In 1961, I voted in favour of the original application to join the Common Market. I also voted in favour of the Single European Act and the acceptance of the treaty of Rome. Our membership of the European Community is not at risk.
I am convinced that, if we remain within the Community and the single European market, we can pursue an extremely successful industrial and financial policy trading with the whole world, and that we would have a much more successful role in that position than if we were part of a European monetary and political union.
§ Mr. JenkinWill my hon. Friend give way?
§ Sir Peter TapsellI really must get on; otherwise, I shall never finish. I have not even begun to approach the core of my speech.
§ Mr. JenkinIs my hon. Friend aware of a country which in 1966 took a negative approach towards the European Community in defence of its national interests and left an empty chair? However, since then, France has established itself very much at the heart of the European Community. I saw an article written at the time by my noble Friend Lord Lawson pointing out that we could now join the European Community, as France had left an empty chair. Although France took an anti-communautaire attitude, it subsequently established itself at the heart of the European Community.
§ Sir Peter TapsellMy hon. Friend is absolutely right. Of course, France will always be a leading state in the European Community, as will Britain. However, France has already suffered terribly from its franc fort policies and its continued membership of the exchange rate mechanism. Last Sunday, the people of France gave a clear 974 indication of their feelings, which they will reaffirm next Sunday. My expectation is that there will be fundamental changes in French economic policy in the months ahead.
I am glad to see my hon. Friend the Financial Secretary in his place, because I want to refer to our friendly exchanges on 14 January, which underline my anxieties and the differences between the declared policies of Ministers, whatever their private views may be, and the views that I express in public.
As has been echoed by the hon. Member for Oxford, East and others, hon. Members, friends and business associates around the world have often asked me why I am so concerned about an independent central bank, when the United States and Germany have independent central banks. To my astonishment, Lord Lawson was apparently a secret believer in an independent central bank. Like the Prime Minister, he was part of a silent minority. Apparently there were a lot of silent minorities in Lady Thatcher's Cabinet.
As there are independent central banks in Germany and the United States, which are clearly democratic countries, people ask me why I am concerned that we cannot do the same in Britain and Europe. I want to address that argument.
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On 14 January 1993, I asked my hon. Friend the Financial Secretary:
since, throughout our history we have never thought it right to establish an autonomous central bank, run by our own fellow countrymen, why should we now in any circumstances wish to set up an autonomous central bank run by foreignersMy hon. Friend replied:If my hon. Friend…takes the view that in no circumstances can he contemplate a monetary authority that is not, first, combined with economic policy…and second, that is responsible 100 per cent. to the House, he clearly cannot in any circumstances support a single currency that circulates in 12 member states of the European Community. That is the consequences of taking such a position.As I said at the time, my hon. Friend the Financial Secretary puts matters with absolute clarity, and those words of his exactly express my position and the reasons for it.He went on:
It seems to me rather odd to argue that the United States or Germany…are any less democratic as the result of the institutions that they have chosen to establish.I said:May I define what I mean by autonomous? I mean a central bank that is not democratically accountable to democratically elected Ministers answerable to a democratic assembly. So even if we had a single European currency, I would argue strongly that we need to have a single European bank that is democratically accountable and answerable—and that is what we do not have in the Maastricht treaty.My hon. Friend the Financial Secretary replied:I understand the point that my hon. Friend makes, but I invite him to design a workable system for a European central bank that is politically accountable to a European political process. I do not believe that it will be easy to do".—[Official Report, 14 January 1993; Vol. 216, c. 1141–42.]That is absolutely true. It is not a question of it not being easy to establish a European central bank that is democratically accountable; it is impossible. The Financial Secretary in effect admitted that. He may wish to qualify that answer when he replies to the debate, but I congratulated him at the time on his clarity.I should like to consider the word "independence". The present Governor of the Bank of England, for whom I have great personal regard and for whose recent personal 975 bereavement we all feel extremely sad, said that he favoured an independent central bank, as did his nominated successor. I wonder whether they really mean what they say.
The word "independence" is often misused. The matter rests not on independence but on accountability. Real independence—that is, non-accountability to a democratically elected body or democratically chosen Ministers—is not possible in a democratic society, as my hon. Friend the Financial Secretary accepted in his reply to me on 14 January.
Let me turn first to the Fed in the United States, and examine to what extent it is really independent and unaccountable. I have had a lot to do with the Fed in the past 30 years. I have known the last four chairmen, and I think I know how the Fed works. I have been there perhaps 30 or 40 times in my life, and I have sat in on all sorts of functions there and attended congressional inquiries, and I feel that I understand how the Fed works. It bears not the smallest resemblance to the European central bank that is described in article 107, which I read out, and in all the supporting provisions of the Maastricht treaty.
In the United States of America, the Federal Reserve Board is wholly accountable to Congress. I invite Ministers to ask any governor of the Fed or any senior congressman or senator whether the Fed is accountable to Congress. The answer will be yes. The Fed was established by Congress, the law governing every activity of the Fed can be changed at any time by Congress, and the Fed remains wholly accountable to Congress. The governors of the Fed have a legal obligation to report to Congress twice a year.
That is why I do not dismiss out of hand new clause 1 and new clause 58—because, much though I dislike the entire concept, if we were to have something like these Treaty provisions, new clause 1 and new clause 58—if it could be Europeanised, as it were, and not just a British provision—would be some help towards moving the European central bank in the direction of what happens with the Fed in the United States.
§ Mr. John Butterfill (Bournemouth, West)I am following what my hon. Friend says with great interest. Can he just enlighten me as to whether the Fed takes direction from Congress on the conduct of monetary policy or whether it retains an independence in its day-to-day actions in that regard?
§ Sir Peter TapsellIt is extremely difficult to give a one-sentence answer to that. It certainly does not take direct instructions.
§ Sir Peter TapsellIt is no good my hon. Friend saying, "Ah." Of course it does not take direct instructions like the Bank of England does. The Secretary to the Treasury in America does not stand up, as Lord Lawson, I think mistakenly, did, and announce that he has moved interest rates up or down. It always used to be announced by the Bank of England, and I think that it was a mistake when the Chancellor openly said that he was making the decisions. In any event, that does not happen with the Fed. On the other hand, in the way that I am going to explain, it is subject to tremendous and effective political pressures.
976 The obvious example of that was at the beginning of President Reagan's first Administration, when there was considerable divergence of opinion on monetary policy between the Fed, most of whose members had been appointed by President Carter, and President Reagan. In the end, President Reagan got his way, but there was a very open debate in the United States, and the chairman of the Fed had to appear repeatedly before Congress and be cross-examined in front of the television cameras, with the whole nation watching and with all the commentators writing. In the end, the Fed came round to accommodate the Reagan economic policies. That is roughly how it works.
I am not suggesting that the Fed takes instructions from the Secretary to the Treasury—the system in America is different—but it does not destroy my argument that the Fed—
§ Sir Peter TapsellMy hon. Friend says that it destroys my argument, but it does not, for reasons that I will explain. The Fed has a legal obligation to report to Congress twice a year. The report is published. The chairman of the Fed is summoned before a congressional committee and is cross-examined at length and in detail on television. These are the basic legal requirements in the United States.
In practice, the chairman of the Fed is frequently questioned by Congress, and usually in front of the television cameras—more than once a month. A former chairman of the Fed complained to me a few years ago that an excessive amount of his time throughout the year was taken up in preparing for congressional interviews and cross-examination, because he was concerned that he might inadvertently, under questioning, mislead markets as to his real intentions. He said that it was very difficult to appear for two hours before a congressional committee and say nothing, which was his intention.
So, far from the chairman of the Fed not being accountable, he is extremely accountable in all these ways, and none of this bears the smallest resemblance to the arrangements in article 107, where nobody is supposed to be allowed to bring any pressure to bear at all on the operation of the European central bank.
§ Mr. FormanI am following my hon. Friend's magisterial speech as closely as I can. Is it not a fact that there is much in the arrangements that have evolved in the United States which is not only attractive in regard to what it does for genuine parliamentary accountability in this area but could provide a model for the future development of the European Community? What I have in mind is a matching of the degree of ex post accountability to the European Parliament for the European system of central banks in future with a similar, transparent accountability, again ex-post, to this Parliament for our own, more independent, central bank in this country. Will my hon. Friend accept that it could be a viable model for future development towards European monetary union?
§ Sir Peter TapsellI agree with my hon. Friend in the points that he has made. If we were to have a European central bank and European union—I am against both concepts—the Fed would be a much better model for us to take than the unworkable, totally undemocratic and unaccountable arrangements set out in the Maastricht 977 treaty. But it is the Maastricht treaty that we are debating, after all, and we have no amendment before the Committee, suggesting that the European central bank be modelled on the Fed. I would be making a rather different speech if that were the case.
The Fed's inability to manoeuvre in exchange rate policy, even short term, is also a major constraint on its independence. The hon. Member for Oxford, East mentioned the fact that this European central bank would not have such complete powers in exchange rate policy as it would have with the internal currency. That matches the arrangements of the Bundesbank. People often point out that the Bundesbank is not as independent as it seems, because, when the two Germanies came together, Chancellor Kohl was able to override President Pöhl's well known wishes about the exchange rates between the two Marks. The same thing happened with the Anschluss in 1938 under the Reichsbank, when Hitler insisted on a much closer relationship between the Austrian schilling and the German deutschmark than the Reichsbank, under Dr. Schacht, wanted, but that is a different point.
Having no responsibility for exchange rate policy at all greatly limits the Fed's powers in the monetary sphere. As I understand the Maastricht treaty, the European central bank would have much more control over exchange rate policy than has the Fed in the United States, where it is specifically excluded from exchange rate policy.
If Congress were to decide that it did not like the way the Fed behaved, at any time it could change the law governing the Fed's activities. But the House of Commons would not be able to do that once the provisions of this treaty came into force. No doubt, if the 12 or 15, or more, nation states that made up the European union ever agreed on a change, it could be brought about, but it is quite unrealistic to suppose that this House alone would be able to make any significant changes to the working of the European central bank. So there is another great difference between the relationship of the Fed to the democratic assembly to which it is answerable and the relationship that the European central bank would later have to this House or this country, or even to the European Community.
Article 107 of the treaty would be anathema to Congress. It would be inconceivable, intolerable and unacceptable if it were to be applied to their own union of states. So why, I ask, do we think that it is acceptable for us? When the Financial Secretary asked me on 14 January why, when the United States had an independent central bank in the Federation, I was worrying about a central bank for Europe, that is the American part of my answer.
§ Sir Peter Hordern (Horsham)Perhaps that is one reason why the protocol states that article 107
shall not apply to the United Kingdom.My hon. Friend may care to reflect on that.I totally accept that the Federal Reserve Board is accountable to Congress, which treats it in just the way that he describes. However, I think he gave the Committee the impression that there was a glorious period for most of our history when we were totally independent—we had our own way of fixing our currency and were independent of any other country. May I remind him that we were members of the Bretton Woods agreement and were wholly dependent on the United States dollar and the Federal Reserve, and had no independence of any kind?
§ 7 pm
§ Sir Peter TapsellOn the first of my hon. Friend's two points, I accept that, because of the opt-out aspect of the protocol that he referred to, we are not governed by that article. As he will know, however, we have to seize that nettle in 1996. Earlier, I pointed out the great political disadvantages if the Conservative party has to go through all these appallingly divisive arguments again on the eve of the next general election. To contemplate doing so would seem to be madness in party political terms, but that is what we are doing by putting off the decision until 1996. That is one reason why I have thrown in my lot completely with the anti-Maastricht group. It is better to get the argument out of the way now, in the first year of this Parliament, than to go through it all again in its last year.
On the question of how independent Britain has ever been, obviously its independence has varied enormously. Prior to Napoleon's Berlin decree codifying the continental system, people were telling Pitt that he had lost independent control of the British currency. It is true that, under Bretton Woods, because of the acute dollar shortage after we had sold our assets all over the world to pay for the war, we were to a large extent in tutelage to the United States, but we escaped it. My hon. Friend the Member for Horsham (Sir P. Horden) suggests that we should now put ourselves in tutelage to the Bundesbank and the German mark, in replacement of the United States currency. I have the highest regard for the United States, but I do not wish us to be one of its colonies; nor do I wish us to live in a German colony.
Everyone talks as though the Bundesbank were such a marvellous organisation that we all ought to model our banks on it. Indeed, I understand that other European countries, such as France, Portugal and Spain, are busy rewriting the provisions for their central banks, with the help of Bundesbank officials, to model them on Bundesbank lines.
One of the things to remember about the Bundesbank, as it is presently constituted, is that it is far more accountable—in the best sense of the word—than the proposed European central bank. Earlier I described what I meant by independence. The Bundesbank is much more accountable than most people realise. For instance, the German Minister of Finance always attends its board meetings, and although he does not have a vote at its council meetings, he is permitted to speak.
I understand from German friends who have held the position that the Minister of the day often speaks at length and with great force at such meetings. He also has the constitutional right to propose motions, although he cannot vote on them, and he can request that the delay of a decision by two weeks. All those are important aspects of accountability, which are built into the Bundesbank's, provisions and there are other more technical arrangements, but I shall not weary the House with those.
None of that accountability is written into the Maastricht treaty for a European central bank and there is not even a suggestion that the President of the Council of Finance Ministers can attend its meetings, address it, ask it to do this or that, or to delay a decision for a fortnight. If one is to believe article 107, the bank will not be accountable to anyone.
§ Mr. Barry Legg (Milton Keynes, South-West)Another important difference between the Bundesbank and the 979 European central bank is that the former works with the grain of German public opinion, but a European central bank will not be answerable to any public opinion, because there is no European public opinion as such.
§ Sir Peter TapsellYes, the latter part of my hon. Friend's comments is true, but I would not presume to comment on the extent to which the Bundesbank operates with the grain of German public opinion. A number of leading German industrialists have been critical of its monetary policies during the past 18 months. The chairman of Deutsche Bank has publicly criticised it, so there is no unanimity, in Germany even, about the wisdom of the Bundesbank's monetary policies. There is no doubt that, for historic reasons, the Bundesbank enjoys enormous prestige in Germany, but that does not mean that it commands universal support for all that it does.
Directors from the German regional central banks outnumber the Bundesbank's directors. The appointment of regional directors has a strong political element, and they feel politically beholden to the people who have appointed them, who are the Mayor Daleys of the German provinces. I do not know any German, but I think that they are called the länder—as most of them are borrowers, I find that confusing. The regional directors are expected to champion the economic interests of their region, and they do so.
As the Chancellor of the Exchequer discovered to his dismay before 16 September, on their way to Frankfurt to attend meetings, the regional directors give little press conferences designed to show their local Bavarian newspaper or wherever what good chaps they are. This may not help the Finance Minister of another country who is desperately trying to protect the parity of his currency. Nevertheless, that is an example of the fact that the Bundesbank is a good deal more accountable than it appears on the surface.
The central bank that I know best is the Bank of Japan, although it is not often mentioned. The Japanese economy has been rather a success story—although it is going through a difficult patch—during the past 25 years, but we hardly ever hear the Bank of Japan quoted as an example for us to model ourselves on. That bank is wholly subordinate to the Japanese Government. The present governor of the Bank of Japan is a distinguished former Treasury official, and he does exactly what the Japanese Cabinet tells him to do. So there is no proof that independence and non-accountability alone or necessarily produce great economic success.
King William III, who was a Dutchman—perhaps the Dutch have a flair for that sort of thing—established our central bank to be independent but accountable, and to be run by our fellow countrymen. Ten of the 11 other member states have always followed suit and have had accountable central banks.
We are told that the Chancellor sings in his bath, but I have less operatic tendencies when I am in my bath. Sometimes I lie there and wonder how we can be prepared to hand over the control of our central bank to a group of foreigners under German domination. I wonder what King William III would have thought about that when he drew up the original charter for the Bank of England
to promote the public good and well-being of our people"—980 of our people. We may be sure that the Bundesbank will never allow a European central bank to manage and issue a single currency which, whatever its name, is anything but the deutschmark in disguise. That is a political and economic fact of life. Nor do I blame it for that. If I were German I should certainly hold that view.Would any German banker in his senses, or, for that matter, any German citizen or saver, want to have the value of his money—his savings and his wages—determined by a secret compromise with the Greek, Italian and Portuguese directors of the European central bank, whose main interest in the Community is to receive handouts from the richer countries and to protect themselves from their own politicians, for whom they have the utmost contempt? To anybody who has ever moved in the real banking world, the idea is absolutely preposterous. With the great influence of the Whips Office, it is certain that, if the Maastricht provisions for a central bank ever come into force, they will rapidly prove to be totally unworkable.
The history of ideas is always significant and worthy of study. As a boy, I trained as an historian, and reading history has always been my main hobby. When one is told that there is nothing so irresistible as an idea whose time has come—which is what people say, or used to say, about European monetary union—I like to think about the history of the idea. We have all read Marx and Engels—at least, Conservative Members have—and we have all wondered how different the Communist utopia would have been if the first Communist revolution had occurred in some country other than Russia. Chinese leaders have made this point to me. Marx clearly hoped that it would occur in Germany. Thankfully for all of us, it did not.
We ought to reflect where the idea of European monetary union originated. The more idealistic souls among us seem to suppose that European monetary union was the brainchild of that nice M. Jean Monnet. In fact, it was the brainchild of the rather less nice Herr Walther Funk.
The First Deputy ChairmanOrder. The hon. Gentleman is making an excellent speech, but he is straying from the subject of the debate. [SEVERAL HON. MEMBERS: "No."] Order. The Chair says that the hon. Gentleman is straying.
§ Sir Peter TapsellI shall come straight back to order, Mr. Lofthouse.
§ Sir Peter TapsellHerr Walther Funk was the president of the Reichsbank, the predecessor of the Bundesbank, from 1939 to 1945. My point is that Funk originated the whole concept of European monetary union, which is what we are debating. Surely, therefore, I am very much in order.
European monetary union was not dreamed up by M. Jean Monnet, an idealistic European; the idea was floated in July 1940 by Walther Funk, who was a drunken, homosexual Nazi toady and was subsequently sentenced to life imprisonment by the Nuremberg tribunal. In July 1940, just after the German panzer divisions had overrun western Europe, Funk circulated a number of documents on European monetary union. These are all set out in the recently published excellent book "The History of the Bundesbank" by the distinguished financial journalist 981 David Marsh. I shall not quote at length, but I have to say that the wording of the Maastricht treaty in certain sections follows almost word for word the documents circulated inside the Reichsbank in 1940. The view, which Hitler strongly shared, was that Europe could not be held permanently subordinate to Germany by force of arms alone, that it was necessary to resort to economic and monetary forces to make the domination permanent.
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Mr. David Marsh, at pages 132–3 of his book, says:
As the Wehrmacht rampaged across Europe, the success of the blitzkreig convinced the Reichsbank, like many others, that the fighting would soon be over. The central bank and the Reich economics Ministry, under Goering, actively laid plans for post-war monetary union across a large part of Europe with the Reich mark as the dominant currency. In June 1940 the Reichsbank economics and statistics department prepared a detailed analysis for Funk and the rest of the directorate, looking ahead to problems for external monetary policy after the end of the war…In fact, by July 1940, the Reich economics Ministry had already drawn up detailed plans for a bank of European settlements, to be called the Bank of Europe, as the pivot of the planned post-war monetary system. Countries eligible for participation in the proposed central European economic union included the Netherlands, Denmark, Slovakia, Romania, Bulgaria and Hungary. The Reich economics Ministry suggested that Belgium, Norway and Sweden could also become associated. Special arrangements would have to be made in a future peace treaty with Britain and France in order to secure the economic recovery of central Europe.
§ Sir Ivan LawrenceThe opt-out.
§ Sir Peter TapsellExactly.
David Marsh's book continues:
Initial plans were thus based on individual countries' maintaining their own currencies but agreeing to permanently fixed exchange rates against the Reichsmark.That is the ERM. It has all happened before.I should like now to turn to the question of who first established an independent and unaccountable central bank. It was not, as many people think, Bismarck in 1870. On the contrary, Bismarck took the view that bankers should not be entrusted with political power, that they would always produce mass unemployment. He made sure, when he set up the Reichsbank in 1870, that it was totally subject to political control—not very democratic political control, but his control.
In 1923—just after Germany, for the first time ever, became a democracy in the shape of the Weimar republic—a gentleman called Dr. Schacht decided that it would not be a good thing for the Reichsbank to be subject to democratically elected politicians. He managed to persuade the Weimar republic in 1923 to set up an independent and unaccountable Reichsbank—the predecessor of the Bundesbank.
Of course, some of our fellow countrymen share Dr. Schacht's distrust of elected politicians. I am afraid that there are many such people in the City of London and in the boardrooms of British industry, as the Chancellor of the Exchequer will discover when he looks for a commercial job. Many people do not admire politicians. It is worth recalling that, when Hitler was elected to power in 1933, the already independent and unaccountable Reichsbank, far from proving a bulwark against irresponsible political adventurism—one of the arguments is that unaccountability and independence provide a 982 barrier against political adventurism—immediately became, under Dr. Schacht's presidency, a slavish and most helpful tool of Nazi tyranny.
§ Mr. Stephen Milligan (Eastleigh)My hon. Friend's account of the origins of European monetary union is most entertaining, but it is, surely, completely inaccurate. The first European monetary union, which was not a theory, but happened and went beyond Europe, was the creation of the gold standard.
§ Sir Peter TapsellThat was not confined to Europe. The gold standard had one great merit: sterling was the anchor currency. If one's currency happens to be the anchor currency, marvellous ideas for monetary union based upon it become quite attractive. The sterling area was attractive when we were the anchor currency; the Bretton Wood agreement was attractive to the United States while the dollar was the anchor currency—although President Nixon left the agreement pretty smartly in 1971 when he found that the dollar was no longer the anchor currency. We would not be the anchor currency in a European monetary union: the Bundesbank and the German mark would provide the anchor currency. Our interests would be subordinated to German interests, as they were while we were members of the exchange rate mechanism.
§ Mr. ButterfillMy hon. Friend said that the German mark would be the anchor currency if there were monetary union. But under the proposals in the treaty, the German mark would fall. If it no longer existed as a currency, how could it become the anchor currency?
§ Sir Peter TapsellAs I said earlier, if we had a single currency, whether we called it the ecu or anything else, it would be the deutschmark under a different name, because Germany is the dominant economy. It is precisely because people admire the way in which the Bundesbank has run its monetary affairs in recent years that they want a European central bank. They think that that bank will be modelled on, and undoubtedly dominated by, the Bundesbank.
The Reichsbank was unaccountable and showed no independence. It did not seek to emulate the Fed in the United States of America, which caused so much trouble to Franklin D. Roosevelt in his first years. By contrast, the Reichsbank overnight became Hitler's creature and provided him with the sinews of war.
People should not be under the illusion that an unaccountable central bank will show a degree of political independence, integrity and liberalism when faced with ruthless and corrupt politicians. History does not suggest that. Far from being a source of weakness to great institutions, their accountability to democratically elected bodies elsewhere is ultimately an essential source of strength to those institutions and those who lead them. Under the Maastricht treaty, no effective accountability will exist—or could exist—as the Financial Secretary recognised in his reply to me on 14 January, which I have already quoted.
Until now, I have made largely economic and banking comments, but I shall now draw some political conclusions. With the loss of ultimate parliamentary control over the central bank, the House will lose the rock on which it was founded and built: control over the money supply. Our constituents will effectively be disfranchised. Those hon. Members who vote for article 107, and its 983 related articles and protocols, will effectively be echoing Cromwell's words when he pointed at the Mace and said, "Take that bauble away."
When I first entered the House, 34 years ago, there were still a considerable number of hon. Members, particularly Conservative Members, who had sat in the Chamber throughout all the debates on Neville Chamberlain's appeasement policies. I never spoke to one such Member who could recall in his heart ever having been a supporter of those policies. I sometimes used to wonder whether the Munich agreement had been carried single-handed by Neville Chamberlain and the Conservative Whips Office.
Before I entered the House, when I was personal assistant to Anthony Eden, the then Prime Minister, Walter Elliot—a distinguished Member of the House who had been here in the 1930s and who voted for the Munich agreement—told me in a private conversation, which I feel able to repeat as he has been dead for many years, that he voted in favour of Munich out of a sense of personal loyalty to Neville Chamberlain. He said that he admired Chamberlain as a man, and felt that he had done a good job domestically. Walter Elliot said that voting for Munich had not only eventually wrecked his own political career but, more importantly, had damaged his self-esteem. He said that he had never ceased to reproach himself for that vote as events unfolded.
I ask my younger hon. Friends, who have not been long in the House, have long careers ahead of them and know in their hearts that the Maastricht treaty is not right for Britain, to remember Walter Elliot. I predict that, 10 years from now, there will be very few Tory Members of Parliament who will easily recall that they were ever supporters of the Maastricht treaty.
§ Mr. BennWe have listened to a speech of exceptional interest from an hon. Gentleman who knows the banking world very well. The account of the hon. Member for East Lindsey (Sir P. Tapsell) of the history of banking, and the relationship of the Bundesbank and the Fed to their Governments, and of the Bank of England to the British Government, merits an enormous amount of study.
I wish that the press were not honouring our debates by their absence. But the newspapers are part of the Greek chorus to which the hon. Gentleman referred at the end of his speech. It is generally assumed by everyone that the Maastricht treaty will be passed, so our debates are a complete waste of time. I find myself in a weird position, as my Front-Bench colleagues are passionately pro-Maastricht. All that has ever been attempted by the Opposition are little procedural tricks to embarrass the Government on a closure motion or something of that sort. We hear no criticism of substance from the Labour Front-Bench team of the Maastricht treaty.
People outside the House are not foolish and they know what is going on. They know of the great cheering when we succeed in voting to go home at 10 pm—but our activities have no substantive effect. The Conservative and Liberal Front Benches are together on the treaty and those of us who hold a different view are publicly presented as a little group of old-fashioned fuddy-duddies who would like to live in the past.
The reality is that the central bank is at the core of the political question that we are discussing. We are not really discussing economics, although I appreciate that that issue 984 has considerable implications. We are discussing where political power will rest, because the bank will have the ultimate right to determine the shape of the budget, which determines the amount of public expenditure allowed.
Nobody has mentioned the fact that the central bank will wipe out the social chapter. If a Labour Government who favoured the social chapter were elected and wanted to spend more money—they might even wish to adopt the social chapter—the central bank would say no. It would say that, if to do so meant borrowing more than 3 per cent. of the gross national product, the Government would not be allowed to do it—there is a self-cancelling element.
The role of 3 per cent. is an interesting one. I recall the publication of the Beveridge report when I was a student about 50 years ago. It set 3 per cent. as the maximum tolerable level of unemployment. We are now moving towards monetarist days when 3 per cent. is to be the maximum public borrowing, which will condemn us to high unemployment levels for ever.
The importance of the debate is that all the Front Bench teams agree. All the parties represented in the House are abandoning their separate traditions. I cannot speak with authority on the basis of Conservative thinking over the years, nor would I wish to do so. My understanding was that it was about a Britain strong and free. That was the title of a Conservative election manifesto which I have a home in my archives. It shows a picture of a great lion in Trafalgar square and it has the slogan "Britain strong and free". It is a Britain weak and governed by a central bank which is on the agenda now.
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Hon. Members may persuade the electorate or the BBC or John Birt by some special financial arrangement that it is about something else, but they should not try to kid people who have been here long enough to know otherwise. If the Chancellor of the Exchequer were committing an offence if he tried to influence the central bank, which is what the treaty says, how can that possibly be the maintenance of an independent nation?
I am not a nationalist. My history does not lead me to the view that a strong pound and, as somebody said about nuclear weapons, the best-defended dole queues in the world, are the main national duties. However, I have interpreted the Conservative party to take that view and it has been completely undermined by Maastricht.
The Liberal party used to believe in free trade: that is what it was all about. My father was elected as a Liberal Member of Parliament in 1906, but sensibly joined the Labour party in the 1920s just after I was born. It took me a year or two to persuade him to make the transfer and he joined the Labour party in 1927. Now the Liberal party is voting for the most highly protected arrangement one could imagine. It has abandoned its faith.
I now come to my own party. However difficult it is for me to do so, I share the view of the hon. Member for East Lindsey about the importance of history, because, if we do not know where we have come from, we do not know where we are and are therefore not quite sure where to go. My reading of what I would call the progressive political tradition in Britain is that it was the ordinary common people who had no vote but wanted one so that they could use it to influence the conditions of life under which they lived. Through the ballot box they could elect a Government who would at least act as a countervailing power to the power of the landowners and capital.
985 That has been wholly and completely abandoned by the Front Bench spokesman of my party. It is not that socialism has been abandoned, because that went years ago. My hon. Friend the Member for Blackburn (Mr. Straw) says that we should abandon clause 4. I am waiting for him to say that the archbishop should abandon the 10 commandments on the ground that adultery is so widespread that one could not hope to build a Church on the basis of excluding it.
However, that is not the issue. The issue is that, 100 years ago, when Keir Hardie was elected to Parliament, the principle upon which he built his support was that it was possible for people who did not own banks or have personal wealth to band together into trade unions and promote a party that would use the ballot box to contain, control and redirect the power of capital.
§ Mr. FormanWill the right hon. Gentleman give way?
§ Mr. BennPerhaps the hon. Gentleman would allow me to finish. I am trying to develop a theoretical argument that needs to be considered and I hope that I am not being provocative. Labour's Front-Bench Members are abandoning their belief in democracy.
§ Mr. Peter Mandelson (Hartlepool)Will my right hon. Friend give way?
§ Mr. BennNo, I intend to develop this point. My hon. Friend will have plenty of opportunities for sound bites. I am putting an argument.
§ Mr. MandelsonMy right hon. Friend has referred to me. Will he give way?
§ Mr. BennNo, I shall not give way.
I am putting a serious argument which I feel deeply. It is that the ballot box is important because it does what I have described in many ways. When a Liberal Government repealed the Taff Vale judgment and allowed trade unions to play a role that the previous Conservative Government had prohibited, they were legislating for a countervailing power against capital. That was greatly to their credit. In many respects the Liberal Government of 1906 were far more progressive than my party today because they carried through much more radical taxation changes and legislated for public ownership of the London docks.
People may agree or disagree with what has been done during this century, but its history shows that trade unionism with a political voice gave people power over their economy which they did not have when they did not have the vote. That was why people wanted the vote. The chartists and the suffragettes were not trying to obtain an A-level in English history or English government. Women wanted power so that Parliament would have to listen and pay attention to women's interests, and those interests were reflected in a minimum wage, in Sunday shopping regulations and in other ways. I fear that that is what my party has abandoned.
§ Mr. BennMy hon. Friend who is trying to intervene asked what hope Britain had of dealing with unemployment. He said it with deep pessimism. My complaint is not that there is a viciousness in Labour Front-Bench Members, but that there is a deep and absolutely unnecessary pessimism. I am on the national executive of 986 the party and I am not trying to be controversial but simply putting a point of view. The party of which I am a member now believes that nothing at all can be done about unemployment because of the power of international capital. I dispute that, because, if it is difficult now, it was difficult for Keir Hardie.
§ Mr. Andrew SmithMy right hon. Friend has described the history of democratic socialism as the attempt by people to gain control of the economic forces that shape their lives. Now that capital and the economic system are clearly organised on a European basis, does not that mean that if we are to exercise democratic power in the interests of working people we must do it in conjunction with our European neighbours? As our conference resolutions and policies make clear, the European Community and the Maastricht treaty are the best available means to do that.
§ Mr. BennThat is the core of the argument. In its manifesto last March the Labour party endorsed the Maastricht treaty even though it had not been negotiated at the time of the previous conference. There was no conference legitimacy for the manifesto. I said in Chesterfield that I was opposed to it. We are not arguing about nationalism versus internationalism: we are on a wholly different issue. International capital is not controlled by handing it over to the archbishop and bishops of international capital—the independent central bankers.
Listening to my hon. Friends on the Front Bench and my other passionate, modernising colleagues is like listening to the maharajahs at the time of the Raj in India who said, "Look, Queen Victoria is here. You must live with her and you will have more influence if you pick up a knighthood from Buckingham palace and go to the coronation than if you follow this silly Nehru-Gandhi stunt of trying to run our own land."
§ Mr. BettsI am still trying to discover my right hon. Friend's realistic alternative in the current situation. He seems to be arguing that we should not be pursuing economic and monetary union as described in the treaty and that we should opt out of our arrangements with the Community. He seems to say that the alternative is simply to retain parliamentary sovereignty and ignore our arrangements with our colleague countries in the Community and that by doing so we can deliver for our people full employment and all the other benefits that he and I want to see. Are those realistic alternatives?
§ Mr. BennMy hon. Friend with his clarity of mind has confirmed his pessimism. He had distinguished service on Sheffield city council and honestly believes that Sheffield can do nothing within the context of Britain and that Britain can do nothing outside the context of the Maastricht arrangement. No one should think that Maastricht will liberate us from world market forces because the ecu could go up and down according to the gambling that might occur with the yen and the dollar. I challenge my hon. Friend's pessimism.
If I accepted it I would never stand for Parliament again because I would have to go to the people of Chesterfield, as I shall have to do if this goes through, and say, "You can vote for whoever you like, but I must tell you honestly and frankly that if you vote for me I cannot do a thing 987 about improving the prospects here because my party has agreed to hand over all the powers not to Parliament but to an independent European bank."
§ Mr. FormanThe right hon. Gentleman's essential thesis seems to be that power in the modern world emerges, as at the time of Keir Hardie, from the vaults of a bank. In this case, he talks about the power of a possible European central bank. The right hon. Gentleman argues that countervailing political power is needed to lean against that. Does he not realise the impeccable logic of the French case, which is that a political counterbalance is needed against the emerging system of a European central bank and that that should be achieved within the framework of the arrangements proposed by the French to bind the Germans and everyone else?
§ Mr. BennThe French socialist party has destroyed itself by following the policy advocated by members of my Front Bench. It has absolutely obliterated itself—although temporarily, not in the longer term.
I was at first against the European Community and wrote an article in Encounter to that effect in 1964. Then, some of the pessimism that I described today overcame me in the 1964 Labour Government. I thought, "This is the way to deal with multinational capital," and favoured our application. Later, I served in the Community, as a member of the Council of Ministers. I came to realise that the European Community is the instrument of multinational capital, to ensure that there is no democratic challenge to the power of international capital. Those who live under the illusion that Brussels and the bankers are our friends against multinational and international financiers are living in a complete dream world.
This may be controversial, but I am bound to say that, for the moment, many of my hon. Friends think that capital should be free to move wherever it likes. They agree that labour should be constrained. Consider the control over labour that exists in Britain compared with the freedom of capital.
This might not appeal to Conservative Members—or they may like it. Paul Johnson has an article in The Daily Mail today saying that the police and the Government have enough firepower to gun down Scargill, Bickerstaffe, and so on, if there is trouble on 2 April. Compare the £10 billion made by speculators on the day that we left the ERM with the fines and sequestration imposed on trade unions if they interfere with production for one day without balloting. That is something that my hon. Friends endorse, too, because it is part of the system that labour should be constrained and capital liberated. Then we tell the populace, "Don't worry—Brussels is the means by which we can control international capital." That is not at all true.
I am trying to chronicle as best I can the nature of the decision that I fear that the House will take. I favoured a referendum in 1968 and still do. The Labour party was not very keen. I was in a minority of one on its national executive and shadow Cabinet, but Wilson came round in the end and we had a referendum. I dare say that, in one way or another, the Conservative party will come around to a referendum, too. But members of my Front Bench are also opposed to a referendum. They do not want the people to have a say. They are absolutely solid in joining 988 the Government in denying the people the right to have the sort of fascinating, important, historic and fundamental debate that we are allowed tonight.
If the House voted by secret ballot on the Maastricht treaty, it would be defeated, because it would not be known to whom to deny a peerage, put on the Front Bench, allow to attend royal garden parties at Buckingham palace, or reward by the corrupt patronage system—even as revamped by the Prime Minister.
§ The Second Deputy Chairman of Ways and Means (Dame Janet Fookes)Order. How does that relate to the amendment under consideration?
§ Mr. BennI will say, as a right hon. or hon. Member always does when called to order, that that was a very helpful point to make, Dame Janet.
This huge issue wipes out centuries of Conservative and Labour tradition—the Conservatives defending the national interests of the nation—I am not a nationalist—and Labour defining the power of the ballot box to change our destiny.
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The consequence will be riot. As I suppose that we will lose the vote on Third Reading, I will prepare myself for the next stage. All that will happen is that I shall be catapulted back 100 years, to a Parliament that is not democratic and a time in which women do not have the vote. How does one live in a 19th-century Parliament, in an era when riot is used to change the law? French farmers and French fishermen are rioting already and some British fishermen are beginning to get the message that, if they want to catch the really big fish in the form of the Cabinet, they had better riot. That will happen because people will not accept unjust laws.
If I cannot influence the outcome of the vote on Third Reading—and I am realistic enough to accept that I cannot—I am determined to leave in Hansard an explanation of what happened and why. Pessimism, defeatism, and the failure to represent the people whom we were elected to serve is what happened. If I were not such a moderate man, I would call it a massive betrayal by Parliament of the people who put us here, but I do not know that I want to use the word "betrayal", because it is more a collapse of our self-confidence.
How is history to be made other than by people who have confidence in their own society and institutions and in their capacity to advance them? The so-called modernisers in the Labour party are taking us back to Victorian England. They are not modernisers but Victorian liberals. They believe in market forces and the Manchester school of economics. They do not like the unions very much. They do not believe in socialism. They want the ins and outs of the Tory-Liberal game of the 19th century—well before the Labour party was founded. That cannot be done, because the circumstances of our time will not allow it.
We have chronic mass unemployment and chronic mass youth unemployment, and people will not accept that. I do not know when the expression of anger will come. It may come on 2 April, with unexpected events. Something quite surprising could trigger it off—but if, when that anger comes, it cannot effectively be represented through the Labour party in Parliament, people will find other ways of expressing it. I fear that because I believe in this place. I may be an idealist even to believe in Parliament, but when 989 I was elected I was told that the great thing about Parliament was that it controlled the purse and the sword. That was the great 17th-century gain, but today we do not control the purse.
§ Sir Terence Higgins (Worthing)The right hon. Gentleman spoke of lack of confidence in ourselves. Is not there some inconsistency in his argument in respect of a referendum? Would not a referendum be the ultimate proof of lack of confidence in this place?
The Second Deputy ChairmanBefore the right hon. Gentleman continues, I remind him that the amendments under consideration concern banking. The right hon. Gentleman is, in effect, making a Second Reading speech, if not one that goes wider.
§ Mr. BennIf banking lies at the heart of the treaty—as it does—you, Dame Janet, will forgive me for drawing attention to its importance.
The Prime Minister supports Boris Yeltsin's referendum, but not a referendum for us. There must be some logic. These big questions are not being considered under parliamentary democracy but are being dealt with under the discipline of the Whips on both sides of the Committee, using all sorts of weapons at their disposal. These questions are not being decided on a free vote of Parliament. At my age that does not affect me, because I do not want anything. They cannot do much to me if I want to speak my mind—but it is disrespectful to the people who put us here to take away the power they lent us and to give it to bankers whom they cannot remove. That is the argument in a nutshell.
I hope that the public have the chance of reading something of the speech of the hon. Member for East Lindsey and of this debate, to understand the enormity of what is being done here and the unanimous betrayal of all the traditions of the three parties by following this route.
§ Mr. ButterfillI have the somewhat unenviable task of following two extraordinarily eloquent speakers—the right hon. Member for Chesterfield (Mr. Benn), who is probably the most eloquent and entertaining speaker left in the House, and my hon. Friend the Member for East Lindsey (Sir P. Tapsell), whose expertise in banking matters is probably unrivalled in the House of Commons. The position in which I find myself is especially unenviable, for I disagree with much of what both of them have said.
I am grateful to my hon. Friend the Member for East Lindsey for explaining in such detail the constraints, and the checks and balances that exist in regard to the Bundesbank and the Federal Reserve Board. My hon. Friend carefully explained that the Federal Reserve Board is accountable to Congress. He also pointed out that it did not control the bank's day-to-day monetary decisions. That was an important clarification, but—perhaps even more importantly—he made it clear that even the Federal Reserve Board, with its renowned independence of view, was subject to pressure from the executive: not from Congress, but from the presidency. That, surely, is rather extraordinary. No one suggests that the President has any authority over the bank, and, indeed, it is not accountable to the executive; it is accountable to Congress.
§ Sir Peter TapsellFirst, I said that the Federal Reserve Board was subject to pressure from both Congress and the 990 President. Secondly, given that the President appoints the board's governors when vacancies occur, he cannot be sand to have no influence.
§ Mr. ButterfillI am grateful for my hon. Friend's helpful intervention. I was not suggesting that the President had no influence; I was suggesting that the board was not accountable to him. Of course, influence is exerted in all these matters—and whoever appoints a central banker, under whatever system, will naturally have influence as a result of his power to appoint. However, it was the accountability point that my hon. Friend was addressing.
Similarly, my hon. Friend explained the independence of the Bundesbank and the element of accountability in that system, but went on to concede that, in the face of the political realities dictated by the unification of Germany, the political will of the people eventually prevailed over the wishes of the Bundesbank, which was forced reluctantly to allow a one-for-one parity between the deutschmark and the ostmark—for which the German people and, indeed, the rest of Europe have subsequently had to pay a considerable price.
§ Sir Peter TapsellI was trying to make the point that the Bundesbank is specifically excluded from interfering with the exchange rate. Chancellor Kohl was entirely within his constitutional rights in making his decision about the parity between the ostmark and the deutschmark. President Pöhl could only give his advice in private: the Bundesbank has no constitutional control over the exchange rate.
§ Mr. ButterfillAgain, I am grateful to my hon. Friend. He will know that the subsequent conduct of monetary policy has been the subject of considerable tension between the Government and the Bundesbank, and that great pressure has been put on the bank, to some of which it has yielded. My hon. Friend's suggestion that independent central banks cannot be politically accountable is not borne out by the facts. Clearly, whatever system is set up to try to give such banks independence, they will all ultimately be susceptible to political pressures from whichever political institution happens to be in place. I believe that the same would apply to a European central bank, although the pressures would come from a different quarter.
Even today, with our new-found freedom conferred by a floating currency, we see in the newspapers questions such as, "Will the Germans reduce their discount rate, and will that enable our Chancellor to reduce our interest rates still further?" It is not true to say that we retain true independence of action; even with that new-found freedom, we are still bound by our relationships with other currencies. Given that Germany is our largest single trading partner, it is clear that we are very much bound up with what happens in Germany, and very much influenced by the power of the deutschmark.
§ Mr. Christopher Gill (Ludlow)Surely my hon. Friend recalls the events of last summer, when our Government consistently told us that, if we left the exchange rate mechanism, our interest rate must inevitably rise. What happened? The day after black Wednesday, interest rates went down. How can my hon. Friend possibly maintain his theory in the light of those real and practical events?
§ Mr. Ian Taylor (Esher)The exchange rate went down as well.
§ Mr. ButterfillI was intending to turn shortly to the events referred to by my hon. Friend the Member for Ludlow (Mr. Gill), but I agree with the sedentary observation made by my hon. Friend the Member for Esher (Mr. Taylor).
§ Sir Teddy TaylorWhat was wrong with that?
§ Mr. ButterfillI am not suggesting that anything was wrong with it.
§ Mr. WinnickWill the hon. Gentleman give way?
§ Mr. ButterfillMay I answer my hon. Friend the Member for Ludlow first? If I give way too often, I may become rather confused about which question I am answering, and where I have got to in my speech. I shall try not to be waylaid too frequently.
We made a political decision to reduce the exchange rate, and we took a gamble on the effect that that might have on inflation. Given that we were in a considerable recession, that appears to have been a wise decision. My point is that, although our currency is notionally free and floating, we are still influenced by what happens in Germany, and must inevitably continue to be influenced by our trading relations.
§ Mr. WinnickNo one is suggesting for a moment that we can act in total isolation from other currencies; that has never been part of the argument. Does the hon. Gentleman accept, however, that part of the argument that he and others are advancing about the ratification of the treaty and the European central bank is very similar to the argument of those who were so keen for Britain to join the ERM—which, indeed, was the conventional wisdom of the time? It was said then that we could not act in isolation, that joining was inevitable and that those who opposed it—as I certainly did—were living in the past. Yet our ERM membership was a disaster, which cost a great deal in British manufacturing jobs. It is now recognised that at least part of the reason for our high unemployment rate was our ERM membership. Thank heaven we are now out of it.
§ Mr. ButterfillI had hoped to deal with the hon. Gentleman's argument later. He is right to say that the ERM was profoundly damaging to us, as it was constituted when we were part of it. What was damaging about it was that the Germany Government were reluctant to fund the unification costs through taxation—although they briefly tried to introduce a 7.5 per cent. special levy, which proved politically unacceptable. They lost a good many seats in the Lander elections as a result. Under the German system, which imposes on the Bundesbank a statutory duty to prevent inflation, the only alternative to funding that enormous level of expenditure was to increase interest rates. That is what went wrong.
§ Mr. Austin MitchellWill the hon. Gentleman give way?
§ Mr. ButterfillI should like to get on, if I may.
I do not think that any of us anticipated the events that would arise out of the unification of Germany. Indeed, I do not think that many hon. Members anticipated the unification itself, still less the strains that it would impose on the economy.
§ Mr. Mitchellrose—
§ Mr. ButterfillI must develop my argument. I have given way several times. The hon. Gentleman will have the opportunity to make his own speech if he can catch your eye later, Dame Janet.
The statutory duty of the Bundesbank to increase interest rates and to have regard only to what is happening in the German domestic economy caused the strains within the exchange rate mechanism and was the fatal flaw within that mechanism. It produced fundamental instability in a system designed to promote stability. We shall achieve stability only if, within a future exchange rate mechanism, the participating central banks have a duty to support the operation of that mechanism rather than a narrow duty to look after their own national interests. That has not yet been fully recognised, but I believe that it is an essential prerequisite to the successful operation of a mechanism.
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Indeed, the very weakness of the mechanism reveals the need either to have a system of freely floating currencies, which we have now, and which will be influenced by a dominant currency—as my hon. Friend the Member for East Lindsey said, it would be dominated by the deutschmark—or to merge all the currencies into a single currency, which would overcome my hon. Friend's fear.
Under the proposed system, the Bundesbank would represent but one equal vote in the operation of a central bank and would to a large extent be giving up its control of what happens in the European economy. That is recognised in Germany where there is now considerable resistance in many quarters to the very idea of giving up the power that it has through the present operations of the market. It therefore seems that we have a great deal to gain, and certainly nothing to fear from German domination, under the system proposed in the treaty.
Indeed, if we were to move quickly to currency union, we should all gain a great deal more influence over our own affairs than we have at the moment. However, I do not think that that utopia will come about for a considerable time, because the convergence criteria are not likely to be achieved in anything like the forseeable future. I do not agree with the proposal that the price that we should all have to pay should be to have cohesion funds to transfer huge sums of money from the wealthier northern countries of Europe to the supplicants in the south. The suggestion that that would be politically acceptable to the countries of the north is pie in the sky. It does not happen even in federal states such as the United States of America, where there is only a limited transfer from the wealthier to the poorer states.
§ Mr. LeggDoes my right hon. Friend realise that, when there is an independent European central bank, there will be one interest rate for the whole of Europe? Germany, Italy, Spain and the United Kingdom will have one interest rate. There will be no question of having easier monetary conditions in one part of Europe than in another. Within that system, the only way to mitigate the inequalities and problems that will arise will be through massive transfers of funds across Europe.
§ Mr. ButterfillI am very surprised to hear that argument from a Conservative Member. We have seen what has happened under our own regional policy. In the United Kingdom, where, my hon. Friend may be surprised 993 to know, we have a monetary union, we have tried to deal with the problems of having some poor and some rich regions by pouring money into the poorer ones, which is what the Labour party has advocated for years. The effect has not been to improve the lot of the poorer regions. In fact, the lot of the poorer regions has improved only when they have had the wit to abandon some of the restrictive practices imposed by trade unions, to embrace free markets and to encourage inward investment. It is the encouragement of inward investment into the poorer parts of the Community which will ultimately be their salvation. Therefore, we have nothing to fear from a system that brings a single interest rate, combined with a single currency, throughout the European Community. However, we shall take a considerable time to get there.
§ Dr. Roger Berry (Kingswood)The previous contribution was extremely interesting. If the hon. Member for Bournemouth, West (Mr. Butterfill) had given way, I would have asked him to consider the scale of transfers within this country and this monetary union. Many of us consider them to be inadequate, but they take place automatically between regions when unemployment is higher in one part of the country than in another. The scale of those transfers is inadequate, but it far exceeds anything planned under the Maastricht treaty as part of the movement to a single currency and to monetary union. I shall say more about that a little later.
The vast majority of amendments in this group, including the modest amendment No. 101 tabled by my hon. Friend the Member for Neath (Mr. Hain) and me, are clearly critical of economic and monetary union, as is amendment No. 36, which I strongly support. One of the interesting features of the Maastricht treaty has been pointed out by the hon. Member for East Lindsey (Sir P. Tapsell). The essence of the treaty is economic and monetary union. About a quarter of the treaty's pages relate to banking arrangements and monetary policies. It is interesting to note that the treaty contains very little reference to other aspects of economic policy but that a quarter of the treaty—its guts and its specific proposals—relate to banking arrangements and monetary policy.
There is little doubt that hon. Members such as myself, who have not yet spoken in the debate, must state whether we are Euro-sceptics or anti-European. For the record, I am not a Euro-sceptic or anti-European. I am strongly pro-European. I am so pro-European that I do not want to support a treaty which will impose monetarism, deflation and unemployment on other members of the European Community, as it would here. There is little doubt that the treaty is a victory for those who believe that economic policy is essentially monetary policy and that the achievement of price stability—zero inflation—is the only worthwhile objective of macro-economic policy.
The view is staggeringly irrelevant, given the enormity of the recession and the unemployment facing the European Community. However, monetary policy as the instrument, and price stability or zero inflation as the objective, seem to be the sum total of economic policy in the treaty. It is a view promoted by bankers, among others, who tell us that it is best to take monetary policy out of democratic control and to put it in their good care.
As for democratic control, I cannot help but remember the enthusiasm that many had for democratising the composition of the Committee of the Regions. It is an advisory body, but it was nevertheless apparently a great 994 victory for democracy when the Government were told in no uncertain terms that they must appoint to it representatives of local communities. That was a great victory for democracy, and I should like a similar victory for democracy when we come to deal with the European central bank or similar institutions.
As for the the "good care" of bankers, I find it surprising that anyone should be convinced by the argument that we should hand them more powers. I could be wrong, but I thought that bankers had something to do with the third world debt crisis because they pursued ill-informed and exceedingly ill-judged lending policies. I could be wrong, but I thought that they had something to do with the disastrous financial deregulation in the 1980s, which led to a wholly unsustainable credit boom and the debt problems that we now face. I am pretty certain that it is also bankers who, with some others, get into hysterics about the extent of public sector borrowing, yet enjoy every little bit of interest that they can get from the much more serious problem of private sector debt. Private sector debt is okay, because bankers do all right out of it.
In fairness, I must add that my opposition to the European system of central bank proposals in the Maastricht treaty is based, not simply on the fact that the bankers support them, but on my genuine belief that economic and monetary union will have the biggest impact of any of the proposals in the treaty, and will inflict serious damage on the economies of Europe.
The proposals are also exceedingly outdated. I find it strange that some people present them as modern when they are based on ideas that became fashionable in certain quarters in the 1980s. It is true that the Delors report was not the first document to promote monetary union within Europe but, if I may be forgiven for not going as far back as some other hon. Members have done, I remind the Committee that in the 1980s, both before and during the debates on the Delors report, the orthodoxy was that we should go for an independent monetary policy aimed exclusively at price stability. That is an old-fashioned idea, extremely inappropriate for Europe in the 1990s, let alone beyond.
My opposition to that part of the treaty is based on the fact that the proposals are confused, monetarist, deflationary and undemocratic. I shall say a few brief words about each of those characteristics, starting with the confusion. It is true that other treaties have confused institutional arrangements for arriving at economic policy with the policy itself. Many treaties, including the treaty of Rome, could be said to have done that. But in the Maastricht treaty there is a hopeless confusion between the institutional framework for setting monetary and fiscal policy—the European system of central banks, the European Monetary Institute, the European central bank, and so forth—and a particular approach to monetary and fiscal policy—the policy to be pursued by the central bank, the convergence conditions, and so forth.
If we wish to establish a set of institutional arrangements for the conduct of economic policy in Europe, they should be robust enough to accommodate policy change. But in Maastricht, we have a mixture, a mess and a confusion between a set of institutions designed to arrive at an economic policy, and a particular economic policy. There has been an accommodation between the Euro-federalists, who have got the kind of institutions they quite fancied, and the monetarists, who have got the economic policy that they wanted.
995 Such confusion is hopeless when it comes to making treaties. Institutions should be able to accommodate changes in policy—unless, of course, the purpose was that we should never change our economic policy. Perhaps the idea was that we would agree the treaty and that would be the end of policy making. In policy terms, that is alarming, because Maastricht reflects an obsession with inflation and—more importantly—an indifference to unemployment that were inappropriate even in the 1980s, and are grotesque in the 1990s.
The objective of the European system of central banks has not been referred to in the debate, although it has been referred to previously. It is essential to repeat it in order to understand the concerns behind the amendments. Article 105 clearly sets out that objective:
The primary objective of the ESCB shall be to maintain price stability.Price stability means zero inflation. Of course the European central banks should support the general economic policies set out in article 2—we have heard that often enough—but those policies are not seriously referred to anywhere else in the treaty, so they will not cause too much of a problem. Article 105 says that the ESCB should refer to the general policies in article 2, but that it should do soWithout prejudice to the objective of price stability".8.15 pmThe objective is clear. We have an independent central bank which is to be established with the legal requirement that its overriding objective should be zero inflation. None of that is accidental. The intellectual roots of the programme are monetarist—the Delors report and before. The pathological obsession with budget deficits and the money supply that is evident throughout Maastricht is based on two monetarist dogmas. The first is that the proper control of the money supply will eliminate inflation, and that that can happen without any harmful effects on unemployment, growth or the real economy.
The second crucial monetarist dogma is that unemployment and growth are determined entirely by supply side conditions, so demand management can be relegated as if it had no importance, or at least only secondary importance. That is not only nonsense but dangerous nonsense. It is why price stability is the overriding objective for the European central bank, and why we are to have an independent central bank with the constitutional requirement to pursue price stability at all costs.
The monetarism is self-evident, and it should be a cause for concern not only among the Opposition. Even the Government no longer accept monetarism—
§ Mr. Stuart Randall (Kingston upon Hull, West)Will my hon. Friend give way?
§ Dr. BerryI shall finish my point, and then give way.
The Chancellor of the Exchequer is desperate to use monetary policy to engineer a consumer-led boom, desperate to use interest rates to encourage consumers to spend more so as to steer the economy out of recession. He no longer believes that zero inflation is a sensible objective, nor does his practice suggest that he still believes that monetary policy should be handed over to somebody else.
§ Mr. RandallI have listened carefully to what my hon. Friend has said about maintaining price stability, but I am worried about the way in which he has written off article 2 by saying that it has been mentioned only once and that it therefore loses its validity. I am sure that that is not terribly logical.
§ Dr. BerryI am not conscious of having said that article 2 had been mentioned only once; it has been mentioned many times in the debate. Article 2 is made much of in connection with the European central bank in an attempt to support the proposition that such a bank would be about more than aiming at zero inflation—a rather stupid objective—because the article refers to employment, growth and so on. But although article 2 mentions employment and growth, the rest of the treaty does not. The treaty places on the European central bank and the other monetary institutions the requirement to pursue zero inflation, but there is no corresponding obligation to pursue policies that deal with the real economy. That is the relevance of what I was saying.
§ Mr. ShoreWe have heard a lot about article 2, and it is nonsense to give it the elevated importance afforded it by my hon. Friend the Member for Kingston upon Hull, West (Mr. Randall). If the other parts of that article, including the commitment to a high level of employment, were basic to the treaty, there would be a protocol on the subject, and all kinds of elaboration—measures to be taken and commitments made. There are no such commitments, and that is why the balance of what my hon. Friend the Member for Kingston upon Hull, West said to my hon. Friend the Member for Kingswood (Dr. Berry) is wrong.
§ Dr. BerryI agree with my right hon. Friend. If one accepts the monetarist position, one can have no objection to those provisions in the Maastricht treaty. Of course one could have no objection to aiming for price stability, because one would believe that it did not affect unemployment or growth. One could not object to setting up an independent central bank beyond anyone else's control, with the specific requirement to achieve price stability, because that would not affect the real economy, so there would be no problem.
To a hard-line monetarist, there is, of course, no difficulty with the proposals, but unfortunately for those who support the Maastricht treaty, no one believes that nonsense any longer—not even the present Government. As has already been said, in a few years' time, our debates may well be judged to have been about a set of proposals that were so unsustainable politically, so unrealistic and so devoid of any recognition of how the real economy works that they will never be implemented. Unfortunately, however, they are the proposals that we have an obligation to debate today.
The monetarist agenda is deflationary, simply because any fool can get zero inflation by hammering the real economy, pushing up unemployment, restraining growth and creating recession. It has been done many times and no doubt it will happen again if certain people have their way. Maastricht is deflationary in other respects, too.
I shall not refer—because it would be out of order, Dame Janet—to the convergence criteria in stages 2 and 3, to which we shall return later, but the whole question of a single currency and monetary union is worthy of attention. I recognise that a single currency has benefits.
§ Mr. RadiceGood.
§ Dr. BerryI recognise that—and not for the first time, as my hon. Friend the Member for Durham, North (Mr. Radice) knows. Any fool who did not recognise that there were some benefits in monetary union would have difficulty in explaining why we have a single currency in this country. We have a single currency because there are benefits. Equally, though, we do not have one currency throughout the world because there are certain disbenefits. Any sensible economic argument about the optimal area for a single currency must address advantages and disadvantages.
I say to my sedentary hon. Friend the Member for Durham, North that I of course recognise the advantages of a single currency. It is true that there may be efficiency gains to be had from the elimination of the costs of exchanging currencies or from the elimination of risk due to exchange rate uncertainty. I concede that. I recognise that a third of what our economy produces is exported and that 60 per cent. of our trade is with the other members of the European Community. Although it is possible to exaggerate those efficiency gains, I recognise that they exist. I also recognise that a single currency would reduce speculation by the simple device of removing some other currencies against which people could speculate, and that there could be virtues—least for Labour Governments—in such a situation.
There are costs as well, however, and they are profound. Above all, a single currency imposes restrictions on the instruments of macro-economic policy that we can use. In the context of this debate, a single currency in Europe imposes a restriction on what we can do in terms of exchange rate and monetary policy. I invite any hon. Member who thinks that this line of argument is trivial to imagine how uncomfortable the present Government would feel if they did not have some flexibility in relation to the exchange rate and monetary policy and how some of the Opposition's proposals would sound if exchange rate and monetary policy had already been abandoned.
§ Mr. RadiceBut the Maastricht treaty leaves exchange rate policy in the hands of the Council. It is not governed by the central bank at all.
§ Dr. BerryI am trying to work out why my hon. Friend is being so antagonistic. On occasion, I say something with which he agrees—
§ Mr. RadiceI am trying to be helpful.
§ Dr. BerryMy hon. Friend has conceded the point that the treaty removes from the national Governments of member states the power to influence exchange rate policy —[Interruption.] I am afraid that it does. One cannot say, "Power is located elsewhere and yet at the same time resides here." It must be one thing or the other.
The cost of a single currency is that the nation states or regions that decide to join in a single currency area give up certain instruments of macro-economic policy: most notably, they have less flexibility on monetary policy and no flexibility in relation to exchange rate policy, for self-evident reasons.
At present, if a country or region in the European Community, as elsewhere, becomes less competitive—no prizes for guessing examples—balance of payments problems emerge and unemployment increases. With monetary union, balance of payments problems will 998 re-emerge as even greater problems of unemployment. Quite simply, the market adjusts to changing levels of competitiveness by generating higher unemployment in less competitive regions. That must be so. That is how the market operates. We need to think very carefully before we support a single currency arrangement given that we know, as a matter of simple fact—there is no difference between the two sides of the Committee on this—that that is how the market adjusts to differences in competitiveness.
To return to my first point, it is a fact that, within nation state monetary unions such as the United States, Germany and this country—
§ Mr. Robert Sheldon (Ashton-under-Lyne)Will my hon. Friend give way?
§ Mr. SheldonThe point that my hon. Friend is making is well understood. Most of what he said is absolutely right and no one ought to quarrel with it; he has put both sides of the argument. As my hon. Friend says, a union could increase unemployment. On the other hand, one could react by reducing the cost of labour. One of the principal reasons why the Government are so opposed to the social chapter is that it denies them that alternative. They must be against the social chapter because, if we are uncompetitive, such action is the only solution that they have—other than increasing levels of unemployment even further.
§ Dr. BerryI agree with my right hon. Friend. That is absolutely correct.
Given that these facts are well known, I shall simply re-state my point. The difference between the proposal for a single currency within the European Community and what exists today in the United States, Germany and the United Kingdom is that, in the case of those three nation states, there are substantial fiscal systems that redistribute resources. There is automatic fiscal redistribution in the United Kingdom, as areas of high unemployment contribute less in tax and receive more in revenue. In Germany, there are formal systems for the redistribution of wealth between the lander.
The Maastricht treaty contains no equivalent way of addressing such imbalances. That is why I argue strongly that it is simply not sensible for member states of the European Community to sacrifice instruments of national macro-economic policy without much larger European Community budget and/or automatic redistributive mechanisms. Maastricht provides neither. It will therefore be profoundly deflationary in the less competitive regions.
§ Mr. BettsI accept the point that my hon. Friend makes and agree that additional money within the Community budget and the mechanisms to which he has referred are not specifically mentioned in the Maastricht treaty. Does he not accept, however, that such matters are capable of development within the European Community? There is no restriction in the treaty to prevent them from being developed. Might not that be another way of looking at the situation? Might we not take the view that monetary union can be developed in the context of other measures to stop the problems of unemployment, which I recognise and on which I agree with my hon. Friend?
§ Dr. BerryThat is a bit like saying that the Budget that we have just debated is capable of being developed to allow us to address mass unemployment in Britain. Of course it is capable of being so developed. The fact that that subject was not dealt with in the Budget was the reason why the Opposition said that it was inadequate to address unemployment and economic recovery. Anything could happen after Maastricht. But there is a treaty before us which contains words and which we must read and understand. Running through the many pages of the treaty dealing with economic matters is the single-minded obsession with the monetarist objective of zero inflation and the monetarist instrument of an independent central bank controlling monetary policy. There is nothing of the kind to which my hon. Friend refers.
§ Mr. MandelsonOn the subject of obsession, my hon. Friend appears to be overly obsessed by the words and gives insufficient attention to the actions that can be taken by politicians and Governments within the framework of the Maastricht treaty—[Interruption.] It is not good enough for those who disagree with other hon. Members to bawl and shout and attempt to prevent them from speaking. That is an unattractive characteristic of this debate. It shows an obvious weakness of argument among some of my hon. Friends.
My hon. Friend the Member for Kingswood (Dr. Berry) referred to the Budget. Is he aware that it is up to politicians and Ministers to take decisions, to form judgments and to implement policies? What is in the Maastricht treaty that prevents politicians and Ministers from taking such desirable decisions within the economic policy guidelines which are a feature of the treaty and which it is up to politicians to draw up and implement?
§ Dr. BerryAs my hon. Friend wants chapter and verse, I quote article 107:
When exercising the powers and carrying out the tasks and duties conferred upon them by this Treaty and the Statute of the ESCB, neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Community institutions or bodies, from any government of a Member State or from any other body. The Community institutions and bodies and the governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the ECB or of the national central banks in the performance of their tasks.
§ Mr. MandelsonWell—
§ Dr. BerryMy hon. Friend will agree that I have not barracked anybody so far. I am attempting to answer his question. If he thinks that that article, explaining how politicians cannot influence the central bank, is inadequate, perhaps he will allow me to summarise my understanding of the provision, and then he can explain why the words mean something different to him. I am not a lawyer; I am a humble hack—
§ Dr. BerryYes, I plead guilty to being one of those. On the basis of my knowledge of the English language, article 107 instructs the European central bank and the Bank of England—denationalised by then, under the treaty—not to take instructions from anyone. It also 1000 commits the signatories to the treaty not to seek to influence the European central bank or national central banks.
§ Mr. RadiceMy hon. Friend argues that economic and monetary union is against the interests of the weakest regions. There is in the Maastricht treaty—whether it is adequate is debatable; I do not think it is sufficiently adequate—a mechanism for dealing with that problem. It is called the structural fund and the cohesion fund. If my hon. Friend had mentioned those funds, he might have had a fair point. He is implying that there is no mechanism in the treaty to deal with such problems. There is a mechanism, though it needs to be expanded.
§ Dr. BerryRedistribution takes place in the European Community. I thought I had pointed out that its extent was inadequate to justify the unleashing of a single currency on member states. In essence, I do not believe that the degree of economic, social and political cohesion necessary for the benefits of a single currency to outweigh the costs exists in the European Community now. I happily recognise that there are benefits from a single currency, but it is foolish in the extreme simply to assume that the costs in terms of rising unemployment that a single currency would impose now could be addressed through the terms of the Maastricht treaty.
There is also a nonsense in the Maastricht treaty as it tries to separate monetary policy from the rest of economic policy. How is fiscal policy—public expenditure and taxation policy—to be run in such circumstances? It cannot be left to a few simple rules about budget deficits. Limiting the size of public sector deficits does not determine a fiscal framework, because the macroeconomic effects of a budget depend on much more than the size of the deficit. One could have the same deficit for radically different levels of expenditure and taxation. It is rumoured that there are some heretics in this place who might believe that we should have higher levels of expenditure and possibly even higher levels of taxation.
A fiscal policy cannot be determined purely by the size of a budget deficit. Fiscal and monetary policy must be determined together. If one produces a budget, one must discuss how it is to be paid for. It would be ridiculous to have one body—in this case an independent European central bank—setting monetary policy, whatever the objectives, with fiscal policy for Europe being determined somewhere else.
There is logic in the argument that, if there is to be monetary union in the European Community and a single currency, we must have political union as well so that there can be democratic control of economic policy. Maastricht does not set out to do that. It hands over monetary policy to the control of non-elected and unaccountable bankers with the legal requirement that they deflate the European economy, but it says little about how that fits in with other aspects of economic policy in Europe. I cannot see how any democrat could support that.
It seems self-evident that the political, economic and social cohesion necessary for a single currency in the EC does not exist today. Any democrat who was arguing for monetary union now would have to argue for political union as well. That would be the only way to achieve democratic control.
In other words, the options are simple. Either we maintain our separate currencies—and co-ordinate 1001 European policy, so long as that is in favour of reflation and not deflation; we assume that we co-ordinate in the desirable direction, though there is some evidence that we do not always do that—and co-ordinate our economic policies to aim for full employment and economic recovery, or we go for a single currency and European political union. I do not believe that the second is either on offer or is desirable at this stage, so I strongly support the first of the two options.
The middle way that says, "We shall not go for democratic institutions in Europe that will control economic policy at a different level from the present nation state but will, on the other hand, hand over the control of monetary policy to non-elected bankers" is confused, monetarist and undemocratic, and will lead to rising unemployment in Europe and, in so doing—paradoxically, perhaps, in the view of some of those advocating it—will lead to greater division in Europe.
I do not want Europe to be rent asunder by an economic package which will increase unemployment and thereby divide. I want a Europe which addresses full employment. The Maastricht treaty does not do it. I hope that at least one of the amendments in this group—whether it is amendment No. 36, amendment No. 101 or whatever—which effectively undermine the proposals for a single currency, is carried, because otherwise it will be a disaster for not simply the United Kingdom but the other economies in Europe.
§ Mr. GillI shall try to focus the Committee's attention on the effects of creating a European central bank on the people of the United Kingdom, the politicians who represent them and, indeed, the political parties to which we all belong. I apologise for quoting article 107 again, but I shall paraphrase:
neither the ECB, nor a national central bank…shall seek or take instructions…from any government of a Member State".In other words, we will remove from the House and, therefore, the control of the people of the United Kingdom that essential element which gives them control over their destiny—money. Money is power. Through the ages, people and politicians have recognised that control of money is the control of power. If we cede the control of money to a European central bank by this Bill, we shall have effectively ceded the control which the people in the United Kingdom previously vested in their elected representatives in the House.
§ Mr. Dennis Skinner (Bolsover)What does the hon. Gentleman think of the idea that one cannot control what one does not own?
§ Mr. GillThe hon. Gentleman is absolutely right; I entirely agree. I should like to ask the Financial Secretary how the Government, who do not believe in returning the Bank of England to the private sector, are prepared, by dint of this treaty, to cede control of the whole of the British economy to an unelected and uncontrollable European central bank without first experimenting in the United Kingdom to see whether it can possibly work. It seems to be entirely illogical that we should proceed along those lines without at least experimenting in our own country, especially when we have a Government who are committed to returning most state institutions back to the private sector.
1002 I hope that the Financial Secretary will respond to my question because many of my constituents find it difficult to understand why, when we are privatising commercial undertakings—at present we face the prospect of privatising the railways—we do not consider that it is important to privatise the Bank of England. At the same time, we are saying that they must support a treaty which will remove instruments that I would prefer to vest in the control of the Bank of England to a European central bank where nationals of other countries will control what our monetary policy will be. It follows that those nationals will also be controlling our fiscal policy.
I shall come back to my theme, which is the effect that the transfer of control and power to a European central bank will have on us and the people whom we represent. If we reach the point—which we inevitably will—at which we are not free agents in this House to make those decisions which the electorate expect us to make, it will be a poor day for British politics and British politicians. The effects of removing such powers from the United Kingdom and vesting them abroad is that, at a stroke, one divides the two principles of good management—authority and responsibilty. In any properly managed organisation, those two principles must be vested in the same pair of hands.
8.45 pm
The people of the United Kingdom look to us to be responsible for all that goes on in this country and all that which affects their lives. If we decide that we will put the authority for much of what we must decide beyond our shores to be decided for us, we will create the classic symptoms of bad management. We will have put authority in one pair of hands and vested responsibility in another pair of hands. Anyone who has any experience of management knows that that simply does not work.
Many right hon. and hon. Members appreciate the unsatisfactory nature of having to tell constituents, "I understand your complaint. I sympathise and agree with your complaint, but it is out of my hands. I cannot do anything about it." I submit that the electorate will not put up with that. People will soon become disenchanted, first, shall we say, with the Conservative Government. They might even be tempted to vote for the Opposition party. It will not be long before the Labour party is proved to be in exactly the same powerless situation as that which I have described. In due course, people will conclude that there is no point in voting for any politician or any party. That is a dangerous position in which to put our country. It will mean that people will feel that there is no point in voting for any party and will, therefore, vote for no party.
§ Mr. Bob Cryer (Bradford, South)Does it follow that, if such power is handed to a central bank and if people who are elected to government are able to shrug off any responsibility by saying that it is not their fault or responsibility because the decisions are made by the central bank, and the procedure was approved by Parliament through a treaty, a degree of alienation will develop which will result in people taking action, possibly by violent means, as my right hon. Friend the Member for Chesterfield (Mr. Benn) said, to seek alternative solutions to the real problems of, for example, widespread unemployment which might result from the decisions of a central bank?
§ Mr. GillThat is exactly my fear. In extreme circumstances, we will reach the position described by the hon. Gentleman and, indeed, portrayed by the right hon. Member for Chesterfield (Mr. Benn).
The right hon. Member for Chesterfield used an interesting word. He talked about the "confidence" of the nation. I do not have much confidence standing up in the Chamber and delivering a speech, but I have every confidence that my views are absolutely sound. I have not a scintilla of doubt that when I oppose the treaty, and especially when I oppose those new clauses before us tonight, I am doing the right thing because I am in tune with the people whom I represent and the majority of people in the United Kingdom.
Whether or not the majority of the people of Britain are right or wrong on the issue is not the point. If the majority of the people believe that we should not sign the treaty—I believe that that is their view—we should not sign it. If one believes in democracy, one believes that the view of the majority should prevail.
The hon. Member for Bradford, South (Mr. Cryer) said that many politicians and Ministers would find themselves powerless to answer responsibly to the electorate. He may recognise that some right hon. and hon. Members might be content with that position. I do not suggest that the hon. Gentleman would be content with it. I have a different opinion. I believe that he would stand up robustly for the views that he holds—with which, incidentally, I disagree, except on this issue. He would not be afraid to stand up for his views and defend them to the people he represents.
However, sad to say, other hon. Members might be content to shelter behind the European central bank or the Common Market and say to the people, "We have done our best. We would like to do more, but sadly the matter is out of our hands." I agree with the hon. Member for Bradford, South that that would lead to great alienation in our nation. We should not underestimate for one minute the threat to our democracy from proceeding with the establishment of a European central bank.
Of course, the establishment of a European central bank would inevitably lead to a central currency. My hon. Friend the Member for East Lindsey (Sir P. Tapsell) suggested that there would be 12 Chancellors of the Exchequer if we had a single currency. I agreed with much of what he said in his excellent speech, but I disagreed with him on this one detail.
If we had a European central bank and a single currency, there would be but one Chancellor of the Exchequer in Europe and the prospect is that that Chancellor would not reside at No. 11 Downing street. He might not be a Member of this Parliament. There is a great possibility that he would be German. That theme was developed by my hon. Friend the Member for East Lindsey. He forecast that the creation of a central bank and single currency would mean that the deutschmark became the currency of the European Community.
§ Mr. CryerDoes the hon. Gentleman accept that some people have the mistaken notion that the Maastricht treaty brings nations together and that we should work towards some conglomerate, as if that was an idealistic aim? Does he agree that where nations are compelled to join together, tensions and antagonisms are created, as we have seen in eastern Europe, following the break-up of the Soviet bloc? An enormous degree of nationalism has developed and 1004 vicious tensions have arisen which have led to enormous tragedies. The idea of forcing nations together instead of nations working together as equals is festooned with doom and potential disaster.
§ Mr. GillI am more than willing to respond to that intervention, but if I do so directly, I risk being ruled out of order by you, Dame Janet. I shall answer the hon. Gentleman's question in the context of the European central bank. He and I talk the same language. I suggest that if 12 Finance Ministers sat round a table trying to decide matters which affected the economic and monetary policy of the European Community, the decision that would emerge from their deliberations would not satisfy him or, indeed, me. Nor would it satisfy the citizens of the 11 other nations which were party to the deliberations.
It is a simple fact that any decision reached by 12 Ministers on future policy would be a compromise. No other country would accept what Britain would like to see imposed any more than Britain would accept what another country would like to see imposed. Already we have so many examples of decisions affecting Britain which have been taken by that process of compromise. Decisions invariably arrive after the event. They are almost invariably late. We do not get decisions when we want them. When they arrive, they are compromises. That is the nature of the beast. They fit where they touch.
The establishment of a central bank would affect the people we represent. Indeed, people will increasingly resent having to accept a compromise decision which they feel in their bones was not the decision that their Members of Parliament in their sovereign Parliament would have reached if they had been in a position to do so. If people feel that they cannot get a satisfactory answer from their elected Members in debates in their own Parliament, they will become disillusioned and disenchanted with the whole body politic. That is very dangerous to our democracy—I stress the words "our democracy".
Our democracy is much older than any of the democracies of the 11 nations which compromise the European Community. Our democracy has evolved. It may not be the perfect democracy, but it suits the British people. The system of democracy that we have built up in this Parliament has been founded on the unions created in the British Isles many centuries ago. It just happens that our system of government suits us in the main. People criticise it—it is not perfect and I do not pretend it is but the system has evolved over many centuries and it suits us now.
Of course, we try to compromise. We keep coming back to that word. Now we are trying to compromise our system of government, which I stress has suited us for many centuries, within another system which also has to accommodate the systems of government that have built up in 11 other nations.
§ Mr. RadiceThe hon. Gentleman was extolling the virtues of British parliamentary democracy. Would he care to comment on the following point? As far as I understand it, we are the only Parliament of the Twelve that does not have the power to ratify treaties.
§ Mr. GillThat is an interesting point, but the hon. Gentleman knows what we are debating and why the House gives such great importance to the Bill. He knows that we have taken so many days to debate it simply 1005 because of the importance that we and—I shall not miss the opportunity to say—the people we represent attach to this particular subject.
I was speaking about the union of the United Kingdom. For hundreds of years, we have had a union, or one could say a common market, within the British Isles. We certainly have a single currency. The conclusions that I draw from our history are perhaps different from those expressed by other hon. Members. It is an object lesson for Britain to learn as it shapes up perhaps to partaking in a broader Europe involving a European central bank and a single currency. A single currency has not removed all the frictions, difficulties and tensions in our society.
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What inevitably happened and will continue to happen is that richer regions of the United Kingdom have to divvy up each and every year to make funds available to the poorer regions so that those poorer regions can be sustained within the overall union of the United Kingdom.
Those who believe that our involvement in the European Community will benefit our own regions delude themselves. Britain is already paying some £2 billion net each year to the Community. That money does not return to these shores. Opposition Members might support my view that that money could usefully go to the regions of the United Kingdom, but is more likely in future, through the cohesion fund, to go to Greece, Portugal, Spain and Southern Ireland. That will be the effect of the greater union that we are now creating. Instead of the wealth of the nation being used to support our regional policy, it will be used increasingly to support other economies.
As an example of how the creation of another single currency has worked to the disadvantage of Britain, I instance what has happened in agriculture. Many right hon. and hon. Gentlemen will appreciate that through the common agricultural policy we have effectively created a common currency—the green currency. To some extent, we have created the equivalent of a European monetary system because, through the compensatory allowances, the green currencies can be adjusted so that no country is disadvantaged. The result has not been enormous prosperity in farming or great happiness to farmers, but quite the reverse. The taxpayer, both directly though his taxes and indirectly as a purchaser of agricultural produce, has had to pay a very high price.
I am mindful of a statistic which my hon. Friend the Member for Southend, East (Sir T. Taylor) has quoted before. If Britain simply gave every farmer each year the index-linked equivalent of £127,000, that would represent a saving to the Exchequer compared with what is happening now. Although we spend more than £127,000 per farmer each year, our agriculture is in a parlous state and very few farmers are content with their earnings and the profitability of their businesses.
Here again one sees a single currency effectively at work, but it has not delivered prosperity or easier working in that industry; it has delivered the absolute opposite.
My hon. Friend the Member for Lindsey, East spoke about the possible aspirations of the German people for the deutschmark to become the currency of Europe after the creation of the European central bank and of a single currency. If the Germans were able to achieve their aspirations, it would preclude English people from achieving any of theirs.
1006 That is a feature which many young people in this country recognise today. They are looking askance at this treaty, which we may be in danger of signing, because they see that signing it will remove from them much of the responsibility for their lives and the authority to do something about their lives and their country. They can see responsibility for the future of their country passing from these shores and being vested in the hands of the nationals of other countries. Many young people today, therefore, are totally opposed to the treaty, to the creation of the single market and to the creation of a European central bank because they see the total erosion of any prospect of their controlling the destiny of their country.
Every one of us, within our limitations, aspires to be able to do something for our country. I feel passionately strongly about this country and about the ability of its people to manage their own affairs, control their own destiny and deliver the standard of living and way of life that they want. Young people, in particular, recognise that all the time we cede power from Parliament we are disposing of their future ability to serve their country and their people and to provide for their families in the way that they would like.
In the end, what is important and what we must take seriously in doing whatever we do in the House is to create the circumstances in which the people of this country can see their aspirations achieved. If we cannot do so, we should not be signing the treaty. If we deny the people the achievement of their legitimate aspirations, we risk unleashing forces which it will be difficult to control. Many argue that the treaty is necessary to suppress the forces of nationalism. I take the contrary view. If, by whatever means—the creation of a single currency or the creation of a European central bank—we deny people the opportunity to achieve their natural and legitimate aspirations, we shall encourage in the British Isles more nationalism than is perhaps already there.
The richer regions of this country are continually funding the poorer regions, but that does not buy happiness or peace because never a year goes by without the Scots, Welsh and Irish coming back to the Hous—and they do not come to say, "Thank you, we're grateful," but to say that it was not enough.
§ Mr. Walter Sweeney (Vale of Glamorgan)Does my hon. Friend accept that ratification of the treaty would lead to increased nationalistic tendencies and to a sense of the denial of democracy—to a feeling of frustration—which might result in disorder on the streets?
§ Mr. GillI have answered that argument in one way, but I should like the opportunity to do so in another, Dame Janet.
The Second Deputy ChairmanI hope that the hon. Gentleman will do so in a way that relates to the amendments under consideration.
§ Mr. GillI shall do my level best to ensure that I meet those requirements, Dame Janet.
The coinage of the realm is at stake. If it is controlled by the European central bank, and if all the decisions affecting it are seen by the people of this country to be defective, or if they disagree fundamentally or in detail with the decisions of the central bankers, it will be a bad day for this country and for its people and there will be enormous resentment.
1007 If people feel that they cannot get redress through the ballot box, they will be left with no alternative but to seek other measures. I am sure that my hon. Friend the Member for Vale of Glamorgan (Mr. Sweeney) shares my view that that would also be a sad day for this country.
During our debates in Committee, much play has been made of the word "loyalty" and loyalty to party and constituents have been mentioned, but I suggest that there are two other important loyalties—loyalty to oneself and to one's country. I shall vote for the amendment.
§ Mr. Malcolm Bruce (Gordon)This will be my first intervention in the Maastricht debate. As the Committee has progressed, I have noticed that the shorter an hon. Member's notes, the longer his speech. I have some notes here, but they are approximately in proportion to the length of the speech that I intend to make.
I have been interested in some of the exchanges of views. One would have thought that the thrust of the argument of those who oppose the amendment is that it is a terrible thing to have an independent bank, and that one needs a bank that is under clear control. Then one would have control of the economy, and problems such as unemployment would be eliminated. That would be a bank similar to the Bank of England, but we have the Bank of England and it is under control, and we also have 3 million unemployed and an appalling balance of payments deficit. That seems to have escaped some of the critics of the developments that the treaty seeks to recommend for this country and for the Community.
I was interested to hear the speech by the right hon. Member for Chesterfield (Mr. Benn), and found it strange to see myself as a rising new Liberal Democrat, hearing the voice of a decaying old socialist, who was quoting Liberal history at me. He seemed to be accusing people of pessimism, but he seemed to be afraid of embracing change and of finding instruments in the mechanism whereby it can be brought about.
The treaty is about trying to take a step forward to build mechanisms, which will have to evolve as the Community has evolved since its inception. It is no secret to the Committee that my party has long argued the case for an independent central bank for the United Kingdom, and not only for the European Community as it develops. I should like to say why we think that an independent central bank is desirable—I stress "independent" rather than "unaccountable".
§ Mr. MandelsonThe reasons for the hon. Gentleman's party's support for an independent central bank will be of great interest to the Committee. Before giving those reasons, however, will he say whether the independent central bank that he advocates should have absolutely no political relationship with Parliament? Why have his hon. Friends said outside this Chamber that they are not prepared to support amendments tabled by my hon. Friend the Member for Oxford, East (Mr. Smith) to achieve some answerability and accountability? Surely that is completely inconsistent with, and contradictory of, everything that Liberal Democrats stand for.
§ Mr. BruceAs I said before I was interrupted, there is a difference between independence and lack of accountability. As has been clearly pointed out, an independent bank is appointed by politicians and operates within a constitutional framework determined by politicians and capable of being amended by politicians.
But I want to answer the hon. Gentleman's question directly. What is not acceptable is the suggestion that the bank should be accountable, in its day-to-day management of the economy, to the Government or to the House of Commons. This point has been addressed by Conservative Members. The problem arising out of the amendment is not whether the bank should report to the House of Commons. Such reporting would present us with no serious problem, but difficulty would arise if reports were put to a vote. The consequences would clearly compromise the principle of the bank's freedom of action and independence. That is why we have reservations about the amendment.
The second point relates to the bank's independence to pursue the strategy set down in its constitution. In general, it has been agreed—although there have been dissenting voices in the debate today—that bearing down on inflation should be the specific responsibility of the bank, and that it should pursue policies designed to achieve that objective. Those who say that that is not the objective that a central bank should freely pursue hold a perfectly legitimate view, but the argument then hinges on changing the articles of the bank and the political framework and constitution within which it operates—if necessary, by changing the treaty. The European Community has developed, step by step, through treaties, and will continue to do so. That is and will continue to be an evolutionary process.
§ Sir Teddy TaylorDoes the hon. Gentleman accept that, even if the House of Commons, under new clause 1, were to pass a resolution to the effect that the activities of our central bank were a mixture of lunacy, irresponsibility and madness, the decisions of the bank, in terms of the treaty, would not be affected in any way? Would not the bank be acting illegally if it paid the slightest attention to the views of the House of Commons?
§ Mr. BruceWhat the hon. Gentleman says is true, although I suspect that it might be quite difficult to prove. The argument has already been advanced in the case of the Bundesbank, which is independent and is required, within specific parameters, to operate independently and not to be directed by the German Government. However, there is a sanction. First, appointment is by the Government, and I suppose that in extreme circumstances the Government could dismiss. But the Government cannot tell the bank to change its policies within specific, legally defined areas.
Policies outside those areas are a different matter. This is about setting up mechanisms by which the bank will operate and mechanisms for effecting change from time to time should the need arise. But there should not be interference in day-to-day management. That is the meaning of independence.
§ Mr. CashThe hon. Gentleman is displaying incredible ignorance of the nature and functions of the Bundesbank. One thing that is crystal clear is that the German Federal Government are responsible for economic objectives, whereas the Bundesbank merely has a function with 1009 respect to questions of currency stability. Everything that the hon. Gentleman says displays a complete lack of knowledge of how the system functions. I do not understand how his party, whose name includes the words "Liberal Democratic", and which has the tradition of the Liberal party behind it, can endorse a system so thoroughly undemocratic and authoritarian. It is an unbelievable position. The people of this country need to know what a fraud the Liberal Democrats are perpetrating on their own electors.
§ Mr. BruceI shall take that intervention for what it is worth, but I think that the hon. Gentleman might listen to the argument before launching his attack. I shall not make the mistake of giving way to him again.
The first argument that we have made is that the pragmatic evidence is that independent central banks have an extremely good record of bearing down on inflation. There is plenty of evidence, not just theoretical but practical, to show that, when a bank acts independently, the record on reducing inflation is extremely good.
The hon. Member for Stafford (Mr. Cash) comments about the Bundesbank—
§ Mr. Denzil DaviesWill the hon. Gentleman give way?
§ Mr. BruceI shall not give way, as I wish to develop my argument. It becomes difficult to do so if one is interrupted every sentence.
The evidence shows that independent banks are effective in reducing inflation. A study published in 1991 by Vittorio Grilli expressed that graphically. It said:
Central bank independence is tantamount to free lunch: it delivers low inflation with no apparent costs to the real economy's macroeconomic performance.
§ Mr. Austin MitchellWill the hon. Gentleman give way?
§ Mr. BruceI should like to proceed further with my argument, as I have a number of issues to raise.
I accept that my argument can be seen at present in practical terms only in individual nation states, as that is all we have to base it on. It has been argued that the effectiveness of a bank in bearing down on inflation and resisting political pressures across the whole of Europe would be less apparent. However, it can be argued that, in a single state, a general election can result in political pressures that affect the framework and organisation of the bank. It is unlikely that all 12 member states will face re-election at the same time, which would ensure greater independence than there is in a single member state.
It is also interesting that those who seem to oppose the concept of a bank operating within specific parameters for particular purposes without day-to-day political interference also seem to believe that, where that interference is apparent and overt, as it has been in this country, it automatically works in the national interest and meets the needs of constituents and electors. I have listened with interest, not only in this debate, but in previous debates, to criticisms—particularly from within the Conservative party—about our membership of the exchange rate mechanism, its undesirability and its effect on interest rates.
I remind Conservative Members of the circumstances in which we joined the ERM. There were numerous opportunities over many years for the Government to decide when the mix of exchange rate mechanisms was 1010 right. They missed every one of those opportunities—almost any of which would have been a better moment to enter than that when the Government decided to do so. It was not the Bank of England that decided when to enter, but the Government. They did so on the eve of the Conservative party conference in order to secure a standing ovation the following day.
That was the most short-term policy manipulation, as a result of which we entered the ERM at the wrong rate. The policy was successful in reducing inflation over a period, but at a severe cost. We had to sustain higher exchange rates than we would otherwise have done, because we also had to sustain interest rates.
§ Mr. Austin MitchellThe hon. Gentleman said that we entered the ERM at the wrong rate, which is certainly true. But in that case, why was the Liberal party so insistent on pressing us to go into narrower bands at that wrong rate?
§ Mr. BruceThe hon. Gentleman should be aware that the point of entering the exchange rate mechanism was to impose a discipline on this country, which would have enabled us to bring down inflation. We are dealing with the short term because it is only six months since we left the ERM.
§ Mr. SkinnerWould the hon. Gentleman go back into the ERM?
§ Mr. BruceIn the present circumstances, we cannot return to it. The Bank of England has expressed the view that we should have a short transition to a single currency rather than go through a long process which leaves each currency vulnerable and open to pressure—[Interruption.] The hon. Member for Bolsover (Mr. Skinner) has moved from his usual place and is hurling sedentary abuse—[Interruption.]
The Second Deputy ChairmanOrder. It is quite out of order for an hon. Member to come between the Chair and the Member who is speaking in the way that the hon. Member for Bolsover (Mr. Skinner) has done. Such behaviour is unacceptable.
§ Mr. SkinnerOn a point of order, Madam Chairman. The hon. Gentleman invited me to come back to my seat, and said that I was in an unusual position. I was about to ask him if he was prepared to go back into the ERM along with Paddy Backdown and his mates, because that would be like a dog returning to his vomit.
§ Mr. BruceIt is probably just as well that the hon. Gentleman's remarks are on the record. They do not do him much credit. The hon. Gentleman and those who hold his view do not have a vision of the future other than a centralised, socialist-managed state which does not yet command wide support in this country. We are trying to build a mechanism in Europe that will make the single market work and develop the Community so that its past successes can be built upon. That is the purpose of the proposals.
We need to look seriously at how we can operate a monetary system with the responsible financial management that an independent bank can provide. A system that is subject to constant political interference is almost bound to fail.
§ Mr. Michael SpicerWill the hon. Gentleman give way?
§ Mr. BruceNo, I should like to make progress.
I am not convinced by the argument that a central bank is anti-democratic. If we agree that economic policy has to be underpinned by low inflation, we must agree a mechanism by which that can be done and grant to a body the authority to pursue the policies to achieve it. Most democracies do that naturally in a variety of ways every week, and it is a perfectly reasonable way to proceed.
It is not reasonable to set up bodies, in the financial sphere or anywhere else, and presume to second-guess them. I have lost count of the number of times that I have been told by Ministers at the Dispatch Box that it is inappropriate to ask them to interfere in the day-to-day management even of public bodies for which they are responsible, because it is not their job to second-guess the people they appointed to manage those institutions. That is a comparable analogy. The constitution, the organisations and the personnel can be changed, but there is no point in setting up bodies and taking decisions away from them.
§ Mr. Michael SpicerThe hon. Gentleman is building his case on the idea proposed by Labour Front-Bench Members that a fixed exchange rate must be established and that interest rate policies should follow from that.
The hon. Gentleman says that he likes fixed exchange rates but did not like the one that applied when Britain entered the ERM. Will he give us a clue as to the exact level of the exchange rate that he would have thought appropriate? Was it when we were shadowing the deutschmark downwards and would have had a 4 per cent. interest rate? That would not have lasted long. It would have blown apart as easily as the one that exploded on white Wednesday. What are the Labour and Liberal Front-Bench spokesmen saying? Even the Government, temporarily at least, have said that they are not subordinating all their policies to a fixed exchange rate, but the Labour party and the Liberal party seem to be pursuing that idea.
§ Mr. BruceWe could dwell on the reasons that the exchange rate mechanism came under pressure, but I do not intend to do so. We could debate whether or not the Chancellor was offered realignment within the mechanism, which could have enabled it to continue on a different basis, leading to a reassessment of the German mark. The ERM failed because of a number of factors, and its failure does not mean that the reasons for being in it were unsound. More fundamentally, its failure does not alter the case for a single currency. Rather, it strengthens the case, because a single currency would be less open to speculation than 12 currencies trying to maintain agreed parities.
§ Mr. Austin MitchellHow do we get there?
§ Mr. BruceI intend to develop my argument in my own way. I have given way several times, but I have a number of points still to make.
I made the point that the central bank would operate under a constitution written by politicians. It would be independent but also accountable.
§ Sir Teddy TaylorRubbish.
§ Mr. BruceThe hon. Gentleman can say, "Rubbish," if he likes, but that is how the bank would operate.
1012 The bank's board members would be appointed by the Governments of the member states and would be representative of them. It would report annually to the European Parliament, European Council and European Commission, and its policies may be debated in the Parliament. That is a much more orderly and genuinely democratic way of going about things than having banks that are subject to short-term political pressures from politicians in a hole trying to manipulate them.
People have every reason and right to say that they do not like or want a central bank—there are perfectly reputable arguments against one—but the argument that a central bank is undemocratic does not stand up. That is by definition to say that countries such as the United States, Germany and New Zealand that have a central bank are not democratic, whereas most of them are rather more successful democracies than our own. They have operated their economies with much more success over a longer period—certainly in the case of Germany—than we have done. We can at least acknowledge that they may have something from which we can learn, rather than abuse the notion of a central bank in a non-intelligent way.
Another argument frequently used concerns the sovereignty of the House of Commons. That is a matter of opinion. Some of us believe that the sovereignty of the House is used not to liberate the citizens of this country but occasionally to enslave them. Members of Parliament can take whatever power they choose by a simple majority in the House, and the citizens of this country have no guarantee against abuse of power. Achieving a majority in the House might be easier—as the hon. Member for Southend, East (Sir T. Taylor) believes—than achieving a majority in the country. Why else does the hon. Gentleman campaign for a referendum?
§ Mr. BennIt is the interrelationship between proportional representation and a central bank. One could give people any electoral system—such as one under which national lists and the votes of the seats correspond—but ultimately, the electorate could not control economic policy no matter how they voted. That would not be democratic. That is where the proportional representation argument is totally phoney. One might offer the electorate the system that the hon. Gentleman's party thinks is better, but in the end they would not control power because, as the hon. Gentleman agrees, it would be handed to somebody else.
§ Mr. BruceI do not want to be drawn too far down that road. The right hon. Gentleman raised the issue of the voting system, not me. I was talking about matters on which he and I agree—such as a Bill of Rights and the rights of citizens being written in as guarantee against the abuse of Parliament, however that Parliament may be elected. I do not regard proportional representation as the definitive answer to all questions of freedom and democracy. There must be other guarantees that do not exist in this country. So far, freedom and democracy have not been seriously and totally abused, although they have been frequently undermined.
§ Mr. Richard Shepherd (Aldridge-Brownhills)Will the hon. Gentleman give way?
§ Mr. BruceI should like to get on.
We must consider a question to which the amendments at least relate: how are the Government to proceed from 1013 their present stance? They are currently reserving their position on European monetary union, which is a three-stage process. We need to establish how they can go on to the third stage if they do not plan to go through the second. I hope that the Financial Secretary will explain how the Government's opt-out will, or will not, work. Alternatively, if they decide to opt in without having gone through the second stage, how can they proceed from the first stage to the third without transition?
I understand that, under the terms of the treaty, stage 2 requires us to make preparations to bring our own domestic central bank into line with the provisions of the independent bank that would be required by stage 3. If the Government resist the mechanism, how are we to achieve that in one go? There is a danger that we shall suddenly have to run extremely fast to catch up if we finally decide to go for monetary union. That is why I believe it makes sense for Britain to consider creating a more independent central bank, on its own merits and on our own terms, whether or not we opt for monetary union. First—as I have argued—that would be a better way in which to run the British economy; secondly, it would achieve the transition from an independent British bank to European monetary union with much less disruption than would otherwise occur.
I am particularly disturbed that the Government, under pressure, have gone for the opt-out, because I believe that that has had serious consequences for the development of the British economy and Britain's role as a financial centre. When I was a member of the Select Committee on Trade and Industry, we considered the implications of the single market for financial services. We were told—not only by bankers in Paris, Madrid and Milan, but even by bankers in Frankfurt—that, in their view, if we moved towards monetary union, Britain's case for securing the headquarters of the European bank would be overwhelming, given the importance of the City of London and the political argument that Britain was entitled to take a major prize from the process.
By deciding to sign the treaty, but not necessarily to sign up for full economic and monetary union, we gave away all our bargaining position. The Germans now assume that the prize will go elsewhere, and believe that they have a very good chance of winning it. For the very reasons cited by Conservative Members, I think that it would be undesirable for the bank to be located in Germany. It is important symbolically to make it clear that, if we proceed to European monetary union, there will be a European bank and a European currency, rather than a Bundesbank and a deutschmark. Britain could have secured a pivotal role, but the Government have effectively thrown that role away.
Those are not just my words; they were uttered to me 10 days ago by Sir Leon Brittan. "How," he asked, "can I possibly suggest that Britain should have the headquarters of a club that it has not yet decided to join?"
§ Sir Peter TapsellThe German Parliament has reserved its position on the single currency and will have to have another vote, which we are not necessarily promised, but how does that strengthen the German claim to have the central bank? The issue is entirely open, and the constitutional position of the two countries is the same.
§ Mr. BruceIf the Germans decided not to be part of the single currency, the enterprise would collapse in any case.
1014 However, they signed up for the principle without demur at the beginning. Some Conservative Members claim to favour the development of the Community but oppose the Maastricht treaty. That is like saying that they will play golf on the same course as everyone else but that they are to get a free lift out of all the bunkers. Surprisingly, other people are not willing to play under those rules.
In the long term, it is not realistic to believe that Britain can maintain credibility within the European Community and opt-out of major developments. The danger is that the majority of the members of the Government do not intend to opt out. They intend to move towards a central bank and European monetary union, but have gone for the opt-out clause because they thought that they needed it to get the proposals accepted by the Conservative party. The contributions made in debates by Conservative Members show that they have received very little gratitude for that, so the Government have paid a high price in terms of the national interest, for no political pay-off within the party. That is something for which they will be held accountable.
The argument that there is to be one unified, centralised bank does not accord with the practicalities of how the Community will develop. That is borne out by the wording of article 107, which refers to the European central bank or the central banks of member states. It is inevitable that the central bank will work through the central banks of the member states and that it will be—to use a word which causes hackles to rise among Conservative Members—a quasi-federal arrangement rather than a wholly unitary, central operation. That in itself gives scope for a more democratic approach.
It is our contention that an independent central bank will be much more effective in pursuing policies which will bring down inflation. That is not only theoretically true but practically proven in countries which have such an institution. It is desirable for the United Kingdom to move in that direction as quickly as possible. It is wholly compatible with our democratic institutions and with broad accountability, and merely removes the day-to-day interference from the operations of the bank.
I agree that convergence will take longer than some have argued. Once it is achieved, the single market which is so enthusiastically embraced by Conservative Members will ultimately not be sustainable without a single currency and bank. We must take it step by step and must be prepared to renegotiate. That is how all democratic institutions develop. However, the process must be formalised step by step, and that is especially true when dealing with the present national frontiers. That is the evolution of constitutional advance.
It is perhaps a problem for this country that we do riot have a written constitution. As we do not have such a constitution, we do not understand that, for most people, agreements must be written down and reviewed and amended from time to time. Constitutional review is a normal process in most democratic countries. If we understood that better, we might be less concerned about and afraid of what is being proposed.
The European Community is a great association of democratic states trying to build a strong economic base on which they can create their own prosperity and compete effectively with other major blocs such as the United States, Japan, the Pacific rim and, perhaps in the long run, the eastern countries with which we can also develop trading partnerships.
1015 I do not accept that the EC is a closed community; it is an open, free-trade community. But the stronger we are internally, the better we shall be able to trade externally. The mechanisms in the treaty are an essential step, and I greatly regret that this country is dragging its feet and sullying its credibility by means of the process that the House is now going through. The longer it takes, the less influence we shall have in shaping the Community, and the more damage will have been done to our long-term national interests.
§ Mr. RadiceI shall argue the case for a European central bank. I believe that it is inevitable that a single market should have a single currency. There is indeed a strong case for a single currency. I was interested to hear that, although he argued against a European central bank, my hon. Friend the Member for Kingswood (Dr. Berry) accepted that there were plus points in favour of a single currency. He said, rightly, that there would be a gain on transaction costs not only for businesses but for tourists and other travellers, and that a single currency would get rid of currency instability.
More important than those advantages is the fact that a single currency underwrites a single market. If currencies compete against one another and develop a system of competitive devaluation, which several of my hon. Friends seem to support, that is the surest way of destroying a single market—and it could well happen. If there is a single currency, a single monetary authority is also needed, and that is the case for a European central bank. As I shall argue, there is a strong case for such a bank to operate independently.
Of course, the political motivation behind a European central bank is that it is a way to escape from German domination of monetary policy. I know that the hon. Member for East Lindsey (Sir P. Tapsell) is worried about German domination of European monetary policy, and he once talked about German bankers as being like panzer generals. If he is really worried about that idea, he should support the idea of a European central bank, because that is the way to stop German domination. It would give every country in Europe a hand, a say—
§ Mr. Bryan Gould (Dagenham)Nonsense.
§ Mr. RadiceYes, it would. Would my hon. Friend like to intervene?
§ Mr. RadiceI am glad to hear that. What I have said is not nonsense; it is true. That is why the French have been so enthusiastic about economic and monetary union. One of the weaknesses of the ERM is precisely the fact that it is dominated by German monetary policy and the German currency.
I admit that I quite like central bankers. I do not see them as demons, as my hon. Friends do. I happen to believe that, if we put a number of central bankers together, of course they will act as central bankers—but as central bankers from different countries. Over the past three weeks, I have had the experience of meeting the governors of the central banks of France, Spain and Germany, and they are all very different—[Interruption.] 1016 I did not go to the Dutch central bank, but I hope to do so. [Interruption.] I was not even offered lunch—unlike the hon. Member for East Lindsey, who was offered lunch by the Italian Foreign Minister. [Interruption.] They did not offer me lunch or dinner—[Interruption.]—and they have not gone to gaol. Neither have I—not yet, anyway.
The central bankers were all very different: they were different because they were Frenchmen, Germans and Spaniards who looked at things from their own national angle. The point about the European central bank is that it will comprise the governors of the different central banks. Over them will be an executive with eight representatives who do not have to be bankers and who will bring to the European central bank different experiences from different countries.
§ Mr. CashWould the hon. Gentleman care to examine the provisions relating to the autonomy of the central bank? Is he aware that what he has just said about the individual bankers being able to represent their national interests is directly contradicted not only by article 7 of the protocol on the central bank, which says that they may neither seek nor take instructions, but even in stage 2, in which the same applies to the central bank governors in the European Monetary Institute? Does the hon. Gentleman accept that his argument is built on sand?
§ Mr. RadiceOf course it is not built on sand. I shall come to the issue of operational independence. It is a good principle. I see nothing wrong with the article that has been bandied about by all those who oppose Maastricht and the Community. It is a sensible way of ensuring that the bank acts independently in an operational way, as I believe it should. I do not believe that there is any other way in which it can operate if it is to be effective.
We have heard much about how terrible it is that the European central bank should have price stability as its primary objective. But what does one expect from a central bank? Surely that is what we want from a central bank. I happen to believe that there is a strong argument for price stability. People in my constituency do not like the currency to be debauched.
§ Mr. RadiceI shall come to that in a moment, if my hon. Friend will wait.
There is nothing wrong with price stability as an objective for a central bank. As my hon. Friend the Member for Hartlepool (Mr. Mandelson) pointed out in a notable earlier speech—I think about three months ago—the central bank operates within the much wider context of an overall economic policy that is contained in article 2. The bank is only in charge of monetary policy, and that monetary policy does not include the exchange rate.
§ Dr. BerryAs it is not possible to achieve price stability or zero inflation with 3 or 4 million people unemployed, how many more people would need to be unemployed and how much deeper would the recession need to be to achieve price stability? Will my hon. Friend explain that to the Committee?
§ Mr. RadiceIf my hon. Friend wants to be entirely literal about this, he is perfectly entitled to do so. I take price stability to mean that one does not have a roaring rate of inflation. That is what the treaty is referring to.
§ Dr. BerryDoes my hon. Friend recognise that the phrase "price stability" does not mean other than roaring inflation? Does he take it to mean stable prices and zero inflation? How many more people must be unemployed to achieve the overriding objective of zero inflation?
§ Mr. RadiceAs I said, my hon. Friend is being entirely literal.
§ Mr. RadiceI appreciate that my hon. Friend the Member for Dagenham (Mr. Gould) is enthusiastic about the issue. He likes to read into every word of the treaty some terrible thing that is about to happen. In fact, it does not say "zero inflation" but "price stability", and I do not see anything wrong in price stability.
§ Mr. MandelsonMy hon. Friend the Member for Durham, North (Mr. Radice) is saying that it is proper and legitimate for price stability to be a primary goal for an independent central bank to pursue. But it is not the only goal. There are other goals and other policy imperatives, and no doubt attention will be given to them all. It is up to Ministers and other politicians to decide among those goals, but it is proper for the central bank to try to pursue that goal of price stability.
§ Mr. RadiceI could not put it better myself. A carefully defined set of powers will be in the hands of the central bank—[Interruption.] There are other powers—for example, on exchange rate policy—in the hands of the European Council. Fiscal policy is in the hands of nation states, except in so far as there are common rules and procedures, as there should be, if there is to be a common European policy.
§ Sir Teddy Taylorrose—
§ Mr. RadiceI will not give way. There is too much noise—[Interruption.]—and I would not be able to hear the hon. Gentleman.
§ The Chairman of Ways and Means (Mr. Michael Morris)Order. The Committee should be courteous to the hon. Member for Durham, North (Mr. Radice) and listen to his words.
§ Mr. RadiceIt has been said that economic and monetary union always works to the disadvantage of the poorer regions of Europe. That is true, which is why there is a cohesion fund and structural funds. I agree that they are not yet big enough—[Interruption.]—and there is in place a framework in which it is possible to deal with some of the disadvantages that arise from a single currency and economic and monetary union.
Much has been said about operational independence. There is a strong case for that, of which the model of the Bundesbank is a good example. Of course, the Bundesbank works from a history different from ours. It works from the experience of Weimar, when the politicians debauched the currency. That is why people in Germany are greatly concerned to have a stable price regime—[Interruption.]—and why the Bundesbank is a popular organisation. Indeed, it has been shown to be the most popular organisation in Germany. It must be said that, in Germany, bankers are more popular than politicians. I do not see anything wrong with having an independent bank or an independent European bank, and I do not see it as anti-democratic.
1018 Like my hon. Friends, I shall argue for the strengthening of ECOFIN, a European Commission and the strengthening of the power of the European Parliament. I do not see anything wrong with operational independence or the beginnings of the accountability features in the Maastricht treaty. The question which arises is whether EMU will happen. Of course that is not certain. It is possible that competitive devaluation—
§ It being Ten o'clock, THE CHAIRMAN left the Chair to report Progress and ask leave to sit again.
§ Committee report Progress.
§
Motion made, and Question put forthwith, pursuant to Standing Order No. 14 (Exempted business),
That, at this day's sitting, the European Communities (Amendment) Bill may be proceeded with, though opposed, until any hour.—[Mr. Nicholas Baker.]
§ The House divided: Ayes 296, Noes 279.
1021| Division No. 203] | [10 pm |
| AYES | |
| Adley, Robert | Cormack, Patrick |
| Ainsworth, Peter (East Surrey) | Couchman, James |
| Aitken, Jonathan | Critchley, Julian |
| Alexander, Richard | Currie, Mrs Edwina (S D'by'ire) |
| Alison, Rt Hon Michael (Selby) | Curry, David (Skipton & Ripon) |
| Alton, David | Dafis, Cynog |
| Amess, David | Davis, David (Boothferry) |
| Ancram, Michael | Day, Stephen |
| Arbuthnot, James | Deva, Nirj Joseph |
| Arnold, Jacques (Gravesham) | Devlin, Tim |
| Arnold, Sir Thomas (Hazel Grv) | Dickens, Geoffrey |
| Ashby, David | Dicks, Terry |
| Ashdown, Rt Hon Paddy | Dorrell, Stephen |
| Atkinson, David (Bour'mouth E) | Douglas-Hamilton, Lord James |
| Atkinson, Peter (Hexham) | Dover, Den |
| Baker, Nicholas (Dorset North) | Duncan, Alan |
| Baldry, Tony | Dunn, Bob |
| Banks, Matthew (Southport) | Durant, Sir Anthony |
| Banks, Robert (Harrogate) | Dykes, Hugh |
| Bates, Michael | Eggar, Tim |
| Bellingham, Henry | Elletson, Harold |
| Beresford, Sir Paul | Emery, Rt Hon Sir Peter |
| Blackburn, Dr John G. | Evans, David (Welwyn Hatfield) |
| Booth, Hartley | Evans, Jonathan (Brecon) |
| Boswell, Tim | Evans, Nigel (Ribble Valley) |
| Bottomley, Peter (Eltham) | Evans, Roger (Monmouth) |
| Bottomley, Rt Hon Virginia | Evennett, David |
| Bowden, Andrew | Faber, David |
| Bowis, John | Fabricant, Michael |
| Brandreth, Gyles | Fairbairn, Sir Nicholas |
| Brazier, Julian | Fenner, Dame Peggy |
| Bright, Graham | Field, Barry (Isle of Wight) |
| Brooke, Rt Hon Peter | Fishburn, Dudley |
| Brown, M. (Brigg & Cl'thorpes) | Forman, Nigel |
| Browning, Mrs. Angela | Forsyth, Michael (Stirling) |
| Bruce, Ian (S Dorset) | Forth, Eric |
| Bruce, Malcolm (Gordon) | Foster, Don (Bath) |
| Burns, Simon | Fowler, Rt Hon Sir Norman |
| Burt, Alistair | Fox, Dr Liam (Woodspring) |
| Butterfill, John | Fox, Sir Marcus (Shipley) |
| Campbell, Menzies (Fife NE) | Freeman, Roger |
| Carlile, Alexander (Montgomry) | French, Douglas |
| Carlisle, Kenneth (Lincoln) | Gale, Roger |
| Carrington, Matthew | Gallie, Phil |
| Channon, Rt Hon Paul | Garel-Jones, Rt Hon Tristan |
| Chapman, Sydney | Garnier, Edward |
| Churchill, Mr | Gillan, Cheryl |
| Clark, Dr Michael (Rochford) | Goodlad, Rt Hon Alastair |
| Clarke, Rt Hon Kenneth (Ruclif) | Goodson-Wickes, Dr Charles |
| Clifton-Brown, Geoffrey | Gorst, John |
| Coe, Sebastian | Grant, Sir Anthony (Cambs SW) |
| Colvin, Michael | Greenway, Harry (Ealing N) |
| Congdon, David | Greenway, John (Ryedale) |
| Conway, Derek | Griffiths, Peter (Portsmouth, N) |
| Coombs, Anthony (Wyre For'st) | Grylls, Sir Michael |
| Coombs, Simon (Swindon) | Gummer, Rt Hon John Selwyn |
| Cope, Rt Hon Sir John | Hague, William |
| Hamilton, Rt Hon Archie (Epsom) | Merchant, Piers |
| Hamilton, Neil (Tatton) | Michie, Mrs Ray (Argyll Bute) |
| Hampson, Dr Keith | Milligan, Stephen |
| Hanley, Jeremy | Mills, Iain |
| Hannam, Sir John | Mitchell, Andrew (Gedling) |
| Hargreaves, Andrew | Mitchell, Sir David (Hants NW) |
| Harris, David | Monro, Sir Hector |
| Haselhurst, Alan | Montgomery, Sir Fergus |
| Hawkins, Nick | Moss, Malcolm |
| Hayes, Jerry | Needham, Richard |
| Heald, Oliver | Nelson, Anthony |
| Heath, Rt Hon Sir Edward | Neubert, Sir Michael |
| Heathcoat-Amory, David | Newton, Rt Hon Tony |
| Hendry, Charles | Nicholls, Patrick |
| Heseltine, Rt Hon Michael | Nicholson, David (Taunton) |
| Hicks, Robert | Nicholson, Emma (Devon West) |
| Higgins, Rt Hon Sir Terence L. | Norris, Steve |
| Hill, James (Southampton Test) | Onslow, Rt Hon Sir Cranley |
| Hogg, Rt Hon Douglas (G'tham) | Oppenheim, Phillip |
| Horam, John | Ottaway, Richard |
| Hordern, Rt Hon Sir Peter | Page, Richard |
| Howard, Rt Hon Michael | Paice, James |
| Howarth, Alan (Strat'rd-on-A) | Patten, Rt Hon John |
| Howell, Rt Hon David (G'dford) | Pattie, Rt Hon Sir Geoffrey |
| Hughes Robert G. (Harrow W) | Peacock, Mrs Elizabeth |
| Hughes, Simon (Southwark) | Pickles, Eric |
| Hunt, Rt Hon David (Wirral W) | Porter, Barry (Wirral S) |
| Hunt, Sir John (Ravensbourne) | Portillo, Rt Hon Michael |
| Hunter, Andrew | Powell, William (Corby) |
| Jack, Michael | Rathbone, Tim |
| Jackson, Robert (Wantage) | Redwood, John |
| Johnson Smith, Sir Geoffrey | Renton, Rt Hon Tim |
| Johnston, Sir Russell | Richards, Rod |
| Jones, Gwilym (Cardiff N) | Riddick, Graham |
| Jones, Ieuan Wyn (Ynys Môn) | Robathan, Andrew |
| Jones, Robert B. (W Hertfdshr) | Roberts, Rt Hon Sir Wyn |
| Jopling, Rt Hon Michael | Robertson, Raymond (Ab'd'n S) |
| Kellett-Bowman, Dame Elaine | Robinson, Mark (Somerton) |
| Kennedy, Charles (Ross,C&S) | Rowe, Andrew (Mid Kent) |
| Key, Robert | Rumbold, Rt Hon Dame Angela |
| Kilfedder, Sir James | Ryder, Rt Hon Richard |
| King, Rt Hon Tom | Sackville, Tom |
| Kirkhope, Timothy | Sainsbury, Rt Hon Tim |
| Kirkwood, Archy | Scott, Rt Hon Nicholas |
| Knight, Mrs Angela (Erewash) | Shaw, David (Dover) |
| Knight, Greg (Derby N) | Shaw, Sir Giles (Pudsey) |
| Knight, Dame Jill (Bir'm E'st'n) | Shephard, Rt Hon Gillian |
| Knox, David | Shepherd, Colin (Hereford) |
| Kynoch, George (Kincardine) | Shersby, Michael |
| Lait, Mrs Jacqui | Smith, Tim (Beaconsfield) |
| Lamont, Rt Hon Norman | Soames, Nicholas |
| Lang, Rt Hon Ian | Spencer, Sir Derek |
| Leigh, Edward | Spicer, Sir James (W Dorset) |
| Lennox-Boyd, Mark | Spink, Dr Robert |
| Lester, Jim (Broxtowe) | Spring, Richard |
| Lidington, David | Sproat, Iain |
| Lilley, Rt Hon Peter | Squire, Robin (Hornchurch) |
| Lloyd, Peter (Fareham) | Stanley, Rt Hon Sir John |
| Llwyd, Elfyn | Steel, Rt Hon Sir David |
| Luff, Peter | Steen, Anthony |
| Lyell, Rt Hon Sir Nicholas | Stephen, Michael |
| Lynne, Ms Liz | Stern, Michael |
| MacGregor, Rt Hon John | Stewart, Allan |
| MacKay, Andrew | Streeter, Gary |
| Maclean, David | Sumberg, David |
| Maclennan, Robert | Sykes, John |
| McLoughlin, Patrick | Taylor, Ian (Esher) |
| Madel, David | Taylor, John M. (Solihull) |
| Maitland, Lady Olga | Taylor, Matthew (Truro) |
| Major, Rt Hon John | Temple-Morris, Peter |
| Malone, Gerald | Thomason, Roy |
| Mans, Keith | Thompson, Sir Donald (C'er V) |
| Marland, Paul | Thompson, Patrick (Norwich N) |
| Marshall, John (Hendon S) | Thornton, Sir Malcolm |
| Marshall, Sir Michael (Arundel) | Thurnham, Peter |
| Martin, David (Portsmouth S) | Townsend, Cyril D. (Bexl'yh'th) |
| Mates, Michael | Tracey, Richard |
| Mawhinney, Dr Brian | Tredinnick, David |
| Mayhew, Rt Hon Sir Patrick | Trotter, Neville |
| Mellor, Rt Hon David | Twinn, Dr Ian |
| Tyler, Paul | Whittingdale, John |
| Vaughan, Sir Gerard | Widdecombe, Ann |
| Viggers, Peter | Wiggin, Sir Jerry |
| Waldegrave, Rt Hon William | Wigley, Dafydd |
| Walden, George | Willetts, David |
| Wallace, James | Wolfson, Mark |
| Waller, Gary | Wood, Timothy |
| Wardle, Charles (Bexhill) | Yeo, Tim |
| Waterson, Nigel | Young, Sir George (Acton) |
| Watts, John | |
| Wells, Bowen | Tellers for the Ayes: |
| Wheeler, Rt Hon Sir John | Mr. David Lightbown and |
| Whitney, Ray | Mr. Irvine Patnick. |
| NOES | |
| Abbott, Ms Diane | Cunningham, Rt Hon Dr John |
| Adams, Mrs Irene | Darling, Alistair |
| Ainger, Nick | Davidson, Ian |
| Ainsworth, Robert (Cov'try NE) | Davies, Bryan (Oldham C'tral) |
| Allen, Graham | Davies, Rt Hon Denzil (Llanelli) |
| Anderson, Donald (Swansea E) | Davies, Ron (Caerphilly) |
| Anderson, Ms Janet (Ros'dale) | Davis, Terry (B'ham, H'dge H'l) |
| Armstrong, Hilary | Denham, John |
| Banks, Tony (Newham NW) | Dewar, Donald |
| Barnes, Harry | Dixon, Don |
| Barron, Kevin | Dobson, Frank |
| Battle, John | Donohoe, Brian H. |
| Bayley, Hugh | Dowd, Jim |
| Beckett, Rt Hon Margaret | Dunwoody, Mrs Gwyneth |
| Beggs, Roy | Eagle, Ms Angela |
| Bell, Stuart | Eastham, Ken |
| Benn, Rt Hon Tony | Enright, Derek |
| Bennett, Andrew F. | Etherington, Bill |
| Benton, Joe | Evans, John (St Helens N) |
| Bermingham, Gerald | Ewing, Mrs Margaret |
| Berry, Dr. Roger | Fatchett, Derek |
| Betts, Clive | Field, Frank (Birkenhead) |
| Biffen, Rt Hon John | Fisher, Mark |
| Blair, Tony | Flynn, Paul |
| Blunkett, David | Foster, Rt Hon Derek |
| Boateng, Paul | Foulkes, George |
| Body, Sir Richard | Fraser, John |
| Boyce, Jimmy | Fyfe, Maria |
| Boyes, Roland | Galbraith, Sam |
| Bradley, Keith | Galloway, George |
| Bray, Dr Jeremy | Gapes, Mike |
| Brown, Gordon (Dunfermline E) | Gardiner, Sir George |
| Brown, N. (N'c'tle upon Tyne E) | Garrett, John |
| Budgen, Nicholas | George, Bruce |
| Burden, Richard | Gerrard, Neil |
| Butcher, John | Gill, Christopher |
| Byers, Stephen | Godman, Dr Norman A. |
| Caborn, Richard | Godsiff, Roger |
| Callaghan, Jim | Golding, Mrs Llin |
| Campbell, Mrs Anne (C'bridge) | Gordon, Mildred |
| Campbell-Savours, D. N. | Gorman, Mrs Teresa |
| Canavan, Dennis | Gould, Bryan |
| Cann, Jamie | Grant, Bernie (Tottenham) |
| Carlisle, John (Luton North) | Griffiths, Nigel (Edinburgh S) |
| Cash, William | Griffiths, Win (Bridgend) |
| Chisholm, Malcolm | Grocott, Bruce |
| Clapham, Michael | Gunnell, John |
| Clark, Dr David (South Shields) | Hain, Peter |
| Clarke, Eric (Midlothian) | Hall, Mike |
| Clarke, Tom (Monklands W) | Hanson, David |
| Clelland, David | Harvey, Nick |
| Clwyd, Mrs Ann | Henderson, Doug |
| Cohen, Harry | Heppell, John |
| Connarty, Michael | Hill, Keith (Streatham) |
| Cook, Frank (Stockton N) | Hinchliffe, David |
| Cook, Robin (Livingston) | Hoey, Kate |
| Corbett, Robin | Hogg, Norman (Cumbernauld) |
| Corbyn, Jeremy | Home Robertson, John |
| Corston, Ms Jean | Hood, Jimmy |
| Cousins, Jim | Hoon, Geoffrey |
| Cran, James | Howarth, George (Knowsley N) |
| Cryer, Bob | Howells, Dr. Kim (Pontypridd) |
| Cummings, John | Hoyle, Doug |
| Cunliffe, Lawrence | Hughes, Kevin (Doncaster N) |
| Cunningham, Jim (Covy SE) | Hughes, Robert (Aberdeen N) |
| Hughes, Roy (Newport E) | Pendry, Tom |
| Hutton, John | Pickthall, Colin |
| Illsley, Eric | Pike, Peter L. |
| Ingram, Adam | Pope, Greg |
| Jackson, Glenda (H'stead) | Powell, Ray (Ogmore) |
| Jackson, Helen (Shef'ld, H) | Prentice, Ms Bridget (Lew'm E) |
| Jamieson, David | Prentice, Gordon (Pendle) |
| Janner, Greville | Prescott, John |
| Jessel, Toby | Primarolo, Dawn |
| Jones, Barry (Alyn and D'side) | Purchase, Ken |
| Jones, Jon Owen (Cardiff C) | Quin, Ms Joyce |
| Jones, Lynne (B'ham S O) | Radice, Giles |
| Jones, Martyn (Clwyd, SW) | Randall, Stuart |
| Kaufman, Rt Hon Gerald | Raynsford, Nick |
| Keen, Alan | Reid, Dr John |
| Kennedy, Jane (Lpool Brdgn) | Robertson, George (Hamilton) |
| Khabra, Piara S. | Robinson, Geoffrey (Co'try NW) |
| Kinnock, Rt Hon Neil (Islwyn) | Robinson, Peter (Belfast E) |
| Knapman, Roger | Roche, Mrs. Barbara |
| Lawrence, Sir Ivan | Rogers, Allan |
| Legg, Barry | Rooker, Jeff |
| Leighton, Ron | Ross, Ernie (Dundee W) |
| Lestor, Joan (Eccles) | Ross, William (E Londonderry) |
| Lewis, Terry | Rowlands, Ted |
| Litherland, Robert | Ruddock, Joan |
| Livingstone, Ken | Salmond, Alex |
| Lloyd, Tony (Stretford) | Sedgemore, Brian |
| Lord, Michael | Sheerman, Barry |
| Loyden, Eddie | Sheldon, Rt Hon Robert |
| McAllion, John | Shepherd, Richard (Aldridge) |
| McAvoy, Thomas | Shore, Rt Hon Peter |
| McCartney, Ian | Short, Clare |
| McCrea, Rev William | Simpson, Alan |
| Macdonald, Calum | Skeet, Sir Trevor |
| McFall, John | Skinner, Dennis |
| McKelvey, William | Smith, Andrew (Oxford E) |
| McLeish, Henry | Smith, C. (Isl'ton S & F'sbury) |
| McMaster, Gordon | Smith, Rt Hon John (M'kl'ds E) |
| McNamara, Kevin | Smith, Llew (Blaenau Gwent) |
| McWilliam, John | Snape, Peter |
| Madden, Max | Soley, Clive |
| Maginnis, Ken | Spearing, Nigel |
| Mahon, Alice | Spicer, Michael (S Worcs) |
| Mandelson, Peter | Steinberg, Gerry |
| Marek, Dr John | Stevenson, George |
| Marlow, Tony | Stott, Roger |
| Marshall, David (Shettleston) | Strang, Dr. Gavin |
| Marshall, Jim (Leicester, S) | Straw, Jack |
| Martin, Michael J. (Springburn) | Sweeney, Walter |
| Martlew, Eric | Tapsell, Sir Peter |
| Maxton, John | Taylor, Mrs Ann (Dewsbury) |
| Meacher, Michael | Taylor, Sir Teddy (Southend, E) |
| Meale, Alan | Trimble, David |
| Michael, Alun | Turner, Dennis |
| Michie, Bill (Sheffield Heeley) | Vaz, Keith |
| Milburn, Alan | Walker, Bill (N Tayside) |
| Miller, Andrew | Walker, Rt Hon Sir Harold |
| Mitchell, Austin (Gt Grimsby) | Walley, Joan |
| Molyneaux, Rt Hon James | Wardell, Gareth (Gower) |
| Moonie, Dr Lewis | Wareing, Robert N |
| Morgan, Rhodri | Watson, Mike |
| Morley, Elliot | Wicks, Malcolm |
| Morris, Rt Hon A. (Wy'nshawe) | Wilkinson, John |
| Morris, Estelle (B'ham Yardley) | Williams, Rt Hon Alan (Sw'n W) |
| Morris, Rt Hon J. (Aberavon) | Williams, Alan W (Carmarthen) |
| Mowlam, Marjorie | Wilson, Brian |
| Mudie, George | Winnick, David |
| Mullin, Chris | Winterton, Mrs Ann (Congleton) |
| Murphy, Paul | Winterton, Nicholas (Macc'f'ld) |
| Oakes, Rt Hon Gordon | Worthington, Tony |
| O'Brien, Michael (N W'kshire) | Wray, Jimmy |
| O'Brien, William (Normanton) | Wright, Dr Tony |
| O'Hara, Edward | |
| Olner, William | Tellers for the Noes: |
| O'Neill, Martin | Mr. Peter Kilfoyle and |
| Orme, Rt Hon Stanley | Mr. Andrew Mackinlay. |
| Parry, Robert |
§ Question accordingly agreed to.
§ Again considered in Committee.
1022§ Question again proposed, That the amendment be made.
10.15 pm§ Mr. RadiceBefore I was so rudely interrupted, I was making the case for the European central bank, and I was saying that there is a strong argument for independent operation. I felt that the Bundesbank was a very effective model because, although it was operationally independent, it worked within an overall economic policy which was laid down by politicians. I argued that we should support the idea of a European central bank because, if we wanted a single market, we had to have a single currency, and if we had a single currency we would need a single monetary authority. I argued that there was a case for having an independent central bank, and in this I argued against my hon. Friend the Member for Kingswood (Dr. Berry), who said that it was anti-democratic. I said that it was not necessarily anti-democratic to have an independent body set up by statute which was accountable, through reports, to the European Parliament and also to the European Council.
It is true that we cannot be certain that we will achieve economic and monetary union or that we will have a European central bank. It is quite possible that conditions in Europe will be so difficult that we will be unable to achieve economic and monetary union. It is possible that we shall enter an era of competitive devaluations. I know that some of my hon. Friends think that the great thing about economic policy is that one should devalue, and then devalue again, and then devalue again.
§ Mr. Austin MitchellMy hon. Friend should not attribute such asinine views to his hon. Friends. One should devalue when a currency is uncompetitive. The test of a competitive currency is when one can balance trading accounts in conditions of full employment and high, and sustainable, growth.
§ Mr. RadiceAs it happens, I agree. As my hon. Friend knows, I thought that we entered the exchange rate mechanism at too high a rate, and I said so at the time. We were overvalued, and I was in favour of devaluation. However, there is a danger that, if one spends one's time talking about devaluation for one's currency, other countries will want to devalue too, which will set up a structure of competitive devaluations as countries devalue against each other. That is the danger now, and once that happens it will start to undermine the single market.
In Europe there is a strong move towards protectionism by many people, and there is a danger that the single market will be undermined and that there will be protectionism. Competitive devaluations and protectionism will result in the sort of dangerous nationalism that we had in the 1930s.
A dangerous scenario is opening up before us, and there is therefore a strong case for a single market, a single currency, a single monetary authority and a single European bank. If we do not achieve those, the forces of disruption and division will triumph in Europe and it will be a loss for all the peoples of Europe. If that happens, it will be to the cost of the people of Britain and of my constituency.
If European monetary union goes ahead, the United Kingdom must be part of it, as it would be disastrous if we were left out. The Government's opt-out policy is dangerous, and it was devised for internal party reasons to 1023 make Maastricht more palatable to the Tory party—it has not succeeded. That policy has meant that we are no longer taken seriously as a potential member of economic and monetary union, and it certainly writes us out of any prospect of geting the European central bank, or any of the European institutions, in the City of London, which will be a great loss for us.
§ Mr. Tim Rathbone (Lewes)Does the hon. Gentleman accept that, since the treaty was struck, more opinon in Europe has come round to the British point of view that a single currency is unlikely to be achieved within the original timetable?
§ Mr. RadiceI have just visited a number of European countries with the Treasury Select Committee, and that is not the case. All the other countries are committed to the single currency—even Germany, which several Conservative Members have quoted as possibly being concerned about the currency. That is not surprising, as the Germans have the most to lose. The deutschmark is the strongest currency in Europe and the German central bank runs monetary policy. If the single currency and the European central bank are created, the show will no longer be German-dominated as it is now, but even the Germans support the principle of a single currency. All they are saying is that it must go ahead on present conditions, as they do not want the European central bank to be watered down; nor do they want countries to come in to EMU if they are incapable of being in it, which seems quite sensible.
It may be right to say that, in the event, EMU will not go ahead. We cannot read the future. I am saying simply that the alternative scenario is not a good one. Competitive devaluation and protectionism, with the single market bust open, is a very worrying prospect for all of us. People's concern about that matter is one of the driving forces behind economic and monetary union. If we are really at the heart of Europe, we should be in favour of the principle of economic and monetary union. If it eventually goes ahead, we ought to be part of it.
§ Sir Teddy TaylorI wish that the hon. Member for Durham, North (Mr. Radice) could have spent a few moments in the Dining Room, where this matter was being discussed. He seems to think that Europe is a daydream land in which all the problems of the world and the nations will be solved by transferring all power and responsibility to central bodies. I wish that the hon. Gentleman could have met organisers from the port of Larne, Northern Ireland, who make the simple point that, as a result of what we are doing, competitor ports in the Republic of Ireland will receive grants of 85 per cent. to build exciting new facilities, which will achieve nothing but will steal business from Lame. The hon. Gentleman's notion that cohesion funds and structural funds will solve the problems of Europe is delusion. Things will not happen that way.
The main amendment in this group concerns article 107. The delightful Treasury Minister on the Front Bench, my hon. Friend the Financial Secretary to the Treasury, will be able to give a very speedy answer: that anyone looking at page 115 will see that article 107 does not, in the meantime, apply to the United Kingdom. On the other hand, associated with this amendment is the whole 1024 structure of what the treaty is about. In no sense is it about the harmonisation of exchange rate policies; it is about the abolition of the rights of people. What my hon. Friends should realise, even at this late hour, is that if the treaty is approved, they will have to ask themselves what on earth they are to say to the voters at the next election.
If the people are unhappy about what the central bank is doing, if they feel that its policies are creating unemployment, what will they be able to do? At present, if they are unhappy with policies, they can vote another party into office. If they are unhappy about policies in the course of a Government's term of office, they can give a warning by voting for Opposition candidates in by-elections. But when all economic policy and decisions are transferred to central constitutions that are wholly outwith the control of elected bodies, the power of the people will have been completely and utterly destroyed.
I hope that, even at this late hour, hon. Members will think seriously about what they are doing to their democracy. They are removing completely people's power to express an opinion. They are taking away people's ability to express a view. Thus, if people are unhappy about what is happening, if they feel that something is wrong and unfair, if they feel that something damaging to the economy is being done, their only means of registering opposition will be to march, demonstrate and, basically, go about destroying the democracy that we have set out to achieve.
It must be appreciated that this was not always the view of Her Majesty's Government. I listen very carefully to what our excellent Prime Minister says. On 1 July 1991, in response to a question from the Leader of the Opposition, he said:
We have made our position clear about a European central bank. If that comes about, it is many years away and it would certainly need to be accountable to a directly elected body."—[Official Report, 1 July 1991; Vol. 194, c. 25.]The argument that we are putting forward is that it is wrong in principle to have a European central bank without any type of people's control or any mechanism for the expression of people's views. I realise that some of my hon. Friends feel that they should go into the Lobby in support of the Government because that is the right thing to do, but they should realise that we are making decisions about something far more important than the future of the Government or of the Conservative party.We are deciding whether people should still have control over the issues in our country and whether they should still be able to warn Governments at election time. If the central bank is established and assumes all the power envisaged, and the central institutions are effectively running all the economies, basically our democracy will be dead. People should appreciate what is happening. I do not believe that people appreciate the extent to which power has already gone and our democracy has disappeared.
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I received a delightful letter from the Prime Minister, who has always shown great courtesy and kindness in his dealings with people who support or oppose his policies. The letter was on a small issue relating to the Sikh community of Britain. They are probably the most law-abiding and decent bunch in our community. Those good and hard-working people faced a terrible problem. In 1025 British law we have exempted them from having to wear helmets when riding motor cycles or working on building sites.
A European directive has been introduced which obliges them to wear helmets in other places such as engineering works. The British Government tried hard, on a majority vote issue, to obtain an exemption for the Sikhs. Sadly, our Government were out-voted. I wrote to the Prime Minister asking him whether—in the light of subsidiarity—he could ask the Commission to exempt the Sikhs. The answer that the Prime Minister sent to me was one of the most dreadful letters that I have received. The Prime Minister was courteous and kindly, as he always is, but he said:
We tried very hard, but without success, to obtain a derogation…Raising the issue again, now the Directive is in force, could well put the existing exemption at risk.The Prime Minister of a democratically elected country said that he dare not even approach the Commission because, if he did, the provisions that have been made for the Sikh community would disappear. That does not show the lack of concern of our delightful Prime Minister for the Sikh community of Britain. I am sure that he cares about them deeply—we saw that in the way in which he tried o fight their case. However, the Prime Minister was saying that he dare not even ask the non-elected Commission, because, if he did, the right of the Sikhs to wear their turbans on motor bikes and building sites could be at risk.The appalling TUPE regulations will effectively destroy privatisation in Britain—a controversial issue in this country today. Those regulations were part of the acquired rights directive which was passed in 1977; they were implemented by law in 1981 with what the British Government believed to be the law of the land. They said, "This is the law—it applies to commercial undertakings." Due to infraction proceedings taken by the European Commission—an unelected body—we now find that the law will apply to all sorts of privatisations and takeovers. It means that not only will future privatisations be difficult to achieve, but every British employer who has participated in a privatisation—[Interruption.] I see that my hon. Friend the Member for Leeds, North-West (Dr. Hampson) is shaking his head, but it happens to be true—
§ The ChairmanOrder. I am having difficulty relating the hon. Gentleman's remarks to central banking. Perhaps he can help me.
§ Sir Teddy TaylorI was referring to the issue as an example of the way in which our powers to influence matters have already disappeared. I was mentioning the matter briefly, not as part of my main argument. Something significant is happening to the powers of people and Parliament.
If we are concerned about the Sikhs—as we all are—there is nothing that we dare do. If we are concerned about the TUPE regulations, there is nothing that we can do. If we go ahead with the European central bank, there is nothing that we can do about basic economic policy or, more importantly, that the people can do with their votes.
Some people laugh and say, "What does it matter? Get the clever people to run things and don't give the power to the people." That is the sort of argument that people use against a referendum, when they say, "Don't let the people 1026 decide—they don't know about it." When people's power is destroyed in any country, something very important is destroyed—the basis of a peaceful community.
§ Mr. RandallThe hon. Gentleman suggests that all decisions will be taken by the central bank. Does he agree that Ministers who are accountable to this Parliament will have a major influence on ECOFIN? Surely it is exaggerating to suggest that all powers—the hon. Gentleman used the word "all" several times—will reside with the central bank.
§ Sir Teddy TaylorI am afraid that the hon. Gentleman is wrong. He is a conscientious attender at our debates and sincerely believes in Europe. I appeal to him to look at the duties of the central bank and at the powers that are being given to the various financial institutions such as the EMI and others. If he does that, he will see that, no matter what views or opinions are expressed, the basic policy must still be followed. I shall give an example from new clause 1—a suggestion by the Labour party that there should be an annual report to Parliament about what central banks are doing.
If that new clause is accepted and we pass a resolution that the central bank follows mad, stupid and irresponsible policies, it will have no effect of any sort, because the central bank has a legal obligation to follow the basic policies set out in the treaty. Some people say that it will not work out like that, but the treaty obliges all institutions to act in that way.
The second point that I hope hon. Members will appreciate is that, before we accept the idea that a central bank should be set up to solve all the problems and achieve low inflation—although in fairness any fool can achieve low inflation by creating 3 million unemployed—we should look at the examples of the recent miracle cures offered by the EEC.
I shall not refer in detail to the miracle cure for agriculture which was to give a fair deal to our farmers and consumers—the common agricultural policy. Despite the years in operation and all the reforms, we are now in the crazy situation where mountains of food and expenditure on the CAP are higher than they have ever been and the people are paying more than ever for their food compared with world prices. The system is a shambles and a nightmare and is not working. The same argument applies to the ERM, which is closely linked because, unfortunately, we are obliged to try to move back to fixed exchange rates when the treaty comes into force.
§ Dr. Norman A. Godman (Greenock and Port Glasgow)I am grateful to the hon. Gentleman for showing his characteristic courtesy in giving way. He spoke about his correspondence with the Prime Minister. Has the hon. Gentleman at any time raised with the Prime Minister the likely location of the bank? Is the hon. Gentleman confident that it will be located in London with various agencies and functions carried out from a site in Edinburgh?
§ Sir Teddy TaylorI have not raised that issue. When one opposes the establishment of a central bank, it is a bit devious to say, "I want it in my constituency or in London or Edinburgh." When one holds the view that the principle of a central bank that is based on policies of fixed exchange 1027 rates is bad, it would be dishonest to suggest a location for it. I am sure that many hon. Members will suggest excellent places for the bank.
§ Mr. Geoffrey Dickens (Littleborough and Saddleworth)How does the ballot box affect banking? If one banks with the Hong Kong and Shanghai bank, the Bundesbank or Barclays, one is not affected by the result of a general election. Hundreds of thousands of companies in this country have to rely on the good will of banks, often to keep them afloat. My hon. Friend grossly exaggerates and clearly does not understand banking.
§ Sir Teddy TaylorMy hon. Friend and his colleagues voted for this wonderful new arrangement called the ERM on the basis that it would bring growth and stability. I know that, as a splendid and respectable person, my hon. Friend did that with sincerity—not because he was told to do so by the Whips but because he knew it was the right idea. I appeal to him to think of the unemployed. Think of the people whose houses are being repossessed as a direct result of a policy that is economic lunacy.
§ Dr. Keith Hampson (Leeds, North-West)That is not the fault of the exchange rate mechanism.
§ Sir Teddy TaylorMy hon. Friend says that is not the fault of the ERM. We know that the British people are having to pay a huge amount of extra cash in taxation—
§ The ChairmanOrder. The hon. Gentleman has assiduously attended the Committee, but his remarks have little to do with the issue of a central bank. Will he please address the amendments?
§ Sir Teddy TaylorCertainly, Mr. Morris. Once a central bank is established, we shall be obliged to return to the ERM and fixed exchange rates. The whole principle behind the central bank is monetary union based on fixed exchange rates. That will again create unemployment and misery, because if one tries to pretend that something is not its worth, one has to distort other factors.
§ Mr. Bill Walker (Tayside, North)My hon. Friend, as a fellow Scot, will recognise that the United Kingdom's central bank is the Bank of England. He may care to inform my hon. Friend the Member for Littleborough and Saddleworth (Mr. Dickens) that the Royal Bank of Scotland, the Bank of Scotland, the Clydesdale bank and all the other banks in Scotland have no say in interest rates, because they are set centrally by the Bank of England.
§ Sir Teddy TaylorMy hon. Friend is absolutely right. The argument is made that we are giving power to the people by obtaining exemption from stage 3. In fact, they will be in the same position as the people of Scotland, who have a Scottish pound note but no control over the United Kingdom's economic policy.
There is not the slightest evidence that passing over all economic power to a central bank will make matters better for the people of Britain. I have sat here treaty after treaty, night after night, debate after debate hearing about the wonderful ideas coming from the EEC that will solve problems and make life better. I wish that my hon. Friends—including those who are smiling, on the Front Bench below the Gangway—would look at Europe today. Do 1028 they see a growth in prosperity? Sadly, they see an area in structural decline and with mass unemployment. When countries such as America have steadily lowering unemployment rates, we should recognise that Europe is in structural decline. As a country stuck on the edge of that, ours would not benefit in any way.
We have tried the common agricultural policy, the ERM and other Euro-policies. When people say that a central bank is the answer, we should tell them that, on the basis of all the evidence, we do not accept it.
No one has argued in the debate that a central bank is a great idea. The European debate has changed dramatically since 1972. There always used to be a bunch of true enthusiasts who said, "This is going to be good. This is going to be great for Britain." With the arrival of the Single European Act, a good number of people still genuinely thought that it would be good for Britain. I gain the impression that very few people—apart from the small number of fanatics that one always finds in both parties—really believe that Maastricht will do any good for this country or its people.
§ Mr. MarlowSurely my hon. Friend knows what has been happening in the background and in the Lobby and that the Government have been saying, "It isn't going to happen. Don't worry—there isn't going to be any monetary union. This horrible edifice isn't going to be built." If that is the case, the contract, and the legal detail—if that is what we are being asked to pass—is it not wrong that we should consider something that is nonsense and then vote for it?
§ Sir Teddy TaylorYes. I will come to that point in a second.
The Government say that if we do not give our approval, bad things will happen to Britain—that it will somehow be sidelined. We should ask ourselves whether it would make matters infinitely worse if we were prepared to say no to a central bank. Britain would be greatly strengthened. Time will tell. My hon. Friend is right to say that the arguments used now are, "Don't worry about a central bank or a single currency. It is not going to happen. It will all break down." Some people genuinely believe that.
§ Sir Teddy TaylorThey know, for example, that fixed exchange rates can never work in the long term. There is no way in which all the countries will develop equally. The argument is made by some—including my hon. Friend the Member for Harrow, East (Mr. Dykes)—that the problem will be solved by dumping vast amounts of money on areas that are not doing so well, to bring them all up to the same level of achievement and activity. If one looks around the world one sees that that is nonsense and does not work.
§ Mr. MarlowMy hon. Friend the Member for Harrow, East (Mr. Dykes) has just said, from a sedentary position, that he believes that it will go ahead. Does that reassure my hon. Friend?
§ Sir Teddy TaylorMy hon. Friend the Member for Harrow, East (Mr. Dykes), who has consistently supported the EC, probably does believe that. I ask him to look back at what has happened to our economy, our democracy and, above all, the powers of the people since we joined the Community. I believe that some people are 1029 supporting all this nonsense because they do not believe that it will happen, but some support it because they feel that we cannot act in any other way. Those people have lost hope and they have lost faith.
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Even if some people think that we should go ahead with the central bank and the transfer of power to non-elected boards, councils and commissions, we have no right to do that without informing and consulting the public. It is shamefully wrong that we should push ahead a massive change in our democratic system without telling and consulting the people.
§ Mr. Derek Enright (Hemsworth)I am grateful to the hon. Gentleman for giving way; he always shows great courtesy in that regard.
I have some sympathy with the hon. Gentleman's arguments about democratic control. I, too, am worried about what is happening to the police, hospitals and the education system. What worries me is that I can find precious little in the Bank of England that responds democratically to the worries of my constituents in Hemsworth. The position has been the same under successive Governments of both hues.
§ Sir Teddy TaylorThat is the whole point. The hon. Gentleman may believe that Conservative policy on the police is rubbish and takes away democracy; that is a fair argument. He may believe that Conservative policies on education are terrible and undemocratic. He may feel that we are not using the controls of the Bank of England in the proper way. If he holds such views, however, he can go out there and fight, get people to vote for him and secure the return of a different Government who will approach things in a different way. The tragedy of the transfer of power to non-elected institutions—to boards, councils and commissions—is that, if the hon. Gentleman suddenly decides that those bodies are pursuing policies that are bad for employment and industry and dreadful for Britain, lie will be able to do nothing.
§ Mr. EnrightWill the hon. Gentleman explain how we elect the officials of the Bank of England?
§ Sir Teddy TaylorAs we know, the Governor of the Bank of England is appointed by the Government of the day and economic policy is determined by the Government. The present Government have pursued certain policies which they assure us will improve the economy and, of course, we hope that they are right; but the point is that, if they are not, people can do something about it. There is something terribly dangerous and bad about the taking of all power of control from the people and the ripping out of democracy.
I ask my hon. Friends to think about this. If the Maastricht Bill goes through and a central bank is established, what on earth will they tell voters at the next election? We shall have some control over the council tax and the grammar schools; we shall have some control over the amount of income tax within a global total of taxation, which will be subject to negotiation and determination on the part of non-elected bodies. Basically, however, the power of the people will go. I believe that the creation of a central bank and the monetary policies of the EC will create mass unemployment and misery and more protectionism; I think that it will be horrible for all our people.
I may be wrong, but the crucial point is that, if we agree to the Bill, what we had will have gone for ever. We shall not be able to sit down suddenly and say, "Let us change all this: it is not working." Sadly, we know from our experience of the common agricultural policy that policies do not simply get changed, particularly when many countries feel that they are doing very well out of them and getting lots of money.
I hope that we shall use the amendment not to try to score party points, but to persuade ourselves that something huge, important and significant is happening to our democracy. We have no right to allow that unless we are convinced that it will benefit our people—or, more important, unless we have given the people a chance to decide for themselves.
§ Mr. ShoreLike other hon. Members, I shall say something about the independence of the European central bank because it merits considerable discussion; but, before I do, I wish to mention the concept of the central bank and a single currency. The two clearly go together: we shall not have a central bank unless we are to have a single currency.
I am wholly unconvinced about the case for a single currency, which is central to the whole argument. It would be a serious mistake if we were to allow ourselves to be absorbed into a single currency, partly because of the difficult issue of convergence. We have had debates about convergence, purely monetarist indicator convergence and what we sometimes call convergence in real economic aggregates.
There is one particular difficulty about convergence. Let us suppose that, at one particular point in time, it could be arranged that all the countries which were potential or candidate members to join the single currency were all enjoying balance of payments equilibrium, full employment and other ideal circumstances. Even if it were possible at that moment to set up a single currency, it could not last. The conditions would change, and we all know the reasons. There is a dynamic working with different force and at a different speed in different parts of the vast area which would be formed in western Europe, and including the United Kingdom. The factors operating in different countries, and perhaps in different regions, are so clearly visible that the dream of a single currency looks like a nightmare when we start to consider the consequences of being locked into a single currency when there are differential rates of growth.
I did a simple calculation about relative movements in the growth of gross domestic product in the seven major economies of the western world. I took 1989 as 100 for all of them. By the end of this year, the estimates are as follows: France, which starts as 100 in 1989, reaches 107 by the end of 1993; Germany, which startes at 100, ends at 111; Japan, which also starts at 100, ends at 114; but the United Kingdom, which started at 100 in 1989, will be 99 at the end of 1993. Within four years, there is a spread of rates of growth, ranging from 14 per cent. for Japan and minus 1 per cent. for Britain. That could be different at different times, or we may do much better.
However, if there were no means of adjusting the rate of exchange of the yen and the pound—if they were frozen together—the consequences for the pound and the United Kingdom would be very severe. Throughout the history of the world economy as it has developed, there have always been movements and adjustments between currencies. There must be, otherwise there would be no tolerable way of making adjustments other than accepting that in the areas that are doing less well than others there would be constantly rising unemployment, whereas in the areas of great prosperity there would be ever-increasing investment. There would be an ever-increasing movement of people from the depressed areas to the areas that were doing well.
We know all this from our experience in our own country over the years. In the past we have had to use powerful instruments of regional policy to correct the tendency. The alternative would have been to let the south of England drain the north, Scotland and a large part of Wales, and let people crowd into the south—as happened to a large extent in the inter-war years.
1032 If there is a single currency in Europe, inevitably there will be a differential rate of growth. We know where the strongest economy in the European Community is located—it is still in Germany, and when Germany has absorbed the former East Germany it will be the super-economy of the European continent. The effect of that on the United Kingdom and on other economies that are not as powerful, and are not growing as fast, will be as I have described. They will experience either rising unemployment or a substantial movement of their people and their investment to the areas of greatest growth.
§ Mr. DickensDoes the right hon. Gentleman agree that convergence would be well-nigh impossible? I do not believe that there is a snowball's chance in hell of there being a single currency. The difficulties are compounded by the fact that, with more countries coming into the European Community, the criteria will not allow for convergence so easily, and the numbers complicate things further. I do not believe that we would ever get into that situation. Even if we did, we should of course maintain the opt-out clause—but I do not believe that we would ever have to use it.
§ Mr. ShoreIt would not be impossible for those events to happen—although it would be foolish to allow them to happen.
In discussing the amendments, we must assume that the option to enter a single currency has been exercised—otherwise the debate would be rather unreal. I agree that that involves a hypothesis, and there is still a big question mark over it. In 1996, or whenever the moment of choice arrived, would the Government opt for a single European currency? Would they want to? In view of some of the criteria for opting in, would they be able to? I do not want to develop that argument now, because it would lead us back into another debate, about the transition—but what I fear most is that the Government may make a serious effort to opt in, which would involve a calamitous squeeze on the British economy. We know the problems that our economy is facing now, and from the financial statement we know what the prospects are for the next four or five years.
The conclusion to which I am coming is familiar to others who have addressed the problem. There may be a single currency, but there will be differential rates of growth and of prosperity. Therefore, either there will be a disastrous situation in the less prosperous and less dynamic regions, or there will have to be an enormously powerful regional policy.
With the best will in the world, there is not the will within the EC for a powerful regional policy. I know that the optimists in the Opposition will say, "Over the years we shall try to develop regional policy and try to pretend that we really all are absolutely identical in our motives and our feelings about each other. We shall come to the conclusion that our feelings about Italy, Greece and so on are exactly the same as our feelings today about our fellow countrymen." That may be a worthy ideal, but it is not the reality. It is difficult enough to sustain a strong regional policy in this United Kingdom.
§ Mr. Austin MitchellDoes my right hon. Friend accept not only that that is unlikely but that, if it happened, we 1033 would still be the second largest contributor unless the problem of redistribution was tackled so that contributions were measured in terms of ability to pay?
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§ Mr. ShoreThat is absolutely right. The whole question of the criteria governing existing regional policy would need to be looked at and, indeed, changed, because that policy is built on objective 1 areas, which are receiving or will receive substantial assistance. Other areas of great need and rapid industrial change get very little regional assistance, and that assistance is not likely to increase.
I have made my point about the difficulty of sustaining a powerful regional policy within a single country. The difficulty of operating a really serious regional policy covering the whole of the half-continent of western Europe will be very much greater.
The only person ever to make a serious study of the problem was Sir Donald MacDougall, a most distinguished economist, who was chief economic adviser to the CBI and, before that, director-general of the Department of Economic Affairs. Donald concluded that one would need a shift of resources equal to 7 per cent. of the Community's GDP. The total European budget is about 1.2 per cent. and the regional fund accounts for about 15 per cent. of that sum. So we are talking about a sum 30, 40 or 50 times greater than what is now available in the enhanced structural funds that have existed since the European Single Act was passed.
The truth is that the enhancement of those funds was to take account of the introduction of a single European market. There has been no enhancement, and no proposal for the enhancement, of regional and structural funds to take account of the progress towards a single currency.
§ Mr. ShoreI accept that, but that was part of the whole package to get four particular countries, which were rather like client states, to take a favourable view. [Interruption.] I invite hon. Members to turn their mind to the meeting in Edinburgh and what Mr. Felipe Gonzalez was trying to achieve. Having established in principle the idea of a fund, he wanted a great deal for Spain—and he got it. The Spanish side of the bargain was, "If we don't get this, we will not give our approval."
§ Mr. HoonMy right hon. Friend always advances a very logical argument. He talked about differential rates of growth. There are already differential rates of growth in each nation state—for example, the London area grows faster than the regions. That partly explains why unemployment is higher in the regions than has historically been the case in the capital city. The right hon. Gentleman would not, for one moment, blame that on the fact that the United Kingdom, like every other member state, has a single currency.
If I followed my right hon. Friend correctly, part of the justification of his argument was that such matters turn upon balance of payment flows and on the deficits created where some countries are growing faster than others. If there were a single currency, there would not be any purpose in calculating balance of payments deficits. We do not calculate the balance of payments deficit as between London and the north. We make no careful calculation of the movement of goods. My concern about my right hon. Friend's impeccably logical analysis is that it operates 1034 from the existing system and presupposes that the position would not be significantly different after the introduction of a single currency.
§ Mr. ShoreThat is an interesting point. My hon. Friend is quite correct in saying that the balance of payments problem, which reflects inbalances of economic performance, would not be visible in a single currency. But the underlying consequences would be the same. Unless there was a correction of some kind—an increase in resources put in—there would be an increase in unemployment in and a movement of people out of areas that were not doing well. We would lose, as it were, the danger signal of a balance of payments deficit. We would not be aware of the physical problems until a disastrous slump was upon us.
§ Mr. Bill WalkerFor nearly 300 years, we in the United Kingdom have operated a single currency and a single bank. During periods of economic difficulty, the discontent and unhappiness felt by people in the regions soon made itself manifest to their parliamentary representatives. We have democratic control here, so we are able to act quickly in such circumstances.
A single currency and a single bank, with the absence of democratic accountability, is not the answer. The people of Britain can complain to, and about, us and there is the ability to change Governments, sometimes at relatively short notice. That represents a balancing factor, for at times we have moved people from poor to wealthy areas and have transferred vast amounts of taxpayers' money from wealthy to poor areas. We have been doing that for nearly 300 years, and the facts are there to be seen.
§ Mr. ShoreThat raises the whole question of what is a community. We refer often to the European Community, but I am not sure that it is a community in the same sense that, for example, the United Kingdom is a community. We feel closer because they are our own people, and we are prepared to do more for them—as we are prepared to do more for our families—than we are prepared to do for others.
That does not mean that we shall be pig-headedly obstinate or ungenerous in our dealings with others. On the contrary, I hope that we shall be very generous. But it is no good pretending that there is the same degree of commitment and sense of genuine community and union between the countries of Europe as there is within each country. We must bear that in mind, particularly when we are talking about the need to transfer major resources to compensate for the effects of a single currency.
§ Mr. EnrightDoes my right hon. Friend recall some of the difficulties he had when Secretary of State for the Environment? For example, when I chaired the West Yorkshire planning and transportation committee, we had some negotiations with him. I remember the way in which I thought he and his colleagues conducted a very centralised administration. I did not realise how little centralised it was until the Conservatives took control. Even so, the response we got was carefully noted in the region.
I suggest that many of the disparities in the regions are recognised more as a result of what is happening in Europe now—because it is essentially a Europe of the regions—than as a result of what is happening in central 1035 Government. Much the same applies when we are in power, although slightly modified, or the Conservatives are in office.
§ Mr. ShoreMy hon. Friend gives a strange viewpoint. Perhaps it reflects past insensitivities. In an earlier ministerial experience, when Secretary of State for Economic Affairs, I was responsible for regional policy. We had a picture, a map, of the whole country showing the state of employment and unemployment and the future commitment of new work into every travel-to-work area throughout the United Kingdom. We put enormous resources into a powerful economic regional policy. In addition to the old development areas, we had special development areas and intermediate areas. Later, as Secretary of State for the Environment, I was involved in putting resources into the inner cities, which had been neglected for too long.
We were able to do that because we had the knowledge, the information, the commitment and a sense of being one political community. We used the strength where we were strong to help weak areas in our country. That is natural; it is what one expects. That is the real meaning of community. The European Community is a different sort of community.
§ Mr. Bowen Wells (Hertford and Stortford)Would the right hon. Gentleman reflect on the experience of the United States, which created a single market among the states of America? The number of states increased over 100 years. A single currency among the states was not established until 100 years after the formation of a single market and the free movement of people. A single currency and a central federal bank were established because one currency became paramount—it became so strong that all the states decided that it would be better to have one currency and trade without the problems which resulted from the differential exchange rates among the states rather than continuously adjust them.
It seems that exactly the same process will take place in Europe because the deutschmark will become the common currency. With the common currency in the hands of the Germans, and with the Bundesbank under its present constitution—which involves currency stability only within the borders of German—we would have absolutely no say about or influence over monetary policy throughout Europe. Therefore, it is essential that we establish a central bank and a single currency which we can influence through democratic institutions.
§ The Chairman of Ways and Means (Mr. Michael Morris)Order. This is a long intervention. The hon. Member's point has been made.
§ Mr. ShoreThe comparison with the United States is not helpful to us. There are so many obviously special circumstances in the history of the United States that one cannot make an easy comparison between what happened there and what may happen in western Europe. A factor which we cannot leave out when we look at the United States is that it has a single Government, a single central bank and a single currency.
I know that some Labour Members long for such a fulfilment and development. However, that is not the line taken by those on the Labour Front Bench—not publicly, 1036 at any rate—or the Government Front Bench. Without that fulfilment and development, we will face serious problems, as the more honest federalists in the Labour party are willing to acknowledge.
§ Mr. MarlowWill the right hon. Gentleman give way?
§ Mr. LeightonIn addition to the original policies of the sort over which my right hon. Friend presided when he was Secretary of State, it is not the case that public expenditure is redistributed in nation states because richer people and richer areas pay in more and draw out less, and poorer people and poorer areas pay in less and draw out more in benefits? Is it not also the case that local government expenditure by rate support grants is redistributed and consists of transferred payments from richer areas to poorer areas?
Public expenditure in nation states is about 40 per cent., but the budget in the European Community is only slightly more than 1 per cent., most of which goes on agriculture. We are not comparing like with like. Public expenditure is minuscule and inadequate to overcome the damage which will be done by a single currency.
§ Mr. ShoreMy hon. Friend is absolutely right, and it is relevant to the argument. When I think about the transfers which take place in the United Kingdom as a matter of course through rate support grants and so on, I sometimes say to myself that MacDougall, in his 7 per cent. of gross domestic product, greatly underestimated the sums which are needed. They are much less than the sums which are dispersed through the federal Government of the United States to the different states which make up the union. We have established that point.
The independence of the European central bank has been the subject of considerable discussion already. I have made it clear that I believe that the single currency idea is basically flawed. That is my position. I am holding on to that. I understand that many hon. Members are interested in the question whether a European central bank should be independent, more or less on the German model, or should be brought under ECOFIN.
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It is not necessary to read article 107 again. No one who attaches any importance to the meaning of words can doubt the strength of the commitment to an independent central bank. It is extraordinary. Not only shall the bank not seek or take instructions from Community or national institutions, but the Governments and the Community institutions
undertake to respect this principle and"—almost unbelievably—not to seek to influence the members of the decision-making bodies".That declaration of independence goes far beyond anything which affects the federal bank in Washington or any other independent bank that I have ever heard of. The wordsnot to seek to influenceare almost unbelievable, but they are part of the treaty and have all the authority of the treaty. They have the authority that they may be interpreted, if need be, by the European Court of Justice. That is why provisions are put into treaties.
§ Mr. RadiceWill my right hon. Friend give way?
§ Mr. ShoreNot for a moment. I want to develop the point further.
I find the provision in article 107 extraordinary. My hon. Friends find it difficult to cope with. They know that it is wrong. They know that such a separation is unacceptable to them because they have intellectual honesty. They know that they cannot accept it because it is intolerable and ridiculous to hand such power to independent bankers. They have to continue pretending that it is a mistake—perhaps a misprint in the text. We heard some of that today.
My hon. Friends have a considerable record in saying that they would never accept a provision such as article 107. The famous document "Meet the Challenge: Make the Change" did not acknowledge the concept of economic and monetary union. It dealt mainly with the exchange rate mechanism. My hon. Friends may say that that was in 1989. What about 1990? Another document went to annual conference then and received whatever approval one obtains there. It said:
premature monetary union would damage Britain… The bank, which will be responsible for the day-to-day management of monetary policy, should be statutorily accountable to ECOFIN for meeting its monetary objectives.The principle was stated with clarity.A similar pledge was made in a later document in 1991. Those were the policy statements of the Labour party up to the 1991 annual conference, the last before the election. We still maintained that it would be intolerable to have a European central bank which was not controlled by a powerful ECOFIN. Now things have changed. Things were slipped out of the national executive and joint meetings of the shadow Cabinet and the national executive in the run-up to the election.
As we know, there was no further annual conference, so the new absurdity is that, apparently, at its last annual meeting, the party agreed to accept it on the ground that it was the best thing we could get. However, it is a major change from the commitments of the past three years. I well understand that my hon. Friends feel uneasy and that leads them to make assumptions about the treaty that are far from the truth.
I do not wish to subject to detailed criticism the proposition that we need a powerful ECOFIN to control the otherwise independent bank, but let us take it at face value. Do we want that?
The treaty contains the opposite of what we want, with all the entrenched authority of a treaty commitment. Some of my hon. Friends say that it simply requires political will, with a powerful new Labour Government storming into Brussels and saying, "We want ECOFIN. We want to bring that great institution under our control." I do not know who they would find as their allies in that task. I am afraid that there will be no French socialist Government available in the next few years. I do not think that there will be a French socialist President for very much longer, so we will find no allies there. According to all accounts, even when we had those allies they were not very successful in getting their way with the other partners in the European Community.
§ Mr. MarlowIt is worse than the right hon. Gentleman says. It would not matter if that exciting, new, dynamic Labour Government were to rush across to Brussels with 1038 those ideas. The Commission would have to propose and the European Parliament would have to agree before any changes could be introduced.
§ Mr. ShoreIndeed, there are many complications. The basic point is that there has been no evidence whatsoever of any substantial body of opinion in the Governments of the present member states in favour of a powerful ECOFIN to which the European central bank is to be made responsible. It simply is not there. Instead, we have the overriding view of the Germans—and it is above all a German institution. As the Germans are deeply afraid of inflation following their appalling experience in the 1920s, we have the most anti-inflationary structure for the bank and the greatest independence for it written into the treaty, in contrast to the wishes of my hon. Friends.
What we have heard from the Labour Front Bench and from a number of Back Benchers is simply wishful thinking. They want it to happen, but it is not there. The opposite is there and they cannot deny it.
We had a reminder of the absurdities and costs of the common agricultural policy. When something is in a treaty—the CAP is in the treaty of Rome—and buttressed by regulations, it takes a great deal to get rid of it.
As long as I have been in politics we have been reforming the common agricultural policy. What about the Mansholt plan? Remember him? Great things were to come from that. There have been wonderful arrangements every decade. We have come back in triumph from negotiations saying that at least we shall put an end to the surpluses, the wine lakes and so on. What has happened? Where are we? We still have the CAP; it is jeered at and laughed at throughout the world, except where it causes considerable pain because it is protectionist and does such damage. It is an absurdity of a policy, but it remains.
When something is written into a European treaty, it takes almost an earthquake to get it out agin, so my hon. Friends should not pretend that there is no substance, weight or authority in what is written into the text of a treaty. Unless they are prepared to face that fact, they are not doing much credit to themselves or to any serious discussion of what is involved.
§ Mr. EnrightI am very grateful to my right hon. Friend for giving way yet again, but may I remind him that it was during the tenure of his Government and his Government's negotiations—[HON. MEMBERS: "Ours."] I was certainly in the party at that time and I supported the party, but I was not, alas, a member of the Government. It was a Government of which my right hon. Friend was a member which negotiated access to the sugar market for British sugar beet farmers, resulting in huge excesses of sugar which continue today, to the detriment of the third world. I deplored it then, and I deplore it now.
§ The ChairmanOrder. I do not think that we need develop an argument on sugar. We are discussing the central bank.
§ Mr. ShoreMy hon. Friend has not, frankly, recorded accurately the history of those years.
I was going on to deal with the desperate plight of my hon. Friends in trying to prove that ECOFIN will be in charge of the European central bank. They are in great difficulties. When they have reached the end of their tether, as it were, when the last possible argument has been produced and dismissed by better information, what do 1039 they say? It is fascinating. They say that we may be right, but that it really does not matter anyway because we have no freedom with our interest rates and exchange rate, that we are dominated by the Germans—we have heard this from all sides—or the Americans or whatever. It really does not matter, they say, that we are transferring one of the great instruments of macro-economic policy to an unelected, unaccountable institution in Europe. We are transferring the power to set our own interest rates and our own exchange rate, and they say that it does not matter. It is not just recently that they have been saying it; they have been saying for the past couple of years that we will have no power over our own interest rates and our own exchange rate.
We know what the answer to that is. Some members of the Government may have shared that view at some stage, but events are a marvellous tutor, and the events on what some hon. Gentlemen call "white Wednesday" in September 1992 showed us that there is a freedom. It is not, of course, a freedom to lower one's interest rates to the point of oblivion. We cannot go right down from 10 per cent., I think it was, before we added the 5 on the fatal day, to 3 per cent., because there are world factors and influences to be taken into account. But there is a big difference between being, as we were on 13 September, 2 per cent. higher than German interest rates and being, as we are today, at least 2 per cent. lower than German interest rates. That is quite a margin of freedom.
If anyone doubts it, let him talk to British industries, which are now borrowing money at much better rates than they were able to do six or nine months ago, and ask whether they would prefer to be a firm in France, where the bank rate is not 6 per cent. but 12 per cent., holding the "franc fort", looking the deutschmark in the face, and accepting for an incredibly long time quite unacceptably high employment, almost the same as our own, 3 million. Frankly, was what happened last Sunday surprising? It should be a lesson for socialists everywhere.
§ Mr. GouldMy right hon. Friend makes a powerful case, but one can add to it. He will recall that before 16 September we were solemnly assured that withdrawing from the exchange rate mechanism would not give us greater freedom to set our own interest rates and that if we dared to break the arrangement interest rates would have to rise. Does my right hon. Friend recall that advice, and what does he think of it?
§ Mr. ShoreYes, I remember hearing that. Undoubtedly, people had that anxiety. I do not think that it was very rational, but, frankly, the Treasury has not been very good at judging or forecasting matters affecting the exchange rate or interest rates.
When we entered the ERM in October 1990, I remember saying—this is not hindsight—that I was convinced that it was the wrong rate; and I am not a great currency expert. From what I could see of the pre-fixed exchange rate and the performance of the British economy, especially in terms of its balance of trade deficit, it seemed self-evident that it was wrong. But the Treasury went ahead, and in written and oral answers to my questions I was assured that the most expert people had been consulted, and different authorities had suggested 1040 that entry was right. I am afraid that they were wrong, and they were also wrong about their estimates of the effects on interest rates and other things of getting the pound out of the ERM.
§ Mr. Nicholas Winterton (Macclesfield)The right hon. Gentleman has referred to the "independence" of the new European central bank, but is he not misguided in using that word? Does he not mean that it is unaccountable? Bearing in mind the huge powers that the bank will have to control the economies of all the countries that comprise the European Community, and given the fact that its policies to deal with and to limit deficits could create massive unemployment in certain parts of the Community, will it not undermine democracy and accountability? As several hon. Members have said, perhaps it will force the people of this country reluctantly to take to the streets to exercise the democratic rights which the body will deny them.
§ Mr. ShoreThe hon. Gentleman is correct. The bank will be both unaccountable and independent.
The political authorities will be totally incapable of influencing the top management of the European central bank. I remind the House that the four executive members of its board and the chairman and vice-chairman are to be appointed for a one-term, eight-year period. Even the most timid people are likely to be very independent in their judgment if they are appointed on such generous terms. One cannot be reappointed, so it is no good sucking up to people or assisting them in any way. The executives are meant to be independent and one could not conceive of any arrangement that could make them more so. That is written into the protocol on the European central bank.
An adjacent matter is also very important. The hon. Member for Macclesfield (Mr. Winterton) was absolutely right: okay, we will have an unaccountable central bank. What are its terms of reference and what has it been asked to do? Article 105 states:
The primary objective of the ESCB"—European system of central banks—shall be to maintain price stability.I do not want to go over all the previous arguments about that, but it is the deflationary heart of the treaty, and it reflects German historical experience and their insistence on those terms of reference before they would agree to the treaty. That clause is very important.Let me return to article 2, which contains a general statement. I know that the phrase "high unemployment" is used three times in the treaty, because my hon. Friend the Member for Western Isles (Mr. Macdonald) corrected me when I said that it was used only twice. Nobody can possibly say that this is not very important. But the faith of my hon. Friends in article 2 is rather misplaced, for another reason. Article 2 must be read in conjunction with article 3a. I do not know whether hon. Members have had a chance to look at the latter. As it is highly relevant, I shall quote it. Paragraph 1 says:
For the purposes set out in Article 2"—including high employment and all these other lovely things—the activities of the Member States and the Community shall include, as provided in this Treaty…the adoption of an economic policy which is based on the close co-ordination of Member States' economic policies".Paragraph 3 says: 1041These activities of the Member States and the Community shall entail compliance with the following guiding principles".What do hon. Members think those guiding principles are? A high level of employment? One looks in vain for that. The principles stated are stable prices, sound public finances and monetary conditions and a sustainable balance of payments. One does not find there much encouragement for those who have pinned their faith on article 2. As I said earlier, we should take article 2 more seriously if there were a 10-page protocol on full employment in the European Community.
§ Mr. MandelsonMy right hon. Friend is right to draw attention to these provisions. Indeed, I have the page flagged and intended to quote from it if given the opportunity. My right hon. Friend refers to sound public finances and a sustainable balance of payments. Why does that give rise to such horror? Why should we, instead, be in favour of unsound public finances and an unsustainable balance of payments?
§ Mr. ShoreThere is no doubt that a sustainable balance of payments is crucial. However, the factors that are picked out here are ones that curtail employment, rather than help to create it. Nobody, except perhaps the Germans, has ever had stable prices and full employment. Sound public finances mean a public sector borrowing requirement of less than 3 per cent. of gross domestic product. And what are sound monetary conditions? Tight money? Certainly, and monetary discipline. I want to find the things that my hon. Friend the Member for Hartlepool (Mr. Mandelson) would have been delighted to find. If there had been a preference to high employment, would he not have waved his papers in the air and rejoiced? Such a reference would have given a little credibility to his faith in article 2.
§ Mr. ShoreI shall not give way. I want to come to a conclusion.
These are not very encouraging guiding principles for people concerned with the achievement of high rates of growth and low rates of unemployment.
I want to put to the Minister a question about article 19 of the protocol in respect of the statute of the ESCB. This seems to give the central bank power to demand minimum reserves for banks and other financial institutions. I have not had an explanation of what is entailed. Is the point that, in order to secure what the bank considers to be sound monetary conditions, it could, like the Bank of England in times past, call up deposits from commercial banks, to be non-interest-bearing and frozen as part of a tight money policy? I should be grateful if the Financial Secretary would explain that—not necessarily now, but when he makes his speech.
Article 108 is a simple little article that states:
Each Member State shall ensure, at the latest at the date of the establishment of the ESCB, that its national legislation including the statutes of its national central bank is compatible with this Treaty and the Statute of the ESCB.My hon. Friend the Member for Oxford, East (Mr. Smith)will have swallowed hard and put on a brave face when he reached that disagreeable item.When the Labour majority Government came to power in 1945, the first thing it did—virtually with the assent of the then Opposition—was to place, not just in public ownership but in Treasury control, the Bank of England. 1042 If I can recall one or two of the phrases that we used then, I think that we said that it was to finance the servant, not the master, of the nation. That was the sort of approach that we took, and we meant it. We meant to take over those factors that greatly influenced the lives of our people. I find it difficult to detect any vestige of the socialist tradition in those of my hon. Friends who are cheerfully contemplating handing over the power of democratic control through our democratically elected Government and Chancellor here to an unelected bank in Europe. I think that such an attitude is utterly deplorable, and I hope that the Labour party will rethink what it is doing.Can anyone envisage the circumstances in which the next Labour Government would come before the House and, in its first Bill, repeal the Bank of England Act 1946 and formally renounce the power to control this country's monetary system? We would die of shame. I am certain that many people in the Labour party would never accept it.
§ The Financial Secretary to the Treasury (Mr. Stephen Dorrell)The group of amendments addresses the institutional implications of those sections of the treaty which deal with the possibility of the establishment of a single currency. Much of the debate has proceeded on the assumption that there will come into force and apply in this country a European system of central banks which will operate a single currency in this country. I shall return to those arguments later.
First, however, I wish to pick up an issue raised by the right hon. Member for Bethnal Green and Stepney (Mr. Shore). He said that for the debate to proceed on such a basis would be to make a substantial leap of logic. The success of my right hon. Friend the Prime Minister at Maastricht means that the House is not being asked now to accept the proposition that a single currency should be circulating in this country or that the institutions set out in the treaty should come into force to operate that single currency. As a result of the British protocol negotiated by my right hon. Friend the Prime Minister, that decision will be made later. That is not the issue before the House today.
§ Mr. Andrew SmithIn the light of what the Minister has said, may I ask if he is aware of the article written by the Prime Minister when he was Chancellor of the Exchequer in The Irish Times on 6 July 1990? He wrote:
There is no more important issue facing the European Community than the path we choose towards economic and monetary union. We are all committed to that goal.Are the Government still committed to that goal?
§ Mr. DorrellThe goal of economic and monetary union has been accepted by EC member states since the early 1970s. The issue is the precise form that the union will take. The treaty sets out a form of monetary union and contains the British position on that form—that under the terms of the British protocol we are not bound to introduce a single currency.
§ Mr. MarlowIf there is monetary union does that not mean that there will be a single currency?
§ Mr. DorrellNo. That is precisely why in the run-up to the Maastricht negotiations we proposed not a single currency system but a common currency which within a monetary union would allow a range of different 1043 currencies to circulate. That is why we have not accepted a commitment to a single currency. We do not accept that commitment to monetary union necessarily implies a commitment to introduce a single currency.
§ Mr. RowlandsWhy in 1993 do we have to write into our domestic legislation all stages 1, 2 and 3 articles and all the protocols? Why not do that in 1996?
§ Mr. DorrellAs the Government made clear in another context, in the Bill, as in earlier legislation to introduce treaty obligations to our domestic law, it is more sensible to legislate for all the implications which might arise from the treaty. That lies behind the drafting of the Bill.
§ Mr. Marlowrose—
§ Mr. DorrellPerhaps my hon. Friend would allow me to answer the question put to me. It is more sensible to introduce into our legislation the provisions which would be necessary if we exercised the choice provided for by the British protocol. That is in line with the manner in which we have legislated for treaty obligations in the past.
§ Mr. SpearingI think that the Minister asserted that the commitment or obligation to economic and monetary union went back to the early 1970s. I do not recall any such commitment in the European Community debates in 1972. My recollection and that of my hon. Friends is that the Government referendum document of 1975 specifically stated that the threat of economic and monetary union had been removed. I do not recall any Conservative denying that. What was the commitment of the early 1970s?
§ Mr. DorrellThe amendments concern the institutional arrangements for the operation of a single currency. At the time of the referendum the argument was not that there was no further Community interest in economic and monetary union—that would have been a hard argument to advance—but that if there was to be a decision to introduce economic and monetary union it would require at the very least unanimity in the Council. Any significant move down the road of such union would involve a treaty amendment, which is precisely what we are debating.
§ Mr. MandelsonThe point about the early 1970s is rather fine and arcane. More relevant is the position of the Prime Minister. For the benefit of those who are following the debate it would be worth clarifying the answer the Minister gave to my hon. Friend the Member for Oxford, East (Mr. Smith), who quoted from an article in The Irish Times of Friday 6 July written by the then Chancellor of the Exchequer, now the Prime Minister:
There is no more important issue facing the European Community than the path we choose towards economic and monetary union. We are all committed to that goal.The Minister says that that is enshrined in the Maastricht treaty, but the Government take a separate position within the treaty. Presumably the Prime Minister has changed the view that he expressed in 1990—or does he now hold a minority position in his own Government?
§ Mr. DorrellI did not say that the position was set out only in the Maastricht treaty. I said that we accept the commitment to economic and monetary union, to which this country has signed up several times—including in the early 1970s. We do not accept that the only way to deliver monetary union in Europe is by introducing a single 1044 currency. That is why my right hon. and noble Friend Lord Lawson, who is not a supporter of a single currency, proposed to the Community that we should introduce provision for a common currency regime which would allow currencies to circulate within the Community on the basis of a monyetary union, but without the introduction—and certainly without the imposition—of a single currency. There is no inconsistency about that.
§ Mr. BudgenCan my hon. Friend say whether the Government are committed to moving back into a system of irrevocably locked exchange rates?
§ Mr. DorrellMy hon. Friend does not accurately describe either the history or the present commitment involved in the exchange rate mechanism. It is true that it is Government policy to return to membership of the exchange rate mechanism when the Government believe that it is in this country's interest to do so.
§ Mr. BudgenAre we committed to going back to irrevocably locked exchange rates?
§ Mr. DorrellThe answer is no. I understood my hon. Friend to ask whether we are committed to returning to ERM membership when it is in this country's interest to do so. The answer to that question is yes.
§ Mr. MarlowMy hon. Friend the Minister said that we are committed to economic and monetary union but that that does not necessarily mean to a single currency—but if one examines the treaty, the only option is a single currency. The Government are committed to the treaty and to economic and monetary union. How can there be economic and monetary union at a later stage without the treaty having a single currency? What alternative is available to the Government?
§ Mr. DorrellI explained twice the Government's preferred option in terms of a route to monetary union.
§ Mr. MarlowBut that is not in the treaty.
§ Mr. DorrellIt is not in the treaty, but neither is any obligation to join a single currency in the treaty. It contains commitments for this country, but a commitment to join a single currency is not numbered among them.
I was asked to give chapter and verse on the commitment in the early 1970s to economic and monetary union. Member states signed up to that at their conference in Paris between 19 and 21 October 1972.
§ Mr. LeightonThe Minister mentioned Britain's commitment in the early 1970s to economic and monetary union and the referendum. The 1975 manifesto of the Government of the day stated:
There was a threat to employment in Britain from the movement in the Common Market towards an Economic and Monetary Union. This could have forced us to accept fixed exchange rates for the pound, restricting industrial growth and so putting jobs at risk. This threat has been removed.
§ Mr. DorrellAs I have already pointed out, I do not feel responsible for that Government in a collective sense. The position in 1975—it remains the same now—was that no form of monetary union could be imposed on the country other than as a result of a treaty amendment, which would clearly require the consent not merely of the Government but of the House in the context of debates such as this.
§ Mr. BudgenWill my hon. Friend give way?
§ Mr. DorrellI should like to make some progress on the question which has provided the substance of the debate—the institutional arrangements which would be necessary if we moved to a single currency.
The question which underlies the Bill is this. Other sovereign countries in Europe have expressed an interest—some, indeed, have gone well beyond that—in introducing a single currency as the means of delivering our collective commitment to monetary union. The question that we in Britain must answer is whether, when other member states of the Community are choosing to take that course, we should repeat the mistake—as I regard it—that our forefathers made at the time of the Messina conference. Should we stand out from the process in which those member states are engaged—the designing of a single currency—or take advantage of the opportunity that my right hon. Friend the Prime Minister won for this country at Maastricht, which sets this process apart from the process started at Messina, and assist in the design of a single currency which may come into force in the rest of the Community?
That is the question that the House must decide. The question is not, "Do we want to accept a single currency?" and still less, "Do we want to accept the institutional arrangements set out in the treaty?" Those are questions to which the House will return as a result of the passage of the Bill. The question with which we have to deal tonight is whether, if there is to be a single currency, the arrangements set out in the Bill are sensible for the management of such a currency, which would circulate in 12 independent member states.
§ Mr. BudgenMy hon. Friend has raised the question of the common currency. Does he agree that, if it is our long-standing wish to move towards economic and monetary union, a common currency can only be a delaying mechanism? Does he agree that, if we are to honour the ultimate obligation, such a currency must lead to a single currency, which is the necessary condition for monetary union?
§ Mr. DorrellLet me say for the third time—in what has been, so far at least, a relatively short speech—that I do not accept that proposition. I continue to believe that a different route for the delivery of monetary union would involve the circulation within the Community of common, as opposed to single, currencies.
§ Mr. MacdonaldWill the Minister give way?
§ Mr. DorrellNo, I want to move on.
Let me return to the subject which has provided the purpose of the debate and answer the question whether the institutional arrangements set out in the treaty are sensible for the management of a single currency. We must at least allow the possibility that a single currency will be introduced. The right hon. Member for Bethnal Green and Stepney made it abundantly clear—as, indeed, did my hon. Friend the Member for East Lindsey (Sir P. Tapsell) and one or two others—that he was against the establishment of a single currency, however managed. If that is the basis on which the discussion is to take place, it will be a wholly academic discussion.
If we are to pursue the argument about what the institutional arrangements could be if a single currency were established—if we chose to join such a currency at a later date, as a result of the opportunity provided for us by 1046 my right hon. Friend the Prime Minister at Maastricht—let us examine what the arrangements could be for the management of that currency.
12 midnight
From the point of view of our history, we are starting with a relatively clean sheet of paper. If we are to answer the question, how do we best manage a single currency starting from a clean sheet of paper, we would do well to set out a few trig points for the argument, as I shall do now.
The first proposition is self-evident. If there is to be a single currency which circulates in the 12 member states of the Community, we have to set up not only the single currency but the monetary authority which will be responsible for managing that single currency. The second proposition is that, if it is to circulate in 12 sovereign member states, that monetary authority—[HON. MEMBERS: "They will no longer be sovereign states."] My hon. Friends may have a view about that.
If the currency is to circulate in the 12 member states of the Community and as there can be only one monetary authority, it follows as night follows day that that monetary authority must be separate from the political institutions of any individual member state. No member state will accept a currency in circulation within its borders which is managed by institutions within the body politic of a different member state. We therefore have to design a monetary authority which is separate from the member states.
My third proposition is that, even when we are designing a monetary authority which is separate from the member states, we should seek to apply the principle of subsidiarity. If monetary authority is to be removed from member states and passed to a single monetary authority, it does not follow that other economic decision-making needs to be removed from the member state level. To manage a single currency across 12 member states, it is certainly necessary to take monetary authority away from member states, but I do not accept that it is necessary or, indeed, desirable, within the principle of subsidiarity, to remove fiscal policy or wider economic policy responsibility from member states.
§ Mr. DorrellI wish to develop this point; then I will give way to my hon. Friend.
This is one of the fundamental disagreements that If have with my hon. Friend the Member for East Lindsey and the right hon. Member for Chesterfield (Mr. Benn) who argue that, if there is to be a single monetary authority, it follows that it must have responsibility for fiscal policy decisions all around the Community. I do not accept that that is technically necessary. At a technical level, it is simply wrong and certainly not provided for within the treaty.
The treaty provides limits, which we shall discuss on a later group of amendments, to the range of policy options open to member states as fiscal authorities—that is where the budget deficit criteria comes into play—but it does not remove from member states the responsibility for fiscal policy. That rests with member states. If there is to be a single currency, the only aspect of economic policy which it is necessary to remove from member states is responsibility for monetary policy.
§ Mr. WilkinsonHow on earth, in the real world, could it be possible to have a single monetary authority conducting monetary policy on behalf of the union while the constituent elements of the union pursue their independent fiscal policy? Surely that is a recipe for total economic confusion.
§ Mr. DorrellWith great respect, I do not think that that is true. It is wrong at a technical level. [Interruption.] One of my hon. Friends queries my use of the word "technical". The conduct of monetary policy is, in large measure, a technical matter. There is the question of accountability, of course, with which I shall deal in a moment, but if the technical questions are not right, monetary policy will not work.
It is a technically wrong proposition to say that monetary and fiscal policy must be exercised by the same authority. Indeed, it is demonstrably untrue, because there are many examples around the world of different parts of the institutions of a nation state operating fiscal and monetary policy.
§ Mr. Denzil DaviesThe Minister protests too much. Nobody—certainly no Opposition Member—has ever said that the whole of fiscal policy is to be put in the hands of the monetary authorities, or of the bank. The point is that fiscal policy will be partly controlled by the Commission and the Council of Ministers. Fiscal policy on public expenditure, in terms of the ceilings, will be shared with—or partly controlled by, or whatever language one wishes to use—the Commission and ultimately the Council of Ministers. So there is also a transfer of fiscal policy—or of control over some of it—to Community institutions.
§ Mr. DorrellI said in terms that I acknowledged that there was an inhibition on the freedom of manoeuvre of independent nation states, arising from the budget deficit criteria. But the right hon. Gentleman is wrong to say that nobody has suggested during the debate that the consequence of moving to a single currency would be that fiscal policy would become the responsibility of the central bankers. That is exactly the proposition that the right hon. Member for Chesterfield argued at some length—and he is wrong.
It follows from what I have been saying—
§ Mr. Austin Mitchellrose—
§ Mr. DorrellI want to make a bit more progress now. It follows from what I have said that it is proposed that the monetary authority be separate from the fiscal authority. We in this country are not familiar with that proposition. We know that our institutions have for some time operated on the premise that my right hon. Friend the Chancellor of the Exchequer is responsible to the House, at this Dispatch Box, for the conduct of both fiscal and monetary policy. If we are designing institutions which could work, and which open for us the choice of a single currency circulating at a later date, we must recognise that that choice is no longer open to us.
If we are designing new institutions which would work and which would allow us to have that choice—a single currency operating within 12 member states—it would be sensible for us to learn from the experience of countries elsewhere in the world which operate fiscal and monetary policy through different institutional arrangements. That is why I make no apology to the Committee for the fact that the European system of central banks looks 1048 remarkably like an institution with which many hon. Members are familiar—the Bundesbank. It is no surprise that the ESCB looks like the Bundesbank: there has been a conscious attempt to learn from the experience of a Community member state which has different authorities for fiscal and monetary policy and which, if we examine its record dispassionately, we see has been relatively successful in the conduct of its economic policy.
That is why, under the arrangements for the ESCB set out in the treaty, the executive board and the governing council and its responsibility to the individual national central banks are reminiscent of the arrangements within the Bundesbank. It is also why article 107, about which there has been substantial debate, is reminiscent of the conditions surrounding the operation of the Bundesbank.
§ Mr. DorrellI want to make a couple of points about article 107, but first I will give way to my hon. Friend.
§ Mr. GillIf my hon. Friend thinks that the Bundesbank is such a shining example to us all, will he tell us why we have not emulated that example before? Secondly, may I remind him of the question that I asked earlier about the irony of the fact that the Government do not support an independent Bank of England, yet are prepared to support an independent central bank?
§ Mr. DorrellMy hon. Friend's first question is put to us regularly. We make it clear that within our own national arrangements the important issue is to tackle the substance of the management of monetary policy, not the institutional arrangements. In the end, it does not matter whether responsibility rests with the Chancellor or with a governing council institution within the Bank of England. The important issue on monetary policy is the conduct of that policy. I am asking the Committee to consider how, if we wanted to follow up the choice that my right hon. Friend the Prime Minister negotiated for us at Maastricht, we would envisage a single currency being managed within the European Community. Present arrangements for the management of monetary policy in this country, as in every other member state of the Community, would necessarily have to be changed if we were to adopt that approach.
§ Mr. Malcolm BruceIf we are even to give ourselves the option to move towards signing up for European monetary union—and allowing for the fact that the Government have kept their options open—would it not be logical and sensible to move now towards establishing an independent Bank of England so as to make the final transition that much easier and our understanding of how the arrangements work that much better?
§ Mr. DorrellI do not accept that. Unless and until we decide that we want to move to a single currency, our energies would be better absorbed using our existing institutions, which work perfectly well at a national level, to conduct monetary policy in order to deliver our substantial policy objectives.
§ Mr. Andrew SmithIf I heard the Minister right, he said that whether monetary policy was under the control of the Treasury or the central council of the Bank was a matter of indifference, and that the important thing was the conduct of that policy. If that is a matter of such indifference, and if the Government are to honour their 1049 implicit obligations in article 109j(1)—from which the United Kingdom is not exempt under the opt-out and under which the compatibility of the statutes of our central bank with the provisions of the treaty is to be assessed—are they not under an obligation to introduce legislation to change the Bank's statutes? And when will they decide whether to do that?
§ Mr. DorrellNeither we nor any other member state are under any obligation to change our domestic monetary arrangements, except in the context of a move to stage 3. If we do not intend to move to stage 3—or until we decide that we intend to move to stage 3—I am not in favour of changing the arrangements that we have, which work perfectly well. The burden of proof is on those who argue that institutions need to be changed. I do not think that the case for change in our institutional arrangements is made.
One or two of the points made about article 107 are not borne out by the provision itself. It is important to stress that, although it is certainly true that the European central bank and the national central banks are prevented from taking instructions from Community institutions or bodies, from any Government of a member state or from any other body—in other words, they are accountable for their own decisions and cannot take instructions from an outside body—it is not true that the second half of the article prevents the House, or newspaper journalists, or any other interested parties, from expressing their view about the conduct of monetary policy by the European central bank.
The second half of the question addresses only Community institutions and bodies and Governments of the member states. Those two groups forswear the opportunity to influence members of the board of the European central bank, but they are a relatively narrow group of people; anyone else is free, under the provisions of article 107, to express views about the conduct of monetary policy by the European central bank. That includes this House. [Interruption.] I shall deal with the question of the proper accountability arrangements of the bank in a moment.
§ Mr. Austin MitchellThe Minister is reducing this House to the level of The Sun or Scallywag in saying that it has the right to give its opinion—big deal.
§ Mr. DorrellI am merely pointing out that those who have argued that article 107 prevents hon. Members expressing their view on the conduct of monetary policy by the European central bank are wrong. The article does not do that.
12.15 am
The right hon. Member for Bethnal Green and Stepney argued that the provisions for the independence of the central bank were a major departure from anything seen before. They are very similar indeed to the arrangements for the independence of the members of the Commission which were introduced by the treaty of Rome, which says:
Members of the Commission, in the performance of these duties, shall neither seek nor take instructions from any Government or any other bodyand it provides thatMember States undertake to respect this principle and not to seek to influence Members of the Commission in the performance of their tasks.So it is not true to say that the independence provisions of the treaty of Maastricht are a significant departure.
§ Mr. ShoreThere is a real difference between one eight-year term not to be renewed and five-year terms for Commissioners, who are eligible for renewal and who hope to be renewed.
§ Mr. DorrellThere is a difference, though I am not sure that I would accept the description of it as a big one. I do not deny that the central bank is set up to be independent and that the provisions are designed to ensure its independence, and I shall discuss how accountability is to be delivered in the context of those independence provisions.
§ Mr. MarlowIn relation to article 107, my hon. Friend said that the House could express its view and opinion. If there is a debate here and he is standing at the Dispatch Box putting the Government's point of view, how will he be able to respond to the debate? What views will he be able to put to the House? How will he be able to take account of the views of hon. Members? What will he be able to say? The answer is nothing. Article 107 says that he cannot say anything.
§ Mr. DorrellIt is flattering to hear my hon. Friend ascribe such importance to the views expressed from this Dispatch Box. I hope that he will feel persuaded to follow the weight of my argument tonight, as he implies he would at a later date in relation to questions about monetary policy.
The arrangements for the accountability of the central bank are set out in two places in the treaty. One is in article 109b, which provides arrangements very similar to those which prevail within the Bundesbank—that members of the Council can attend and argue their case but cannot vote within the governing council of the bank, that the bank in turn will be invited to participate in Council meetings and that the central bank will produce
an annual report on the activities of the ESCB and on the monetary policy of both the previous and current year to the European Parliament, the Council and the Commission, and also to the European Council.That refers to the Heads of State and Government meeting on a six-monthly basis. It goes on:The President of the ESCB shall present this report to the Council and to the European Parliament".Those are the institutional arrangements for reporting set out in that article of the treaty.In addition, and of some significance in view of recent events in this country, are the arrangements set out on page 94 in article 15 of the ESCB protocol. That article sets out extensive requirements for the ESCB to publish reports on its activities. It requires:
A consolidated financial statement of the ESCB shall be published each weekand it states that it must draw up and publish reports on its activities quarterly, with an annual report being made in the way I described. That is of some significance, particularly in view of the arrangements that the Chancellor has set up for the conduct of monetary policy in this country. He has placed great stress on the importance of providing information to those who operate in the market, or comment on the market in the newspapers, and people who are interested in such affairs so that they can see on a regular basis the information against which money policy decisions are made. The same arrangements are provided in this treaty in the context of the European central bank.
§ Mr. Alex Salmond (Banff and Buchan)The Minister would show more conviction if he openly admitted that this House will lose a range of powers in the future. Some of us think that it is a cracking good idea. Does he accept that in the future, the influence of this House on aspects of monetary policy and the central bank will be roughly equivalent to, say, that which the Scottish Grand Committee has on fiscal policy in Scotland at present?
§ Mr. DorrellI do not know whether the hon. Gentleman was in the Chamber when I started my speech, but I made it clear that if there is a single currency which circulates in 12 member states of the Community it follows, as night follows day, that the existing monetary arrangements within the member states would lose some of the power that they have at present. That is the choice that the House will be asked to make when it decides to join a single currency. It is not being asked to make that choice now.
§ Mr. Andrew SmithWhen I asked the Minister a question relating to article 109j(1), he said that there was no obligation for the United Kingdom to move towards the independence of the central bank until the third stage. I draw his attention to article 109e(5), which clearly states:
During the second stage, each Member State shall, as appropriate, start the process leading to the independence of its central bank".When will the Government take a decision on that?
§ Mr. DorrellI did not say that we had no obligation to introduce an independent central bank until we had moved to a single currency. I said that we were not obliged to do so unless and until we decided that we wished to move to a single currency. That is the position.
§ Mr. HainIf amendment No. 36 were put to the vote and carried, would that prevent the Government from ratifying the treaty, in the light of the Attorney-General's guidance on amendment No. 27? As amendment No. 27 related to opting out of the social chapter, so the British Government have opted out of stage 3 of monetary union, which this debate and the amendment specifically address.
§ Mr. DorrellI made it clear that we have introduced a Bill which gives effect to all the provisions necessary to the exercise of either discretion on the question of a single currency. The Bill makes provision which will work if the United Kingdom chooses to adopt the single currency or if it chooses not to adopt the single currency.
The arrangements that I have described have been referred to by more than one hon. Member in the debate as a bankers' Europe, making provision for the conduct of monetary policy to be unaccountable and conducted by central bankers in a way which is contrary to the interests of working people throughout the Community. Today and in an earlier debate on this subject, my hon. Friend the Member for East Lindsey asked why, even if we have a single currency—
§ Mr. HainOn a point of order, Dame Janet. I regret having to raise a point of order, but I ask for your guidance on this point. I asked the Minister a specific question about legal advice from the Attorney-General on amendment No. 36. During previous debates in Committee on this Bill, we were promised that advice, but that point has not been answered. Could you give some guidance as to whether that point should be answered because we might be required to vote on it shortly?
§ The Second Deputy Chairman of Ways and Means (Dame Janet Fookes)Such matters of substance are not a matter for the Chair.
§ Mr. DorrellIn conclusion, I return to the basic point. This evening, the Committee is not being asked to give the green light to a single currency. The decisions that the Committee is making in the context of this Bill have no consequences for the independence of the Bank of England, for parliamentary control of our existing monetary policy arrangements or, as the right hon. Member for Chesterfield argued, for the Conservative tradition of a strong and free United Kingdom or, indeed, the Labour party tradition, which he identified as standing against the interests of capital.
The day may come when the House is asked to decide to adopt a single currency, with the institutional arrangements that I have described, but we are not at that day now. If we decided to go to stage 3 we would have to consider the issue of an independent central bank under the arrangements that I have described. We would also have to establish to our satisfaction our own procedures for making those arrangements accountable.
Today's isssue is much simpler. Is this a sensible arrangement for the management of a single currency, if we chose to adopt one? I believe that is, and on that basis I do not want to see amendments incorporated into the Bill which would make those arrangements unworkable.
§ Mr. HainThe debates on this and the next two groupings of amendments deal with the guts of the treaty—its economic framework. The reason why I am so critical of the treaty is that the economic framework, specifically in terms of establishing an unaccountable central bank, is bad for our economy and society.
When one examines the origins of the proposal to establish a central bank, one finds that it was framed during the high tide of monetarism in the 1980s, when European policy makers hatched the idea of the independent European central bank. The hon. Member for East Lindsey (Sir P. Tapsell) took us back to an earlier genesis of the idea in the late 1930s. I shall not follow him in that.
When the proposal for a European central bank was hatched, the political situation was entirely different. The intellectual fashion was for monetarist ideas. The independent central bank was an example of that. It will be the driving force behind Maastricht. It will drive Europe uncompromisingly towards monetary union and enforce price and interest rate stability, virtually regardless of the consequences for employment, redistribution and public welfare, all of which would be entirely secondary matters for the all-powerful bank.
We have seen that that monetarist vision is deeply flawed. It has been rejected in America and I am sure that it will soon be rejected here in Britain. It should be rejected in Europe, too. In that sense, the economic framework of the Maastricht treaty is severely out of date. It was out of date even before the ink had dried on it.
Massive changes have occurred since the original economic programme for Maastricht was framed. For example, we have seen the reunification of Germany and massive deflation has been imposed across Europe. Unemployment is rising continuously. It now stands at some 18 million to 19 million across the European Community. If present trends continue, according to the 1053 Organisation for Economic Co-operation and Development, that total will reach 30 million, with all the awful prospects that that holds for us. In addition, the ERM has imploded. All those factors have created an entirely new situation which should have been recognised. It requires a renegotiation of the treaty's economic framework, especially the establishment of an independent central bank.
§ Mr. Nicholas WintertonI am following the hon. Gentleman's speech closely and I find myself in considerable agreement with it. He has just come on to the establishment of an independent European central bank. Bearing in mind the control that that bank will have and the criteria on which it will operate, will not it produce massive unemployment throughout the European Community? In the absence of any accountability, will not it create social unrest which most of Europe, and certainly the United Kingdom, has seldom, if ever, experienced?
§ Mr. HainIndeed. I was about to deal with that point. The bank to which the hon. Gentleman refers was due to be established as part of the final stage 3 transition to monetary union and a single currency. That is why I raised the question that the Minister failed to answer on amendment No. 36. I take his failure to answer directly as confirmation of the fact that if amendment No. 36 were carried the ratification of the treaty would not be affected. We have to assume that because the Minister has not denied it.
Under article 3a the primary objective is
to maintain price stability and, without prejudice to this objective, to support the general economic policies in the Community, in accordance with the principle of an open market economy with free competition.These activities of the Member States and the Community shall entail compliance with the following guiding principles: stable prices, sound public finances and monetary conditions and a sustainable balance of payments.There is absolutely no mention of full employment policies.12.30 am
Nobody has disputed the fact that this is the most important article in the treaty. It is far more important than article 2 to which some of my hon. Friends constantly refer and which I call the apple pie and motherhood article. It is full of nice, generous phrases, but is virtually meaningless when measured up to the specific targets and policies which are carefully prescribed in subsequent articles and specified exactly in article 3a.
§ Mr. MandelsonWhy are the parts of the treaty that my hon. Friend likes and is fond of quoting so much more meaningful than the articles to which his hon. Friends refer? Why are high employment, high living standards and growth, so hollow and meaningless whereas what he likes is so full of meaning and portent for the future of Europe? I do not understand it.
§ Mr. HainLet me explain to the hon. Gentleman why he should understand it and ask him to restrain the sharpness of his tongue. If he reads the article and compares the specific references in article 3a to price stability and so forth to the rather general phrases in article 2, he will see that the latter are apple pie and motherhood phrases about full employment and welfare, 1054 to which we can all subscribe but which are specifically denied by article 3 and all the subsequent articles that I am about to quote to him.
§ Mr. RowlandsWill my hon. Friend draw attention to the primary objectives in article 5 on the ESCB? While article 2 is
with a view to contributing to the achievement",article 3 requires compliance. The language is totally different. One involves compliance while the other is a general objective.
§ Mr. HainIndeed. My hon. Friend makes a convincing point. It is the central flaw in the views of those who are turning a blind eye to the real content of the treaty, as the hon. Member for Hartlepool (Mr. Mandelson) is inviting us to do. He wants us to salute the general phrases and the nice, rolling words of the treaty, but he wishes us to ignore the specifics which ultimately require legal compliance, despite their hugely deflationary consequences. I consider that irresponsible because it will have enormous consequences not only for my constituents in an outlying region of Britain, but for his constituents who also live in an outlying region, especially in relation to the hub of the European Community where all decisions will be made and where power will be centralised.
§ Mr. MandelsonTalking about sharpness, I do not need to take any lectures from hon. Friends about the effectiveness with which I represent my constituents.
May I just ask my hon. Friend two things? Why is it that article 2, the first substantial article of the entire treaty, which starts with the words
The Community shall have as its task"—I will not read the rest of it because it is familiar—is so meaningless? Secondly, why—after all, my hon. Friend raised article 3a—does not he subscribe to this categorical and clear statement which I should have thought would enjoy the support of all Opposition Members:the adoption of an economic policy which is based on the close co-ordination of Member States' economic policies, on the internal market and on the definition of common objectives"?What is so commonly objectionable about that? I should have thought that it echoed precisely Labour party statements and our manifesto at the last general election.
§ Mr. HainThere is nothing commonly objectionable about it at all. No hon. Member could object to those fine and rolling words.
§ Mr. MandelsonMy hon. Friend is choosing to ignore them.
§ Mr. HainNo, I am not choosing to ignore them at all. What I am pointing out to the hon. Member and to other hon. Members, if they care to listen, is that one can start off a treaty with all sorts of fine words, but when it comes to the implementation of that treaty—
§ Mr. MandelsonMy hon. Friend is ducking and weaving.
The Second Deputy ChairmanOrder. We cannot have a sub-conversation going on. The hon. Member for Hartlepool (Mr. Mandelson) has had a number of opportunities to intervene. When he is not intervening, he must keep quiet.
§ Mr. HainI am grateful, Dame Janet. Could I just emphasise that it is not a question of picking and choosing or ducking and weaving but of looking objectively at the treaty and at those instruments, one of which is specified in article 3a, the principal one of price stability, an objective which nothing must compromise. One then has to measure up those specific instruments against the woolliness of the earlier phrases and the fine words that we can all salute and subscribe to.
§ Mr. LeightonIn relation to what my hon. Friend has called the apple pie and motherhood clause, with these woolly words, is it not a fact that similar words also occur in the treaty of Rome? But what has been the result of that? Why is it, if we have such nice words in the treaty, that we have 18 million to 19 million workers unemployed? Is not it true that, despite having those nice words in the treaty of Rome, the Community has become the unemployment black spot of the world, and that this would make it worse?
§ Mr. HainWithout going into the treaty of Rome, I think that my hon. Friend's point about the European Community becoming the unemployment blackspot of the world is valid. The average unemployment rate in the EC has now outstripped that in the Organisation for Economic Co-operation and Development, whereas it used to be below it. One must ask why. The answer is clear. What we have had in the past few years is a dress rehearsal for precisely the kind of deflationary, monetarist policies which Maastricht celebrates and institutionalises and which will cause mass unemployment and further deflation across Europe.
§ Sir Teddy Taylorrose—
§ Mr. HainI would like to make progress, if the hon. Member does not mind, but I shall be happy to give way later.
Under this treaty the European central bank will be an independent institution. It will be required, as article 3a specifies, to be single-mindedly dedicated to low inflation, virtually regardless of the consequences for employment and social equality. That is the key point. It is specified that national central banks will be subordinated to the unaccountable European central bank and not to their elected Governments—a point which has recurred in contributions to this debate. It will be specifically prevented from being accountable to the elected national Governments. If the timetable is strictly adhered to, the Bank of England would have to be privatised, or at least made fully independent, by 1999, as is already happening in France and has just been completed in Spain.
The independence of the European central bank is uncompromisingly spelled out in chapter 2, article 107—another one that I want to quote for the record:
When exercising the powers and carrying out the tasks and duties conferred upon them by this Treaty and the Statute of the ESCB, neither the ESCB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Community institutions or bodies, from any government of a Member State or from any other body.The Community institutions and bodies and the governments of the Member States undertake to respect this principle and not to seek to influence the members of the decision-making bodies of the ECB or of the national central banks in the performance of their tasks.There is not much fudging, or ducking and weaving there—it is crystal clear. Elected Governments and politicians 1056 are barred from influencing the governing body of the European central bank, which is equally obliged to disregard any representations made to them.
§ Sir Teddy TaylorI fully agree with that excellent argument. Will the hon. Member remind his very gullible and talkative friend, the hon. Member for Hartlepool (Mr. Mandelson), that many political parties have promoted policies comprising full employment, high wages and lots of sunshine, but those are extremely difficult to achieve if the basic policies inherent in the manifestos are a load of rubbish and if they are deliberately designed to create unemployment and misery?
§ Mr. HainI shall allow the hon. Member for Hartlepool to make his own case in his own way.
Not only does the treaty require—
§ Mr. James Arbuthnot (Wanstead and Woodford)rose in his place and claimed to move, That the Question be now put.
§ Question put, That the Question be now put:—
§ The Committee proceeded to a Division, and the Second Deputy Chairman having directed that the Doors be locked—
§ Mr. John Wilkinson (Ruislip-Northwood)(seated and covered): On a point of order, Dame Janet. You will notice that the Door to one of the Lobbies has been locked whereas the Door to the other one has been left open. We have seen some funny tricks in the Committee, but this is one of the oddest.
The Second Deputy ChairmanI think that it was my fault. I ordered the Doors to be locked in error. I apologise for the mistake. I am sure that the Doorkeepers will open the Doors to allow us to proceed as usual.
§ Whereupon the Doors were unlocked.
§ The Committee having divided: Ayes 236, Noes 70.
1058| Division No. 204] | [12.40 am |
| AYES | |
| Adley, Robert | Browning, Mrs. Angela |
| Ainsworth, Peter (East Surrey) | Bruce, Malcolm (Gordon) |
| Aitken, Jonathan | Campbell, Menzies (Fife NE) |
| Alexander, Richard | Carlile, Alexander (Montgomry) |
| Alton, David | Carlisle, Kenneth (Lincoln) |
| Amess, David | Carrington, Matthew |
| Ancram, Michael | Channon, Rt Hon Paul |
| Arbuthnot, James | Chapman, Sydney |
| Arnold, Jacques (Gravesham) | Churchill, Mr |
| Arnold, Sir Thomas (Hazel Grv) | Clarke, Rt Hon Kenneth (Ruclif) |
| Ashby, David | Clifton-Brown, Geoffrey |
| Atkinson, Peter (Hexham) | Coe, Sebastian |
| Baker, Nicholas (Dorset North) | Congdon, David |
| Baldry, Tony | Conway, Derek |
| Banks, Matthew (Southport) | Coombs, Simon (Swindon) |
| Banks, Robert (Harrogate) | Cope, Rt Hon Sir John |
| Bates, Michael | Couchman, James |
| Batiste, Spencer | Currie, Mrs Edwina (S D'by'ire) |
| Bellingham, Henry | Curry, David (Skipton & Ripon) |
| Beresford, Sir Paul | Dafis, Cynog |
| Blackburn, Dr John G. | Davis, David (Boothferry) |
| Booth, Hartley | Day, Stephen |
| Boswell, Tim | Deva, Nirj Joseph |
| Bottomley, Peter (Eltham) | Dorrell, Stephen |
| Bottomley, Rt Hon Virginia | Douglas-Hamilton, Lord James |
| Bowden, Andrew | Dover, Den |
| Bowis, John | Duncan, Alan |
| Brandreth, Gyles | Dunn, Bob |
| Brazier, Julian | Durant, Sir Anthony |
| Bright, Graham | Dykes, Hugh |
| Brooke, Rt Hon Peter | Eggar, Tim |
| Brown, M. (Brigg & Cl'thorpes) | Elletson, Harold |
| Emery, Rt Hon Sir Peter | McLoughlin, Patrick |
| Evans, Jonathan (Brecon) | Madel, David |
| Evans, Nigel (Ribble Valley) | Maitland, Lady Olga |
| Evans, Roger (Monmouth) | Malone, Gerald |
| Evennett, David | Mans, Keith |
| Faber, David | Marshall, Sir Michael (Arundel) |
| Fabricant, Michael | Martin, David (Portsmouth S) |
| Fenner, Dame Peggy | Mawhinney, Dr Brian |
| Fishburn, Dudley | Merchant, Piers |
| Forman, Nigel | Milligan, Stephen |
| Forsyth, Michael (Stirling) | Mills, Iain |
| Forth, Eric | Mitchell, Andrew (Gedling) |
| Foster, Don (Bath) | Mitchell, Sir David (Hants NW) |
| Fox, Dr Liam (Woodspring) | Monro, Sir Hector |
| Fox, Sir Marcus (Shipley) | Moss, Malcolm |
| Freeman, Roger | Needham, Richard |
| French, Douglas | Nelson, Anthony |
| Gale, Roger | Neubert, Sir Michael |
| Gallie, Phil | Newton, Rt Hon Tony |
| Garel-Jones, Rt Hon Tristan | Nicholls, Patrick |
| Garnier, Edward | Nicholson, Emma (Devon West) |
| Gillan, Cheryl | Norris, Steve |
| Goodson-Wickes, Dr Charles | Onslow, Rt Hon Sir Cranley |
| Gorst, John | Oppenheim, Phillip |
| Grant, Sir Anthony (Cambs SW) | Page, Richard |
| Greenway, John (Ryedale) | Paice, James |
| Grylls, Sir Michael | Patnick, Irvine |
| Gummer, Rt Hon John Selwyn | Patten, Rt Hon John |
| Hague, William | Pattie, Rt Hon Sir Geoffrey |
| Hamilton, Rt Hon Archie (Epsom) | Peacock, Mrs Elizabeth |
| Hamilton, Neil (Tatton) | Pickles, Eric |
| Hampson, Dr Keith | Porter, Barry (Wirral S) |
| Hanley, Jeremy | Portillo, Rt Hon Michael |
| Harris, David | Powell, William (Corby) |
| Haselhurst, Alan | Rathbone, Tim |
| Hawkins, Nick | Redwood, John |
| Hayes, Jerry | Renton, Rt Hon Tim |
| Heald, Oliver | Richards, Rod |
| Heathcoat-Amory, David | Riddick, Graham |
| Hendry, Charles | Robathan, Andrew |
| Hicks, Robert | Roberts, Rt Hon Sir Wyn |
| Higgins, Rt Hon Sir Terence L. | Robertson, Raymond (Ab'd'n S) |
| Hill, James (Southampton Test) | Robinson, Mark (Somerton) |
| Horam, John | Rowe, Andrew (Mid Kent) |
| Hordern, Rt Hon Sir Peter | Rumbold, Rt Hon Dame Angela |
| Howarth, Alan (Strat'rd-on-A) | Ryder, Rt Hon Richard |
| Howell, Rt Hon David (G'dford) | Sackville, Tom |
| Hughes, Simon (Southwark) | Shaw, David (Dover) |
| Hunt, Rt Hon David (Wirral W) | Shaw, Sir Giles (Pudsey) |
| Hunt, Sir John (Ravensbourne) | Shepherd, Colin (Hereford) |
| Hunter, Andrew | Smith, Tim (Beaconsfield) |
| Jack, Michael | Soames, Nicholas |
| Johnston, Sir Russell | Spencer, Sir Derek |
| Jones, Gwilym (Cardiff N) | Spicer, Sir James (W Dorset) |
| Jones, Ieuan Wyn (Ynys Môn) | Spink, Dr Robert |
| Jopling, Rt Hon Michael | Sproat, Iain |
| Kellett-Bowman, Dame Elaine | Squire, Robin (Hornchurch) |
| Kennedy, Charles (Ross,C&S) | Stanley, Rt Hon Sir John |
| Key, Robert | Steel, Rt Hon Sir David |
| Kilfedder, Sir James | Stephen, Michael |
| Kirkhope, Timothy | Stern, Michael |
| Kirkwood, Archy | Stewart, Allan |
| Knight, Mrs Angela (Erewash) | Streeter, Gary |
| Knight, Greg (Derby N) | Sykes, John |
| Knox, David | Taylor, Ian (Esher) |
| Kynoch, George (Kincardine) | Taylor, Matthew (Truro) |
| Lait, Mrs Jacqui | Temple-Morris, Peter |
| Leigh, Edward | Thomason, Roy |
| Lester, Jim (Broxtowe) | Thompson, Patrick (Norwich N) |
| Lidington, David | Thornton, Sir Malcolm |
| Lightbown, David | Thurnham, Peter |
| Lilley, Rt Hon Peter | Townsend, Cyril D. (Bexl'yh'th) |
| Lloyd, Peter (Fareham) | Tracey, Richard |
| Llwyd, Elfyn | Trotter, Neville |
| Luff, Peter | Twinn, Dr Ian |
| Lyell, Rt Hon Sir Nicholas | Viggers, Peter |
| Lynne, Ms Liz | Walden, George |
| MacGregor, Rt Hon John | Wallace, James |
| Maclean, David | Waller, Gary |
| Maclennan, Robert | Wardle, Charles (Bexhill) |
| Waterson, Nigel | Wolfson, Mark |
| Wells, Bowen | Wood, Timothy |
| Wheeler, Rt Hon Sir John | Yeo, Tim |
| Whitney, Ray | Young, Sir George (Acton) |
| Whittingdale, John | |
| Widdecombe, Ann | Tellers for the Ayes: |
| Wigley, Dafydd | Mr. Andrew MacKay and |
| Willetts, David | Mr. Robert G. Hughes. |
| NOES | |
| Abbott, Ms Diane | Lawrence, Sir Ivan |
| Adams, Mrs Irene | Lewis, Terry |
| Anderson, Ms Janet (Ros'dale) | Lloyd, Tony (Stretford) |
| Barnes, Harry | McAllion, John |
| Barron, Kevin | Macdonald, Calum |
| Beggs, Roy | McMaster, Gordon |
| Bermingham, Gerald | McWilliam, John |
| Betts, Clive | Mandelson, Peter |
| Boyce, Jimmy | Martin, Michael J. (Springburn) |
| Budgen, Nicholas | Meale, Alan |
| Campbell-Savours, D. N. | Michael, Alun |
| Cann, Jamie | Mowlam, Marjorie |
| Chisholm, Malcolm | Pike, Peter L. |
| Cran, James | Pope, Greg |
| Cryer, Bob | Reid, Dr John |
| Cunliffe, Lawrence | Robertson, George (Hamilton) |
| Cunningham, Rt Hon Dr John | Ross, William (E Londonderry) |
| Darling, Alistair | Rowlands, Ted |
| Davies, Rt Hon Denzil (Llanelli) | Shepherd, Richard (Aldridge) |
| Davis, Terry (B'ham, H'dge H'l) | Shore, Rt Hon Peter |
| Dixon, Don | Simpson, Alan |
| Evans, John (St Helens N) | Skinner, Dennis |
| Foster, Rt Hon Derek | Smith, Andrew (Oxford E) |
| Gill, Christopher | Smith, Llew (Blaenau Gwent) |
| Godman, Dr Norman A. | Spearing, Nigel |
| Gould, Bryan | Stott, Roger |
| Griffiths, Nigel (Edinburgh S) | Taylor, Sir Teddy (Southend, E) |
| Hain, Peter | Walker, Bill (N Tayside) |
| Hall, Mike | Wilkinson, John |
| Heppell, John | Winnick, David |
| Hill, Keith (Streatham) | Winterton, Mrs Ann (Congleton) |
| Howarth, George (Knowsley N) | Winterton, Nicholas (Macc'f'ld) |
| Hughes, Kevin (Doncaster N) | Wray, Jimmy |
| Jessel, Toby | |
| Kennedy, Jane (Lpool Brdgn) | Tellers for the Noes: |
| Kilfoyle, Peter | Mr. Austin Mitchell and |
| Knapman, Roger | Mr. Ron Leighton. |
§ Question accordingly agreed to.
§ Question put accordingly, That the amendment be made:—
§ The Committee divided: Ayes 48, Noes 234.
1060| Division No. 205] | [12.55 am |
| AYES | |
| Abbott, Ms Diane | Lawrence, Sir Ivan |
| Adams, Mrs Irene | Leighton, Ron |
| Barnes, Harry | Lord, Michael |
| Beggs, Roy | McAllion, John |
| Bermingham, Gerald | McWilliam, John |
| Budgen, Nicholas | Marlow, Tony |
| Campbell-Savours, D. N. | Martin, Michael J. (Springburn) |
| Cann, Jamie | Mitchell, Austin (Gt Grimsby) |
| Cash, William | Reid, Dr John |
| Chisholm, Malcolm | Ross, William (E Londonderry) |
| Cran, James | Rowlands, Ted |
| Davies, Rt Hon Denzil (Llanelli) | Shepherd, Richard (Aldridge) |
| Davis, Terry (B'ham, H'dge H'l) | Shore, Rt Hon Peter |
| Gill, Christopher | Simpson, Alan |
| Godman, Dr Norman A. | Skeet, Sir Trevor |
| Gould, Bryan | Smith, Llew (Blaenau Gwent) |
| Griffiths, Nigel (Edinburgh S) | Spearing, Nigel |
| Hain, Peter | Spicer, Michael (S Worcs) |
| Hall, Mike | Taylor, Sir Teddy (Southend, E) |
| Howarth, George (Knowsley N) | Walker, Bill (N Tayside) |
| Jessel, Toby | Wilkinson, John |
| Kennedy, Jane (Lpool Brdgn) | Winnick, David |
| Knapman, Roger | Winterton, Mrs Ann (Congleton) |
| Winterton, Nicholas (Macc'f'ld) | Tellers for the Ayes: |
| Wray, Jimmy | Mr. Bob Cryer and |
| Mr. Dennis Skinner. | |
| NOES | |
| Adley, Robert | Foster, Don (Bath) |
| Ainsworth, Peter (East Surrey) | Fox, Dr Liam (Woodspring) |
| Aitken, Jonathan | Fox, Sir Marcus (Shipley) |
| Alexander, Richard | Freeman, Roger |
| Alton, David | French, Douglas |
| Amess, David | Gale, Roger |
| Ancram, Michael | Gallie, Phil |
| Arbuthnot, James | Garel-Jones, Rt Hon Tristan |
| Arnold, Jacques (Gravesham) | Garnier, Edward |
| Arnold, Sir Thomas (Hazel Grv) | Gillan, Cheryl |
| Ashby, David | Goodson-Wickes, Dr Charles |
| Atkinson, Peter (Hexham) | Gorst, John |
| Baker, Nicholas (Dorset North) | Grant, Sir Anthony (Cambs SW) |
| Baldry, Tony | Greenway, John (Ryedale) |
| Banks, Matthew (Southport) | Grylls, Sir Michael |
| Banks, Robert (Harrogate) | Gummer, Rt Hon John Selwyn |
| Bates, Michael | Hague, William |
| Batiste, Spencer | Hamilton, Rt Hon Archie (Epsom) |
| Bellingham, Henry | Hamilton, Neil (Tatton) |
| Beresford, Sir Paul | Hampson, Dr Keith |
| Blackburn, Dr John G. | Hanley, Jeremy |
| Booth, Hartley | Harris, David |
| Boswell, Tim | Haselhurst, Alan |
| Bottomley, Peter (Eltham) | Hawkins, Nick |
| Bottomley, Rt Hon Virginia | Hayes, Jerry |
| Bowden, Andrew | Heald, Oliver |
| Bowis, John | Heathcoat-Amory, David |
| Brandreth, Gyles | Hendry, Charles |
| Brazier, Julian | Hicks, Robert |
| Bright, Graham | Higgins, Rt Hon Sir Terence L. |
| Brooke, Rt Hon Peter | Hill, James (Southampton Test) |
| Brown, M. (Brigg & Cl'thorpes) | Horam, John |
| Browning, Mrs. Angela | Hordern, Rt Hon Sir Peter |
| Bruce, Malcolm (Gordon) | Howarth, Alan (Strat'rd-on-A) |
| Burt, Alistair | Howell, Rt Hon David (G'dford) |
| Campbell, Menzies (Fife NE) | Hughes Robert G. (Harrow W) |
| Carlile, Alexander (Montgomry) | Hughes, Simon (Southwark) |
| Carlisle, Kenneth (Lincoln) | Hunt, Rt Hon David (Wirral W) |
| Carrington, Matthew | Hunt, Sir John (Ravensbourne) |
| Channon, Rt Hon Paul | Hunter, Andrew |
| Churchill, Mr | Jack, Michael |
| Clarke, Rt Hon Kenneth (Ruclif) | Johnston, Sir Russell |
| Clifton-Brown, Geoffrey | Jones, Gwilym (Cardiff N) |
| Coe, Sebastian | Jones, Ieuan Wyn (Ynys Môn) |
| Congdon, David | Jopling, Rt Hon Michael |
| Conway, Derek | Kellett-Bowman, Dame Elaine |
| Coombs, Simon (Swindon) | Kennedy, Charles (Ross,C&S) |
| Cope, Rt Hon Sir John | Key, Robert |
| Couchman, James | Kilfedder, Sir James |
| Currie, Mrs Edwina (S D'by'ire) | Kirkhope, Timothy |
| Curry, David (Skipton & Ripon) | Kirkwood, Archy |
| Dafis, Cynog | Knight, Mrs Angela (Erewash) |
| Davis, David (Boothferry) | Knight, Greg (Derby N) |
| Day, Stephen | Knox, David |
| Dorrell, Stephen | Kynoch, George (Kincardine) |
| Douglas-Hamilton, Lord James | Lait, Mrs Jacqui |
| Dover, Den | Leigh, Edward |
| Duncan, Alan | Lester, Jim (Broxtowe) |
| Dunn, Bob | Lidington, David |
| Durant, Sir Anthony | Lightbown, David |
| Dykes, Hugh | Lilley, Rt Hon Peter |
| Eggar, Tim | Lloyd, Peter (Fareham) |
| Elletson, Harold | Llwyd, Elfyn |
| Emery, Rt Hon Sir Peter | Luff, Peter |
| Evans, Jonathan (Brecon) | Lyell, Rt Hon Sir Nicholas |
| Evans, Nigel (Ribble Valley) | Lynne, Ms Liz |
| Evans, Roger (Monmouth) | MacGregor, Rt Hon John |
| Evennett, David | MacKay, Andrew |
| Faber, David | Maclean, David |
| Fabricant, Michael | McLoughlin, Patrick |
| Fenner, Dame Peggy | Madel, David |
| Fishburn, Dudley | Maitland, Lady Olga |
| Forman, Nigel | Malone, Gerald |
| Forsyth, Michael (Stirling) | Mans, Keith |
| Forth, Eric | Marshall, Sir Michael (Arundel) |
| Martin, David (Portsmouth S) | Smith, Tim (Beaconsfield) |
| Mawhinney, Dr Brian | Soames, Nicholas |
| Merchant, Piers | Spencer, Sir Derek |
| Milligan, Stephen | Spicer, Sir James (W Dorset) |
| Mills, Iain | Spink, Dr Robert |
| Mitchell, Andrew (Gedling) | Sproat, Iain |
| Mitchell, Sir David (Hants NW) | Squire, Robin (Hornchurch) |
| Monro, Sir Hector | Stanley, Rt Hon Sir John |
| Moss, Malcolm | Steel, Rt Hon Sir David |
| Needham, Richard | Stephen, Michael |
| Nelson, Anthony | Stern, Michael |
| Neubert, Sir Michael | Stewart, Allan |
| Newton, Rt Hon Tony | Streeter, Gary |
| Nicholls, Patrick | Sykes, John |
| Nicholson, Emma (Devon West) | Taylor, Ian (Esher) |
| Norris, Steve | Taylor, Matthew (Truro) |
| Onslow, Rt Hon Sir Cranley | Temple-Morris, Peter |
| Oppenheim, Phillip | Thomason, Roy |
| Page, Richard | Thompson, Patrick (Norwich N) |
| Paice, James | Thornton, Sir Malcolm |
| Patnick, Irvine | Thurnham, Peter |
| Patten, Rt Hon John | Townsend, Cyril D. (Bexl'yh'th) |
| Pattie, Rt Hon Sir Geoffrey | Tracey, Richard |
| Peacock, Mrs Elizabeth | Trotter, Neville |
| Pickles, Eric | Twinn, Dr Ian |
| Porter, Barry (Wirral S) | Viggers, Peter |
| Portillo, Rt Hon Michael | Walden, George |
| Powell, William (Corby) | Wallace, James |
| Rathbone, Tim | Waller, Gary |
| Redwood, John | Wardle, Charles (Bexhill) |
| Renton, Rt Hon Tim | Waterson, Nigel |
| Richards, Rod | Wells, Bowen |
| Riddick, Graham | Wheeler, Rt Hon Sir John |
| Robathan, Andrew | Whitney, Ray |
| Roberts, Rt Hon Sir Wyn | Widdecombe, Ann |
| Robertson, Raymond (Ab'd'n S) | Wigley, Dafydd |
| Robinson, Mark (Somerton) | Willetts, David |
| Rowe, Andrew (Mid Kent) | Wolfson, Mark |
| Rumbold, Rt Hon Dame Angela | Yeo, Tim |
| Ryder, Rt Hon Richard | Young, Sir George (Acton) |
| Sackville, Tom | |
| Shaw, David (Dover) | Tellers for the Noes: |
| Shaw, Sir Giles (Pudsey) | Mr. Sydney Chapman and |
| Shepherd, Colin (Hereford) | Mr. Timothy Wood. |
§ Question accordingly negatived.
§ Mr. SpearingOn a point of order, Dame Janet. Can you help the House by confirming the rules of order? I understand that my hon. Friend the Member for Neath (Mr. Hain) had been making his speech for about 10 minutes when the closure was moved. Is it the custom of the House for hon. Members, for reasons of courtesy, to wait until the end of a speech before moving the closure, or have you discretion to accept it immediately if you think that sufficient debate has taken place on a matter of this importance?
The Second Deputy ChairmanIt is perfectly within the rules for the closure to be moved in the middle of a speech—and, in fact, the hon. Member for Neath (Mr. Hain) had spoken for 15 minutes.
§ Mr. CryerOn a point of order, Dame Janet. Would it be in order for documents relevant to the debate to be laid on the Table? It is the custom and practice of Parliament for relevant documents to be made available to hon. Members. I have in mind the document that sets out the deal between the Government and the Liberals, under which the Liberals voted with the Government so that they can get away on Friday to go to a conference at Dunoon or somewhere similar.
The Second Deputy ChairmanIf such an agreement exists, it certainly does not have the status of a state paper.
§ Mr. WinnickThe matters that are due to be debated, some of which have already been debated, are of great political and economic significance. Is it the case that you, Dame Janet, have complete discretion over whether to accept the closure motion? In view of the rumour, which is presumably correct, that the Government intend to debate amendments and new clauses until 1 pm on Thursday, what will be the position of the Chair with regard to closure motions moved by the Government? Surely there should be plenty of time to discuss these issues. The Government should not take the opportunity to run through them all in one night which, judging by the 10 o'clock business motion which they won with the Liberals' support, they intend to do. I hope that those points will be duly taken into account by the Chair.
The Second Deputy ChairmanI do not offer hostages to fortune by speculating on what might or might not be. I deal with situations as they arise.
§ Mr. Austin MitchellOn a point of order, Dame Janet. I had tabled eight amendments in the previous group but was not called to speak. That group covered a major issue—the future of the central bank—and was decided in a brief six and a half hours. If, as you said, you have the discretion to turn down a closure motion, may I ask how you are able to consider the matter in the middle of an hon. Member's speech?
The Second Deputy ChairmanI make my own decisions on that and I am confident that I made the correct decision. The role of the Chair is simply to ensure that there is no gross abuse of the rights of the minority. After that, it is for the Committee to decide whether to curtail debate.
§ Mr. WilkinsonFurther to that point of order, Dame Janet. I would not for a moment question your ruling, which is wholly within the letter of the rules of procedure, but is it in the spirit of this place, which works effectively by agreement, understanding and tolerance, for the Government to move closure motions in the middle of speeches?
The Second Deputy ChairmanI have already explained that it is perfectly within the rules and I do not think that I can make any further observations.
§ Mr. SkinnerOn a point of order, Dame Janet. You may have noticed that, during the past few years, debates have taken place in other parts of the country, for example, in Scotland and Wales. I wonder whether you are prepared to have a word with Madam Speaker about having a series of Maastricht debates in Newbury in the run-up to the by-election? Labour Members could explain about the conspiracy between the Tory and Liberal parties, tell the Newbury electorate that they are both in one bag and give the people there a chance to vote for members of the Labour party who will vote against Maastricht.
§ Mr. Bill WalkerOn a point of order, Dame Janet. You quite properly said that the Chair's responsibility was, among other things, to protect the minorities. As I happen to be the only Scottish Conservative Member who stood at the general election on a platform of opposing the 1062 Maastricht treaty, would I be correct in assuming, Dame Janet, that I belong to that rare breed of minorities that are to be taken into consideration? If so, may I remind you that I was trying to speak in the debate?
The Second Deputy ChairmanIt may not always be possible to call all hon. Members who wish to speak, but I think that the hon. Gentleman would agree that he has had a reasonable share. We must now turn to the next—
§ Mr. WinnickWill you, Dame Janet, accept a motion to report progress?
The Second Deputy ChairmanNo, I will not. We now come to the next group of amendments, under the heading "Economic policy and deficits".
§ Mr. Peter ShoreI beg to move amendment No. 79, in page 1, line 9, after 'II', insert
'(with the exception of those Articles and Protocols set out in Schedule [Excessive Deficits])'.
The Second Deputy ChairmanWith this, it will be convenient also to discuss the following: Amendment No. 98, in clause 1, page 1, line 9 after 'II', insert
'(except Article 104c on page 19 of Cm 1934 which concerns excessive Government deficits)'.Amendment No. 100, in page 1, line 9, after 'II', insert'(except Articles 103(3) on page 18 and 109j on page 28 of Cm 1934 which concern convergence conditions for monetary union)'.Amendment No. 119, page 1, line 9, after 'II', insert'(except the protocol on the excessive deficit procedure on page 111 of Cmd 1934 in relation to Article 104c of Title II).'.Amendment No. 201, in page 1, line 9, after 'II', insert'except Article 102a of Title VI on page 17 of Cm 1934'.Amendment No. 202, in page 1, line 9, after 'II', insert'except Article 103a(1) on page 18 of Cm 1934'.Amendment No. 324, in page 1, line 9, after'II', insert (except paragraph 2 of Article 103 on page 18 of Cm 1934)'.Amendment No. 362, in page 1, line 9, afer 'II', insert'except Article 3(a) Section 1 as referred to in Article G on page 10 of Command Paper number 1934'.Amendment No. 47, in page 1, line 10, after '1992', insert'but not Article 103 in Title II thereof'.Amendment No. 48, in page 1, line 10, after '1992', insert'but not Article 104c in Title II thereof'.Amendment No. 61, in page 1, line 10, after '1992', insert'but not the Protocol on the Excessive Deficit Procedure.'.Amendment No. 203, in page 1, line 10, after '1992', insert'but not Article 103a in Title VI of Title II thereof'.Amendment No. 114, in page 1, line 17, at end add—'The above subsections shall only come into force subsequent to the laying before Parliament of a Command Paper concerning the implications for the United Kingdom of Articles 102a and 103 and related Articles of the Treaty on European Union, with particular reference to the decision-making structure in respect of economic convergence and allocation of resources and to approval of its terms by Resolution of both Houses of Parliament.'.New clause 2—Information from Commission—'In implementing the provisions of Article 103(3) of Title II of the Treaty on European Union, information shall be submitted to the Commission from the United Kingdom indicating performance on economic growth, industrial 1063 investment, employment and balance of trade, together with comparisons with those items of performance from other member states.'.New clause 57—Convergence criteria: assessment of deficits—Before submitting the information required in implementing Article 103(3) of Title II of the Treaty on European Union, Her Majesty's Government shall report to Parliament for its approval an assessment of the medium term economic and budgetary position in relation to the social, economic and environmental goals set out in Title II, Article 2, which report shall form the basis of any submission of information to the Commission which may be required under Articles 103(3) and 104(c) of the Treaty.'.Amendment No. 80, new schedule:—
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cc1063-210
- EXCESSIVE DEFICITS 82,449 words, 6 divisions