HC Deb 16 May 1994 vol 243 cc556-647

[Relevant documents: White Paper on Developments in the European Community July to December 1993 (Cm 2525) and the Commission's White Paper on Growth, Competitiveness and Employment (Supplement 6/93 to the Bulletin of the European Communities).

Madam Speaker

Before I call the Minister to open the Adjournment debate, may I appeal to the House? A number of hon. Members on both sides of the House will be taking a great deal of interest in the debate. I do not wish to impose a 10-minute limit on speeches, but I ask hon. Members to exercise voluntary restraint in regard to the length of their speeches.

3.36 pm
The Minister of State, Foreign and Commonwealth Office (Mr. David Heathcoat-Amory)

I beg to move, That this House do now adjourn.

My right hon. Friend the Secretary of State apologises for not being present; he is attending a meeting of the Foreign Affairs Council in Brussels. He had hoped that the discussion on Bosnia would allow him to return in time for the debate, but, for other reasons, it has had to be delayed until this afternoon.

We are to debate two White Papers, one on developments in the European Community during the last six months of last year and the other on the European economy. If there is a common theme running through both papers, it is making the European Union work better.

The Maastricht treaty came into effect in November last year, after clearing its final hurdles in the German constitutional court. Our aim now is to make a success of it. Implementing the treaty means curbing the itch to legislate, and seeking Community instruments that are simpler and clearer. It also means putting into practice the second and third pillars of the Union, so that member states can tackle issues of foreign policy, justice, and home affairs on a basis of more effective intergovernmental co-operation.

The Uruguay round of the general agreement on tariffs and trade was also completed successfully last year, in December. The Government strongly supported the efforts of Sir Leon Brittan, the Trade Commissioner, who conducted negotiations on behalf of the 12 member states. It was vital for us that the European Union maintain its free-trading vocation, remaining committed to dismantling trade barriers not just within the Community but worldwide. It was not easy to overcome the protectionist tendencies of some other member states, but there is no doubt that—as with previous GATT rounds—this round will deliver a powerful boost to world prosperity.

Figures are obviously only estimates, but a recent Organisation for Economic Co-operation and Development study estimated that an increase in world income of about US $270 billion could result from the Uruguay round. The industrialised and developing world will benefit from increased trade flows and there will be better rules for settling trade disputes.

Mr. Derek Enright (Hemsworth)

Will the Minister admit that countries that are highly dependent on trade in cane sugar, for example, have come out of the GATT round extremely badly? They are 20 per cent. worse off than they were when they received special concessions from the European Community. Is not the throwing away of our responsibilities to small banana and cane sugar producing countries the reason why some of us are cynical about the way in which GATT works?

Mr. Heathcoat-Amory

Under the Lome conventions, we have a number of legal obligations to assist certain developing countries. The hon. Gentleman mentioned bananas and sugar, but the agreements, if modified, can be reconciled with the free-trading objectives of the Uruguay round. It was noticeable that the developing world was enthusiastic about the Uruguay round; it sees a great deal to gain overall in a freeing up of world trade.

The European Commission, negotiating on behalf of the 12 member states, deserves our thanks for the persistence with which it conducted those negotiations, but the self-discipline of the 12 member states made an agreement possible. We hope to introduce and to give effect to the World Trade Organisation; the agreement was signed in Marrakesh and is due to come into force on 1 January next year.

During those negotiations, another feature of the economy was at the top of the British agenda for Europe—unemployment and the need to tackle the associated question of competitiveness in world markets. In the past, we have discussed competitiveness in Europe, but we also need to ask whether Europe is competitive in world terms and, if not, what we can do about it. Similarly, unemployment in Europe has been under-debated and has not received enough attention.

A change of emphasis is noticeable, particularly among those in Europe whose vision of the future has hitherto been about creating new institutions. The value of institutions lies not in theory, but in what they do, what they deliver and how effective they are. We believe in creating a people's Europe, not a Europe for bureaucrats and politicians. That means responding to people's day-to-day concerns about jobs, security, crime and the need for budgetary discipline and action against waste and fraud. That has meant patient work in the Council of Ministers with other member states that share our aims in particular areas of policy.

For instance, the Maastricht treaty gives full legal status to subsidiarity. That means that decisions will be taken by member states unless the policy objectives require action at Community level, as was the case with the GATT negotiations. To give effect to that principle, last year the British and French Governments submitted a joint list of directives to be withdrawn, amended or repealed. Most of them were accepted and the Commission is now working up details for implementation.

We will keep up the pressure and the Commission will produce another report by the end of this year. I know that the German presidency, which starts on 1 July, attaches the same high priority to making subsidiarity work in practice and to turning the words of the treaty into action.

The White Paper on the European economy is in many ways a disturbing document. There are 20 million people unemployed in the European Union and the number has been rising at every turn of the business cycle over the past 30 years. Even in good years, growth in Europe has delivered far fewer new jobs than in economies elsewhere in the world. Last year, member states were invited to submit papers on growth, competitiveness and employment. Ours was the first to be published—we submitted it in July last year. Many of its themes were incorporated into the final Commission White Paper, which is one of the subjects of today's debate.

Europe has become a high-cost continent. Action is needed to lighten the burden of regulations, to improve the flexibility of labour markets, to avoid excessive social costs and to improve training. Action is also needed to complete the single market and enforce the rules on competition. In December last year, the European Council adopted just such an action plan. The Commission is now to conduct an audit of existing legislation in terms of its effect on employment.

There is a feeling, which is now widely shared, that well-meaning legislation has imposed uncosted burdens on industry and business.

Mr. Michael Fabricant (Mid-Staffordshire)

Has my hon. Friend read the report by the Organisation for Economic Co-operation and Development which was published about two years ago and said that non-wage employment costs were the biggest single cause of unemployment in France which is now at its highest level in absolute terms?

Mr. Heathcoat-Amory

Yes, non-wage labour costs are sometimes startlingly high in Europe, which is undoubtedly a contributory cause of unemployment. When I said that the feeling was widely shared, I included thoughts from the OECD's report and other studies that offer the same conclusion. There is no doubt that the result of such burdens and costs has been higher unemployment in Europe and firms becoming less competitive in world markets. In other words, over-regulation leads to unemployment.

Mr. Anthony Coombs (Wyre Forest)

Does my hon. Friend agree that the ability of different communities to create jobs is a matter not merely of wage costs caused by social regulation but of the imposition of taxation? The proportion of gross national product taken in taxation in Europe varies between 36 and 45 per cent., whereas the United States takes only about 31 per cent. and Japan 29 per cent? It is precisely those countries which have been most successful in creating jobs.

Mr. Heathcoat-Amory

I could have said that Europe is becoming a high-cost and high-taxation continent, and something must be done about both. However, overregulation was the subject of my remarks. I was drawing attention to the fact that the Government are tackling the problem at the national level. We believe that it must be tackled with the same vigour in the Community.

It was clear at the very successful Anglo-German summit last month that many of the concerns about cost, taxation and over-regulation are shared by the German Government and, as they will be taking over the presidency on 1 July, I think that we can look forward to further deregulation initiatives in the latter half of the year.

Sir Teddy Taylor (Southend, East)

Does my hon. Friend agree that, apart from the problems of high costs and high taxation, which are part of the European set-up, we also have a serious problem with vicious protectionism? Does he recall our correspondence about the crazy restrictions recently placed by the European Community on trade with China which have knocked on the head two firms—PMS. and Hi-Tec—in Southend? They have been instructed to reduce their business by 75 per cent. which will mean the loss of jobs as a direct result of European protectionism.

Mr. Heathcoat-Amory

I recall the correspondence with my hon. Friend. He will know that we did our best at the Council meeting concerned further to liberalise trade and to dismantle the restrictions to which he has referred. He will agree that barriers have come down and that restrictions have been removed on trade between the two countries, although not as far and as fast as he would like. I know that the firm in his constituency had been put at a disadvantage by the remaining barriers to trade.

The action plan agreed last year at the Brussels summit did not tackle only cost and regulation; it also includes measures to make the single market work better. A high-level group is to co-ordinate work on energy and transport networks. A separate group is studying information networks and we hope that that will lead to rapid moves further to liberalise the European telecommunications market. Many of these are long-term measures, but interim reports will be made to the European Council meeting next month in Corfu and further reports will be made by the end of the year, by which time we wish to see real progress.

Other areas in which the citizens of Europe want action are international crime, terrorism, drugs, money laundering and illegal immigration. Those are dealt with in the so-called third pillar of the Union through co-operation between Governments. Good progress has already been made and, in particular, the EUROPOL drugs unit started work in February to analyse and exchange intelligence on drug trafficking and related crimes.

My right hon. and learned Friend the Home Secretary recently launched an initiative to crack down on fraud in the Community, again using the new procedures available under the Maastricht treaty. European taxpayers have the right to know that their money is being properly applied and that waste, mismanagement and fraud are being dealt with. The European Parliament has new powers in this area to ensure that money is accounted for and that the reports of the European Court of Auditors are taken seriously and followed up.

Indeed, the European Parliament now has wider powers to check the legislative process. They can help us to redefine the work of the Community so that what needs to be done is done better, through fewer, clearer instruments which are then properly complied with and properly enforced.

Mr. Harry Barnes (Derbyshire, North-East)

The second item on the Order Paper today is a motion on a report of the Court of Auditors on the environment. Why was it 16 months before that report was presented to European Standing Committee A, by which time it was outdated? The Committee was so incensed that the motion before it was defeated. Today's motion must either be accepted or objected to, and we cannot discuss it on the Floor of the House. If we are concerned about the report of the Court of Auditors, should not the matter be discussed on the Floor of the House?

Mr. Heathcoat-Amory

If the hon. Member has complaints about procedure, he would do better to direct them to the business managers. My point, which I repeat, is that reports from the European Court of Auditors, which have tended to be largely ignored in the past, are now to be followed up and implemented. In addition, the European Parliament has certain powers to ensure that that happens.

Mr. Nigel Forman (Carshalton and Wallington)

Does not the interesting example raised by the hon. Member for Derbyshire, North-East (Mr. Barnes) underline a rather important home truth about the European Union, which is that national Parliaments and the European Parliament should regard each other as complementary rather than as necessarily conflicting? Together, they can add to the sum total of public accountability.

Mr. Heathcoat-Amory

My hon. Friend makes a fair point. The real debate in Europe now is how the new powers are to be used; that is the importance of the European elections. People now have the chance to put in Members who will utilise the new powers and, where necessary, work with their colleagues of similar parties in national Parliaments to achieve the same ends.

I return to the future of the Community and, in particular, enlargement. I am pleased that the European Parliament recently approved the agreement to admit Austria, Norway, Sweden and Finland to membership of the Union. The way is now clear for signature of the accession treaty, probably at the next European Council meeting in Greece, and a Bill to enable United Kingdom ratification will be introduced to Parliament in due course, certainly in time to meet the deadline of the end of the year. All that, of course, is subject to the referendums that must be held in each of those four states and for them to decide if they wish to join.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

What assessment has the Minister or the Foreign Office generally made of the damage that was done by the position of the British Government and others in the qualified majority voting fiasco to the subsequent referendums in the potential member states?

Mr. Heathcoat-Amory

Our assessment is that it has done no damage at all. It shows that important national interests can be protected and that agreements can be reached. That should be of assurance to new countries coming in, which have a well-developed sense of statehood.

The whole process of enlargement fulfils a longstanding British ambition. Indeed, we started the ball rolling on the current round of enlargement at the Edinburgh Council meeting of 1992. The negotiations for enlargement were tough and a number of member states had important interests to defend. We protected our fisheries, we kept our budget rebate intact and, yes, we reached agreement to protect minority positions in the Council of Ministers when votes are taken by qualified majority. Just to avoid any misunderstanding, let me emphasise that that issue was about majority voting.

We will continue to insist that, on vital national interests—matters such as taxation, defence, foreign policy, immigration, treaty changes and so on—unanimous voting will continue to be required. I realise that that is the difference between the parties. The Opposition wish to extend majority voting, and they have said so on a number of occasions, but we do not.

We look forward to the four new countries joining on 1 January next year, if possible. Of course, they will not all share our views, but they are free traders and they are used to making their way in the world. They will be contributors to the budget, so they will share our views on the importance of budgetary discipline. They all have a keenly developed sense of statehood, with strong national parliaments. All of them are committed to good government and a European Union based on the rule of law.

Mr. David Winnick (Walsall, North)

Will the Minister give way?

Mr. Heathcoat-Amory

One more time, perhaps.

Mr. Winnick

In view of what the Minister has just said, is he aware that there is increasing concern, certainly in this country, over the fact that, in the new Italian cabinet, five members are clearly pro-fascist and in the second tier of 37 Ministers, 12 are associated with fascism?

Bearing in mind the fact that, as I have said in exchanges with the Foreign Office, next year will be the 50th anniversary of the defeat of fascism, when we will be celebrating—not commemorating, but celebrating—the end of the war against fascism, does not the Minister recognise that the answer that he gave me in the previous Foreign Office questions was very complacent indeed and that we should be concerned—however it came about—that there are fascist Ministers and Cabinet Ministers in one of the leading member countries?

Mr. Heathcoat-Amory

I do not recall that the hon. Gentleman complained when we used to do business with Communists and Marxists, some them with extremely disagreeable records on human rights. At Government level—I include the previous Labour Government—we frequently have meetings with the leaders of east European countries and the countries of the former Soviet Union, most of whom were hardline Communists, with extremely poor records on the treatment of human rights.

I shall repeat the point that I made, possibly to the hon. Member for Walsall, North (Mr. Winnick), at a Question Time. It is for the Italians to decide, under their democracy, whom they elect. If they elect a Government and they are committed to the constitution and duly elected, we will do business with them.

Mr. Enright

On a point of order, Madam Speaker. Is it in order for a Minister to attack an hon. Member of the House for taking positions which he has never taken? For example, my hon. Friend the Member for Walsall, North (Mr. Winnick) has always—

Madam Speaker

Order. The hon. Gentleman is not raising a point of order with me. He is putting to me a point of argument and frustration. If Opposition Members catch my eye, they will be able to put matters in another perspective.

Mr. Heathcoat-Amory

The hon. Member for Walsall, North asked a question and I gave an answer. That is what the hon. Member for Hemsworth (Mr. Enright) is complaining about.

Mr. Winnick

Further to the point of order, Madam Speaker. You are the defender of Back-Bench Members and I have been accused of being a defender of dictatorships and totalitarian movements if they were communist. That is a lie, and the Minister should withdraw his statement.

Madam Speaker

That is a matter for debate, not a point of order. If the hon. Member feels that he has been done an injustice by the Minister, he may seek to catch my eye and to set the record, as he believes it to be, absolutely correct.

Mr. Heathcoat-Amory


Mr. Winnick


Mr. Heathcoat-Amory

I am not disputing the hon. Gentleman's record of standing up for human rights. I made the separate point that he and his hon. Friends did not complain when the Government, and the Labour Government, used to do business at official level with communist countries and Marxist states, all of which had deplorable records on human rights.

My final point is that if we make a success—

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

Will the hon. Gentleman give way?

Mr. Heathcoat-Amory

I hope that the hon. Gentleman will forgive me for not giving way. I have begun my concluding remarks and I wish to adhere to Madam Speaker's injunction that we try to keep our remarks relatively brief.

A successful enlargement this time round will, we hope, pave the way for future rounds of enlargement. Recently, two more countries—Hungary and Poland—applied for membership. Already, Malta and Cyprus are being considered. Those developments raise important questions about institutional reform and finance—questions that go well beyond the scope of today's debate. We welcome, however, the prospect of reuniting Europe, its having been divided by communism for nearly 50 years.

We reject a European Union that is rigid, centralised and incomplete. We share with other countries a view of Europe that is diverse, outward looking and able to face common challenges with confidence. I believe that the events of the past six months and more have taken us further in that direction.

4.1 pm

Ms Joyce Quin (Gateshead, East)

The debate, when first planned, would have coincided with the opening shots in the European election campaign. That is no longer the position because of the tragic death of John Smith last week.

The debate allows us, however, to advance our views on what we see as the development of the European Union, to comment on the documents that are before us and to show that there is an alternative to the Government's approach and that we have many positive ideas for the way forward.

I welcome the debate, but its timing is unfortunate for practical reasons. It is rather odd that the debate coincides with the meeting of the Foreign Affairs Council in Brussels. That being so, it is rather difficult to influence any of the discussions that the Foreign Secretary might be having with his counterparts. In terms of our ability to influence today's meeting, it is a matter not of one minute to midnight but of one minute after midnight.

The Minister raised various issues, one of the most important being the enlargement of the European Union, to which the Opposition give an unqualified welcome. It is something for which we have long called. We feel that we have much in common with the four applicant countries, with their strong social democratic tradition and their belief, like us, that Europe needs a strong social dimension as well as a strong economic one.

I shall ask the Minister one or two questions about enlargement, and especially about the agreement reached at Ioannina—the famous Ioannina compromise. I recently wrote to the Prime Minister to question what he said in the House about the agreement. The right hon. Gentleman said that it was 'justiciable' in the European Court of Justice. I am sure that the Minister knows that in the European Parliament recently the Commission President, Jacques Delors, said that the agreement at Ioannina was a political declaration but not a legal text.

Does the Prime Minister still adhere to his belief that the agreement is justiciable? I tried to raise the matter with the Minister in Committee last week during a discussion on enlargement, but my question was not answered. I would welcome an answer today.

I should like the Minister to comment on a claim that was made to me by one of the Labour Members of the European Parliament about a statement by the Secretary General of the Council to a meeting of the Foreign Affairs and Security Committee of the European Parliament a week ago. He described what would happen, once the Ioannina compromise was supposed to be working—that would come into play when between 23 and 26 votes were against a Council decision—when four countries besides Britain were part of a so-called blocking minority of 23 votes.

According to the Secretary General, it would be necessary for all the countries concerned to say specifically that they wanted to use the Ioannina compromise. Therefore, it would not be enough for Britain to say that, since a certain number of votes were against a proposal, the compromise should be automatically invoked. He also said that, should one of the countries opposed to the decision withdraw its opposition in the spirit of unity, matters would simply proceed, despite the fact that our Government might want to invoke the compromise, without any hindrance. Will the Minister comment on that?

It is clear from a parliamentary answer to one of my hon. Friends that the Government's assurances on social issues are simply oral and that there is nothing in writing. We strongly believe that nothing has been achieved other than a restatement of what was already the case. The Government may say that certain issues will not come before the Council because they will not be taken under the health and safety heading.

Many countries would agree with us, however, that many of the social directives proposed in Brussels are related to health and safety—for example, the vexed directive on working time and the directive on the protection of young workers. A strong case can be made for saying that working inordinately long hours harms health and safety. The Government have made a completely false assumption that health and safety has nothing to do with those important issues.

The Labour party strongly believes that we should play a positive, central role in Europe. That is the best way in which British interests can be safeguarded and British people can be given a good deal from the European Union. The Opposition also believe that that is the best way for Europe to make progress.

I should like to illustrate that argument by referring to four policy areas where the kind of policies that we are putting forward would be good for Britain and good for Europe. On the economy, we welcome many of the proposals contained in the Delors White Paper, although we would have preferred the stronger version that was originally available. We believe that a great deal could be achieved through co-operation on infrastructure projects that would help to create jobs. For example, funding should be given to provide direct rail links between the channel tunnel and all the regions and nations of this country. Such links are long overdue.

I am sure that my hon. Friends could refer to numerous public transport schemes that deserve funding in their areas, and if I may be permitted to cite one from my part of the country, the completion of the Tyne and Wear metro integrated transport system would be greatly welcomed. I say 'integrated', although, unfortunately, integration has been lost because of bus deregulation and other measures.

Many important environmental projects should be encouraged through such co-operation and the Opposition's idea of public-private partnerships. We should also like regional funds to be put to much more effective use; so often they have swollen the coffers of the Exchequer without providing proper additional benefit to the regions concerned. After all, the regional funds of the European Union were originally designed to offer such benefit.

We also believe that more co-operation on research and development is important. We regret the rather negative attitude that has been adopted to the European Community's framework programmes. Those programmes should be extended and better targeted.

We also, importantly, believe that our industry needs equal treatment in the European Union. Whether we are speaking about our old industries such as steel, shipbuilding or coal, where we believe that we have lost out unfairly in the European context, or about research and development and new industries, we need measures that ensure that we are not disadvantaged by the support that other countries may give.

That is also important for exports. When I used to take a special interest in that subject from the Opposition Front Bench, I was worried that we had a far more niggardly attitude to such aspects as export credit guarantees than many of our European competitors. It seems to me that the Government are expressing a vain hope when they say, as they often do, that they will cut down support and hope that everyone else will follow suit. I do not believe that that is a sensible way to approach industry in the European Union. One must obtain agreement on a common level of support so that progress can be made.

Mr. Fabricant

Perhaps the hon. Lady knows that I was greatly involved in exporting before I came to this place. Does she accept that, since the Budget and the previous Budget, the Export Credits Guarantee Department now offers terms at least equal to those of HERMES in Germany?

Ms Quin

I accept that there were some modest measures to support exports, but, for many years, there were many discrepancies in the terms of the support that we were offering. How many exports were lost in the interval? I am speaking about a number of years ago. I think that that weakened our economy at a difficult time for US.

On other aspects of the economy, we note that today the European Commission is still giving a rather unfavourable forecast of British economic growth. We believe that the policies that have been pursued have weakened our economy and our industrial base, in spite of our great natural advantages of oil, coal and gas. A great deal more needs to be done if the economy is to recover.

The second area to which I shall refer is social and employment matters. I say strongly that the Labour party believes that the European Union is not simply a market or a free trade area: it has been a market with a social dimension from the beginning. It is obvious that a social dimension has been built into the European Coal and Steel Community treaty, the treaty of Rome and subsequent treaties. Therefore, it is not credible for the Government in the 1990s to try to remove the social dimension of the European Union on the spurious ground of subsidiarity. That simply will not work, and it explains why we are so marginalised and isolated on that issue.

Mr. William Cash (Stafford)

The hon. Lady suggested that the Government might oppose the progress that she would advocate towards greater social cohesion on the ground that we might be marginalised or that it might be spurious to do so. Has she considered the fact that the jobs of the people of this country depend emphatically on our being competitive, and that the only way in which we can be competitive in global markets is by having wage costs that are comparable with those throughout the world?

Ms Quin

I do not accept the hon. Gentleman's argument for a minute. Perhaps, in replying, I can refer to inward investment, which I know exercises the attention of hon. Members on both sides of the House. If one considers inward investment and the reasons for it, one will see that low wages have practically nothing to do with the inward investment that has taken place in recent years.

I refer the House yet again to the evidence that was given by Nissan to the Employment Select Committee during its study on inward investment in which Nissan said clearly that the social chapter, far from presenting it with a threat, caused no difficulty to the company because it already had terms and conditions that exceeded those of the social chapter. Indeed, it was interesting that the management of Nissan, in their evidence, said that they thought that the low-wage, low-skill approach to the economy was the road to economic disaster.

Mr. Graham Riddick (Colne Valley)

Will the hon. Lady explain why the United States, which has a low-tax, deregulated, free-market economy, has managed to create 30 million new jobs in the past 20 years, whereas the European Community, whose economy has gone in the opposite, more regulated direction over the same period, has managed to create only 5 million new jobs, most of which are in the public sector?

Ms Quin

I stoutly maintain that no facile correlation exists between low pay and poor conditions and high employment. For example, the Government have spent much time advertising in German and Swiss newspapers about the virtues of a low-wage economy, yet Switzerland, in particular, has an unemployment rate of only 4 per cent.

Sir Teddy Taylor

Switzerland is not in the European Community.

Ms Quin

That is irrelevant to my argument. I said that there was no correlation between low wages and poor employment conditions and the level of unemployment. Employment terms and conditions in Switzerland are much better than those in this country. Austria, which is applying to join the European Union—it hopes to join shortly and I trust that the referendum there will be successful—also has low unemployment, yet it is extremely keen on the social chapter of the Maastricht treaty. The hon. Member for Southend, East (Sir Teddy Taylor) should bear that in mind.

Sir Teddy Taylor

Does the hon. Lady appreciate that she has hit the nail on the head? It is not low or high wages but membership of the EC which causes the burdens, high costs and unemployment that the people of Europe are now suffering.

Ms Quin

The hon. Gentleman has a strange view of the universe. The record of the past 20 or 30 years shows that the countries in the European Union with the lowest wages and poorest working conditions have not had particularly high unemployment; the contrary has been the case. If deregulation is such a success, why was this country, after 10 years of that medicine, the first to go into recession?

Several hon. Members


Ms Quin

Many hon. Members now want to intervene, but I have already said enough to show that no simple correlation exists between poor wages and poor conditions and high unemployment. I feel confident about that.

Listening to Conservative Members, one would think that inward investment would never go to countries with good employment conditions or high wage and non-wage costs. In the past couple of weeks, I have noticed that the South Koreans are to assemble cars in Europe. The plant where they hope to produce up to 30,000 vehicles a year is in Germany. That is another matter that should be borne in mind.

Mr. Bernard Jenkin (Colchester, North)

Will the hon. Lady give way?

Ms Quin

I have already given way several times.

The growing inequalities in Britain under this Government are outside the general trend in the European Union and we want that to be reversed. Such inequalities are morally wrong but also economically indefensible and Britain is paying the price for the fallacy that poor wages and bad conditions are linked to economic efficiency. Plenty of evidence shows that that is not so.

Mr. Simon Burns (Chelmsford)

Will the hon. Lady give way?

Ms Quin

I may give way a little later.

On the social dimension, we also regret that the Government have consistently blocked a range of directives which we think would have helped British people at work, and which would have been very much in their interests. I could mention several of them, but in particular there was the information and consultation of workers in multinational companies, the directive on parental leave and the directives on giving employment rights to part-time and full-time workers.

Let me say clearly that we not against flexibility. We believe that flexibility is an important aspect of employment, but we do not want flexibility to be a lifetime penalty of lost benefits and poor pension and holiday entitlement. We would like flexible part-time work to be an opportunity, not a penalty.

Mr. Burns

The hon. Lady will accept that a significant amount of inward investment has come to different parts of the country during the last decade or so. During her speech, she has given a number of reasons which were not the cause of that inward investment. Would she be kind enough to tell the House why she thinks those companies decided to invest in this country?

Ms Quin

There are several reasons, such as the availability of labour and of certain skills. As for Japanese investment, the fact that we speak English is an advantage because of all the commercial contact which Japan has had during the past 30 years with the United States. It was obvious that the Japanese would look to Britain, and we welcome them to areas such as mine in the north-east. I willingly concede that companies have received grants from the Government and from other sources.

It is also fair to say that there is some concern among would-be inward investors, particularly because the two opt-outs which the Government have negotiated mean that we seem to be semi-detached in a European context. Perhaps it is for that reason that the rate of investment into the United Kingdom has slowed somewhat, and we have seen efforts by some companies—particularly by the Japanese, but also by the South Koreans, as I mentioned just now—to invest in other countries.

To a certain extent, those companies may feel that they do not want to put all their eggs in one basket, which I can understand; but there is also a feeling—borne out in an Ernst and Young report on inward investment—that our semi-isolation in the European Union is a factor weighing in the minds of inward investors. The Government ought to take that into account.

Mr. Jenkin

Will the hon. Lady give way?

Ms Quin

I have given way several times, and I will not give way again. I know that many of my hon. Friends want to speak.

Mr. Jenkin

It relates to the hon. Lady's point.

Ms Quin

This will be the last intervention I take.

Mr. Jenkin

I am grateful to the hon. Lady. Why is unemployment so much worse in so many other EC countries than in ours, and why is the EC as a whole an unemployment black spot compared with developed countries throughout the world?

Ms Quin

Given that unemployment in Britain has been consistently higher than in other European Union countries during the time the Government have been in power, the hon. Gentleman should perhaps direct that question to the Government. We must look at different countries in different ways. For example, Germany has had specific problems recently which it has tackled with tremendous courage. It is interesting that the European Commission is now painting a brighter picture for Germany in the future. [HON. MEMBERS: 'What about France?'] Recent predictions are rather more favourable for France than they are for Britain. [HON. MEMBERS: "No".] Yes, according to the lunchtime news today.

The third area I should like to mention is the environment. The Labour party feels positively about European environmental initiatives and we believe that it is an important area for us to co-operate on in the future. The subject was, to a certain extent, debated fully last week, and I commend to the House the excellent speech by my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith), who talked about Labour's policies and attitude towards European environmental issues.

Perhaps at this stage I should respond to something that the Minister said about the question of subsidiarity. We believe that the Government's view of subsidiarity is entirely false. They seem to see it as a simple choice between taking decisions in Brussels and taking decisions in Westminster and Whitehall. Labour believes that subsidiarity means taking decisions at the lowest most appropriate level—that could mean the local level, regional level, national level or European level, or even the United Nations level, depending on the issue which is being discussed and which is under consideration.

We note from the report "Developments in the European Community: July-December 1993" that the Government's claim a few months ago that they had managed to scrap certain European environmental directives on the ground of subsidiarity is completely false; it is clear from the report that those directives have not been scrapped. I am glad that they have not been scrapped. We are not against them being revised if that means even better standards for Europe's citizens as a whole.

Sometimes the Government try to convince us that they are defending British interests by raising the Union Jack. I do not want to see the Union Jack raised alone on dirty beaches around our coasts. I want to see the Union Jack alongside the blue flag of environmental approval from the European Community, which would at last signify that we had complied with the commitments that the Government entered into when they signed certain European environmental directives. It is a scandal that many years later we are still far away from fulfilling those obligations.

As for the environment, we also believe that there is tremendous scope for job creation in energy efficiency. Perhaps I can echo the complaints made by my hon. Friends about the way in which the Government recently scuppered the Bill of the right hon. Member for Berwick-upon-Tweed (Mr. Beith). We believe that such measures have job creation potential, and it is something that should be looked at seriously. There are also opportunities for our industry in helping to clean up the, sadly, heavily polluted economies of central and eastern Europe. Those economies have tremendous problems and they need our help both in aid and in trade.

Finally, I turn to the fourth element on which I believe we have positive proposals to put forward—decentralisation in the European Union. I have already talked about our views on subsidiarity. We believe in regionalisation and decentralisation. We find it rather strange that the Government sometimes complain of bureaucratic centralism in the European Union when bureaucratic centralism seems to be the recipe that they have been keen to give to the people of Britain over the past 15 years.

Mr. Winnick

Does my hon. Friend agree that on decentralisation—I have been following what she is saying—it is absolutely essential that all member countries in the Community should have a commitment to democracy? Therefore, does she share my apprehension at the Minister's complacent remarks about the inclusion of fascist Ministers in Italy—[Interruption.] Tory Members who are heckling will undoubtedly next year savour celebrating the end of the war against fascism. If that is true, why are they so complacent about the presence of fascist Ministers in the Italian Government?

Ms Quin

I agree with my hon. Friend. I should have liked a more fulsome apology from the Minister to my hon. Friend's intervention earlier in the debate.

We want to see a more open and more democratic European Union. I think my hon. Friend will agree when I say that we believe that the contribution of the four new members to the process will be important. We hope, although we do not expect, that the Government will support those four new countries in their desire for greater openness in the proceedings of the Council of Ministers and, indeed, in their great concern to ensure proper freedom of information throughout the European Union.

The Labour party has a positive agenda on the four areas that I have mentioned. We do not believe that everything in the Euro-garden is rosy. We also have ideas for change, whether they be on the common agricultural policy, an increased battle against fraud or an increased European awareness of problems to do with racism. One of the proposals in our European document is for a European Commissioner with a specific remit for racial equality. The European Union has done a great deal for women's rights, but there is a great deal that could be achieved, particularly for ethnic minorities and the various groups in the European Union.

I have tried to make my speech positive. I believe that the Labour party has a positive programme to put forward. There is a great deal about the Government's approach that we reject. I conclude by quoting from the very fine tribute to John Smith that was made by Michael Foot in The Observer yesterday, in which he said that he had hoped that John Smith would be here to play a full, magnanimous part in the Europe he had helped to create". I hope that that will inspire many of us in the months and years to come.

4.30 pm
Sir Edward Heath (Old Bexley and Sidcup)

I gladly agree with the hon. Member for Gateshead, East (Ms Quin), the Opposition spokesman, on her last remark. It is sad at this particular time that John Smith is no longer with us. He was always absolutely clear headed about the European Community and the European Union and developed all his views in accordance with it. During the campaign—if he had been taking part—I believe that he would have given a very important lead to the people of this country and would have secured the support of his party for it.

The debate is important, in part because we are at the beginning of a campaign for the election of our European Members of Parliament, but also because we are now hearing from Government sources that the Government are preparing, apparently, a wide mass of proposals to put forward at the 1996 conference. It is therefore good that we are able to express our views before the European election, and also, if I may say so, that the Government recognise that they could not be more wrong if they think that they will change the European Union into a free trade area, which was their former idea. The quicker they learn that the better.

The debate gives an opportunity for mentioning a few home truths. I do not want the Government to go through the same humiliating performance that we saw when they recently tried to change the voting system in the European Union. Nothing was more humiliating as far as our country was concerned, and it has done us immense harm. It did so in part because at the same time it emerged from sources—said to be in Downing street—that if the Prime Minister did not get everything that he wanted in 1996, we were out.

I was in the United States at the time that that was published, and the Americans said to me,"But what on earth can your people be thinking of? You do not matter outside the Union. We are not interested in you outside the Union." I heard exactly the same from the far east. It was then stated that of course there was no such intention. But the damage was done. People ask, "What are you playing at?" They think that those who make such suggestions are out of their minds; and on that I agree.

When it comes to the importance of the election, I hope that all hon. Members will urge the people of this country to vote, as that is essential. Ever since I have been connected with European interests in the political way, which is now nearly 50 years, I have always been told by the Europeans, "We want you to show us how to create the European democracy. You have the oldest Parliament among us. You have the mother of Parliaments. You have the experience and the expertise, and it is your lead and guidance that we want." And we failed them completely.

At the previous European election 33 per cent. of the people voted—the lowest percentage in the European Union. What is there to be proud of in that as a country, a Parliament or a party? That is why I hope that we can urge our people to use their European vote. We cannot say that the attendance for the debate is a good example of the keenness of the House to debate European matters. We must try to persuade people to vote, and for that an explanation is required.

Over the past 15 years the people of this country have been given no explanation of what is going on in the European Community. [Hon Members:"'What about your White Paper?"] My White Paper was extremely good and greatly appreciated at the time. [Interruption.] Perhaps we could have some manners. Good manners were certainly not displayed during the speech by the hon. Member for Gateshead, East (Ms Quin).

The trouble with Maastricht was that the Government took it for granted that because a large majority sent the Prime Minister to Maastricht and because he won the general election and got the Second Reading on the Bill, everything was straightforward. But it was not and people now require a full explanation of what is happening, what we are doing, why we are doing it and how it benefits them.

Over the past 15 years the Government have not said a good word about the Community. People have had no information about the money coming to us—more than £9 billion in the past seven years for regional development and other purposes—nor have they been told that we get a larger share than any other member of the European Union.

Mr. Peter Shore (Bethnal Green and Stepney)

Will the right hon. Gentleman give way?

Sir Edward Heath

I am sorry, I shall not give way. Madam Speaker has asked that everybody be brief. I shall be as brief as I can and I hope that the right hon. Gentleman will be called.

When for 15 years nothing is put forward with the weight of Government backing and official information what can people do except read the nonsense in the deplorable gutter press? Last weekend an American said to me, 'How has your press got into this state? It is incredible. We had always thought that the British press at any rate was truthful and that it dealt with important matters. But now nothing appears in many papers about what is going on in the union unless it is a matter at which they can throw mud.' That puts the task on us and especially on the Government and their information services to explain everything that is happening.

We have rightly heard a great deal about the social order, the economy and wages in the Union and about the action being taken on those issues. This country went into the depression much earlier than others and we have come out of it somewhat earlier than others. That is the economic truth. Germany has the highest wages in the Union and was the most successful. But it then had unification and took on 18 million people who had had 50 years of communism and an entirely out-of-date industrial set-up that was falling to pieces. To a large extent those people were less skilled than people in the rest of western Europe and they naturally wanted to take quick advantage of joining western Germany.

Perhaps people can today criticise Chancellor Kohl for going for immediate unification, but I do not think that he could possibly have done anything else. The Front-Bench idea of a royal commission to examine it for 15 years and committees to look at the individual recommendations bore no resemblance to reality. Chancellor Kohl had no alternative. However, the ratio of the East German mark to the West German mark was misguided. If they had stuck to their original proposal of a ratio of 3:1 they would not now have so many problems. But I have no doubt at all that the Germans will master it: the signs are already showing.

We are told that the answer is to push down wages. One of my hon. Friends said that that is the only answer. What is the logical conclusion? It is that to compete in the Pacific, one must reduce wages to the level of the People's Republic of China. Who would accept that? No one—not for a moment. One way to compete is by forcing wages down wherever possible. Another is to improve one's management and technology—and that is the alternative that we should be working on, for all that we are worth. The Government ought to give that objective every possible financial support.

The problem will become greater because much of the People's Republic of China has technology newer than that of this country. When China invests, it insists on the latest technology, from countries that have the latest technology. That is the real problem facing this country. We shall not get anywhere returning to the dogma of the old diehards in my party from whom we thought that we had moved away, who earned us such a bad name in the 1920s by their lack of support for workers and pressing wages down as hard as they could. That is past. If that is emphasised in my party, it will be disastrous for it when the next test comes. I have no doubt about that. Let us concentrate on better management and improved technology. That is the only chance that we have of competing.

Other countries in the Union will do that. Once the Germans get through this spell, they will do that as much as any country. The Japanese come to the United Kingdom because they can pay higher wages and get results. They have been doing that successfully for the past 20 years, but they will not continue if Britain is outside the Union—not for a moment.

Some countries inside the Union believe that the French and Germans will separate, but that will not happen. Their interests are too close. They have learnt their lesson. We have seen that not only in terms of their economies but in defence and foreign policy, in which the French and Germans are drawing closer and closer together. The idea that one can permanently separate foreign policy, defence, and economic and financial matters does not bear examination. What can be achieved in foreign affairs and defence depends on one's economy and finances.

If one does not have the economy and the finance right, one cannot do the other things. To say that it is an achievement to separate them bears no relation to reality. The other member states know that and will go on their own quiet way, merging things together. Once again, we shall be on the fringe.

What nonsense it would be to imagine that we could separate those three aspects in this country, with finance and the economy being looked after at Westminster; foreign policy in Liverpool, because it has always been outward-looking and has a view across the Atlantic; and defence in Edinburgh, because the Scots will get a war quicker than anybody. Those aspects are bound to come together, and we shall not achieve anything by trying to slow that process.

As to the single currency, my right hon. Friend the Prime Minister said that he would not hold a general referendum but that perhaps we should have one on a single currency when the time comes. That is a fascinating idea. If the other members of the Union said that they had decided on a single currency, we would have to say that we made an undertaking to hold a referendum. The issue of whether sterling entered a single currency would be campaigned on in public for four or six weeks. What would happen to sterling during that time? Look what happened in a couple of hours on Black Wednesday. What would happen during four to six weeks' campaigning on whether or not to join a single currency? It is fantastic and unbelievable that anyone could even consider such a thing possible. That would again bring us into disrepute.

More and more, other members of the Union are saying, 'They want to be on the outside, and we can let them be on the outside.' They take less and less notice of anything that we put forward. I hope that my right hon. Friend the Foreign Secretary and other members of our Front Bench realise that.

Four new members of the Union have been approved. I met a large number of people in Europe over the past week and I know that those four countries were the angriest about the attempt to change the voting. They said, 'We are joining, and now you are trying single-handed to monopolise the voting.' The Foreign Office did not even discover whether there was any support for that change. What a Foreign Office. What a policy—to try to do something like that without knowing whether or not one could get it through.

On Thursday, I was in Aachen for the awarding of the Charlemagne prize to the Norwegian Prime Minister and had a great opportunity to learn the views of others. The President of Germany made his farewell speech there. Also present were Prime Ministers, Foreign Ministers and nearly 20 ambassadors. There was no Minister from the British Foreign Office present, no British ambassador from Bonn—not even a clerk from the British Foreign Office. Do not other Union states draw the conclusion that we are not interested in what happens in Europe and in the Union? Of course they do, and they act accordingly. Those may seem simple matters but they are important when people are working together in a union. Over the years, I have seen countries growing closer and closer in all their activities.

After the collapse of the Soviet empire, President Bush said that we would have a one-power world and that it would' be a peaceful world. Worryingly, we have seen instead a world more stricken by strife than anything since the end of the second world war. The one world power tried to deliver what it thought were the goods, and failed. It failed over Yugoslavia, where the United States was not prepared to put troops on the ground to bring about any other solution. It failed over Somalia, where it withdrew its troops, and in other activities. The USA is taking less of a place.

It is not a one-power world now. Russia is still a power. We saw the way that the election moved, and we hear what the Russians have to say. When I was in Moscow the week before Easter, I spoke to business men, politicians and diplomats. They said, 'We like the British Government's know-how approach, of saying that they will show us how they do it and that we can follow it if we like.' I saw some of the schemes being undertaken. But those business men, politicians and diplomats said, 'However, we will not have anyone tell us what we must do. Anyone who tries will be in difficulty.'

Therefore, there is Russia, which is a military power that is also tying up individual parts of the new Russia. There is the People's Republic of China with a population of 1.25 billion people and 12.5 per cent. growth each year. When the American Secretary of State went to China and threatened to remove the most-favoured nation clause unless it did as the United States required in respect of human rights, China said, 'Kindly go away,' and the Secretary of State left with nothing. China too is a modern power.

More and more American business men say, 'You cannot try to tie human rights to other matters when countries have different civilisations, histories, religions and political systems. By all means try to influence them in respect of human rights, but do not try to force them with threats, when it is a power of that size and importance.'

Japan is the fourth power of great importance. Economically, it leads the world. It may have difficulty keeping Prime Ministers—I was going to say that Japan is not unique in that, but I will not say anything at all. Japan's achievements are remarkable, and it will continue being ahead in technology and to tie up with the People's Republic of China.

The sixth possible power is India. Often, we do not realise how much is happening in India today from the point of view of its economic development and political influence in Asia.

The fifth power, which already exists, is the European Union. If we are to play any part in the world and in those six powers, it will be in the European Union. If we go outside it or move on the fringe of it, we shall have no effect on the rest of the world powers. That is a new situation, since the collapse of the Soviet Union. We have been very slow to realise the way that the world powers are developing. If we do not appreciate that, we shall be left behind.

Let me say to my hon. Friend the Minister and his right hon. Friends that it is vital for us to carry out the task that the Prime Minister originally identified. He said that we should be at the heart of Europe. We cannot be at the heart of Europe if we are not prepared to take part in its heartbeats: that is the humble truth. That is what we must do, and do whole-heartedly. Instead of constantly explaining why we are not going to do things, and trying to do less and less—which does not benefit the people of this country anyway—we must show that we want to make the utmost contribution that we can to the European Union. When we can show the world that, the world will respect us again and we shall have influence in our own continent.

That is the task. The Government are responsible for carrying it out, and I want to see it carried out fully.

4.50 pm
Mr. Peter Shore (Bethnal Green and Stepney)

The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) painted a very wide canvas. I found myself in considerable agreement with part of what he said; but, as is so often the case, his judgments struck me as being continually distorted, first, by his barely concealed anti-Americanism and, secondly, by his enthusiasm for Europe, which goes far beyond any serious sensible balance of advantage and disadvantage.

I was going to intervene on a simple point, which itself illustrates the point that I have just made. The right hon. Gentleman pointed out that we are recipients of money from the European regional fund. That is true, and if we tot up the sums received over 10 years or so we will find that they add up to a substantial amount. But the right hon. Gentleman knows—probably better than anyone else—the extent of our net contribution to Europe. After allowing for all the money that we receive for the regions and from any other funds, and for the rebate negotiated so bitterly by the right hon. Gentleman's successor as Prime Minister, we find that every year an average of some £1.5 billion to £2 billion is paid by this country for the so-called privilege of being a member of the European Community. That is a fact.

Another fact of—I think—much graver importance is that, over the past 10 years, the balance of our manufacturing industry trade with Europe has totalled the appalling figure of nearly £90 billion; or, rather, minus £90 billion. Before we joined the European Community, we had a slightly positive balance with Europe. I am prepared to allow for a great deal of difference on how we judge the overall enterprise of Europe, but no one in his senses who looked at the facts objectively could pretend that we have not had to bear grievous burdens and heavy handicaps as a result of our membership of the Community. I see that I have the continuous dissent of the right hon. Member for Old Bexley and Sidcup; that does not surprise me.

Let me turn to the subject of the debate. The Minister reminded us that on 1 November 1993 the European Union —the creature and creation of the Maastricht treaty—came into effect. On that day, at a stroke, every person in Britain, and every citizen of the other 11 states in the European Community, suddenly found himself acquiring citizenship of the European Union. I am sure that that came as a great surprise to those people—those who knew what was going on, that is.

I must tell the House that there were no wild scenes of enjoyment and public rejoicing in the streets of Stepney and Bethnal Green on 1 November 1993. Because I am fair-minded, I should add that there were no acts of overt hostility, such as a public burning of the treaty. Neither event took place—I think because the British people are now just about soggy, fed up and bored stiff with all that has been going on. As the right hon. Member for Old Bexley and Sidcup rightly complained, over the past two or three years very little has been explained to them about what is implied in—and, indeed, what is in—the Maastricht treaty, and how it will affect them. There has been a total failure to communicate. I say that from my side of the argument, but I am sure that the right hon. Gentleman would say the same from his side.

The failure to communicate is a great pity, but it does not mean that things are not happening; they are. Notwithstanding reassurances from Ministers, the great engine of federalism is still driving ahead in the European Union. Two processes are involved: first, the various mechanisms and timetables set out in the Maastricht treaty, and, secondly the preparations for the 1996 intergovernmental conference, which have already started.

Stage 2 of economic and monetary union began on 1 January 1994. The European Monetary Institute—the precursor of the European bank—has been established, and the Government have complied with their obligations under stage 2 of EMU by forwarding to the Commission the progress report on the plans made by the British Government to conform with the convergence criteria laid down in the Maastricht treaty. Based on the November 1993 Red Book, fiscal projections over the next five years show that the United Kingdom's public sector borrowing requirement will conveniently fall to 2.75 per cent. of gross domestic product in 1996–97, and to 1.5 per cent. of GDP in 1997–98. Both are well within the 3 per cent. of GDP demanded by the Maastricht treaty.

The Government, of course, will say that that is pure coincidence—that their basic aim all along was to get the PSBR down, irrespective of how the economy was progressing as a whole and irrespective of unemployment levels.

Interest rates and inflation rates are also down to the levels that would meet the obligations of moving from stage 2 to stage 3 of economic and monetary union. Only our absence from the exchange rate mechanism disqualifies the United Kingdom from making an application in three years' time. We all remember the Prime Minister's encouraging words in his article in The Economist last autumn, when he said that—what were the words he used?—joining the ERM was 'not on the horizon' or that 'not in the foreseeable future' would he contemplate such a move. He is keeping his options open, however.

Despite the setback to the ERM when the franc was forced out of its 2.5 per cent. band last year, and the subsequent introduction of a new 15 per cent. band within the ERM, exchange rate policies on the continent have remained firmly linked to the deutschmark at the old parities, and monetary policy has continued to reflect the anti-inflationary stance of the Bundesbank. The ERM, and with it EMU, is—I fear—back on course.

We cannot imagine, or take it for granted, that the ERM is in a state of total collapse and that we can cease to worry about the imminence of EMU. On the continent, the federalist drive remains powerful and undisguised. The Conservative and Christian Democrat parties—the European People's party, I think they call it—adhere to the Athens declaration of 11 November 1992. On organising the future of Europe, they said: 'the European people's party advocates European unification on the basis of democracy and federalism. The Maastricht Treaty on Political Union and Economic and Monetary Union provides an appropriate and sturdy framework for European unification … but the Treaty on European Union is not enough in itself to achieve the aim of European Union. Starting now we must therefore prepare for the Inter Governmental Conference scheduled for 1996 and draw up a European Constitution. The Federal Constitution of European Union must be democratic and based on the principle of subsidiarity'. The federal constitution of European Union! What can I say to the right hon. Member for Old Bexley and Sidcup and his hon. Friends about that? I understand that the Conservative party has some kind of close relationship with the European People's party. I hope that we shall hear, if not Ministers, then Back-Bench Conservative Members, categorically reject the assertion that that federal aim is shared by the Conservative party of this country. I hope that we shall hear that loud and clear before the end of this debate.

I have not been able to lay my hands on a similar declaration by the Party of European Socialists, of which I find all of a sudden I am a member and which my party has apparently joined. The great majority of continental socialists are federalists. I was pleased, therefore, to receive a communication in my mail this week from my right hon. Friend the Member for Copeland (Dr. Cunningham), the shadow Foreign Secretary, in which he nailed what he described as a number of lies, including: lie 5: Labour is Federalist and wants a centralised Europe". I do not know about wanting a centralised Europe, but I am glad to have my right hon. Friend's assertion that it is a lie to suggest that Labour is a federalist party. Let him make that noise again, and let him say it loud and clear.

The Liberal Democrats are openly federalist, but they are not alone in that—so are such influential people as the right hon. Member for Old Bexley and Sidcup and such influential organisations as the European Movement, which recently published a pamphlet about what Britain's stance should be at the intergovernmental conference in 1996. The pamphlet includes these significant proposals: 'the co-operation in the fields of justice and home affairs should be transferred to the competence of the community institutions'. So we can say goodbye to that pillar. It continues: 'the common foreign and security policy should be brought by stages into the competence of the community institutions'. If the European Movement had its way, we could say farewell to the other so-called pillar—foreign policy. The document continues:

'Britain should renounce its opt-out from the commitment to Economic and Monetary Union … The IGC should provide the drawing up of a constitution for the Union'. I believe that hon. Member for Harrow, East (Mr. Dykes) is the chairman of the European Movement. He is not in his place today, but that cannot be helped. It is interesting that he should so publicly and openly associate himself with the federalist aim in that document. Its line reflects the provision in the Maastricht treaty for the IGC in 1996, which specifically calls for a review to be undertaken of the so-called pillars of which the Foreign Secretary is so proud.

Those same federalist views are held by the Institutional Affairs Committee of the European Parliament, whose recent report was approved by an overwhelming majority of Members of the European Parliament. It is not without significance that, during his recent visit to the European Parliament, Chancellor Kohl gave his support to greatly increased powers for the European Parliament. The federalist goal is the cherished purpose of the European political elite—the classe politique, whose ambitions are so significantly divergent from those of the mass of the populations whom they claim to represent.

The 13 May issue of The European contains an interesting MORI survey of European response to the following question: 'on balance do you support or oppose a United States of Europe with a federal government'? In four countries—Belgium, Greece, Italy and Spain—those in favour outnumbered opponents, but in the other eight member states, the reverse was true. In the United Kingdom, no fewer than 68 per cent. of the electorate oppose a federal Europe—Liberal Democrats, please note—while only 17 per cent. are in favour.

In 1996, the issue of a federal union will directly confront us in the IGC, but there is an indirect route to the same purpose, which should also deeply concern us—the proposal that we should adopt a single currency and enter the third stage of EMU, which would deny any British Government the effective means of economic self-government. We must be equally aware of that danger and implacably opposed to that course of action.

I do not agree with the right hon. Member for Old Bexley and Sidcup that the inevitable consequence of having a single market, a large area of open trade and open movement of capital in Europe is a single currency. I do not believe that the recent formation of the North American Free Trade Agreement will lead to a single currency absorbing the peseta or the Canadian dollar; nor do I believe that it will lead to a new, wider federal union that is larger than that between those countries.

Mr. Nigel Forman (Carshalton and Wallington)

The right hon. Gentleman gives the instructive example of NAFTA. He is not arguing, is he, that the effective freedom of national authorities, either in Ottawa or in Mexico, is enhanced by the nominal freedom of their currency being allowed to move against the American dollar?

Mr. Shore

They have considerable freedoms over their economies and their political goals. There is a great difference between claiming that sovereignty is absolute power, which it is not, and that it is self-government, with preferences being made on behalf of a country's people and not at the behest of others. It is an important distinction, which the Canadians understand. After the United States, Britain is the largest English-speaking country in the world, but there are others—Australia, New Zealand and Canada. Are those smaller English-speaking countries about to absorb themselves in a vast political and economic union with either Japan, in the case of Australia and New Zealand, or America, in the case of Canada? Of course not; they value and are prepared to defend their national self-government and freedom—and so should we.

I have already referred to the Prime Minister's article in The Economist last autumn, which gave considerable encouragement to those of us who do not like the idea of economic and monetary union. Nothing would give me more satisfaction than to hear Ministers say that they have not only temporarily opted out of the commitment to the third stage of EMU, a European central bank and the single currency but have concluded that those goals are not for us, and that on no account will we accept them.

I should like a similar commitment from my party. During the passage of the Maastricht Bill, it was depressing that, after the tabling of amendment after amendment to strike out the commitment to a single European currency, to the goals of convergence, to a European central bank and to the proscription on public borrowing beyond 3 per cent. of GDP, those proposals were voted down by the Government, with the Opposition sitting on their hands and abstaining.

Last September, I was much encouraged by the speech of my right hon. and learned Friend the then Leader of the Opposition, who, sadly, is no longer with us. It is important that his words should be noted. He said: 'Today I re-affirm the aim and the goal of full employment remain at the heart of Labour's vision for Britain. Labour's economic strategy will ensure that all instruments of macro economic management, whether it concerns interest rates, the exchange rate or the levels of borrowing will be geared to sustained growth and rising employment'. That speech was an implicit—almost explicit—repudiation of economic and monetary union, a single currency and a European central bank. One cannot deploy all the instruments of interest rate, exchange rate and levels of borrowing without repudiating the doctrine of economic and monetary union in the Maastricht treaty.

Mr. Ian Taylor (Esher)

Will the right hon. Gentleman give way?

Mr. Shore

No, I am coming to the end of my speech. I hope that that commitment will be re-affirmed by the Labour Front-Bench spokesman later tonight.

The right hon. Member for Old Bexley and Sidcup told us that we should urge the British people to vote in the forthcoming European election. My reply to that is, 'Yes, but we should be clear-sighted.' The one thing that will not arise in the election—to my regret and, probably to that of the right hon. Member for Old Bexley and Sidcup—is a serious judgment on Europe and our future in it. It will not even be mentioned in most of the speeches that are made. The election will be a judgment on the Government's performance in recent years. The right hon. Gentleman knows that as well as I do, so let us be reasonably impartial. We shall urge all our fellow citizens to vote but—whatever his party label—I ask them not to vote for a self-proclaimed European federalist.

5.9 pm

Mr. David Howell (Guildford)

I am grateful for the opportunity to participate in this rather calm debate on what is undoubtedly a very contentious subject. The House wishes to debate the issue in a mood that is inevitably sombre after the tragedy of last week.

In the document that is the subject of our debate, my right hon. Friend the Foreign Secretary, whose absence I quite understand—he is attending a Council meeting of Community Foreign Ministers—states rather hopefully that he believes that the dust has now settled on the Maastricht debate. I wish that he was right, but I cannot agree with him.

I believe that the issues raised before, during and after the Maastricht treaty process remain important and very much to the fore. I do not believe that the dust has settled; nor do I believe that the position of the party of which I am a member is quite as it is so joyfully described by the media and by its critics, including the Opposition, although that is a reasonable position for the latter to hold. They claim that my party is wholly divided, like an orange, and sliced between two contrary views on the future of the European Union.

I may already be defying the tone of earlier speeches, but I believe that it is wrong and that, in my party and, I suspect, in the Opposition, there is substantial common ground on the type of Europe of which we want to be part and on how we believe it should develop in the years ahead. Such common ground not only exists but is growing all the time. It not only has supporters in this country but is gaining adherents in all member states. That is certainly my experience, even in the so-called olive states of Spain and Italy, although I do not know so much about Greece.

What is that common ground? Let me try the patience of the House a little and describe that common ground on which I am convinced that my party and the country can unite and present a powerful front. I believe that we should get away from the various labels. We have been accused of being marginalised and isolated and of standing out against the European process, something which I would not wish to do.

Some colleagues may object to this, but I believe that most of us want to argue from within Europe. We want not to be silent or to accept everything that is rolled out but to argue from within. Our future does not lie in walking away from the right kind of European Union, for which we can and should fight and argue.

Such a Europe is a Europe of nation states, states of diversity which do not seek to have uniform standards imposed on them and which do not wish to be merged into a super-state. Those who argue otherwise and talk about the inevitable destiny of a Europe that is going to be a great political power bloc in a world divided into many such blocs have an old-fashioned and outdated view of how the variegated world will develop.

It should be a Europe of nation states, and that view is increasingly shared by those who vote, speak and act in the Parliaments and legislatures of the member states as they realise that some people really were contemplating the alternative—a Europe not comprised of nation states.

The characteristic of our stance should be that we put to the fore a clear and dynamic view of what we want to achieve at the 1996 intergovernmental conference. I do not accept that that conference will be a tinkering affair, a way of tidying up post-Maastricht, while we roll towards the goals asserted by the high priest of Maastricht. Those who say that there is nothing much to be done in 1996 so we had better squeeze all that we can from it while the process rolls on are adopting a dangerous attitude.

In 1996, there will be a need for Union reform, not tinkering. We shall need institutional change, even constitutional change. Although the right hon. Member for Bethnal Green and Stepney (Mr. Shore) does not like to talk about the constitution of a future Europe, we shall and should be involved. We should not be frightened of talking about constitutional issues in the type of Europe that we want or of setting off on the right road. If we do not proceed, the present constitution—that embodied in the existing treaties—will be the one to roll forward the process, and that is not the type of Europe of which I wish to be a member. I believe that a growing number of people in Europe feel the same.

I do not feel 'comfortable'—to use the phrase of my right hon. Friend the Foreign Secretary—with the European constitution, the structure of European treaties or the way in which they are being interpreted today. Many people feel the same.

Nor do I feel happy with the concept of a multi-speed Europe which implies that, although different bands of European countries will move in different collective groups towards various objectives, there is nevertheless an overall sensation of speed and movement towards an integrated whole. Statesmen who want a settled Europe instead of constant upheaval and argument about how we should live in great single market that we have yet to build would be wise to seek equilibrium rather than rush towards this or that objective in this or that collective mood. We need a settled Europe.

I hope that most members of my party will agree that 1996 will provide an opportunity to halt the federalist agenda so accurately described by the right hon. Member for Bethnal Green and Stepney. Unlike him, I believe that it can be halted. He has long held the view that it cannot and that the process is inevitable. If we are strong and confident and hold our position, I believe that we can change the direction and tone of many of the openly federalist commitments of members of the older generation who are influencing the Brussels scene.

For many years, I have followed the words of Jacques Delors, a man of vast ability who has many admirable qualities, but whose recent comments are becoming increasingly bizarre. He seems to be asserting ever more stridently a type of old-fashioned centralism against the wishes of the people of Europe. He was quoted the other day—although I hope that it is nothing more than a mistranslation—as saying that people who did not share his integrationist views were racist. That implies that all those in the member states—but especially those in Britain —who do not agree with the centralising process inherent in his ideas for political and monetary union are to be branded as racists.

There is a strong consensus in my party—perhaps the word 'consensus' is unfashionable and 'common ground' might be a safer expression nowadays—on the need to formulate a policy about the way in which we want to shape Europe after 1996. What does that mean? It certainly means that the Commission's monopoly of the power to initiate legislation should be curbed, a notion to which I attach great importance. If this is not too intimate an affair for the Opposition to hear, I notice that intensive discussions at grass-roots level in our party have produced a series of recommendations suggesting precisely that.

Although members want to stay in the European Union and argue from within, they want the Commission's powers to be curbed. We must work out precisely how that can be done. We have to make precise proposals for altering the legal procedures by which it is decided whether a matter belongs to the competencies of the Commission, the central machinery of the Community or to the nation states. We must also re-examine the European Court of Justice; we cannot allow judgments constantly to be made in favour of the Union.

I listened in vain to the Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Wells (Mr. Heathcoat-Amory), waiting to hear his view of how national Parliaments, including ours, are to play a formal part in the procedures of subsidiarity and the government of the Community. The Maastricht treaty contains some fine words about national Parliaments playing their part. However, I have heard nothing since on how that should be brought about.

We know that Chancellor Kohl has sent a letter to the European Parliament inviting it to the party. It has been invited to participate directly in shaping the agenda for 1996. It concerns me that for this Parliament and for other national Parliaments, the high-flown phrases of the Maastricht-makers have not turned into anything. No proposals exist of any kind other than that we are allowed to have debates such as we are having now.

Mr. Edward Leigh (Gainsborough and Horncastle)

On the subject of Mr. Jacques Delors and national Parliaments, does my right hon. Friend think that this Parliament should have, for example, more of a role in the appointment of a successor to Mr. Jacques Delors?

Mr. Howell

That may well be so. We need at least to assert the type of people whom we expect to see as the Commissioners of a future European community. They should, after all, be servants of the people of Europe and not their masters.

I have no criticisms of the skill and importance of some of the great men and women who propose themselves as candidates for the Commission in the future; I hope that future Commissions will be composed of some of the best and brightest brains in Europe. However, I hope that they will be officials and not people with a high political profile. We are certainly entitled to have that opinion and I believe that we would be served in that way.

'Subsidiarity' is an elastic word. I believe that we are united in believing that it is not just a legal concept which can be solved by legal rulings, let alone by the European Court of Justice. It is political concept and a political judgment, so judgments must be made by politically legitimate bodies. That is why I conclude that we cannot accept that the list drawn up of what should be subsidiarised—if there is such a word—or devolved from the Community should be drawn up by the Commission or even that Governments should get together, draw up lists and discuss them with the Commission.

It is central to the political role of this House and of other national legislatures that we should have a say in what should be unravelled and decentralised from the Community, in terms of future powers and, indeed, of existing powers.

There are people who argue that what one is saying is all very fine, but that the game is lost—the thing has rolled away from us and there is nothing to be said in 1996. That is profoundly wrong. On every side, there is a growing army of people who understand very well that we want a new kind of European Union with new priorities. It will be a wider body which is based much more on the nation states.

The accession countries tend to have gone along with Maastricht to see the accession business through. However, when one travels to those countries and talks intimately to the business and political leaders, one finds a very different tone, whether in Helsinki, in Stockholm or, to some extent, in Oslo. As I said, if one goes to Madrid, which used to be the ultimate home of federalist enthusiasm, one now hears a totally different view as the people there begin to understand the British arguments. As a senior Minister there told me the other day, 'We the Spanish—and our arguments—are converging with you.'

While we focus on the wrong objectives, which we must change in 1996, the real objectives for the modern Europe, which some of us thought we were fighting for and building, are slipping away from us. What is the real objective? It is that the whole of Europe should be democratic and in the democratic community. What is happening while we are having all these arguments? Recycled communists are slipping back into power in country after country in eastern and central Europe. They are beginning to creep back in Hungary; they are back in the Ukraine; they are back in Lithuania; and they are beginning to have a greater influence in Poland.

Our children and grandchildren would say, 'Having fought in the war and then having seen the tragedy of Europe split, you had an opportunity; then came the wonderful opportunity of these countries coming back to democracy. Yet you argued about the finer points of monetary and political union while these countries slipped away again.' They would never forgive us.

This is where the priority lies and this is where the idealism lies, if we are trying to put the idealism back into Europe, as I believe we should. We should concentrate on the real issues of history and get away from the absurdities of trying to impose the political agenda of a single currency, which will, of course, never work. A common currency—a hard ecu—might work, but the goal of a single currency, as George Soros and others regularly point out, is the way in which to make George Soros rich. It has done so already and will do so again.

We do have a positive agenda. We are building the greatest single market the world has ever seen. It stretches from Lapland and the Gulf of Finland to Lisbon in the west, and from Syracuse in the south to the north of Scotland. This is a mighty enterprise which, if we work at it and get the security aspects right, will bring back into the democratic community all the nations of Europe which belong in Europe including, in my book, the Baltic three, which are just as much part of Europe as are the Visegrad four.

That is the agenda that we should now pursue, without apology or hesitation. It commands wide and growing support in Europe, and it is the one on which we should concentrate if we want to see the right kind of Europe after 1996.

5.24 pm
Mr. Denis MacShane (Rotherham)

I have addressed many audiences and many chambers, but none quite as intimidating as this, with my true friends behind me and my real opponents facing me. I gather that convention demands that one must be polite, so polite one must be.

I am very conscious of coming to the House in place of Jimmy Boyce, a man who came from a part of our society about which not enough of us know. He was unemployed for many years, a victim of the very cruel policies that have cost so much for some of the great talents of our nation over the past 15 years. I come from a different background, but I will fight for the causes that Jimmy supported. I hope that I can in some way measure up to the service that he provided to Rotherham in the short two years in which he was a Member of this House.

I am also conscious of the fact that I follow in the footsteps of Stan Crowther who is well known to the House and was a great public servant to Rotherham over 50 years of political life. I am also conscious of following in the footsteps of Brian O'Malley, the man who inspired me when I first became involved in politics. He collapsed at the Dispatch Box, another victim of the stress of public life. Like everyone else, I was glad of the tributes paid to John Smith in the press. We speak no ill of the dead; perhaps from time to time, my old friends in the Gallery may speak some good of the living.

Last week was for me the best of weeks and the worst of weeks. When I came to the House on Tuesday, John Smith greeted me and said that it would be a day that I would remember for the rest of my life. John Smith talked of a dream, but the dream was extinguished when, on Thursday, he left us. He spent a whole day with me in Rotherham, seeing the steel plant and the college, and talking to Asians and to party members. He left a message of hope for a new and better Britain.

I am proud to have been elected by the people of Rotherham to represent their interests in Parliament. They have not always been so happy in their choice. The first Member for Rotherham—a Member for Yorkshire in those days—was Sir Thomas Wentworth, later the Earl of Strafford. Older Members of the House may remember that he was executed on a Bill of Attainder in 1641. He was promised that his life would be saved by none other than King Charles I, but he was, of course, sacrificed.

Alas, the right hon. Member for Kingston upon Thames (Mr. Lamont) and the right hon. and learned Member for Putney (Mr. Mellor) are not with us today. They must know how poor Thomas Wentworth felt as they, too, were given the full support of a Prime Minister—a sure sign that they were about to mount the political scaffold. 'Put not your trust in princes', were Thomas Wentworth's last words. The spirit of Rotherham and, indeed, of Yorkshire ever since has been one of sturdy self-reliance and a rejection of authoritarianism and the centralising forces that Toryism has represented throughout the ages.

Rotherham was the place where Thomas Paine, that most noble of commoners, who brought democracy to America and the 'Rights of Man' to Europe, even as he was forced into exile by the Pitt Government, built his great suspension bridge. I do not know how many hon. Members know that Thomas Paine was a great manufacturer as well as a great democrat. The bridge was a feat of great engineering, as important as in many ways as his enunciation of the rights of man. Paine's bridge was built by the Walker Brothers of Rotherham, whose cannons sunk Napoleon's fleet at Trafalgar.

What would Tom Paine find if he returned to Rotherham today? The great manufacturies, on which Adam Smith based his 'Wealth of Nations', have all but disappeared, 25,000 jobs have gone since 1979 and the coal mines, which once promised Britain its own energy source safe from the perils of foreign disturbances, are now capped. The local council, with the money and the will to build homes for the homeless, is prevented from doing so by the most centralised administration since that of Charles I.

Paine would find poverty in Rotherham, I am sad to say, as bad as anywhere in Europe. Indeed, he was dismissed from Government service for arguing for fair wages for public servants. Poorly paid public service, he argued, attracts only the ill-qualified and breeds corruption, collusion and neglect. He went on: 'An augmentation of salary sufficient to enable workers to live honestly and competently would produce more good effect than all the laws of the land can enforce.' I offer that to our low-wage merchants on the Government side of the House. We already knew that Thomas Paine was a great democrat and a friend of Rotherham manufacturing, but it came as news, even to me, that he believed in a statutory minimum wage 200 years before its time.

For all those problems, Paine would find, as would anyone who visits Rotherham, a town and a people whose spirits are unbroken despite all that has been thrown at them in the past 15 years. The pedestrianised town centre, which is one of the nicest in Europe, is spoiled only, alas, by the pressure on shopkeepers arising from the declining purchasing power of the citizens of Rotherham.

One of the world's most advanced engineering steel plants, UES, is at the cutting edge of modern technology. I must to say my hon. Friends, talk not of steel as an old industry. Steel is one of the most modern and advanced sectors of our economy.

There are new partnerships between the chamber of commerce, the training and enterprise council, the local council and the trade unions, which support unity and a common cause to promote Rotherham.

Tom Paine would also find a very great sense—Tom Paine was, if nothing else, an internationalist—of feeling that, if Rotherham is to succeed, Britain must play its full part in Europe, because Britain is part of Europe as surely as Yorkshire is part of Britain.

I pay tribute to the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), the Father of the House, who, since 1938, has stood for, yes, a Tory vision of internationalism against isolationism and that yellow streak of appeasement and opting out, which has always shamed the Conservative party, as it shames it in so much of its policy today.

We are part of Europe and the Euro-septics on the Government Benches may want their cash-and-carry Europe, in which each state takes what it wants. They decry centralisation, yet they have gone through the Division Lobby voting for measure after measure after measure to transfer power from local authorities—indeed, from the House—to give it to their friends in privatised companies and quangos. I want to see power shared downward to the regions, to communities, horizontally to the sister units of civil society in Europe, but, above all, I want to see power made accountable.

If we are to live in an international community in which trade and travel and money and ideas can go through porous frontiers, at least we, as human beings, as subjects of Her Majesty, as citizens of Europe, should have the right to have the human spirit protected through regulation of trans-frontier activity. Yes, Europe is too important to be left to Brussels, but if we are to fight for British interests, we must do so by promoting transparency, democracy and accountability in all European institutions. R.H. Tawney described the hereditary disease of the English nation as 'the reverence for riches' and went on: 'If men are to respect each other for what they are, they must cease to respect each other for what they own.' I apologise to the hon. Ladies present and to you, Madam Deputy Speaker, for the references to the rights of man and quoting men. I see myself, after post-modernism and post-industrialism, as the first 'PPC'—post-politically correct—hon. Member.

England is the most money-obsessed country in Europe. Switch on the BBC and every five seconds there is some Brylcreemed spokesperson for the bond markets telling us how the dollar is doing. The BBC and ITV tell us the price of the stock market at any moment, anywhere in the world, but have ceased to report on the values needed to bring cohesion back to our communities. I do not blame them. They take their lead from those who rule our society and until we get public interest hands on the tiller of the state, instead of the sticky fingers of so many of the Conservative Members and their friends in the till, the media can do no more than take a lead from those who put a price on everything, but know the value of nothing.

For all our obsession with cash, Britain remains the poor man of Europe. Italy's gross domestic product per capita in 1960 was exactly one half of Great Britain's. Now, it has overtaken us. We have been so busy preaching at Europe and trying to teach Europe the secrets of the United Kingdom's economic record, we have committed, to use James Fenton's phrase—how pleased I was to see my old friend become professor of poetry at Oxford on Saturday— 'the fault of thinking small and acting big'. Perhaps we have forgotten that we have some lessons to learn; lessons about partnership, lessons about the successful countries in Europe. Germany, even after unification, has a lower unemployment record than our own. The Benelux countries and the new entrants are successful, too. Those who proclaim themselves Thatcherites, such as in the Prime Minister's favourite holiday country Spain, have the worst record of job creation and balanced development.

The core answer from Europe—one of vital importance to Rotherham and one to which I intend to commit myself in the House—is that manufacturing is not dead and, despite all the best efforts of the Government, should not die. The rising sun has been coming here continually to try to save a sinking England, but we now find that Japanese investment is going to Germany, to France and is leaving these shores.

If I may refer, as a socialist, to my favourite Sunday reading, The Sunday Telegraph tells us how well Germany is doing, that the Japanese research and development centres are installing themselves there and that the Japanese now prefer to be in Germany because of its high skill base, good labour relations and its position as Europe's engine of growth.

My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) blamed our balance of trade on Europe. I have to say to him that it is 15 years of anti-manufacturing policies, of the destruction of partnership, of the lack of investment and the money that has flowed overseas that has been at fault. In fact, if we would learn from our European partner competitors, Britain would be in a much better shape.

It is not only an economic question. I was privileged to have many conversations with John Smith when he was in Rotherham and he talked of the constitutional changes that Labour would like to introduce, such as the end of the absurd spectacle of hereditary Members in another place making and casting laws, the need for national Governments for Scotland and Wales and regional assemblies, and the need for a referendum—not on electoral reform as I see it, but on re-thinking the way in which we govern ourselves. That is part of the constitutional package that I think is necessary for a new Britain.

As with John Smith's commitment to full employment and to trade union rights, we are seeing fleshed out a new programme to reconstruct our lives in Britain as great as that which we saw after the war, but, this time, with us secure in the heart of Europe.

A Europe of what? Is it a 'Europe des patries' as General de Gaulle said? That is difficult for us. We have four nations, but what is our fatherland? That is not a word that we can use easily as British people. It is not a united states of Europe or a stepping stone to Tennyson's 'Parliament of the World', either. After many years working in Europe, I find the Germans more German, the French more French and the Italians more Italian. It is only we in Britain who seem to live in a permanent identity crisis about who we are and what it means to be British. That is because the old Toryism is dying. The new Labourism is not yet born. As a consequence, the morbid symptoms of corruption and xenophobia that lie at the heart of the Cabinet are everywhere to be found where the Government are at work.

Those who are hostile to Europe are to be found in all nations. We have the Euro-sceptics here, there are the French communists and now we have the Italian fascists. I have with me the programme of Philippe de Villiers, the conservative right-winger in France. He wants Europe to be protected against any imports from outside the Community. He wants also a Europe in which national controls stop immigration. Like the Chief Secretary to the Treasury, my father came here in the 1930s. He was a refugee from fascist Europe. The Europe that is described by Philippe de Villiers is not one of which I want to be part. Indeed, I am not even sure whether Conservative Members believe in such a Europe.

Closing the door to foreign immigrants and to exports from around the world is not a Europe in which we need to believe. We in Europe should defend our interests, but, at the same time, we in this country should deepen our friendship with countries such as Germany and—I declare an interest because my wife is French—France. In the words of Victor Hugo, 'France is the adversary of England as the better is the enemy of the good.' I am conscious of returning to the country that made me. I have returned from elsewhere in Europe, where I worked for many years. I have learnt much, and some of that learning I might bring to the House. I am not 'A steady patriot of the world alone, The friend of every country but his own.' I remain British. I am proud of the schools that made me and of the health service that put me together when I cracked my head open in the 1950s. I am hopeful that such again could be the kind of United Kingdom in which my children can grow up. It is a country in which we always refer to faith, hope and charity. But greater than any of those concepts is justice.

I will argue for justice for the people of Rotherham. I will strive for economic justice for the unemployed and social justice for the weak and disabled people of Rotherham. I so much agree with those who say that the best tribute that we could pay to John Smith would be to pass the Civil Rights (Disabled Persons) Bill, which was recently talked out. There must be 'plain justice'—justice for the criminals who walk free in an England that opts out of Europe. In so many parts of our communities, unfortunately, it seems to opt out of decency and law and order. If I can deliver any part of that message during my time in the House on behalf of the people of Rotherham, I shall be well pleased.

5.43 pm
Sir Peter Hordern (Horsham)

The hon. Member for Rotherham (Mr. MacShane) made a most eloquent speech. He made it within a week of arriving in the House, which I must tell him is somewhat unusual. He spoke gratifyingly about his predecessors, who are of great historical interest in some instances, such as Tom Paine and Wentworth. I rather think that the hon. Gentleman favours Tom Paine rather than Wentworth.

The hon. Gentleman spoke movingly about his more immediate predecessors, Jimmy Boyce and Brian O'Malley. There are some in the House who will remember Brian O'Malley with affection. Indeed, we remember them both with affection and because they remind us, if we needed any reminder, of the course of human mortality in this place. The hon. Gentleman is most welcome. We all enjoyed his speech and we hope to hear him on many such occasions, although perhaps he will not get quite such an easy ride in future.

The debate allows us to take stock of our position in the European Union before the intergovernmental conference in two years' time. The debate is welcome for that. As my right hon. Friend the Member for Guildford (Mr. Howell) said, there is a substantial majority in the House for Britain being at the heart of Europe. I am sure that that is the position. It is the case also that Europe cannot afford to ignore the rest of the world. It must be more aware of its relationship with other countries than perhaps it has been so far. The impression given over recent years is that it is concerned only with its internal identity. It has appeared to have been trying to fashion a political identity and has not been sufficiently aware of the opportunities and the penalties that might ensue unless we take account of the competitive position that arises from other countries. The European Union as a whole must be aware of that position.

We have been a member of the European Union for 20 years. In contrast with the right hon. Member for Bethnal Green and Stepney (Mr. Shore), who I know has been opposed to our membership of the Union throughout that time, as have one or two of my hon. Friends, I say that our membership over that period means that we have inevitably fashioned ourselves as a fully-fledged member of that Union, especially in a commercial sense. It is absurd to contemplate damaging our economic future by pulling out of the Union, as some hon. Members wish to do.

If we were to take that course, we would be damaged. There is no question about that. We would not have seen the flow of inward investment from Japan and the United States on the scale that has been apparent if we had not been members of the European Union. Much more importantly, we would not have seen that investment if they had thought that we would not last as members of the union. If we pulled out, we would be sidelined and ignored in all discussions within the European Union. That would surely be the result if we showed that we were reluctant to play our part.

We should ask ourselves why it is that all the EFTA countries, which have the benefit of association with the European Union, are so anxious to become fully fledged members. They wish, of course, to have some say in those matters that affect them and in their economic well-being. They all believe that they must have some say in all the economic, trade and environmental issues in which they are so closely involved.

Some people are putting about another option. They argue that the course of our European trade has been damaging to us. They say that we have a deficit on our balance of trade with Europe and that if we had concentrated rather more on the far east, all would have been very much better. I do not know why it should be our self-appointed role to tell business men where they should do their trade. We can take it, however, that they will pursue their business wherever it is to their best advantage to do so.

We need a firm industrial base, which the United Kingdom is now much too small to provide for itself. We have seen increasingly over the past few years—I am sure that we shall continue to do so in future—the international division of labour. To believe that we could form a large enough industrial base on our own is absurd.

It is foolish to play down the significance of the European market. The European Union has 6.5 per cent. of the world's population and generates 25 per cent. of global economic output. The EU's total output has risen by 30 per cent. since 1980, that increase being almost as large as China's total gross domestic product in 1990. Those who are enthusiastic about our trade and interest in the far east, which we can commend and hope to go for, must not ignore the substantial importance of the European Union for our business and jobs.

In a business sense, we are up to the neck and beyond in Europe. That was the position long before the single market started. British business has been breaking into Europe, finding new markets and establishing commercial links. If we examine the pattern of commercial development, we find British firms both large and small enmeshed within the European Union. What would happen if we had associated status? Only today, negotiations are taking place between British Airways and Air France on the basis that British Airways should be allowed to land at Orly airport. Imagine for one moment what our position would be if we had associate status. We would have no negotiating power with the French or any other country that tried to trade against our interests. Important European institutions, such as the Commission on Competition, are essential for our economic well-being.

Mr. Jenkin

I thoroughly agree with the thrust of my right hon. Friend's argument. A great many people who have been critical of the Maastricht treaty and the way in which the European Union is now operating would not, however, advocate leaving the European Community. As my right hon. Friend has said, we would regard that as totally counter-productive.

Sir Peter Hordern

I am sure that that is true.

We must be aware of the fact that other countries have perfectly legitimate points of view and a perfectly legitimate way of carrying out their own objectives. The thought that we could lecture them into adopting some other form of activity or try to persuade them to go against what they deem to be their own interests is ridiculous. We must, of course, always stick up for our own national interests, but we must at least be aware that other countries believe that they have their own national interests too.

One of the reasons why I am so much in favour of the European Union is that we need a large single market. We tend to think of that market in terms of manufactured goods only, but we must also think about it in terms of services, in particular financial services. We have an decided advantage in the City, which is one of three global centres. As most of the savings in the European Union are in the form of bonds and as savings in this country and the United States are mostly in the form of equities, we have an unrivalled opportunity to sell financial services. We should be able to harness capital to the cause of the European single market.

One day, once the infrastructure is in place, eastern Europe will provide an industrial and commercial renaissance. We need to be at the centre of Europe to ensure that that happens. That will not happen, however, unless those countries are able to export their goods and services to us. There is far too much talk of welcoming those countries to democracy, free trade and enterprise while at the same time barriers are being raised against their exported goods and services. Such a policy is neither legitimate nor fair, and we must change it.

We must always be on the side of free trade and open markets and opposed to protection. The brute force of the economic facts of life will ensure that happens because otherwise unemployment will increase as companies throughout the European Union start to invest elsewhere. For some years, many German firms have invested in the United Kingdom because they say, quite frankly, that they cannot produce their goods at home competitively because of their wage rates and other expenses. One cannot protect employment by passing laws that place too high a burden on companies' costs. We must argue against that and demonstrate our case from within the European Union.

Of course there are objectionable sides to the Union—for example, its flood of regulations, fraud and waste, especially in the common agricultural policy. We must strengthen the European Parliament, as the Maastricht treaty provides, to deal with those problems. Some of the opponents of Maastricht are even against giving the European Parliament additional powers to combat fraud and waste within the CAP. They would rather that that fraud and waste continued than give additional powers to the European Parliament to allow it to question the Commission about the causes of such fraud and waste. Surely that is carrying opposition to an absurd degree.

We have an opportunity to start from first principles in contemplating the IGC in two years' time. Let us suppose that the treaty of Rome had never been signed. It would have been better to have had the single market without tariff barriers. We should not imagine, however, that we could ever persuade the French about the virtues of the free market, as Cobden, on his own, once persuaded Napoleon III in 1860. The single market exists and so do some of the health and safety regulations and the social chapter, from which we have an opt-out.

Such opt-outs may be the pattern of the future. We already have an opt-out from the single currency. If France, Germany and Holland meet the conditions laid down by Maastricht, I see no reason why, if they decide to do so, they may not have a single currency of their own. There is nothing in the treaty to prevent them from doing so. It would be up to business and industry to decide whether they wish to deal in the ecu or to continue to deal in sterling or any other currency. For many years, the oil industry has carried out its business in exactly the same way by dealing in the United States dollar. There is nothing strange about that. We can afford to be entirely neutral on the matter.

We should not say, however, that it would be wrong for those other countries to form a single currency if they wished to do so. In any event, we would be unable to stop such a decision. Such decisions should be part of a gradual, evolutionary process based on the idea that our business and industry should be able to deal in a single currency—for example, the ecu—if they find it convenient.

That also means that we cannot disclaim all responsibility for what happens to sterling, as some people would do. Some people believe that it was a great mistake to join the exchange rate mechanism. They believe that the solution is to allow sterling to fall to a level at which full employment could be guaranteed. When we had a strong pound linked to the gold standard we were able to attract funds from all over the world and the same was true with Bretton Woods. In those days, we always had low interest rates. I must remind those who believe that a falling pound is the answer to our economic problems that, goodness knows, we have had one for long enough. It did not appear to have all the advantages that people would like to claim for it. If we returned to such a policy we would have much higher interest rates.

Whether we have a single currency in Europe or anything else, the sensible thing to do is never to say never. We must always allow evolution to take place. We must see how things work out in the future. There is something very unattractive about us lecturing European countries about how they should run their affairs. To do so to the extent that we damage our own interests is absurd.

We may not always agree with other European countries, which have different traditions and different interests, but as a predominantly trading nation, we simply cannot afford to be anywhere but at the centre of Europe. We cannot afford to be isolated. That does not mean that we must have a federal Europe but if we believe, as we must, that trade and investment will provide the engine of growth and the prosperity that we need, it is essential for us to be at the centre to remove the barriers that may stand in the way of such trade.

For centuries we have been at war with our European neighbours. The peace is new and very fragile. We need to be at the centre to act as much as we can in harmony with other countries. We must always act with common sense. That is the spirit in which we should conduct negotiations at the IGC.

5.57 pm
Mr. Denzil Davies (Llanelli)

I also congratulate my hon. Friend the Member for Rotherham (Mr. MacShane) on his remarkable and excellent maiden speech. Those congratulations are tinged with some envy because he showed the kind of confidence that some of us have taken 20 years to acquire—perhaps we have yet to acquire it. I am sure that he will represent the people of Rotherham with skill and diligence in the years to come.

It is a pleasure to congratulate my hon. Friend the Member for Rotherham but the debate also takes place in the sad aftermath of the death of John Smith. John and I came to the House in 1970. We both had the honour to serve in the 1974 Labour Government—he served in a number of Departments and I served at the Treasury. He was a good and revered friend and a formidable leader of my party. We did not agree about everything. He was a Scot and I a Welshman. I sometimes used to tease him that perhaps there were too many blessed Scots in the parliamentary Labour party. He sometimes showed a certain amount of impatience with the looseness and prolixity of language which the Welsh sometimes employ when discussing political matters, but at least we agreed about devolution. We differed on the Common Market—the European Union, as it is now called. He believed in it when it was not fashionable to do so in my party. He also believed in the European ideal.

It is now, apparently, fashionable in my party to believe in the European Union—I do not know about the European ideal. Not only do we believe in it, but we adhere to almost every facet of it—the social chapter, the autonomous central bank, a single currency, the entrenchment of a rather monetarist economic policy in the Maastricht treaty. Sadly, in voting for the Maastricht treaty, we seem to have voted to abandon that commitment to full employment for which I always thought that my party stood. All I can hope is that fashion will change again and given the speed with which my party has ditched old beliefs and acquired new fashions in the past 10 years, that may happen.

The European Union is a strange beast. As it trundles along towards the ever-closer union of European peoples, that higher state of fusion which the Europeans apparently want, it devours democracy as it goes. Step by step, politics is taken out of politics because, as more and more of the functions of a democratic nation state are transferred, as they are being, to the Union, they are usually transferred into non-democratic organisations, to non-elected institutions, to a type of glorified Euro-quango.

Democratic choice in the present Union—perhaps we can change it for the future—is gradually and irrevocably diminished. Elections become more and more about personalities and trivialities. The treaties, the directives, the case law, the European Court—the whole of the acquis communautaire, as I think we should call it in one short phrase—is entrenched. It is a constitution, a massive written constitution—we hear so much from people who say that Britain does not have a written constitution and should have one—that is entrenched in the sense that not even a single nation state can change it.

I believe that the constitution of the United States can be changed with a two thirds—perhaps three quarters—majority of the two Houses of Congress but this constitution cannot be changed by a single nation state or by two or three nation states. It now needs 12 nation states to agree to change the fundamental constitution of the acquis communautaire. They all have to agree.

Mr. Burns

I think that I am correct in saying that, to change the constitution of the United States, two thirds of the states must vote for a change.

Mr. Davies

That may well be so, but at least there is a mechanism. It is not an easy mechanism and it has been used only once or twice, perhaps only once. Here, we have an entrenched constitution that cannot be changed by Britain or by any one of the 12 member states without the consent and agreement of the other 12. Before long, if the referendums in the four applicant states result in a yes vote, 16 nation states will be needed to change the constitution. After a while, no doubt, if other nations came in, it will be 20.

That is not a recipe for democracy. I believe that the more nation states come in, the less democratic—if that is possible—the European Union will become, because the possibilities for change will become fewer and fewer. In that situation, the entrenched bureaucracies of the European Union will take over and make the decisions, because the democratic bodies will not be able to vote for change.

That unchanging acquis communautaire is a comfortable mode for the political class, for the bureaucrats who follow it, for the diplomatic corps and the range and army of hangers-on and followers of the European Union. It is convenient, it provides gainful employment, it is a type of superior welfare state for the political class and those people around them. Elections come and go. The electorate can change little because they cannot change the acquis communautaire. Indeed, one cannot even touch it and if one criticises it too much one is described as all sorts of things—possibly even a racist, as we heard from Jacques Delors. The vested interests are happy because that cannot be changed.

The elections to the European Parliament were mentioned earlier. I hope that my team wins and no doubt there are other members of other parties in the House who hope that their team will win. It is only natural. Frankly, however, an objective elector does not become involved in the day-to-day minutiae of politics. For an objective elector, does it matter whether the Conservative party, the Labour party or the Liberal party—or all three parties—subscribe totally to the acquis communautaire? None of us can change it; neither can the European Parliament. Does it really matter who is elected, from that point of view? Obviously, we want to impose a defeat on the Government and I hope that we do so, but does it really matter to someone who is not involved in politics? Does it matter who is elected to the European Parliament? It has very few powers and it must keep its hands off the entrenched constitution.

The Minister mentioned the 20 million unemployed people in Europe. Those 20 million people, unlike the political class, are not within the pale—they are outside it. I believe that the European Union has little to offer them and that, sadly, the 20 million will increase, even if recession recedes in Germany and France. Renewed growth in Germany and France will mean a reorganisation of their industrial base, which will create more unemployment.

What does the European Union have to offer those unemployed people? Bits of paper, commissions, committees, unelected assemblies that go back and forward to Brussels. The real levers of economic and industrial power, which lay within the nation states, are being transferred to the European Union, which cannot act. We are losing the very levers of power that we on the left used to believe enabled us to do something about unemployment. Instead of them, we have received an entrenched economic structure in the Maastricht treaty, to which the old European left would have taken considerable objection. The modern European left, apparently, has accepted and absorbed, and been delighted to take on board, that new economic system.

When there is a British general election, I usually try to write my own short manifesto. I try to write about industrial policy and economic policy. I found it very difficult last time to write about industrial policy because I could not check the treaty of Rome. I suspect that, next time, the words about economic policy will be few and we shall have to fill our sentences with clichés and statements of little substance.

The British electorate are not stupid. They have to choose between the people who aspire to be emperor at the next election. Given the context and framework of the treaty of Maastricht and the European Union, I suspect that the electorate will recognise that the emperor has no clothes. That may be why only 30 per cent. turned out in the last European elections. I suspect that not many more will turn out this time.

The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) still lives in a world of economic blocks. Having lost the old ones, he is looking for new ones. Apparently, India is to be a new economic block. We shall leave him in that world. The Union was conceived as an impregnable economic block in a world of large economic groupings. Inside its walls, the people of western Europe would be secure from the rantings of the bear to the east and from salesmen that sometimes descended on Europe from Asia and America. Those hordes of vulgar commercial travellers from Osaka or Chicago would be kept out of the new Europe and the whole entity would be secure and safe.

I have news for the right hon. Member for Old Bexley and Sidcup: the world has changed. We now live in a global rather than regional world, although that may sound like an 'Irishism'. The pillars on which the European Union was founded have been buffeted by external economic forces beyond the control of the political class within the pale.

Throughout the 1970s, one talked of economies of scale. What has happened to those? We hear little about them today in the steel or car industries. Over the past 10 to 15 years, a massive revolution has taken place in manufacturing. I would not say that small is beautiful but, provided that a company has the right skills and technology, it can compete whatever its size. We no longer live in a world of large economic blocks and economies of scale. In terms of the production of goods, we live in a world of decentralisation.

The Minister mentioned GATT, of which we hear little these days. The Uruguay round was extremely important. What price regional economic pacts when one has GATT? The right hon. Member for Horsham (Sir P. Hordern) mentioned services. GATT has not gone quite that far yet, but it is certainly moving in that direction. If we look at manufacturing in terms of GATT, we find a global, rather than regional, economic world. Part of my argument is that the world is passing those regional economic blocks by.

Mr. Forman

I agree with what the right hon. Gentleman said about the new global realities. In the context of his remarks on GATT, does he accept that the regional groupings—whether the European Community, the Cairns group or the North American Free Trade Agreement—provided the levers by which people could get at least some of what they sought?

Mr. Davies

I would not say that they provided the levers, but I entirely accept that, if countries band together and agree a negotiating stance, they are in a stronger position. We are now moving towards a global economic world, especially if a world trading organisation is set up. It therefore makes no sense for the dinosaur of the EC to try to create an ever-increasing union of European peoples, because economic factors outside will have an effect.

The European Union can be compared to IBM a few years ago. IBM was the classic dinosaur—it grew in the 1960s and early 1970s but then failed to compete because it was out of date and smaller companies in Japan and especially the United States beat it. It is now trying to restructure and compete again. Likewise, the European Union as conceived is out of date. Who knows? Perhaps it will do an IBM. I do not really believe that it will, because the political class within the pale has no real incentive fundamentally to reform and become radical. I suspect that 1996 will be more of the same, as the beast trundles on, seeking a higher state of fusion of the European peoples. I hope that a radical restructuring takes place. If not, we should remember that, once we achieve fusion, fission happens soon after.

6.15 pm
Sir Teddy Taylor (Southend, East)

The right hon. Member for Llanelli (Mr. Davies) worried me when he said that he did not know what to put into his election manifesto. Knowing him to be a truthful person, it has been plaguing me. As he is a kind and Christian gentleman, he could say that, if elected, he would be kind to children and animals, but, sadly, one cannot even say that now. A letter that I received this morning from the Minister of State, Ministry of Agriculture, Fisheries and Food said that, even if we were concerned about the foul cruelty of animals being transported to Europe and all hon. Members voted against it, we could do nothing. A legal reassessment has been made of article 36 and, although the Government thought that they might be able to do something, sadly, they can do nothing. All that the right hon. Member for Llanelli can say is that he will be kind to children and animals, in so far as the EC will permit.

I have listened to many dull, light and uninspiring maiden speeches, but the hon. Member for Rotherham (Mr. MacShane) made a confident and exciting speech. I hope that we shall have the privilege of hearing him on many occasions. What he said about John Smith was right. I went to university with John at the same time as my young wife went to school with his young wife. He was one of the few to emerge from the House with honesty, consistency and integrity. We should all pay tribute to him as we admire and applaud those virtues.

What worried me about the hon. Member for Rotherham—I do not seek to criticise a maiden speech—was that, in a dramatic part of his speech, he held up an exciting pamphlet produced by Philippe de Villiers and said that that terrible man, who is either a fascist or a communist, wanted to protect European trade from trade outside the Community. As a socialist who believes in liberty and the freedom of people, he said that he could never have anything to do with that. It struck me how right the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) was. Basically, we must tell people the truth about the EC rather than give interpretations, arguments or visions, and I hope that the Government can do something about that.

Had the hon. Member for Rotherham, who is obviously talented, been told that the EC was one of the filthiest protectionist rackets in the world and that two firms in Southend had been put out of business because of protectionist measures introduced by the EC six weeks ago, he would have known more. That is not a criticism of him. People simply do not know.

In this brief speech I appeal to the Government to tell people the facts about a few matters. People can then make a reassessment and will probably appreciate Government policy more than they do. The only economic truth that we can say now is that Britain is doing better than other member states of the EC. Unfortunately, we can do nothing about that because the main reason for it is that we were chucked out of the exchange rate mechanism.

I urge the Government to abandon their policy of make-believe and optimism, and tell people the facts. First, people should be told how much being in the EC costs the average Scottish and English family. The information that I have received from the Government is that we are £32 a week worse off. Of course, there is the question of extra unemployment. If we forget about the unemployment, it seems that the cost is £32 a week. The Foreign Secretary kindly wrote to me to say that the cost of the common agricultural policy to the average family was an extra £28 a week. The cost of our contributions works out at £4 a week, so we can say to people in Canvey Island and elsewhere that the cost to them is £32 a week. That is factual and clear, and people should be told.

Secondly, people need to know the facts about our trade with the EC. I have read articles by Prime Ministers and Cabinet Ministers in which they have said that one half or three quarters or two thirds of our trade is with the EC, but the Government must tell people the facts. My understanding is—I am subject to correction—that, since we joined the EC, we have had a trade deficit of £100,000 million, or £2,000 per person. The Government simply have to tell people whether that is the case. There is nothing worse in the world than seeing politicians on the screen arguing about what they think about things. We must tell people the facts, and let them draw conclusions from them.

Thirdly, if the European Court makes decisions which have serious consequences for this country, the Government simply must tell people. As an hon. Member who has been here for a long time—probably too long—I find it almost embarrassing that when something fundamental happens in Europe, it is almost impossible to find out about it.

Take, for example, the recent and rather embarrassing court decision that an Army officer who became pregnant could, apparently, get up to £300,000 in compensation. That was acutely embarrassing, because soldiers who had lost two legs while serving in the Army were getting about one fifth of that sum. People said that that was terrible, silly and odd. Even my hon. Friend the Member for Castle Point (Dr. Spink) said that it was terrible. Unfortunately, there is nothing that we can do about it. The crucial thing is that we should be told what is happening.

My understanding is that, since that decision was made a short time ago, the Government have agreed to hand over a total of £7 million to women in that position, and I am told there is a lot more money to come. It is appalling, because it basically upsets the former pattern whereby there was a limit of £11,000 on compensation. That has now gone out of the window.

Why should not people be told? The Minister is certainly one of the decent guys, and he is a straightforward man. I ask him: why cannot people be told what is going on?

Let me refer to a situation in Southend-on-Sea. I do not know whether any hon. Members represent areas which have experimented with something called privatisation, but we have led the field in that in Southend with our cleansing department. It has been a great success. Costs are very low, workers are happy, and the standard of cleansing is high. Unfortunately, the EC has said that the Government have applied something called the acquired rights directive wrongly and, therefore, someone must pay.

Apparently, when a firm is taken over, one must guarantee jobs, wages and working conditions. However, the Government were told by their top legal advisers—there are many of them—that they should not worry, because the directive did not apply to local authorities or to health authorities. Southend, which is a very good council, went ahead with privatisation. It has now found to its horror that the Government were wrong.

Mr. Brian Wilson (Cunninghame, North)

The hon. Gentleman will know that the directive applies to Britain only because a good Labour Government signed up to it in 1977, and his party has spent 14 years trying to avoid its legal responsibilities. If we had never had that good Labour Government to sign it, the directive might not have applied.

Sir Teddy Taylor

The hon. Gentleman is right. The directive came through at the end of the Labour Government. Labour and Conservative Governments were told by the legal experts that it did not apply to local councils and health authorities, but now it does. What will happen? The Government must tell me, because someone has to pay compensation. Lots of money must be paid, as every worker who was not taken on and did not have his job guaranteed and every worker who joined and had his wages reduced or his conditions not met must be compensated. The Trades Union Congress—a wonderful organisation which looks after the interests of workers—has initiated 500 claims.

I should like to find out how much this will cost and who will pay. I am trying to find out.

Mr. Wilson


Sir Teddy Taylor

I have said that the hon. Gentleman was right—he is always right. The hon. Gentleman should listen to this.

Basically, someone has to pay. Employers in Southend are worried about it and are asking whether they have to pay. In addition, employees are asking from whom they should claim. I say that the TUC will look after them because the EC has sorted it out. We want to know who will pay, and how much. That is the kind of thing which the Government must tell us.

Those who deliver papers are called newspaper boys. I do not know whether any other hon. Member present has his papers delivered, but it is a way to make sure that one gets the paper bright and early in the morning. I have said in public meetings that newspaper boys should not worry because the Government would sort it out so that they would not lose their jobs. I have found to my horror that that is not happening at all.

The Government apparently got what they called a four-year exemption, and something called the European Parliament then said that it would have to take out that British. opt-out. It seems that, under something called the Maastricht treaty—most right hon. and hon. Members voted for the treaty, but I did not as I was rather suspicious of it—if the European Parliament wants to change it, it cannot do so unless there is unanimous agreement among Ministers. This is happening all the time, and nobody notices. I wish that I had noticed that. If I was as clever as other hon. Members, I would read the treaties and find out.

It seems that we are in a terrible position. The newspaper boys in Southend, despite all the assurances given to them by the Conservative party, seem likely to lose their jobs unless we stop the directive; and, apparently, we cannot do that because it would require a majority vote.

These are important and complicated matters which people such as myself, as well as Ministers, do not understand. The Government should tell us what is going on, and I hope that they will.

Dr. Robert Spink (Castle Point)

Before my hon. Friend gets away from presenting the facts, may I say that he has concentrated so far on the deficit side. Will he also address the benefit side? We know that newspaper boys are important, but they are not the be-all and end-all. Has not the greatest benefit of our membership of the EC been that we have had peace, strength and democracy for 45 years? Is not that a great benefit which is worth paying for? Will not my hon. Friend seek to strengthen our trading links with Europe? I accept that we must resist federalism and political union.

Sir Teddy Taylor

That is what worries me. The Conservative party says to newspaper boys that it will sort out the problem, and then the newspaper boys find that, when things go wrong, Conservative Members say that they do not matter so much, and they talk about peace.

My hon. Friend is a talented, sincere and upright man—so I am told. He talks about peace. He should read the treaty of Rome. I know that he is very young and that he was not here at the time the treaty was signed, but the only thing that the treaty said we could not deal with in the EC was defence. Defence was guaranteed by something called NATO, which is a splendid organisation because the Americans are involved in it.

On the matter of trade, I hope that my hon. Friend will ask—he will not get an answer if he tables the question, as they have now stopped such things—what our deficit with the EC has been since we joined.

I do not want to waste time, as I want to talk about Southend. If the Government were willing to listen to talk about the damage done to Southend-on-Sea by the EC, they would be horrified. First, Southend has a lot of unemployment—14.5 per cent. Despite that, the Conservatives did quite well in the local elections because people were hopeful for the future. We lost only one seat —and I did not like us losing that seat.

The Government said that they were aware of the level of unemployment and that they would give the Southend area assisted area status. I am not a great one for subsidy, but local people said that it was a great idea. They said that other people thought that it was good, and they wanted it also. The Government politely explained to me that they were very sorry but under the rules they had to go to Brussels before they could give their money. They said, however, that it should be okay.

So they went to the bloke in charge called Van Miert. He saw the long list, and, before he even looked at it, he said that it was too long and that the Government had to cut off 10 per cent. Southend, unfortunately, was in the bottom 10 per cent. He had not looked at the name Southend, nor had he considered it. I went to the Government and said, 'Surely he cannot do this. There was not a meeting, nor was there a committee.' They said, 'Sadly, no. Mr. Van Miert decides.' He decided that Southend had lost, and we felt upset about that. I have asked the Government whether there was anything they could do. They have said, 'Sorry, too bad.' The Government were very nice and said that they would put Southend forward for a Euro-grant. Mr. Millan, another Commissioner, apparently said that London had bigger problems, so we could not get a grant.

MK Electric, an excellent firm in every respect, employs many people in Southend and Essex. I met the firm's directors last week. They are horrified because we are to have something called the Euro-plug. They said that it is terrible—it will destroy jobs. They also told me that people in England and Scotland will have to spend an extra £1,000 on their house, first, on taking out the plugs; secondly, on taking out the sockets; and, thirdly, not on replacing the wiring but on making changes to it. Those three things will cost each householder about £1,000.

The employers' organisation had a meeting and said that it was absolute rubbish—they did not want it. Unfortunately, the Commissioners told them that the EC will do it anyway; if the organisation does not put forward a plan, it will go through. PMS is one of the nicest firms on God's earth. A chap called Paul Beverley runs it. He is a super-duper business man. He employs 200 people from my constituency. Last year, he exported £8 million worth of goods. If the Government want to increase exports, they should think about that. Is not £8 million of exports great?

What has happened to Paul Beverley? Six weeks ago, he received a note saying that the European Council had decided to slash trade with China. I asked why. The Minister, who is a brave man and a super guy, voted against the decision because it was rubbish. However, the decision went through. PMS imports lots of furry toys—they are lovely toys of a high quality—from jointly owned factories in China and then exports them. It employs many other firms. It has been told to cut its business to one quarter of what it was. That is terrible.

What can the firm do? It has proceeded—I know that hon. Members will not understand this—by way of a complicated processs known as letters of credit. That means that firms pay money for goods to be delivered later. They have paid out lots of money but they cannot get the goods in. They have asked what they can do about it. I am afraid that the answer is nothing at all.

A super firm called Hi-Tech is a big employer in Southend. It is a good, upright firm. It pays big wages and it is a good employer. It looks after people well. It sent me a fax today saying that, unfortunately, it had been affected in the same way. It explained that it has 50,000 items waiting in the ports, which is in excess of its annual allocation. The company has paid for the items, but they cannot come in. That is not funny. It is appalling when firms, which are fighting in a competitive world, employing people, exporting and making profits, are banged on the head by stupid Euro-rules.

One might ask why the rules are coming in. Apparently they are coming in because some countries in Europe had restrictions and some, such as ours, did not, and it was decided to have harmonised restrictions. Rules are put through by majority vote—with Britain voting against them—and we are now in the soup.

We are suffering a great deal. If we examine the facts properly, people will realise that the whole of Britain has suffered immensely. The people have suffered most of all. I am sure that the hon. Member for Rotherham, whose speech I enjoyed, will think about what the EC has done to the poor people of Britain. They are the ones who have suffered the most. It is the poor who suffer from outrageously high prices for food. It does not matter so much to me because I can afford to buy food; it does not worry me. Poor families suffer most of all.

We have the appalling value added tax. It is the most cruel and nasty tax which hits the poorest people hardest of all. The hon. Gentleman will be aware that, under the tax-free test, we are obliged to extend VAT to almost everything. The poor are suffering and jobs are suffering. The saddest thing of all is that, despite all the talk about how we would have expansion, growth and development, Europe is a very sick place, with mass unemployment and massive borrowing.

We must ask ourselves what on earth we will do about it. It is crucial to abandon all this silly talk about sitting around the table and reforming the organisation. It will not happen. Year after year, we kid ourselves that reform is coming. We are told every year that the common agricultural policy is changing and that things will get better. Ministers say that expenditure will be cut. I wrote a letter asking whether expenditure would be cut, and the Minister wrote back saying that it would not be cut; it would increase by less than it was going to increase before.

The plain fact is that there is no way that we can control the constant increase in the authority of Brussels. It goes on and on every day. There is no way that we can curb it—the example of the common agricultural policy is there for all to see—and there is no way that we can secure jobs in the EC. We must ask ourselves what on earth we will do about it. The crucial thing to do is, first, to tell people the truth. The Government must tell people the costs, tell them about the trade, tell them all the facts, not propaganda, and tell them the figures.

Secondly, we must give people a voice. To be honest, nothing has been more shameful in the history of our democracy than the fact that vast areas of freedom, liberty and sovereignty have been passed over to outside bodies without consulting the people. It is wrong in principle, it is contrary to democracy and it is contrary to all that people in the Labour party and the Conservative party should stand for.

I therefore hope that the hon. Member for Rotherham, who made a great speech today—it was one of the best and most talented speeches that I have heard—will think, just as other new Members have, about democracy, his rights and the rights of the people of Rotherham to influence things and ensure that things happen as they want them to. The sad fact is that as they look ahead to elections, whether European or national, many of them will wonder what on earth is the point if the same things happen, no matter who they vote for.

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

I cannot hope to compete with the hon. Member for Southend, East (Sir T. Taylor) in terms of touching every popular strand that is going. I made notes as he went through them—from pregnant women to local authorities, newspapers boys and electricians, and ended up with furry toys. None the less, the hon. Gentleman's points were important—he made them consistently.

At the end of my speech, I shall come back to the point on which the hon. Gentleman finished because a criticism that is often made of those in his party who come from his direction in this argument is that they do not set out what would be their alternative. Simply setting out the option of a referendum—I think that is what he was hinting at—or some sort of better level of consultation than he feels we have had is not enough. There was a referendum in 1975 which made the position clear. The hon. Gentleman does not seem to have lived with the consequences of that. I therefore think that he must go a bit further and be clear on what he would do, given the consequences of a future referendum.

Like other hon. Members, I refer to the fact that this debate takes place in the long and dark shadow of the death of John Smith. Within the village that is Westminster on occasions such as this, the House will appreciate that Scottish Members feel something of a close-knit family right across the parties, whether we sit for Scottish constituencies or represent seats elsewhere, as the hon. Member for Southend, East, who once sat for a Scottish constituency, does.

In paying tribute to the late John Smith, and as I represent a highland constituency, I pay a particularly warm tribute to the affection and strong sense of Celtic being that he felt in being a west highlander. He was born in Dalmally and was then brought up and educated in the earlier part of his life in Ardrishaig. Indeed, I am delighted that my hon. Friend the Member for Argyll and Bute (Mrs. Michie), in whose constituency both of those communities are located, is beside me.

As well as absent friends, I welcome, if not a parliamentary friend in the strict sense, none the less a first-time contributor to the proceedings of the House today—the new hon. Member for Rotherham (Mr. MacShane). I very much endorse all the warm sentiments that have been expressed about the excellence, fluency and force of his speech. I congratulate him on it. Given the sudden death of the Leader of the Opposition, it has been noted that the debate this afternoon has proceeded in a slightly less partisan and slightly more measured context.

Noting the documents which have been issued to accompany the debate, I was amused to see the covering letter of 29 July from the Prime Minister on Downing street paper to Mr. Delors enclosing the Government's White Paper on growth, competitiveness and employment in the European community, which was part of the discussions going towards the summit at the end of last year. In that letter, the Prime Minister, in a characteristically friendly and personal fashion, added a handwritten note to Mr. Delors saying: 'I hope your back is recovering—I do sympathise!' I do not know whether the Prime Minister has been suffering from a bad back, but as that was written on 29 July, I think that it possibly refers to the knives that were sicking out of it—most of which came from his side of the House. Indeed, most of the hon. Members whose fingerprints were on those daggers I can see before me this afternoon.

The Minister of State, in opening the debate, spoke about competitiveness and unemployment. There must be no doubt in anybody's mind that, with 19 million people unemployed across the member states of the European Union, that must be the No. 1 political priority. The broad thrust of the Commission's White Paper that was tabled for the Brussels summit is welcome not least because it dwells on the need for a Europewide recovery plan to tackle the problem. Although we have our differences in the House about economic policy and the approach to take, we must never lose sight of the fact that we are inextricably bolted to a European Union-wide economic unit. It is on that level that much can be done to tackle the glaring social and economic problems generated by the appalling levels of unemployment across the Community. In particular, the Liberal Democrats would argue for the need to generate new public and private investments, not least in cross-border infrastructure projects.

The hon. Member for Gateshead, East (Ms Quin), speaking from the Opposition Front Bench, referred to the channel tunnel and the rail links on either side of it. In a sad way, they are almost a physical embodiment of all that is wrong with Europe: they are moving at a faster speed on a better quality track on one side of the English channel but at a slower speed on a poorer quality track on our side. That is something of a metaphor for all that is wrong with too many aspects of Europe, not just the approach, but rail links on either side of the channel tunnel.

Mr. Giles Radice (Durham, North)

It is not wrong with Europe.

Mr. Kennedy

The hon. Gentleman says that it is not wrong with Europe, but wrong with us. I would very much subscribe to the construction that he puts on it.

Secondly, looking back to the end of the second world war, or one aspect of it, as we will be in a week or two, surely the far-sightedness of that period in the Marshall plan, which was introduced to deal with the debris of much of the European continent, could and should be emulated now by the developed economies of western Europe—as it was known before the collapse of the Berlin wall—to help the countries of central and eastern Europe to upgrade and improve their economies and, we hope, reach the stage where they, too, can accede and become full members of a wider and deeper European Union. It would be in this country's economic interests if that happened, as we would benefit from the increased trade and increased flow of goods, material and people.

Thirdly, we should increase investment in science and innovation generally. That means giving greater priority in this country as well as increasing the pressure at European level towards a greater emphasis on scientific development and education and skill training generally. Fourthly, we should try to establish common guidelines for training throughout the European Union, again helping the free passage of labour across the existing member states of the Union. Fifthly, on the economic side, we should look for ways to give further incentives to employers to recruit new employees. Perhaps some aspects of the benefit system could be transferred directly to employers to encourage them. All those things should be considered.

In the economic context, I shall make a couple of brief points from the vantage point of the highlands and islands of Scotland. The Government's document that accompanies the debate makes it clear that, along with Northern Ireland and Merseyside, the highlands and islands of Scotland have qualified for objective 1 status—and very welcome it is too.

Mr. Dafydd Wigley (Caernarfon)

Lucky you are, too.

Mr. Kennedy

The hon. Gentleman, who represents a Welsh constituency, says, 'Lucky you are, too.' We appreciate that fact. I am sure that the right hon. Member for Strangford (Mr. Taylor), who represents a Northern Ireland constituency, would agree with me and the chief executive of Highlands and Islands Enterprise that the whole point of getting objective 1 status is to get out of objective 1 status; that objective 1 status in itself is a reflection of comparative or relative poverty within the existing European Union; that it is not something to open the champagne about; and that it is not a status that we want to hold on to. We want to use it as a springboard to ensure that we never have to go back to that status again.

When the Minister replies, perhaps he will address the concerns of the highlands and islands—I do not know about other places where objective 1 status has a role to play—that the advent of objective 1 funding from Europe is being used by the Treasury, or in this case by its instrument, the Scottish Office, merely as a way of reducing the other expenditure that would otherwise be devoted by central Government. In other words, the all-important additionality principle is being diluted and undermined simply by reducing existing roads budgets or other forms of infrastructure budgets. They are being reduced and additionality, through objective 1 funding, is coming in to take its place. That is not supposed to be the way in which it works. It is supposed to be genuinely new money additional to the needs of the area, and additional to the provision that would otherwise be made.

Also looking at the economy of the Scottish highlands and islands, I particularly stress to the Minister the very real problems facing—he mentioned it in his speech—the protection of fisheries. I draw his attention to a distinct but discrete aspect of fisheries: the fish farming industry. After tourism, it has become the second single largest employer in many of the most fragile communities across the highlands and islands. It is been a great success story and one that we pay tribute too.

However, the activities of Norway in dumping excess salmon on the European Union markets has distorted the price of salmon and has had a disastrous effect on our domestic industry in fish farming. As the European Union reference price for salmon is now taken as the benchmark for salmon prices, the industry should legitimately look for more effective action from the European Union if prices do not reach that benchmark. That, of course, depends on the willingness of the UK Government to press home the case for the industry.

Sir Teddy Taylor

Who will buy it?

Mr. Kennedy

I will happily give way to the hon. Gentleman if he wishes to intervene.

The Government, however, should go further than that. They should also give their approval—I do not understand their reluctance—for the setting up of salmon producers' organisations in the UK and, for that matter, elsewhere in the European Union. To date, they have been notably lukewarm in their attitude towards that idea. They have displayed a distinct unwillingness to give statutory backing, which is needed for such producer organisations to be effective and if full use is to be made of the reference price mechanism. I hope that the Minister will address those very pressing regional concerns from that part of Scotland.

I wish now to look to the longer term development of the European Union and to what might happen, not least in the context of the 1996 intergovernmental conference and what will follow after that. Surely the European Union needs to become more democratic. I do not wish to ruin his day, but while I share some of the suspicions and anxieties of the hon. Member for Southend, East (Sir T. Taylor) that there is not enough democracy, and certainly not enough transparency, in the Union, he and I part ways when we wonder how best that can be addressed.

We would like to see more co-decision-making at a European level: in other words, decisions being moved away from the Council of Ministers, or the Council of the Union as it will become known, where sovereignty is pooled. We want more responsibility and authority to go to the European Parliament, for we believe that sovereignty is a more authentic representation of the peoples of Europe. We do not believe in ceding more power. It is not an argument about ceding more power to Brussels from Westminster. It is an argument about taking the power that Brussels already has and making it more transparent and accountable to its relevant democratic institutions.

Mr. Oliver Heald (Hertfordshire, North)

Will the hon. Gentleman give way?

Mr. Kennedy

I thought that that might provoke a response from the Conservative Benches. I happily give way.

Mr. Heald

I recently read the Liberal party document entitled 'Making Europe Work' which states that this country would no longer have independent armed forces but would become part of a European integrated army. Majority voting would be used to govern it, and in a sense Mr. Delors would be in charge of the direction of important aspects of British defence and foreign policies. If that is not ceding power from this place to Europe, what is?

Mr. Kennedy

The hon. Gentleman anticipates my next set of arguments. If one wants to talk about a more democratic Europe, one must flesh out what is meant in terms of its institutions. I was speaking about the existing situation, the current powers of the European Union and the relative powers of the Council, the Parliament and the Commission.

Dr. Spink

Will the hon. Gentleman give way?

Mr. Kennedy

I should first like to respond to the intervention by the hon. Member for Hertfordshire, North (Mr. Heald). I do not know whether he is the hon. Gentleman's hon. Friend on this issue, so perhaps I should say his nominal hon. Friend.

Existing powers should be made more democratic in the way that I have outlined. I am delighted to see that the hon. Member for Hertfordshire, North is reading our document. I shall make sure he is on our mailing list for the future. The hon. Gentleman properly looks at the long term. We take the view that, as the right hon. Member for Old Bexley and Sidcup (Sir. E. Heath), the former Prime Minister, said, as we develop more coherent and concise economic and social policies, greater co-operation in areas such as defence and foreign policy will surely follow.

I part company with Margaret Thatcher's assessment of Bosnia. It is not that Bosnia proves that Europe cannot work; it is proof positive that on defence and foreign policy issues Europe must work better and more successfully than it has done in the past. The only way to achieve that is to evolve institutions that can give practical effect to defence and foreign policy decisions. If we cannot influence matters within our own perimeter in terms of the former Yugoslavia, it is a poor day indeed. That is the longer term issue going beyond 1996. I shall deal with the veto in a moment.

Dr. Spink

I should like to question the hon. Gentleman on the veto. Will he confirm that it is Liberal Democrat and Labour policy to abandon the right of a veto in the Council of Ministers? Is not that abandoning British sovereignty?

Mr. Kennedy

The hon. Gentleman was commendably pro-European a few minutes ago, but he has obviously tried to row back towards the shores of the Treasury Bench and regain some of the good will that he may have used up with the Whips on this issue. The hon. Gentleman is wrong. What the Conservatives are doing, and will do increasingly when the European campaign proper gets under way next week, is portraying those of us who want more co-decision-making and co-operation at European level as people who are surrendering every last vestige of British interest.

We have not committed ourselves to the wholesale introduction of majority voting in the Council. For example, we are not recommending that for issues affecting common foreign and security policy, interior and judicial affairs or for Community matters such as economic policy where the Council acts like Cabinet Government. The distinction that must be made is in the document from which the hon. Member for Hertfordshire, North quoted. The document says that our Council voting commitment is to European Union legislative and not executive matters. The document makes that clear early on.

Mr. Heathcoat-Amory

How does the hon. Gentleman reconcile that with what the right hon. Member for Yeovil (Mr. Ashdown) said in a speech to the congress of European Liberal Democrats and reform parties in December? The right hon. Gentleman said: 'We want Ministers to make decisions without single nation vetoes.'

Mr. Kennedy

I think that the Minister was present when the Foreign Secretary raised that issue in our European debate on the day that my right hon. Friend was delivering that speech at the ELDR congress on the south coast. The Minister would have heard the exchanges in that debate, but if he did not I shall flesh out exactly what there was no time to explain fully on that occasion. The Minister takes the ELDR commitment to mean that in theory the UK can be outvoted in the law-making process, but I think that he would be the first to acknowledge that that could happen only when four subsequent conditions were met.

The first condition would be when the UK failed to build the 23-vote qualified blocking minority out of 74 in the Council. We have 10 of our own. The second condition would be when the elaborate built-in consultation procedure failed to produce a compromise and the third is when the Commission refuses to withdraw the legislative proposal. The fourth is that the European Parliament wields' an absolute majority of 284 votes against us, in which Parliament, of course, we will have 87 MEPs.

It would be a catastrophic failure of British diplomacy if with all those hurdles, following a proposal and an initial log jam or diplomatic difficulty, we could not find a compromise. As a former Prime Minister, the right hon. Member for Old Bexley and Sidcup, made clear, the Foreign Office is in no position to lecture anyone on these matters, for the straightforward reason that it marched its troops to the top of the hill on the issue of qualified majority voting and had to turn them round. In an ignominious departure for British diplomacy, it had to march them swiftly down again precisely because the Foreign Office was not able to proceed in that way.

All those qualifications are to deal with a Government who would be instinctively hostile to sitting at the table in the first place and discussing the issue. They do not apply to Governments who would adopt a much more positive approach.

Obviously there must be more decentralisation in developing the European Union. I was fascinated by the speech by the right hon. Member for Bethnal Green and Stepney (Mr. Shore). He lambasted federalism without ever defining it. Subsidiarity now seems to be the name of the game and in the other member states it is seen as the flip side of federalism. Federalism is not a centralising, drawing in of power to Brussels but the decentralising of power down to the regions and nation states. The Government do not want to talk too much about that because they want subsidiarity to stop at the English channel and not be applied in the United Kingdom. That again distinguishes us from them.

We need a more diverse European Union that is wider but also deeper along the lines that I have outlined. If we are to take people with us, we will have to consider consulting them directly in the way mentioned by the hon. Member for Southend, East. As he knows, I voted for a referendum on Maastricht. I would do so again on the post-1996 intergovernmental conference—assuming that it reaches an agreement that represents a further major constitutional development for this country.

Mr. Burns

Will the hon. Gentleman give way?

Mr. Kennedy

No, because I have taken too many interventions and spoken for longer than I intended and I now wish to conclude.

The right hon. Member for Old Bexley and Sidcup spoke about the need for more explanation and that was echoed and reinforced by other hon. Members. The best way to take people with us is for all of us who are, broadly speaking, on the pro-European side, and who form a cross-party majority of five out of six in the House, to get on the stump together outside when it becomes relevant and necessary and to argue the case along the lines that I have outlined. I believe that, as in the mid-1970s, we would receive a resounding and clear-cut yes from the good sense of the British electorate.

6.58 pm
Mr. James Couchman (Gillingham)

I am pleased to be able to take part in this thoughtful debate. It is thoughtful because of the sad events of last week, but it is none the worse for that. I congratulate the hon. Member for Rotherham (Mr. MacShane) on his excellent maiden speech. It was not only unusual in that it was delivered within a week of his arrival but because it was delivered to a fairly full House. I am sure that he enjoyed speaking to such a full and distinguished Chamber.

The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) spoke of referendums. It is worth remembering that in 1975, Mr. Harold Wilson thought that it would be a good ploy to hold a referendum on whether the United Kingdom should remain part of the then Common Market, to get himself off the hook with the left wing of his party. Some people thought that that referendum was about Britain's entry to the Common Market but it was really about whether Britain should remain in it.

As a lukewarm European at that time, I voted yes for two reasons. I thought that Britain's membership would be good, even essential for succeeding generations—for my children and grandchildren, if not for myself. My second and more insistent reason was the nature of the opposition to Britain remaining in the Community. That consisted of a bizarre coalition comprising Wilson's left wingers, most of the trade unions, a small but vociferous band—and they are still vociferous—of little Englanders in the Conservative party and the National Front. It seemed that anyone who espoused respectable and responsible politics—I was then chairman of Bexley constituency Conservative association—would vote yes, even if without great conviction or enthusiasm.

In a six-week campaign, the mainstream of each party urged a yes vote. The little Englanders suggested that if we escaped the clutches of the Community, food prices would magically fall and Britain would renew links with Commonwealth and EFTA countries as if nothing had happened in 1973. Even in 1975 that hypothesis was weak, and two thirds of people voted against the anti-European case.

If such a referendum had been held on the Maastricht treaty and its consequences, or were to be pledged and implemented on the outcome of the 1996 intergovernmental conference—the agenda for which will not be known for many months—I should have no difficulty voting again in a positive light. There can be no ambivalence as to the vital nature of our continuing membership of what has become the European Union. There can be no harking back to our historic economic links with the old Commonwealth. Canada, Australia and New Zealand all want to weaken or finally to break their last notional ties with the United Kingdom, and large numbers of each country's population aspire to republic status.

Canada has formed new and logical relationships with the United States and Mexico through the North American Free Trade Agreement. I disagree with the right hon. Member for Llanelli (Mr. Davies), who is inclined to pooh-pooh blocs in general. NAFTA will stand up. Australia and New Zealand recognise that their future lies in sharing the prosperity of the Asia-Pacific nations with Hong Kong, Indonesia, Thailand, Singapore, Malaysia, Taiwan, Japan and China.

The suggestion that Britain might enjoy looser ties with Europe through an EFTA-type trading relationship has proven flawed by the enthusiasm of EFTA nations in their wish to join the European Union. Does anyone seriously believe that the remainder of the enlarged European Union nations—by then numbering 15—would allow the United Kingdom to retain and to enjoy the advantages of trading on the basis of the Single European Act while resigning its responsibilities for all other aspects of the Community? I think not.

I share the aspiration of my right hon. Friend the Prime Minister to Britain playing a full part in the Union. One of the most important ways that the United Kingdom is already at the heart of Europe is in its status as an attractive location for the European headquarters of companies outside the European Union. The EU has a 344 million population and on the successful accession of the four aspirant nations, that figure will rise to more than 360 million. The Union is already the world's largest trading bloc, accounting for two fifths of world trade. It is no surprise that American, Japanese, Taiwanese and Korean companies want European bases that allow them to trade within the EU on the same terms as their European competitors.

It is no coincidence that 40 per cent. of American and Japanese investment in Europe has come to the United Kingdom. In my constituency there is a major Australian insurance company headquarters employing 800 people; American, German and Dutch companies; and three Japanese company European headquarters. The latter were attracted to Gillingham by exploiting our unique relationship with Japan based on the 'Shogun' story, because the English sailor who was the model for 'Shogun' was born and brought up in my constituency. We have been able to exploit that by twinning with two Japanese cities.

In Kent generally, there are 200 foreign-owned companies from many countries. They include such important employers as Pfizer in Sandwich—for which I have the honour to be an adviser—with 2,500 high-grade research and development production jobs in the pharmaceutical industry. It is worth noting also that the American pharmaceutical industry has overwhelmingly located its European headquarters in this country. I caution that if we weaken our ties with Europe, such companies would think hard about maintaining their production facilities here. There is an over-supply of pharmaceutical production within Europe. There will be rationalisation, which—with the access that we ought to have through the European Medicines Evaluation Agency—should come to the UK, but it may not if we weaken our ties.

Foreign-owned companies choose Britain for their European headquarters for various reasons. We speak English, which is undoubtedly the first-choice international language, and the first-choice second language for children to learn throughout the world. English is the language of commerce and industry, science and the air. Above all, it is the language of the United States, and we must hope that it remains so.

Our corporate taxation and, yes, individual taxation are more attractive than those of our European partners. Foreign investors are warmly welcomed and receive equality of treatment with British-owned firms. Foreign investors discover that we have a skilled and flexible work force, with an industrial relations record in recent years much better than that of many of our European competitors.

Contrary to the remarks by the hon. Member for Gateshead (Ms Quin), the fact that we have not signed up to the ruinous non-wage costs involved in the social chapter produces labour costs that are 40 per cent. lower than Germany; 20 per cent. lower than Italy, France and Japan; and 18 per cent. lower even than low-tax deregulated states. I do not notice my Taiwanese, Japanese and Hong Kong friends telling me that I must sign up to the social chapter.

Mr. Enright

I have heard those statistics before, and I am interested to know the formula by which the hon. Gentleman arrived at them. It is obviously complicated and he may not be able to explain it now, but if he will put the formula in writing to me, I shall be grateful.

Mr. Couchman

I take note of the hon. Gentleman's request and I shall try to oblige.

As the City of London is vital as a financial market and has worldwide links, it is no surprise that foreign-owned companies choose the UK for their European base, but the City alone would not hold them here if we weakened our ties with Europe—let alone attract new investment. Our status as an enthusiastic and aggressive participant within the EU will allow us to attract investment, remain the maker of 50 per cent. of television sets in Europe, become a net exporter again of motor cars and maintain our position as one of the three or four most important research-based pharmaceutical industries in the world.

Our position at the centre of the Union will allow us to remain a great manufacturing and trading nation, whereas sitting on the fringes contemplating our navel clearly would not. My reasons for voting yes in 1975 probably were not so daft. The Opposition had a total lack of credibility. Our membership of the European Union will benefit my children and grandchildren. I should be just as right 20 years on to support our wholehearted membership of the Union in any referendum that might follow the agreements that we hope to be reached at the intergovernmental conference in 1996.

7.18 pm
Mr. Giles Radice (Durham, North)

Apart from the remarks by the hon. Member for Gillingham (Mr. Couchman) about the social chapter, I much agreed with his vigorous defence of the European Union. It was somewhat unusual these days, coming as it did from the Conservative Benches, but I welcomed it.

I congratulate my hon. Friend the Member for Rotherham (Mr. MacShane) on his fine, vigorous and—dare I say?—bold speech. I would certainly not have dared to make such a maiden speech. He will not be surprised to learn that I much appreciate the strength of his European convictions. That, indeed, is part of the answer to my right hon. Friend the Member for Llanelli (Mr. Davies), who was hoping for a change of fashion in the Labour party. I do not think that he will get it; indeed, I believe that very soon there may be more anti-Europeans in the Privy Council than in the parliamentary Labour party.

I want to devote some of my speech to paying tribute to John Smith, whose tragic death shocked us all, and to his position as a European—for he was indeed a European. I first met him in 1962, at a young Königswinter conference in Berlin a few months after the wall went up. I have a snapshot, taken then, of Smith as a 24-year-old, looking all bright-eyed and bushy-tailed, very much the rising young politician. I remember that we were all extremely impressed by his remarkable self-confidence and maturity. For both of us, Berlin was an important moment: it not only confirmed the evils of totalitarianism, but convinced both of us of the value and strength of the great European project and the necessity for Britain to be part of that project.

John Smith had a fine record as a convinced European. In 1971, he was one of the 69 Labour Members who voted—against the party whip—for British entry. For him that was a very big step, for John Smith was nothing if not a party loyalist. I think that the strength of his European convictions was demonstrated by the fact that, as a very ambitious young politician, he was prepared to put his career on the line.

In the mid-1980s, with my right hon. Friends the Members for Islwyn (Mr. Kinnock) and for Birmingham, Sparkbrook (Mr. Hattersley), John Smith played an important part in Labour's conversion to the main pro-European party in British politics. I might add that yesterday his support for British membership of the exchange rate mechanism, and for the principle of a single currency, was criticised—with his usual impeccable taste —by Lord Tebbit.

I know that John Smith had private doubts about the rate at which we went into the ERM. Certainly he did not discourage me when I said in the House, immediately after the decision, that we had entered at the wrong time, for the wrong reason and at the wrong rate; and when the crisis came in 1992, he put the case for devaluation within the ERM rather than leaving it. It could be argued that that was the wrong choice, given what happened to the ERM in 1993. I note, however—along with, I believe, my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore); certainly it was some anti-European who spoke earlier—that since the introduction of the new flexible bands, the ERM has worked extremely well. I think that John Smith was right to argue for stable exchange rates: they are what business men want, and what my constituents want.

As for the single currency, John Smith saw it as the likely and desirable long-time concomitant of a single market—although not necessarily the inevitable consequence—but did not believe that it would come about without a far greater convergence of the national economies. Certainly it could not come about in the middle of a recession. I think that his position was consistent. All Opposition Members had to congratulate him on his handling of the Maastricht proceedings in the House: he kept his party together and harried the Government, yet —as my right hon. Friend the Member for Bethnal Green and Stepney just complained—he never voted against an issue of principle, with the single exception of the social chapter. In that instance, the Government had opted out of the treaty. It was a very skilled performance by a very skilful politician and political leader.

The principles behind John Smith's stance on Europe can be characterised thus. First, he believed passionately that Britain's destiny lay on the European continent. Britain, he thought, was now a medium-sized post-imperial power, linked to the continent not only by geography, history and culture but by economics, politics and security. More positively, he saw that the common market—the European Community, now the European Union—had made war impossible in our half of the continent.

Some speak as though this were just a question of the age-old quarrel between France and Germany; but next year we shall celebrate the end of the war in which we were involved. Indeed, Britain was involved in two world wars, and Anglo-German antagonism was certainly an underlying factor in the outbreak of the first. I rejoice—both countries rejoice—in the fact that Britain and Germany are now partners in the European Union, and good allies too.

John Smith was also strongly in favour of the prosperity that the European market—the single market and the customs union—has brought to the continent. He thought that we could not afford to be left out of that. Hon. Members may talk of our balance of trade with the rest of the European Community, but the fact is that Germany is now our biggest single trading partner. We cannot be shut out of a market that contains our main partner: that is the reality that John Smith understood so well.

John Smith's second principle was that Britain had to be a positive member of the European Community, not a negative, carping member. He believed that the best way in which to secure British interests was to be positive rather than negative, whole-hearted rather than reluctant. His strategy—the strategy that I think Britain should adopt—was that we must win friends, build coalitions and gain concessions. We need not always opt out, oppose or try to block other countries from taking action, as we have done too often over the past 15 years.

Being positive means accepting, in many cases, that we must co-operate with our partners. A medium-sized European power like Britain cannot go it alone. Over foreign and security policy, we must get together with other countries. All right, Bosnia is a ghastly failure; but that makes the case for better co-operation, rather than the case for no co-operation at all.

In some instances, we must integrate more with our partners. We integrate in the context of trade, competition policy and, for obvious reasons, the environment: the environment is an issue that spills over national boundaries. We also integrate in regard to aspects of social and labour policy, although there is an argument between the two Front Benches, and the two main parties, about the extent to which we should do so. I believe that, eventually, we should also integrate in terms of monetary policy, but that is an argument between a number of us.

We agree that we should have a more democratic European Union, but how we can achieve it is a different matter. We hear from the Conservative party that it is terrified of a centralised federal state, but a federal state is not centralised: that is the whole point. We are talking about power being devolved downwards.

Mr. Shore

And upwards.

Mr. Radice

And outwards, yes.

I think that there should be more powers for the European Parliament, and more effective national scrutiny; but subsidiarity does not stop at national boundary level. As John Smith said so often, power needs to be devolved downwards to the regions. That is a strong case, and the subject of a strong argument between the two Front Benches and the two parties.

Finally, we need a bigger European Union—an enlarged European Union. There is an important question for hon. Members who are always criticising the European Union. It must be a pretty odd club if it is so terrible that everyone wants to join it—four new members are about to do so. I see the hon. Member shaking his head, but he has not yet addressed that argument. I hope that the EFTAns will join us.

Mr. Cash

On a point of order, Mr. Deputy Speaker. At a crucial moment in his speech, the hon. Gentleman appeared to point in my direction—although he may have been pointing at someone else—and to suggest that, somehow or other, my hon. Friends and I oppose enlargement. I have checked and not one of my hon. Friends sitting next to or behind me indicated dissent.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

That is not a point of order for me. I assume that the hon. Member for Durham, North (Mr. Radice) will put the matter right.

Mr. Radice

I was saying not that the hon. Member for Stafford (Mr. Cash) opposes enlargement but that he had not addressed the argument. He criticises the European Union all the time, but it is a club that everyone wants to join.

I hope that enlargement is ensured, although it was endangered by the absurd and appalling diplomatic fiasco caused by the Government's policy on the blocking minority. They almost derailed the enlargement process because the Prime Minister was concerned about Conservative Back Benchers. We must make it our top priority to have Poland, Hungary, the Czech Republic and Slovakia in the European Union. I agree with the hon. Member for Gillingham that that is important.

Enlarging the Community will involve a number of changes, which some people have not faced up to. It will mean more majority voting, because a new Community with more members will work only with more majority voting. Those who argue for enlargement have to face up to that, but they do not.

The Government were right to raise the issue of the weighting of voting, but they chose the wrong time to do it. Again, changes will have to be made to European budgets if those other countries enter the European Union.

In an entirely non-partisan way—in the spirit of this debate—I look forward to the European elections. Having listened to the speech by my hon. Friend the Member for Gateshead, East (Ms Quin), I am very confident that my party will fight the election as the main pro-European party in British politics, presenting a positive agenda agreed with its sister parties in Europe. That is a commendable innovation and I delight and rejoice in it. With respect to the Conservative party, I hope that it will also fight a positive campaign without spending all its time looking over its shoulder at the so-called Euro-sceptics, many of whom are not sceptics but antis.

Mr. Cash

That is totally untrue.

Mr. Radice

That may be untrue of the hon. Gentleman, but a number of his hon. Friends have told me that, once the European elections are over, they will come out in their true colours as anti-Europeans, although I hope that that will not happen.

The case for the European Union needs to be made by both major parties, which, of course, will have differences of emphasis on how the Union will develop. I was glad to hear the hon. Member for Stafford, who fought against me in 1979 in Chester-le-Street, advancing that argument. We cannot afford to be left out, left behind or to become even semi-detached. It is in Britain's interests that we are not only part of the European Union, but a positive part of it, not a reluctant part.

Being positive about the European Union is one of John Smith's legacies to my party. It is something that the Conservatives should heed as well.


Mr. Ray Whitney (Wycombe)

In harmony with the spirit of concord that survives in this place following the sad death of John Smith, I say that I am in broad agreement with the hon. Member for Durham, North (Mr. Radice), just as he said that he was in broad agreement with the remarks of my hon. Friend the Member for Gillingham (Mr. Couchman); that is a good place from which to start.

I join those who paid tribute to the impressive maiden speech of the hon. Member for Rotherham (Mr. MacShane). I hope that it will not offend the tradition of gentleness to the hon. Member who makes a maiden speech if I say that I know Rotherham fairly well—my wife's aunt taught Brian O'Malley at Mexborough grammar school—and that I did not recognise one or two of the hon. Gentleman's descriptions of the recent history of Rotherham. Perhaps we can compare notes over a drink on some other occasion.

This is an important juncture at which to consider the affairs of the European Union. We face the elections on 9 June and it is right that the parties, in the spirit of amity that prevails, should set out their stalls and offer to the British electorate their recipes for and concepts of the European Union. My right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) was right: the important thing is a high turnout, although we hope that the high turnout will be on the right side. A significant debate is being held nationally. A high turnout is important not only for the election next month, but so that Britain's contribution to the intergovernmental conference in 1996 may be constructive and profound and may shape the development of the Union as we want it to.

Opinions differ on how we should shape that development. We resile from many elements of the socialist manifesto, which the Labour party has signed. The attitude of the Liberal Democrats has a centralising thrust and deserves to be set before the British people so that they can be clear about it and can make their judgments. Some of the remarks of the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) deserve to be studied carefully and should be compared with those of the leader of his party and the contents of Liberal Democrats' documents. Some interesting lessons may be drawn from that. I doubt whether some of those propositions will prove acceptable to the British electorate.

The Chamber and the nation should be debating those matters, not the two outdated propositions that have been around for two years, on which the debate has centred and which fail to understand what has happened in the world. The first proposition is that Britain should leave the European Community. The second, which is heard more often because there seems to be a reluctance among those who present it to support the first, is that we should form a revised free trade area. That proposition has been tackled by a number of hon. Members on both sides of the House but, for many years, it has not been relevant. As long ago as 1975, Baroness Thatcher said:

The Community gives us a chance to influence world affairs. Britain's instincts have never been isolationist and membership of the Community enables us to play a full part in the counsels of Europe and a continuing role in the affairs of the world. That remains true today. As has been said, at a time when the former EFTA countries are clamouring to join the European Union, the idea of Britain moving back, seemingly alone, and re-creating a European free trade area does not bear a moment's examination. It is odd that that proposition should have been considered for more than a moment; in fact, it has received two years' worth of intense attention from the media. It is baffling to people outside this country that two such untenable propositions should have been taken quite so seriously for quite so long, especially by people in the media who take themselves so seriously.

We are accustomed to the fact that some parts of the tabloid press suffer from the little England syndrome, and no one bats an eyelid at that. Most countries have their own home-grown chauvinists, but it is depressing that so much of our serious press has given house room to such outdated—indeed, dead—propositions. They have, of course, come from the stables of two non-British—one is tempted to say "colonial" but that would not be politically correct—newspaper owners, Mr. Murdoch and Mr. Black, who seem to have decided firmly that they do not want Britain to be at the heart of Europe and who use their press influence to that end, aided and abetted by people who I believe should know better, such as the editors of The Times and The Sunday Telegraph.

In a letter to the editor of The Times, whom I used to regard as a friend, I made so bold as to suggest that, since he took up his distinguished chair, he had expressed views that were negative, muddled and alarmingly out of touch with current European realities. The letter was not published; I suffered censorship at the hands of the letters editor. When I protested, I was told that the letter was a personal attack on the editor of The Times —which, in view of the usual content of editorials in that and other newspapers, struck me as strange.

The approach that I have outlined may be baffling, but I believe that it explains why two wholly outdated concepts have been given such an airing. I desperately hope that they have come to the end of the road and that we can now seriously debate how Britain should collaborate with our European partners.

The Conservative concept of the European Union is of a grouping of nation states that co-operate and collaborate when it suits their interests to do so. Despite what has happened in the past two years, the latest poll by The Economist reveals that, when asked about their attitude to membership of the European Union, the British electorate consider it "a good thing" by a majority of two to one. Interestingly, that is the same result as in 1975, when the electorate voted for continuing membership. If they still hold that view after being subject to a barrage of comment, I am confident that, as we move into what I hope is a more constructive and positive phase of our relationship with our European partners, their understanding of where Britain's national interests lie will deepen.

I ask my hon. Friends and those outside who appear desperately frightened of membership of the European Community to have courage and to believe in this country. Very few people on the continent of Europe fear that they will lose their German-ness or their Frenchness because of their membership of the European Community. Mr. Séguin and Mr. Delors have two very different concepts of how they want the European Union to develop but neither believes that the Frenchness of France will be threatened by France's membership of it and—my goodness—I have not the slightest doubt that our country will preserve the essence of Britishness of which we should all be proud. I therefore call on some of my hon. Friends and other doubters in the two camps that I have described to have more courage and more national self-confidence.

I also remind such people of Britain's role and the contribution that we still have to make, of our long democratic history and our deep sensitivity to and understanding of how the world works. I do not want to make too much of it but I still believe passionately that we have a contribution to make. As the Foreign Secretary is fond of saying, we still have the ability to "punch above our weight", not only in military and defence matters but in diplomacy and world politics. One of the ways in which we have a contribution to make is through our relationship with the United States. I shall not mention the special relationship but it is important none the less.

Ray Seitz, the recently retired American ambassador to Britain, is known to many hon. Members. No one would challenge his commitment to his country or his knowledge of Britain and the world. He said: if Britain's voice is less influential in Paris or Bonn, it is likely to be less influential in Washington. So while Britain's role in the Union is indisputably complicating to our relationship, it is also indispensable to the relationship. And this is perhaps truer today than in the past when economic issues have come to define security as much as defense issues. That, too, is something that we should all ponder.

Let us not deny or challenge the fact that it is right for Britain to be at the heart of Europe. We can now debate legitimately what type of Europe we should fashion. I am sure that the Conservative vision of Europe is the one that will appeal to the British people and respond to their instincts.

7.36 pm
Mr. Derek Enright (Hemsworth)

John Smith's is a lively presence here tonight because it has informed much of what has been said. I mention in particular the fact that he was a sea of certainty here when I was beleaguered in Europe. We pro-Europeans in the European parliamentary Labour party felt that we were not wholly isolated at that time because of people such as John and my hon. Friend the Member for Durham, North (Mr. Radice) who spoke so well this evening.

The fact that John cannot pursue what he was doing is a great shame. I regret very much that he cannot finish the series of speeches on which he had embarked and his articles on the reform of international financial institutions and other international bodies, examining them in the context of the European Community. I hope that other members of the party will take up the torch.

Much of what I have to say has already been said supremely well by my hon. Friend the Member for Gateshead, East (Ms Quin) and by the right hon. Member for Old Bexley and Sidcup (Sir E. Heath). I shall recall the roots of the European Community. Let us not forget that a number of fortresses were set up after the 1939–45 war. There was the potential for a huge number of countries —not least this country—to become inward-looking because of severe economic problems. The hon. Member for Chingford (Mr. Duncan Smith) is beginning to look cynical.

Mr. Iain Duncan Smith (Chingford)

The hon. Gentleman referred to my looking cynical. The reason is that I seem to have heard this speech endlessly, endlessly, endlessly. I thought that the purpose of this debate was to look forward and to see what was being proposed as the direction for Europe. We endlessly go back to turgid history; whether it is two years ago or 40 years ago, it is endless. When will people get on and discuss what will happen in future?

Mr. Enright

The hon. Member for Chingford must understand his roots. From his many pronouncements, it is clear that he does not, and that he does not know where he is going. He must know where he has come from to know where he is going. He is precisely the sort of person who says, "I would not have started from here." Unfortunately, he did start from there.

It is worth recalling that the continent was starving and that children had rickets at the end of the 1940s. It is worth recalling that we had meat rationing and that we were held to ransom by Argentina in terms of beef sales. It is important to remember that. Some flavour of that was given by the passion of my hon. Friend the Member for Rotherham (Mr. MacShane), who made a very fine maiden speech. I am sure that he will remind the hon. Member for Chingford about the roots and origins of the ethic that brought about Europe.

Neighbour states in Europe that had always been at war were intent on settling their differences. They were intent on doing that even though, most recently, they had grievously wronged each other. That is why they wanted an ever-closer union. That is why they said that they would not have starvation again on this continent and that they would not have war again on this continent. That is why the institutions were started.

It is true to say that we depend on people for what we do. It is also true to say that we depend on institutions to continue the actions of those people. As we know only too well this week, people pass away. It is the institutions that must continue the good that is in them.

The institution that started the European Community was the Coal and Steel Community. As has been said today by my hon. Friend the Member for Gateshead, East, in the middle of that is not just economics.

The hon. Member for Stafford (Mr. Cash) regularly talks about economics; he likes the economics of the marketplace, but he does not like everything that goes with that. He once said in the House that the Single European Act was okay because it was just about the marketplace —that it was not about all the other fripperies. However, if he went back in history and read closely the Coal and Steel Community treaty and the Euratom—European Atomic Energy Community—treaty, he would see that they were about the consumer, the worker and the individual who lives in Europe and is a citizen of Europe. It is from those roots that the present position has grown.

We must not forget the morality of Europe. If Europe is just an economic concept, it is not worth defending. It is more than that. It is an economic, social and spiritual concept; that is what we must decide to follow and cherish. We must decide whether to follow, as the hon. Member for Stafford does with commendable rapidity, whatever Alan Walters says—if the hon. Gentleman has not said it before. We must choose between the sort of Europe that Alan Walters wants and the sort of Europe that St. Francis of Assisi wanted. The hon. Gentleman must decide which side he is fighting on. He should consider St. Ignatius Loyola, who fought valiantly for the rights of working people.

When we discuss the social contract—I think that I can talk about this here without causing a fuss—we are talking about a just wage. The hon. Member for Stafford prefers to call it a minimum wage because he wriggles out of things like that. We are talking about a just wage. A just wage in the European Community is what the Church to which he and I belong has fought for. It has fought that battle for more than a century, going back to Rerum Novarum and Quadragesima Anno, and coming through to encyclicals of this century and the Low Week pastoral, which the conference of Catholic bishops issued. There is support for the social legislation in the European Community.

Mr. John Butterfill (Bournemouth, West)

I believe that the hon. Gentleman is right to stress the ethical basis on which the Union was founded; that is important. However, is not it equally important today to resist protectionism, which beggars our neighbours and will diminish the ethical basis on which the Community was founded?

Mr. Enright

The hon. Member is absolutely right. What the European Union has been about, and what it was about as the Coal and Steel Community, was a balance between getting an organisation of Governments and free trade and a free economy. There are all sorts of arguments about how one defines free trade. We can get off the hook of free trade in a number of ways, as the hon. Gentleman knows well. However, we must ensure that that free trade —that free market—is properly regulated so that it behaves in a moral way.

It is not self-evident to me that all businesses behave in a moral fashion—far from it, in fact. We regularly read in the financial pages of the misbehaviour of individuals and of whole firms. Even British firms misbehave on occasions; we are not talking just about these continental chaps who come in from over there.

Trade unionists have told me that they were pleased to be taken over by BMW because they had looked at the agreements in Germany between BMW and its work force. They realised that those agreements were much better than anything that they had had in Britain until now. As has been said, we should remember that all the firms involved in the inward investment that has arrived have lived up to the social chapter and beyond it. I challenge any hon. Member to tell me of a firm that has come to this country from outside which has not lived up to the social chapter in its entirety, including consultation with its work force.

My right hon. Friend the Member for Llanelli (Mr. Davies) mentioned IBM. I was sorry that he used IBM as an example, because I believe that he got it wrong. One of the reasons why IBM went under was that it guaranteed a job for life. It said to its people throughout the world, 'We will not sack you. We will make sure, as long as you behave and as long as you try to do your best for us, that you have your job.' There was real security of tenure there. The company said, "We will make sure that we consult all the work force." Real consultation went on, not always through unions, but in a variety of ways. The result was that some of the small firms and some of the fly-by-night boys pinched part of IBM's market, and the company had to respond.

My right hon. Friend the Member for Llanelli was right to say that the company had to look again at what it was doing and at its policy of no sacking. That no-redundancy policy had to be reviewed. The company had to give up the policy and to say publicly, 'We are sorry.' After more than 70 years—I do not know how many years exactly—the company gave up that principle. However, it said, 'Even though we have given up the principle, in practice we shall try to continue it even though the firms that we oppose are playing fast and loose with their work forces.' With voluntary redundancies in this country, IBM has kept its promise and has started to build up again.

My right hon. Friend the Member for Llanelli is right to say that we must review the workings of the European Community from time to time and that we have to ensure that it is ticking over properly. That is precisely what 1996 is about.

Now I shall come to the moment which the hon. Member for Stafford has been sitting on the edge of his seat waiting for—to say the sort of things that should be happening in future, with which, I am sure, he will agree on each occasion. First, the European Parliament must be given more power. There is no doubt about that.

The dreadful phrase "democratic deficit" is terrible, but it means that we are not doing, democratically, what we ought to be doing. What we certainly should be doing, for example, is giving powers of co-decision making to the European Parliament and the Council of Ministers. We have our input into the latter—except that we do not. I am bound to say that, when I was in the European Parliament, I had more control over the Council of Ministers and the Commission than we have in this place. It is quite extraordinary.

We can ask Ministers questions and they can give answers, but we do not know whether their answers are true and we do not know whether what they say in the Council of Ministers is consonant with what they say here. They tell us sometimes that that is so, but they will not open up to us about the debate that goes on, which is extremely important.

That is a reform for which I shall certainly push in 1996, as, indeed, will the European Movement, that dreaded creature of whose board I am proud to be a member. It will be pushing very hard for transparency, to reveal who votes for what and how the argument goes on important legislation.

The European Movement will be pushing for—I am sure that the hon. Member for Stafford will also want it —a constitution for the European Union. On top of that —I am absolutely certain that the hon. Gentleman will agree with me on this point—once we get that constitution, we should go round all the member countries and have a referendum on it. I agree entirely with having a referendum at that point. That is the appropriate point at which to have one.

It is also true that we should have a reduction in the number of members of the Commission with enlargement of the EU, which, please God, will come soon and be confirmed by the peoples of the countries that are applying. With enlargement, the Commission will become too cumbersome and we must work out a new method of appointing Commissioners, to be approved of by the European Parliament, with the Commissioners being appointed, as are candidates from the House, with the approval, perhaps, of the House of Commons. That has never happened before and it is about time that it did. It seems very important that the House should be caught up in that process.

We desperately need before 1996 a reform in the House of the way in which we scrutinise European legislation. The right hon. Member for Guildford (Mr. Howell) is not in his place, but I would have made the following points had he been here. It seems that the Select Committee on Foreign Affairs has been totally the wrong place to examine European policy, and European wrong-doing in some cases. The job would have been done far better by the Select Committee on European Legislation.

Standing Committees A and B on European matters should be given different powers in different forms. We need to consider all those points and ensure that we put our own house in order, instead of sitting upstairs in Committees for a few moments, and then having the Whips on both sides getting together and deciding that an item will be referred to Standing Committee B when we have recommended that it goes somewhere else, or vice versa, or even that it be considered on the Floor of the House. All those reforms should be made.

Of course, as I have already said, we should sign up to the social chapter. We should also certainly sign up to monetary union. I am not in two minds about that. The Benelux countries, Germany and France are going to take the route of a single currency and we have, at the very least, to decide our response to that.

I was greatly encouraged by West Germany when it took on the ostmark. It did it at a blow and it did it at parity. It was a most remarkably courageous act, by a Conservative Chancellor, admittedly. It was rash, but it has come off. It caused real suffering in East and West Germany for a time, but we have now seen the fruits of that daring and constructive move.

You, Mr. Deputy Speaker, know as well as anybody else that I represent an area which has been ravaged by unemployment and has seen its principal industries wiped out at a blow, not by anything done by the European Union, but by the short-term actions of the Government. I should like to take the coal industry as an example of what we should not be doing in relation to Europe and of the positive harm that it does us if we do not take into account the European dimension.

Energy should be at the forefront of our debate in Europe. It is important not only for now or for next year, but for way into the next century. When the Government were allowing the coal industry to go into decline and, in some cases positively destroying it, people in the Commission were asking why we did not put the coal industry into a European energy policy and why we did not ensure that we had the necessary indigenous supplies, which would not leave us to be ransomed by others outside the Community. We did not heed those voices. The result is that many people in my constituency are unemployed and we do not have the security of energy supplies going into the next century. It is those areas of policy that we should start to debate to see how we can put right, in a European framework, what we have hitherto got wrong.

I am optimistic. I hope that people will vote in massive numbers in the European elections, but I shall not say which way I want them to vote, because the debate is bipartisan today.

7.56 pm
Mr. William Cash (Stafford)

I am certainly not bipartisan and I sincerely hope that people will vote Conservative in the election.

I enjoyed enormously the maiden speech of the hon. Member for Rotherham (Mr. MacShane), although I think that he may—I hope—in due course, come to refer to those of us who espouse the Euro-realist cause as Euro-realists and not Euro-septics. It was a good speech and I felt very much at home during it because I lived for 25 years very near where the hon. Gentleman comes from, and the experiences of seeing the steel mills of Sheffield being destroyed and the coal industry around that area disintegrating had a powerful impact on bringing me into politics. I took a different route from the hon. Gentleman, but I am sure that he appreciates that we may arrive at different conclusions from similar motives.

With respect to the hon. Member for Hemsworth (Mr. Enright), who spoke about the coal industry, the massive £6 billion subsidy paid to the German coal industry has had a significant knock-on effect, I dare say, in his constituency.

With respect also to the hon. Member for Rotherham, the £25 million fine imposed on British Steel was substantially the result of an increase in the volume of steel available in the Community, as a result of the over-subsidisation in Italy, Spain and other countries. Therefore, from that point of view, I am looking for a constructive and new landscape for Europe.

As my hon. Friend the Member for Chingford (Mr. Duncan Smith) said in an intervention, what we are seeking to do as Euro-realists is bring back into the Community a sense of purpose, which is relevant to the third millennium and not to retread the old, obsolete policies; they were well intentioned, but they were based on the 1950s and 1960s. Certainly, since the wall has come down, those policies have become increasingly irrelevant, not only in terms of the new development in the Pacific rim and the far east, but in respect of eastern and central Europe, because the ball game has changed, as Bosnia and the tragedy that we have witnessed there testifies.

We are looking for a constructive and purposeful European Community. It is with deep regret that I have to say that the Maastricht treaty is part of the background to the debate. The treaty reflects implicity the developments that took place before it was completed and signed, which are within the framework of the White Paper.

There was a great Foreign Secretary in the 19th century —Palmerston—who put British foreign policy in a fine context when he said that it was a narrow policy to suppose that this or that country was to be marked out as the eternal ally or the perpetual enemy of England: We have no eternal allies and we have no perpetual enemies. Our interests are eternal … and those interests it is our duty to follow. It is regrettable that the context in which developments have taken place since the 1950s, which have changed the world so much, have taken us to a point where we are locked into a legal framework, which means that we are not able to choose the alliances that we need to establish from time to time to be certain of the degree of stability that is needed for the next millennium.

The failure of the Western European Union, the European Union and the rest in respect of Bosnia is a testament to the overall failure that I have described. The fifth title of the Maastricht treaty, riddled as it is with confusion, will create the foundation for more trouble as we move forward over the next five to 10 years.

The concept of the single currency is already obsolete. It is still being peddled by the CBI, however, as we read in the newspapers today. It is a concept which will destroy the very morality to which the hon. Member for Hemsworth referred, which is based on the freedom of people to vote —the freedom of democracy in their national parliaments and in their nation states. We should be fighting for the sustenance of that morality and the democracy that goes with it.

Mr. Enright

Will the hon. Gentleman give way?

Mr. Cash

I shall not give way, because I know that others wish to speak. I promised that I would not speak for long.

My right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) says continually that he believes that if those of us who are Euro-realists were, as he puts it, to be honest—[Interruption.] The hon. Member for Durham, North (Mr. Radice), who is interrupting, has said much the same, but has had to withdraw. My right hon. Friend says that, effectively, the Euro-realists want to leave the European Community. That is entirely untrue. Such a policy would not lead to the stability that we need.

We need to be in both Europe and the world at large. That is the key point. The idea of a single currency, which has been vaunted and advocated by my right hon. Friend the Member for Old Bexley and Sidcup and by the CBI and other organisations, has today been repudiated by the Institute of Directors. From now on, my right hon. Friend will be unable to state that it is the will and the wish of the business men of England, or of the United Kingdom, to have a single currency. It is made clear in the document that I hold before the House that that is no longer the position of the Institute of Directors. Indeed, I do not believe that it ever was.

Against the background of the tragic circumstances of the death of the Leader of the Opposition, the debate has been conducted in more measured terms than I believe the right hon. and learned Gentleman would have expected. We are looking to a new landscape for a new Europe. I am talking not about the brave new Europe that is being devised by the Commission and the adherents of the Maastricht treaty but about a new Europe that will involve the renegotiation of the Maastricht treaty, the Single European Act and the treaty of Rome. We must not be negative about the good things that are contained in those documents, but we must make them relevant to the requirements of the new century, to which we should be looking now.

It is a matter of the deepest regret to me that there is so much untruthfulness, as my hon. Friend the Member for Southend, East (Sir T. Taylor) said, and as my right hon. Friend the Member for Old Bexley and Sidcup indicated, that the treaties have passed through the House by stealth. People have not been informed of what they really involve. They have not been told the truth about where they are going.

I should like to see fair and open trading with the European Community that is based on democracy, with the people of this country being given the information that they need so that they can form a judgment. It is because they have not been given that information that I believe that we must have, and will have, a referendum.

8.5 pm

Mr. John D. Taylor (Strangford)

I begin by congratulating the hon. Member for Rotherham (Mr. MacShane) on his excellent maiden speech. The confidence and fluency that he displayed was a credit to any new Member. He has certainly launched himself well in his political career in the parliamentary Labour party.

This weekend, ex-service men recalled the battle of Monte Cassino in Italy. I had occasion—I do not know whether the hon. Member for Hemsworth (Mr. Enright) was with me at the time, when we were both Members of the European Parliament—to visit the British Commonwealth cemetery at Monte Cassino. I am not known as a person with great emotions but I was moved on that occasion to see the acres of headstones.

It was especially moving for me, coming as I do from Northern Ireland, because as I entered the cemetery I saw that all the headstones in the immediate area were for soldiers in regiments from Northern Ireland. At the entrance are the headstones of members of families that are well known throughout County Fermanagh, such as the Wests, the Cathcarts, the Wilsons and the Farrells, who were all members of the Royal Inniskilling Regiment. It was even more tragic when I read that those who died were 17½ years of age, 18, 19 and so on. They lay there with their colleagues from Scotland, Wales, England and, indeed, the Republic of Ireland. That brought home to me the fact that we are part of Europe in peace and in war.

We in Northern Ireland feel that we are Europeans. The first people who came to live on the island of Ireland were the Picts from Scotland. Sometime later, the Celts arrived. These were the Irish from France. They came in larger numbers, and that has been a problem ever since in the island of Ireland. It was the Ulster people who were there first, but we all came in one way or another from Europe. We feel historically, culturally, religiously and economically part of Europe. We are Europeans. We are certainly not Asians, Americans or Africans.

Being European does not mean, however, that we must automatically accept a united states of Europe. Similarly, it does not mean that we must automatically accept a single currency. It does not mean either that we must accept the transfer of national sovereignty to unelected bodies in Brussels. As we prepare for the 1996 intergovernmental conference, we must be aware of where some people throughout Europe are trying to lead us.

We in the Ulster Unionist party welcome the enlargement of the European Union with the coming of the four new countries—the three Scandinavian countries and Austria. We welcome the Scandinavians because of their close identity with social democracy, their fair interpretation of international agreements and their implementation of those agreements. I am sure that the hon. Member for Hemsworth would agree that their Protestant work ethic will be helpful in establishing a balance in the European Union between the south and north of Europe.

We look forward to future enlargement of the Union —the Minister referred to the possibility of Malta and Cyprus becoming members. The membership of Cyprus intrigues me because it is an island that is now made up of two states and two Governments. There is no free movement of people, trade or services within it. It is therefore difficult to understand how it could become part of the European Union until its internal problems are overcome.

If the Minister watched the recent Eurovision song contest he will know that the only country that gave Cyprus the maximum 12 points was Greece and that the only country that gave Greece the maximum 12 points was Greek Cyprus. If Cyprus became a member of the Union we could end up with two Greeks on the Council of Ministers rather than one. Terry Wogan himself pointed that out during the television coverage of the Eurovision song contest.

In the next few years, the issue of a single currency will be further debated, as it must, in the House. We already have a single currency in Luxembourg and Belgium and its use may be extended to cover the Netherlands, France and Germany. They could go it alone. If we have a single currency for all Europe, the ecu, it will still have to have an exchange rate against other external currencies such as the Japanese yen and the American dollar. The value of the ecu in the international exchange markets will have to be supported by the central authorities in Europe.

That means that those authorities will have to introduce greater uniformity in the taxation systems throughout the 12, soon to be 16, members of the European Union. Those authorities will also have to exercise some control over public expenditure within those 16 nations, in the same way as the United Kingdom Government controls the public expenditure of local government. Brussels will also have to impose some restrictions on the public sector borrowing requirement of the 16 member nations. All that suggests that, by necessity, government will have to be transferred from London to those central authorities in Brussels.

The hon. Member for Hemsworth said that he did not like the phrase 'democratic deficit', but I believe that it speaks for itself. There is a lack of democracy within the European Community's institutions; I am thinking not just of the Commission but of the European Parliament, of which we were both Members. People speak about giving greater powers to that Parliament, but we must first ensure that it is a democratic institution.

Oh yes, people may vote, but they do not do so in a uniform electoral system. A system of one man, one vote may operate, but one vote is more equal than another, because the member countries are not fairly represented within that Parliament. It is weighted in favour of the smaller countries and against larger ones, such as the United Kingdom and Germany. Countries of that size do not have a fair say in that Parliament, because it is not democratically elected on the basis of one man, one vote of equal value.

The Minister may be unable to reply to the comments that I wish to make about Northern Ireland, but I want to place them on the record. In the early 1970s, when we were negotiating membership of the European Community, the then Northern Ireland Government at Stormont were involved in discussions with the Home Office and the Foreign Office in London to ensure that certain matters relating to Northern Ireland were taken into account before the Act of accession.

One of the things on which an understanding was reached was that a civil servant from the Northern Ireland civil service would be a member of the United Kingdom representation in Brussels—the UKREP. For many years, there was a civil servant from England, one from Wales, one from Scotland and, until recently, one from Northern Ireland at the UKREP. That helped to ensure that matters particular to Northern Ireland were not overlooked when the United Kingdom negotiated certain matters in its relationship with the EC.

A Northern Ireland civil servant no longer serves on the UKREP and recently we have observed that, when decisions have been made in negotiation between the United Kingdom and the Commission, the special problems of Northern Ireland have been overlooked. I shall give three examples, the first of which relates to the beef processing industry.

The EC Commission has now introduced a scheme called the de-seasonalisation scheme. It has created a situation within the island of Ireland whereby the dead meat plants in the Republic of Ireland are able to give £56 more per animal than the dead meat plants in Northern Ireland. As a result, there is now a massive flow of beef cattle, store cattle and even calves from Northern Ireland to the Republic. Cattle from Great Britain are also moved through Northern Ireland down to the Republic to be killed in the southern Irish dead meat plants.

Apart from the incentive of £56 per animal, a further attraction of the Republic of Ireland is that it sells beef to certain countries in north Africa, such as Libya, and in the middle east, with which the United Kingdom does not trade. The scheme is causing serious problems for the dead meat plants of Northern Ireland, the throughput of which has declined month by month. The employment of many workers in our dead meat plants is now under serious threat because the implementation of de-seasonalisation scheme in the Republic is proving disadvantageous to the beef industry of Northern Ireland.

My second example also relates to agriculture. I will not go into great detail on the EC cereal compensation regime except to say that, once again, it works against the interests of Northern Ireland. They may well have been overlooked when the scheme was negotiated by the Government. The cereal aid in 1994 will be as follows: in England, £191 per hectare, in Scotland, £182 per hectare, in Wales, £167 per hectare and in Northern Ireland, £152 per hectare. I know that people in Wales share our great dissatisfaction with the present scheme. We recommend that England, Wales and Northern Ireland should be treated as one region. That would mean that everyone would benefit from the European cereal aids compensation scheme in the same way, and we would all get £190 per hectare.

My final example of the way in which Northern Ireland has been treated disadvantageously because our problems have been overlooked within the EC relates to education. The EC has understandably agreed to a system whereby those in university education receive the same grant in the country in which they are studying as that which that country gives its own undergraduates. That seems reasonable. If a few thousand students from France go to Germany, they receive the German university grant, and if a few thousand Germans go to France, they receive the French university grant.

That system is okay where countries pay grants to their university students, and everyone agreed to it in the Council of Ministers, but what happens if one country does not pay grants to its university students? Such a country is the Republic of Ireland. All the students in the Republic of Ireland quickly caught on to that wonderful system. If one goes to the United Kingdom, one immediately qualifies for university grants from the United Kingdom Government and the education authorities. Now, people are even qualifying for the student loans scheme. That is okay for Great Britain—not many Republic of Ireland students will go there—but it is creating a serious problem for Northern Ireland, especially for the poorer section of our community, which is often the Catholic section.

I shall tell you how it works, Mr. Deputy Speaker. We have only two universities in Northern Ireland and several colleges of further education. In the two universities alone, there are more than 3,000 students from the Republic of Ireland, and the number increases by the year. They all receive that grant from the Government, and every student at university in Northern Ireland costs Her Majesty's Government £5,500 per annum. That scheme therefore costs the United Kingdom Government about £15 million per year—British taxpayers' money being used to educate southern Irish students. However, if British students, especially in Northern Ireland, go to the Republic, they do not receive a grant because there is no grants system in the Republic. It is a one-way traffic.

Why do I say that it is hurting the Catholic community? My argument is supported by facts. Traditionally, Protestant undergraduates looked towards Great Britain because they felt British. Traditionally, most Catholic students stayed in Northern Ireland or went to the Republic. Now, as a result of the competition from the southern Irish students pouring in, taking advantage of the European Community scheme and obtaining grants from the United Kingdom Government, they cannot obtain places in Northern Ireland to the same extent as previously. The result is that, although in 1971 only 3 per cent. of Catholic students left Northern Ireland to go to England, Scotland and Wales, by 1991, the percentage had increased to 30 per cent. Catholic students are having to leave Northern Ireland because they cannot obtain places in the Northern Ireland universities.

I conclude with another short argument. We speak about a single currency. I have given three examples of ways in which the European Community, by ignoring the special problems of Northern Ireland, is creating an imbalance or unfair competition or distorting the market. Given the single currency that already exists in Belgium and Luxembourg, is it not time for Her Majesty's Government once again to consider, in consultation with the Government of the Republic of Ireland, having a single market—a single currency—and the fair implementation of common policies such as the common fisheries policy and the common agricultural policy in the British Isles as a unit?

There was a time when we had a single currency in the British Isles. As we progress in Europe, step by step, we should, in the context of the British Isles, begin to think in terms of all the islands being one country again—in the Community, naturally. They would be sovereign states none the less—I am not suggesting the abolition of the Republic of Ireland. If we had a common currency, greater uniformity of tax systems in the British Isles and fairer administration of the common European Community policies, the disparities and the unfair competition across the border within the island of Ireland to which I have referred would be overcome overnight.

8.23 pm
Mr. Quentin Davies (Stamford and Spalding)

I should like to add my own congratulations to the many congratulations that the hon. Member for Rotherham (Mr. MacShane) has received on his maiden speech, and to give him my best wishes—at least, personally—for his continuing career in the House.

It is always a pleasure to follow the right hon. Member for Strangford (Mr. Taylor), who speaks with the greatest lucidity and mastery of his brief whenever he speaks on behalf of his constituency and his Province, as was the case tonight. He persuaded me, at least at first sight or at first hearing—this was my first knowledge of the existence of the problem—that there might well be a case for having a permanent representative of the Northern Ireland Office in UKREP, and I shall listen with interest to the reply that he will no doubt receive later to that question.

I did not agree with the right hon. Member for Strangford in the rest of his analysis. I found it slightly surprising that the right hon. Gentleman, of all people, should suggest that the establishment of a single currency in the European Union would subvert the political independence of the individual members of that Union. As the right hon. Gentleman said, a good example of a single currency area is the one that existed, for the 50 or 60 years following 1922, between the Republic of Ireland and the United Kingdom. We in the United Kingdom were certainly not governed from Dublin during that period and I do not suppose that the right hon. Gentleman seriously would suggest that the Republic was governed from London during it. He adduced an interesting example which, I am afraid, runs counter to the conclusions that he wished to draw from it.

I should like to mention two arguments which have been central to the debate and which have formed a major part of the discussion in the country; then I shall refer to two issues which, remarkably, have not featured in this debate or in other recent debates on the European Union and which have also been strikingly and, I think, unfortunately, absent from the general public discussion of European matters.

A great deal has been said about the single currency. My reaction is that more has been said on the subject than it is worth while to say at the present juncture, given that, during the intergovernmental negotiations that led up to the treaty of Maastricht, the Prime Minister negotiated an option for this country—the option to join a single currency if we wished and if our economy met the convergence criteria, which is an objective that we are pursuing for its own sake anyway. Unlike the other members of the Union, we have no obligation to join that currency automatically after the turn of the century, even if our economy meets the convergence criteria.

In politics, as in other areas of human life, a free option is a valuable instrument and no one in his right mind should throw it away by determining in advance whether or not he will exercise it. Many people—some, I fear, in the House and some, I fear, in the media—have reasons for not wishing to draw attention to the fact that the Prime Minister scored a remarkable diplomatic success, extraordinary by historical standards, in enabling us alone of the members of the Union to enjoy that option.

As we have that valuable asset, which has been handed to us by the Government and by the efforts of the Prime Minister, why throw it away? Discussion of the subject should properly wait until the time when we have to decide whether to exercise the option. Obviously, we shall do so in the light of the circumstances prevailing at the time; and in any case we shall need to consider the matter only if a single currency has emerged on the continent.

A second theme that ran through the debate was perhaps the most striking one of all because it was mentioned not only on both sides of the House but on both sides of the European controversy—if I may call it that—within the two major parties and by the Liberal Democrats. It was mentioned by the hon. Member for Hemsworth (Mr. Enright), by my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) and in remarkably similar terms by the right hon. Member for Bethnal Green and Stepney (Mr. Shore) and the hon. Member for Southend, East (Sir T. Taylor). It was mentioned by the hon. Member for Durham, North (Mr. Radice) and by many other hon. Members on both sides of the House.

It is the fact that the European Union, as it exists, is insufficiently democratic and unsufficiently accountable and therefore is insufficiently understood. Given the great importance of decisions taken in that context, the public do not follow them thoroughly enough. That is unsatisfactory.

I hope that all hon. Members can agree on these matters, and also that we can agree with our European partners, because the fundamental impetus behind the establishment of the European Economic Community, as it then was, was the desire to create a vehicle to nurture and defend democracy. Democracy is the great principle that has emerged from centuries of European political traditions, which we all share; yet we have created institutions within the European Union which, in many ways, remain a travesty of democracy.

Until the Maastricht treaty, exclusive rights of initiative were in the hands of the unelected Commission. That was an affront to every principle of democratic legitimacy and electoral accountability and represented the essentially technocratic nature of the original European institutions when they were created back in the 1950s. I am glad to say that the Maastricht treaty made some inroads into the monopoly of initiative held by the Commission; and at the Edinburgh summit, which followed the signing of the Maastricht treaty, we made considerable progress—at the behest and initiative of the British Government, let it not be forgotten—in opening up the Council of Ministers. For example, we can now see the voting record on legislative decisions taken in the Council of Ministers, which is extremely welcome. Nevertheless, a large part of the Council of Ministers' activities takes place behind closed doors. It is like being back in the 18th-century world with Ministers meeting in cabal behind the green-baize door, then coming out and telling the people what has been decided on their behalf.

Unless those doors are opened, we shall never have the democratic accountability in the Community or the public participation in the detail of debates to which all hon. Members, to judge by this debate, clearly aspire. We need to know not only who voted how on the relatively unusual occasions when votes are taken, but what arguments were adduced, by whom they were put forward, and what alliances were forged. Ministers who take decisions in the Council of Ministers on behalf of the peoples of Europe owe that elementary duty of accountability and transparency to their electorates, and I hope that we shall achieve a measure of those values in any constitutional changes in 1996.

We still suffer from a lack of transparency and accountability, despite the improvements to which I have already paid tribute, which make it impossible for the public to exercise their function as a democratic electorate. I must emphasise that it is equally impossible for national Parliaments to fulfil the function, which all of us would like to fulfil, of holding our Ministers accountable for what they do in Brussels. Unless we know the detail of what they are doing, the arguments that they are putting forward and what has taken place on our behalf, the whole structure of scrutiny of Brussels in this place and the rhetoric about democratic legitimacy and national parliamentary sovereignty will remain hollow.

I said that I wished to touch on two subjects that had not been mentioned in this debate and which had been unduly neglected in the public discussion: they have in common the fact that they involve a profound British interest in ensuring that the European Community moves forward in a positive direction. First, we need to complete the single market. It is a major national priority and should be a major political priority.

Someone is bound to say, 'We have already completed the single market. We got the 300 directives through by 1 January 1993, so what is he talking about?' But the single market has not penetrated three extremely important areas —areas where we may as well not have had those 300 directives. What is particularly galling and should attract the attention of the House is the fact that, in those three areas, British industry has the greatest contribution to make and stands to gain most from opening up a single market. The three areas are energy, telecommunications and airlines.

Everyone who has read the papers in the past few days knows about the airline problem. I pay tribute to my right hon. Friend the Secretary of State for Transport who, after tremendously hard work, subtle diplomacy and sheer persistence—persistence was vital in making progress—has made a significant breakthrough. But we need to go further and open up the airline market in the European Union. We need a genuine single market there.

Individual Governments should not be able to subsidise lame-duck airlines, as far too many of our European partners have done and as the French propose to do to the tune of 20 billion francs in the case of Air France. That is a distortion of resources and competition; it is a weakening and a distortion—indeed, it is a travesty—of the single market; and it is not even in the interests of French taxpayers, because that money will be drawn from taxation from other more productive sectors of the French economy and disbursed on the loss-making bureaucracy that calls itself Air France.

Had the French had the courageous deregulation policies that the British Government have had the guts to put through in the past few years, there is no reason why Air France could not have been the shining success story that British Airways has been. Inherently, in terms of its route structure, Air France began with all the same advantages, possibly even more.

Privatisation and deregulation have created in this country not only an extremely successful British Gas, which is now a major player in the world energy markets, but independent gas companies. So far, we have deregulated the gas market. Above an annual consumption of 2,500 therms, customers can contract with any gas supplier they wish. We are now moving towards complete deregulation. On the continent, however, nothing has happened.

When will British Gas or the independent gas companies be able to contract with customers elsewhere in the single market? What does a single market mean if they cannot do that? When will we stand up to those monopolies, which are often state-owned, such as Gaz de France, Ruhrgas and Gasunie, which consistently and resolutely decline to open up their distribution networks to competitive suppliers on an arm's-length basis? The interests of important British industries are at stake and we should take the single market to its logical conclusion.

The same applies to telecommunications, where we have not only the successful BT and Mercury that emerged from privatisation, but the world's most successful and competitive cable industry—more successful and competitive even than similar industries in Japan or the United States. Those companies, too, should be allowed to ply their trade on the continent and, if they have the makings of a sector of industry that can become a power throughout the European Union and the single market, they should have every opportunity to achieve that. I hope that the Government will continue to pursue those objectives. I am grateful for the progress that they have made but they must continue to pursue the objectives with the greatest possible vigour and forcefulness. They can be confident that they will have everybody—at least, all Conservative Members —thoroughly behind them when they do so.

Extraordinarily, defence has been a great lacuna in our debates. It is in defence perhaps more than in any other area that it is vital that we make progress with implementing the Maastricht treaty, particularly with regard to the development of effective common defence policies.

There are two central impulses for that: one is the increasingly insistent American pressure for the European allies, as they call them, to develop a viable pillar to the Atlantic alliance. That pressure is being diplomatically and often subtly delivered, but it is unmistakeable. The Americans have made it explicitly clear that they envisage that situations will arise in future close to Europe in which they will expect the European allies to take either the great bulk of or all the responsibility for physical and military intervention—if that is decided upon—while they give full diplomatic and political support. Frankly, that is the world in which we shall be living in the 21st century.

The other impetus that lies behind the need to put some content into the provisions of the Maastricht treaty is that we live in what is clearly—it has become almost a clich' to say it—an increasingly dangerous and unpredictable world. We are all concerned about the instability of eastern Europe and the Balkans. We all realise that we must take seriously the prospect of Russian revanchism under Vladimir Zhirinovsky, Rutskoi or whoever. That might lead to attempts to take back the Crimea, to a war with the Ukraine or to attempts to subvert the Baltic republics, which we never recognised as being part of the Soviet Union, even when they were occupied by it.

We all share the concern about the instability in the Maghreb, and about the destabilisation of Algeria and, potentially, of Egypt. Those countries are pretty close to home. Most of all, the House should be profoundly concerned at the prospective breakdown of nonproliferation after 20 years. It is all too likely that, at the turn of the century, there will be six, seven or perhaps eight new countries around the world with nuclear weapons. Libya, Syria, possibly Iraq—despite our best efforts—Iran, Pakistan, India, Israel and North Korea. Some of those countries—particularly those in the middle east and the Maghreb—are uncomfortably close to us.

Against that background, it is becoming increasingly difficult on economic grounds for us to maintain a full-range independent defence capability. It is becoming increasingly difficult for us even to maintain the reduced defence establishment which resulted from the original 'Options For Change' cuts. There is continual pressure from the Treasury for further effective cuts.

During the past year, it has been announced that several weapons programmes have been abandoned, including the tactical air-to-surface missile for the RAF and the MSAM system. We are told that there is a whole range of very desirable capabilities, such as attack helicopters, which we simply cannot afford.

We shall have to take difficult decisions as we go into the new century, as will the French, about the future of our nuclear deterrence. Are we to abandon it in a world in which there is not only increasing instability but an increasingly wide availability of nuclear weapons? Are we to renew them and to maintain their operability? Will we go for a fourth generation nuclear deterrent?

Frankly, it seems extremely unlikely that the taxpayers of Britain alone, or of France alone, will be prepared to carry those burdens. There is already legitimate concern about our conventional defence capability. People are saying that perhaps we no longer have the means available to us to launch another Falklands campaign or to take part in another Gulf war. I hope that that is not the case, and the Government have given reassurances on that point.

Whether or not that is the case now, it is clear that it will be difficult for us alone to provide the kind of defence capability which all of us—at least those on this side of the House—set store by maintaining. Therefore, economic logic as well as geopolitical logic leads towards the only possible alternative—increasing defence co-operation and integration with our partners in the European Union.

As a first step, I hope that we can go further than the individual procurement co-operation that has yielded such excellent results as Jaguar, Tornado and now the European fighter aircraft. I hope that the Government will take up the possibility of extending to defence procurement the public procurement directive. That seems once again to be in the interests of the whole Union, but particularly in the interests of this country. The Union would gain lower procurement costs as a result of the competition which would flow from that and, since we have probably the strongest defence industry in the European Union—the French, I know, have a strong one, but ours has been rather more succesful recently—we have a disproportionate amount to gain industrially.

Beyond that, we cannot put off for very long the need to contemplate a very real degree of defence specialisation and therefore to look at the co-ordination of policies which will be required if we go down that route. This is all about what it has been all about all along: it is about creating a framework in which we can preserve democracy, prosperity, freedom and hope for the future of our civilisation in this part of the globe, not only in the next few months or years but well into the next century and beyond.

8.46 pm
Mr. Dafydd Wigley (Caernarfon)

I was not fortunate enough to be in the Chamber on Thursday, and I am glad of the opportunity to express my great sadness at the loss of John Smith and to express to his Labour colleagues and to his family every condolence. May I also take the opportunity to congratulate the hon. Member for Rotherham (Mr. MacShane) on his excellent maiden speech, which now seems several hours ago?

I would like to go straight into the main theme of this debate. I have always been a believer in a united Europe; not for economic reasons, but for political reasons. Twice this century, this continent has torn itself apart, and people who say that that could never happen again need only look and see what is happening in Yugoslavia after structures disappeared.

I want to see a united Europe, and a Europe of the people which recognises the rich variety of cultures and languages within the continent. I want to see a Europe which has a stronger social dimension. It is a scandal that 25 per cent. of the poor people of Europe live here in the United Kingdom. We want to see a Europe united in its diversity. The last thing we want is a centralised and monolithic European Union, and we need to strengthen mechanisms to protect decentralisation.

That takes me on to the question of subsidiarity, and the papers which we have before us. Subsidiarity came into force on 1 November, and it is something that we welcome. But the Maastricht treaty talked about taking decisions as close as possible to the people they affect. Several hon. Members have referred to the fact that subsidiarity should not be a dipole between Brussels and Strasbourg. It should be a process which goes throughout the whole community so that decisions are taken as close as possible to the people.

Decisions should be taken at district or county level, and should not be taken at an all-Wales level or an English regional level. If the decision can be taken in Cardiff, it should not be taken in London and certainly not in Brussels or Strasbourg. We want to see the strengthening of local government side by side with the development of the concept of subsidiarity. We believe that that should involve the creation of a democratic tier of government on a regional level in England and, of course, in Wales, Scotland and Northern Ireland.

Constitutional developments are now taking place which have a considerable significance for the future. The European Committee of the Regions had its first meeting in March. I was lucky enough to be there as a guest witness of the first session. I would like to see that body developed into a second chamber of the European Parliament, analogous, perhaps, to the structure in Germany where the upper chamber representing the Länder can act as a block on the centralising tendencies of the first chamber. That argument is bound to be heard very much over the coming years.

On the question of the Committee of the Regions, I would be grateful if the Minister could clarify what will be the position of the councillors who lost their seats in the local elections. Will they continue be able to sit as representatives, deputies or alternates on the Committee? Sadly, that incidence arises in Wales. Mr. Bill Hughes, who is an ex-councillor in Swansea, is in that position. Although I disagree with his politics, I have a lot of respect for him as an individual. That matter needs to be cleared up.

We welcome the extension of the European Union. The Scandinavian countries and Austria will undoubtedly strengthen the social dimension. But as Europe grows, so must there be a question as to the appropriate structures for Europe. Will Malta have a Commissioner and a seat on the Council of Ministers? If Malta can have one, why not Wales and Scotland? If Luxembourg has a voice on the Council, with a population the size of that of the county of Clwyd, surely Wales is entitled to a seat as well. A moment ago, the right hon. Member for Strangford (Mr. Taylor) referred to discrepancies in the way in which the European Parliament is comprised. Ireland, with about the same population as Wales, has 15 seats in the European Parliament; Wales has five. Clearly, we need a root and branch review.

I shall refer to regional policy for a moment. Clearly, if we are moving towards a common currency, there must be a much stronger regional policy; otherwise, one of the tools that is available to fine tune the economy between the areas of depression and the areas which are very successful will disappear. That will have to be made up by a stronger regional policy.

If we look at last year's changes in the structural funds, Wales did not do quite so well as some other areas—the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) mentioned that earlier. The highlands and islands of Scotland were lucky in getting objective 1 status. Northern Ireland and Merseyside have objective 1 status, but Wales missed out. We did not even succeed in holding on to our objective 2 status in north east Wales shortly before Christmas when the review took place. As a result, resources that could have helped in vital infrastructure development have been lost, and that makes the competition against neighbouring Merseyside even more difficult. We want to ensure that we have regional policy that works effectively for Wales.

I shall turn for a moment to objective 5b and put a point to the Minister. Objective 5b is important for rural Wales. But what is the timescale for the resources from this tranche of objective 5b to come on stream? Originally, it was meant to be on 1 January 1994; clearly, we missed that. I believe that the Welsh Office strategy was not available until April, and it will take about six months for the Commission to respond to it. In other words, it will be October before we get any semblance of objective 5b funds coming through. That will virtually sterilise the fund for 1994.

There are many valid and valuable projects waiting to take advantage of the funds. Many of them are training projects. I believe that unemployed people, and the development of the economy in those areas that are justified in having objective 5b money under the criteria laid down by the Community, should certainly be getting the funds quicker. I hope that the Government can do something to speed that up.

There is also the question of the regional challenge. I refer to a reply that I received last week from the Secretary of State for Wales. The regional challenge approach, with a top slicing of objective 5b resources, seemed to be singularly inappropriate for rural Wales. There is a danger of having only a few large schemes, ignoring the needs of many areas that have valid smaller projects that would come under objective 5b. It is a constant complaint that the Development Board for Rural Wales and the Welsh Development Agency have a tendency to go for flagship projects and the small projects—the few thousand pounds here and there—which could help small businesses and help to overcome problems in the local environment are ignored. I hope that top slicing will not lead to that.

I hope for clarification aabout who will be taking decisions on the regulations. The Secretary of State's stance is directly contrary to the regulation which states that the partners should decide on these matters. The Secretary of State has taken the decision himself. The public bodies should have been involved in that. That matter needs to be cleared up as well. The Government believe that there can be some leverage with the big boys investing, but that is unlikely in areas such as rural Wales. I urge the Government to think again. It may be appropriate for urban areas but it is certainly not appropriate for our type of areas.

I also draw attention to the question of objective 4. What is happening with the new objective 4? Will the resources that are available under objective 4 be used by the Government? Will they be used to adapt to industrial change and changes in production systems? That could enable many small companies to improve their performance. It could improve relationships between suppliers and the forces of demand. It could improve partnerships between large companies and subcontractors. They are important aspects. I should like to know the Government's latest position vis-a-vis objective 4. Are they persisting in not implementing objective 4 fully in the United Kingdom? Do they not accept that objective 4 funds could be valuable in reskilling the work force—something that is very important?

I shall touch on agriculture. Clearly, farmers in Wales depend on the support that comes from the European Community. They are worried about the effects of GATT and future changes to the common agriculture policy. Welsh family farms are especially dependent on getting appropriate support, and rural Wales depends on family farms. If agricultural support is not related to production in the future, I hope that it will be replaced by a relationship to agri-environmental projects. After all, farmers are the custodians of our rural environment and they need to be given the resources to maintain their livelihood.

There are questions arising which relate to the GATT agreement. Can the Government say what will be the effect of GATT on United Kingdom agriculture, especially on upland farmers and on the livestock and dairy sectors? Can the Minister tell the House whether the House of Commons or the European Parliament will ratify the agreement? That is an important question. I am interested to know whether there is any indication of the thinking of the European Court of Justice on this matter, which I believe is currently under consideration. If there is to be a new world trade organisation, we must ensure that it does not become a super-quango but has some answerability, and not only answerability to the forces of supranational corporations.

Fishing is important in many areas around our coastlines. It is not as large an industry as it used to be in Wales but it is still important in some parts. We are concerned about the lack of transparency at Fisheries Council meetings which has led, frankly, to a loss of confidence in the procedures of the Council. No one seems to know what is being argued on behalf of our fishermen, and communities where the economic welfare depends on fishermen, such as parts of north-east Scotland and areas like Milford Haven, want to know what is happening.

If I understand it correctly, the next Fisheries Council meeting is in June. Can we have a clear statement on the accession of Spanish and Portuguese fishermen to British fishing waters? Our fishermen deserve that and need it. Perhaps the Government could clarify whether there is a need for an adjustment or amendment to the treaty to safeguard the position of fishermen. Have they clarified the position in relation to that?

The trans-European networks are important. They designate the route Dublin-Holyhead-BirminghamFelixstowe-Harwich-Benelux. That is one of the main routes that needs priority. I press for the resources available through trans-European networks to be available to upgrade the A5 across the island of Anglesey. That is part of the Welsh Office rolling programme, but it needs to be treated with greater urgency.

In the trans-European network exemplifications given in the document before us, I note that a large proportion of the projects are railway projects. I certainly support, as does my party, projects which aim to move freight from road to the railways. I believe that the trans-European road network needs to be sensitive to environmental factors. I note that chapter 3 of the White Paper says: 'Only projects that have passed the environmental impact scrutiny are eligible.' I hope that that will be borne out in practise.

On electricity networks, I see that reference is made to the possibility of connections between the UK and Ireland. I ask whether an interconnector could be built on the Gwynedd or Dyfed coast. I imagine that Gwynedd is the closest to Dublin and would be a singularly appropriate place for that to happen.

The UK was found guilty by the European Court of Justice of failing to comply with the bathing water directive in regard to Blackpool and Southport. I understand that the 10-year period of compliance runs from the date of notification. That might cause bigger problems. Clearly, there is a major cost implication of upgrading and maintaining environmental standards, but I feel that it is wrong that that burden should fall on the water rate payers in those maritime areas. It should come in its entirety out of central Government funds, or it will be greatly unfair.

I am delighted that progress has been made in ensuring that the links between Wales and Ireland will be eligible for Interreg funds, not only between Holyhead and Dublin, but between Pembrokeshire and south-east Ireland. I hope that the Government will give some idea of the time scale for the funds becoming available. Will they issue guidelines on the type of projects that will be appropriate? Who will be able to make applications? What will be the mechanism for doing that?

We are looking forward to a Europe that is progressively more united. We are determined that it should be a Europe that is as close as possible to the people and fully democratic. Wales is comfortable in a European setting. When we have our own Parliament to enable us to play an even fuller part in the debates in Europe, that link will be even stronger. In the meantime, we must make the most of the opportunities available to us. I hope that everyone in Wales intends to do so on 9 June.

9.1 pm

Mr. Iain Duncan Smith (Chingford)

I am grateful for catching your eye at this stage, Madam Deputy Speaker. I was not expecting to do so right now.

I join hon. Members from both sides of the House who, since Thursday's sad events, have said that the loss of John Smith from this House is a sad loss. As a believer in the style of politics in the House, I believe that it is important to be able to listen and disagree with people's opinions and ideas while still appreciating the style, intelligence and wit with which they are delivered. In John Smith that was very much the case. It was always rather galling to watch him at the Dispatch Box, while making a point with which one disagreed, twisting the knife while making one laugh at the same time. That was a great skill.

I welcome the hon. Member for Rotherham (Mr. MacShane) and congratulate him on his well-delivered maiden speech. I also give him a small warning. Some two years ago, I made my maiden speech in a similar debate, and the path that I chose has allowed me to part company with the Government on one particular subject. My warning to the hon. Gentleman is that I read the treaty of Maastricht, which caused me all these problems. I suggest that, if he does not read anything, he will be an extremely compliant Back-Bencher and do very well in the future.

Tonight's debate is important. I am fully aware of the time and therefore will hurry my speech a little. As I listened to all the speeches tonight, it occurred to me, and it became quite aggravating in a sense, that so much is constantly about regurgitating vision after vision—competing visions, historical visions. That is the problem. The whole thing seems to be a mess as people try to vie with each other for a bigger or wider view of what the world should have been, or what it will be, while never wanting to differ from what was said 20 or 30 years ago.

I agreed very much with some of the points that the right hon. Member for Llanelli (Mr. Davies) made about power blocks and a smaller and smaller global trading market. I believe that the world is shrinking at an extremely rapid rate. In the past six or seven years, we have seen so many developments out there that for us constantly to harp on about the way that Europe develops is immutable is to fly in the face of events: the cold war has ended; we have seen massive change across eastern Europe, with the Berlin wall coming down, changes in the relationship across the Atlantic, changing trading patterns, and a massively growing power base in trade in the far east. To reject all those and continue saying that what was laid down as structures in the European Community would therefore deny the possibilities that come out of all of that change.

In some ways Britain is pivotal in Europe. We have a foot in both camps because we are a part of Europe and have a part to play in the rest of the trading and economic world. Historically we have been global and European traders for the past 300 or 400 years. It is in our interests to ensure that developments in Europe and in the rest of the world do not affect our stance on either position to such a degree that it is difficult for our business men and traders who operate successfully in all markets to proceed in that at which they excel—trading and exporting.

More than half our trade is with the rest of the world, and 45 per cent. of it is with Europe. More and more business men are choosing to take advantage of developing markets in the far east and the United States. Those markets have consistently been growing faster than markets in Europe and have shown less concern for massive over-heavy social protection. The absence of such protection gives a competitive edge. We must pay heed to that and try to ensure that that of which we are a part is shaped accordingly.

Too often in the debate it has been said that there is only one alternative to being absolutely compliant—to be absolutely out of the European Community or Union. I reject that view of how things will be in 10 or 15 years. I do not know exactly what position we will be in 15 or more years from now, but we are a part of Europe and want to continue to be part of Europe as long as it benefits us to be so. If it did not so benefit us, the arguments would be wholly against Britain being a member. The arguments for being as much a part of the rest of the world in a global trading sense are powerful.

Our businesses may end up strapped by higher and higher social costs and heavier protection inside Europe and may be unable to take advantage of developing markets. We must fight against that. The main question in the debate is what we do in 1996 because all else pales into insignificance in the intervening period. That is the crucial point at which the Community has to decide where it wants to be, whether it wants to continue to take a shrinking share of world trade or to make sure that its markets are deregulated and open to competition, giving businesses across Europe the opportunity to trade.

The European Community needs some major reforms, and I shall skip through them quickly. First, we must look carefully at Community social policy. The whole concept of a level playing field in social policy is absolutely mad. We should be united in understanding that the constant drive for a uniform level of social protection will not protect those who are holding down jobs but will make it more difficult for them to remain in employment.

Governments who are elected on whatever platform, whether socialist or Conservative, must decide on the level of social protection and must balance it against the costs and burdens to industry and the effect on their competitiveness in Europe and worldwide. We must try to repatriate that social area back to national Governments for decision. A legitimate way to compete is to balance all those costs against the trading environment, and we should do that as co-operating nation states within Europe.

There is no question but that the common agricultural policy is in huge need of revitalisation and reform. We cannot go beyond 1996 without any plan to change it. Much has been said about the CAP, but few proposals have been made. We must strive to abolish subsidies on agricultural production and put subsidies—if any—on income, and eventually phase those out. That can legitimately be done within the national framework.

There must be transparency for all who elect Governments throughout Europe. They must be able to identify how much of taxation is spent on all sorts of mechanisms. One should bear in mind the fact that only 40 per cent. of the money ends up with farmers. It must also be madness to have a bureaucracy working almost for its own sake. If we can return to national control under a watchdog within the Community, that should be perfectly acceptable and would make a lot of sense.

As was said by the right hon. Member for Llanelli (Mr. Davies), we must be careful not to obliterate the market in the outside world of 4 billion people by an obsession that only one power bloc of 300 million people exists. We must invite others to compete with us on agriculture and lower the burden of cost on families, who it is estimated pay £1,000 more a year for the agricultural produce that they buy in the shops as a direct result of the CAP. That must be reformed and changed.

Clearly, an important time is ahead—1996 must be about institutional reform and change to the Commission, and trading and social reforms that will make Europe a deregulated, free-trading area governed by co-operating national Governments, but which identify those areas that they can best deal with individually.

I will conclude with the words of Francis Bacon: He that builds a fair house upon an ill seat committeth himself to prison. Rigid structures, lower competitiveness and blanket social provisions across Europe in an attempt to produce a level playing field will destroy the one thing that we seek to achieve—an outward-looking, free-trading Europe of nation states in which all my right hon. and hon. Friends can believe.

9.12 pm
Mr. John Hutton (Barrow and Furness)

I add my congratulations to my hon. Friend the Member for Rotherham (Mr. MacShane) on his impressive maiden speech. I look forward to him addressing the House again in future.

I would describe myself as a strong supporter of the European Union. It was a pleasure to hear such strong support for it in tonight's debate. I want the Union to continue to evolve into an effective economic, political and foreign policy entity. I hope that that is also the Government's view as they take us into the 1996 intergovernmental conference.

It is perfectly appropriate for the House to debate the style and kind of European Union that we want, but I suggest that the guiding principles governing the Union's development should be openness, transparency and full commitment to decisions being taken at the appropriate level—be it regional, national or Commission. That is fundamental if the momentum that is building up from the Union's evolution is to be maintained and to continue to enjoy popular support among this country's electorate. That is critical.

In the short time available to me, I make a special plea for two industries that have not been mentioned tonight —shipbuilding and defence, which is critically important. I am glad that the Government have committed themselves in the White Paper to a renewed 7th directive on state aid to the shipbuilding industry. I urge the Minister and the Government to maintain that support for a renewed eighth directive if, meantime, there is no international agreement on withdrawing all state subsidies for shipbuilding.

It would be suicidal for the Government to withdraw their support for that directive: it would have a devastating impact on the British shipbuilding industry. The directive is an essential life support system for the industry, and I hope that it will be extended beyond the end of the year, because it is important not just to my constituency but to other shipbuilding communities. I particularly urge the Government to maintain their argument with the Commission for the extension of that principle of state aid to the warship yards: that, too, is very important to my constituents.

Secondly, I urge the Government to do all that they can to ensure that the Konver initiative is renewed at the end of the next financial year. We had PERIPHERA last year and Konver this year; together, the schemes have produced £2 million worth of important support for job-creation activity in my constituency and throughout the north-west. It is important that that aid should be maintained, and continued in the future.

I know that the Government have an ideological objection to the whole principle of defence industry diversification, but I think that those two schemes in particular have demonstrated the relevance and appropriateness of Community initiatives at that level. The defence industry simply cannot cope on its own with a sudden reduction in the volume of work that the Government are placing with it. As the Government are the industry's only substantial client, the normal rules of the market place do not apply to it.

I hope that it is common ground between the parties tonight that we are not prepared to sit in the House and allow such a critical and strategic national industry, which supports thousands of communities and hundreds of thousands of skilled engineering workers, to evaporate on the altar of some ideological free market experiment. The defence industry is too important for us to play politics with it. For that reason, I hope that the Minister and the Government will take forward and support the Konver initiative and the PERIPHERA scheme next year.

9.16 pm
Mr. Ian Taylor (Esher)

In the time remaining, I cannot make a speech, but I will make a gesture. Let me begin by paying my own tribute to the late John Smith. He and I were both positive about Europe: it meant a lot to him, and it means a lot to me. We were positive in the sense that we did not believe that the interests of the people of this country could be sustained and enlarged by a crabbed and inward-looking attitude, and the pretence that the nation state alone is sufficient.

Of course we differed in our solutions to the problem of achieving the type of Europe that we wanted to develop; that was natural. One of the facts that have emerged over the years is that there is not always a British position in regard to the future of Europe, but there is often a Conservative or socialist position. In forming such attitudes, we may well want to find allies in like-minded parties throughout the Community.

In my few minutes, I want to place something on record. If we are positive about what we can achieve for the British people by active membership of the Community, we shall succeed in ensuring that the British people themselves are enthusiastic about the Community. It is in our interests to have a common foreign policy, with all the uncertainty that surrounds us; it is in our interests for that policy to include a common defence policy involving our building up the Western European Union.

The WEU must, of course, be closely allied to NATO, without which it could not function because of the importance of America. Since the Brussels agreement in January, however, America has accepted that the WEU can use its targeting intelligence and lift capacity without necessarily involving American troops in any particular operation. We are beginning to make enormous progress in that regard.

It is in this country's interests for us to tackle environmental questions across the Community rather than just internally. It is in our interests—I know that people understand this when it is explained to them—for us to tackle crime and drugs on a Community basis. Such issues matter to our constituents; they also have a pan-European implication. Most important, we cannot resolve our economic problems without action across the Community. Member states have the common objective of a low-inflation, high-growth economy. As we have seen during this terrible recession, from which we are now emerging, an economy will not succeed without assistance and reinforcement from success elsewhere.

There must be a common approach on how to achieve low inflation. That is why close co-operation between Finance Ministers is necessary and why, in building a single market without exchange controls, we must develop common policies and share similar goals, without which unemployment will continue to be much higher than it need otherwise be.

Unemployment is the most critical issue in the Community. It is unacceptable that 19 million people are unemployed in the Community. The most positive contribution that the British Government can make is to understand—this understanding is becoming more widespread among European employers federations in many countries, whatever their Government—that they have to get people back to work and increase the competitiveness of European companies to create jobs and economic growth. Britain has contributed to that thinking. We must show the British people that, when we are self-confident and we put our arguments clearly, we can influence others, not by handbagging them but through intellectual argument and by carefully presenting statistics and evidence that an idea is relevant to others.

That is why we can go confidently into the European elections, present our agenda and get the British people on our side and why we can have a European Union that can build on the confidence that we can engender within it. I am glad that I have had four minutes in which to speak in the debate.

9.20 pm
Ms Quin

With the leave of the House, I shall reply. This has been a wide-ranging and, despite some widely differing views, harmonious, good-tempered debate.

It has also been wide-ranging in time. My hon. Friend the Member for Hemsworth (Mr. Enright) took us back to 1940, for which he was subjected to a little criticism from the hon. Members for Stafford (Mr. Cash) and for Chingford (Mr. Duncan Smith), but the hon. Member for Stafford then took us back to Lord Palmerston and gunboat diplomacy.

We heard a tremendous maiden speech from my hon. Friend the Member for Rotherham (Mr. MacShane), who spoke with great confidence and flair. He transported us back to Tom Paine, Wentworth and even Charles I. I join in the tributes that were paid to my hon. Friend. We appreciated his tribute to Jimmy Boyce, who, sadly, served this House for only a short time.

Given my hon. Friend's background and experience, it was highly appropriate that he should make his debut in this debate. I assure him that in no way was I trying to dismiss the old industries as irrelevant. I am all too aware that the contribution that they are capable of making to industrial development has been undervalued, and that new technologies are applied to older industries to make an artificial distinction between old and new industries, which is not viable. I wish my hon. Friend a long and successful career in the House.

Throughout the debate, many fine tributes have been paid to John Smith by many of my hon. Friends who knew him at the beginning of his parliamentary career or even before—my hon. Friend the Member for Durham, North (Mr. Radice) produced a photograph from 1962. There was considerable praise for John Smith's views on Europe and for his consistency. Before attending this debate, I re-read the speech that he made in the momentous debate of July 1971 and found that many of his comments then are highly relevant to today's debate, including, for example, his affirmation that Europe is not only a free trade area and his belief in the regional dimension of Europe.

I welcome the Foreign Secretary who has just joined us. I do not know whether he will be able to give us a graphic blow-by-blow account of his latest skirmish in Brussels or whether he has good news for Euro-sceptics and Euro-enthusiasts alike—perhaps he has already been able to tell the Minister of State.

Clearly, a variety of views have been expressed by Conservative and Labour Members. The hon. Member for Stafford urged us to call Euro-sceptics "Euro-realists", although I am not sure that we would all agree that that was the most suitable term. We also discovered that there are different types of Euro-sceptics, and.there has certainly been speculation in the press—although I am not sure how authoritative it is—that some were contemplating urging withdrawal from the European Union. However, Conservative Euro-sceptics assured us that that was not the case.

As usual, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) made a stimulating contribution, which was appreciated to varying degrees by his right hon. and hon. Friends. Whenever I see the right hon. Gentleman speak with conviction but without notes, I am tempted to throw away my Euro-paper mountain; but I do not feel that I have the confidence or perhaps the experience that he has.

There has been comparatively little mention of the Maastricht treaty, for which I think that I am rather grateful. The right hon. Member for Guildford (Mr. Howell) referred to the "high priests of Maastricht". I was a little worried; I am not sure who they are and wondered whether there might be some contenders for the title in the Chamber today. Is it a type of annual award that could be introduced? Perhaps the right hon. Gentleman will explain at a future date.

Many themes have been raised in the debate and I shall mention just a few. The concern that Britain is being isolated in the European Union cropped up several times, and not only in speeches from Opposition Members. It was mentioned by the right hon. Members for Old Bexley and Sidcup and for Horsham (Sir P. Hordern) and by the hon. Member for Wycombe (Mr. Whitney).

The Government face a dilemma: they say that they want to be at the heart of Europe, but some of their actions put us on the periphery, and we cannot be at the heart of Europe and on the periphery at the same time. The fiasco of qualified majority voting of a few weeks ago was mentioned in that connection by the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy).

Mention was also made of the European monetary institute. It appears that one of the reasons why it is sited in Frankfurt is that it would be difficult to have it in a country that has opted out of financial integration as set out under the Maastricht treaty. That impression was reinforced in the German newspapers when the institute was set up: they thanked John Major for allowing Germany a free run.

Our isolation in terms of the social chapter was mentioned by many hon. Members, especially by my hon. Friends. Despite the strong and successful efforts not to have a partisan slanging match, there was much concern about that opt-out and a feeling that a policy of opt-out and veto was a rather negative approach.

That brings me on to the veto itself. Again, there were some claims—thankfully, not as many as we have experienced lately—by Conservative Members that Labour wanted to abandon the veto. That simply is not the case. Any reading of our party documents will show that in foreign policy, in taxation and in some of the areas where there is already a veto, we have no intention of giving up the veto. It seems to us entirely appropriate in those policy areas.

There was a rather humorous piece not long ago in the Evening Standard which quoted one Conservative Member, anonymously, as saying that if the Conservatives had to keep claiming that Labour was set on abandoning the national veto, they would have to go to confession twice a day to save their souls. We believe, however, that majority voting is used as a rule in the European Union.

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

indicated dissent.

Ms Quin

The Foreign Secretary may shake his head. If one considers all the decisions made in 1992, for example, one sees that many thousands did not need to go to a vote and that others were decided by qualified majority voting and not by unanimity. However, we believe that it is important to have the veto in certain areas.

During the debate, the dreaded F-word made its appearance from time to time. As ever, it seemed to be a rather disputed term. Some say that it means a centralised super-state and some talk about the European version of federalism in which there is an emphasis on decentralisation and subsidiarity. We are not in favour of a centralised super-state. Having fought against bureaucratic centralism at home, with the establishment of so many quangos and the weakening of local government, it is unlikely that we would go on a crusade for bureaucratic centralism in the European Union.

Perhaps it is a question not just of the F-word, but of the E-word. I heard that Conservative canvassers in the local elections were told not to use the dreaded E-word—Europe. It will be extremely difficult to follow that advice in the European elections which will be upon us shortly.

The theme of openness and democracy in Europe was mentioned by hon. Members on both sides and it was one of the factors that provided for some unity in the debate. The hon. Member for Stamford and Spalding (Mr. Davies), for example, complained about secrecy in the Council of Ministers. That sentiment was heard from many Opposition speakers.

I should like to ask the Minister a question that I asked him last week, but to which I have not had an answer. We were disappointed, to put it mildly, that the Government did not back the Dutch Government in supporting the case put forward by The Guardian, which complained about the lack of openness in the European Union's deliberations. It might be good to get the Government's view on that when the Minister responds.

Many hon. Members on both sides talked about improved parliamentary scrutiny. That is an important issue. Having been a member of European Standing Committee B, which scrutinises European legislation, I am well aware of the worth of the work of that Committee. None the less, many of us still feel that there are many ways in which scrutiny can and should be improved, not necessarily by duplicating the scrutiny that takes place in the European Parliament, but perhaps by complementing it. In that respect, good relations between Members of Parliament and Members of the European Parliament are important.

I believe that there is not a conflict here between national Parliaments and the European Parliament, with its growing authority and influence. We need a strengthening of the democratic elements in the European Union generally. In that respect, the interests of national parliaments and the European Parliament may, as often as not, go hand in hand.

The issue of subsidiarity was, again not surprisingly, raised at several points during the debate and the importance of allowing the regions and, indeed, local authorities their voice in the European decision-making process was stressed by many hon. Members. The hon. Member for Caernarfon (Mr. Wigley) talked about the Committee of the Regions. One of the things that gave the Opposition much satisfaction was that, as a result of one of the rare victories in the House, we were able to ensure that the representation on the Committee of the Regions would comprise elected local members. That is something that we feel very strongly about.

The idea of a referendum was mentioned in passing, but did not feature greatly in the debate. I seem to remember that when the referendum took place in 1975, the pattern of the result was that the further one got away from London and the south-east, the rather more lukewarm the yes vote was. I have a theory, which I have no way of proving, that if we had a referendum today, the result might turn out to be the other way round. In many ways, Scotland, Wales, the north of England and the other regions of England have seen a European Union which seems to be genuinely interested in regional matters and in decentralisation. That is a very important premise, on which we ought to build for the future.

The intergovernmental conferences, to be held in 1996, were mentioned by many hon. Members, including my right hon. Friends the Members for Bethnal Green and Stepney (Mr. Shore), and for Llanelli (Mr. Davies). Both of them mentioned the debate that we shall no doubt have over the possible progress towards European monetary union. The Labour position is that it wants to see those criteria interpreted flexibly. I very much endorsed what my hon. Friend the Member for Durham, North said of the need for greater convergence, to which I would add the commitment to growth and the commitment to tackling the issue of employment.

Mr. Forman

Will the hon. Lady give way?

Ms Quin

I shall give way once.

Mr. Forman

When the hon. Lady says that her party would like those criteria interpreted flexibly, does that mean that, if a smaller group of countries in the European Union were to press ahead towards full monetary European at an earlier date, she would wish Britain to be part of that smaller group—or would she not?

Ms Quin

We would not like the idea of a two-tier Europe, especially if Britain were to be in the slower lane. When we are talking of flexible interpretation, we are talking of being part of the discussions and trying to consider the criteria flexibly.

I know that some hon. Members felt that, once those criteria were included in the Maastricht treaty, there was nothing to be done about it. However, I must say that, having been in the European Parliament, I am not defeatist about treaties and directives. Directives are frequently amended. In fact, much of our time in the European Parliament was spent looking at amendments to directives. Indeed, the treaty of Rome turned out to be an extremely flexible document. People who would share my persuasion on the left interpreted it and laid the stress on certain paragraphs, and people of a rather different political persuasion argued in relation to other paragraphs. That has always seemed to be part and parcel of the European way of doing things.

The issue of enlargement was mentioned and, again, one other aspect—[Interruption.] I shall stick strongly to what I have said, but perhaps we may argue about it on a future occasion.

One of the other subjects on which there was unity in the debate was the fact that we all welcomed the enlargement which, we hope, will take place next year. Other potential applicants were mentioned, such as Malta, Cyprus, and, of course, eastern European countries. Again, there was a strong feeling on both sides of the House that the European Union must not develop at the expense of opening out to the countries of eastern Europe. Having encouraged the transition in those countries, it would be reprehensible for us to be seen to turn our backs on them or, indeed, to be retreating into some kind of narrow-minded protectionism. It is extremely important for the future that we keep their interests very much at heart.

There are clear differences between the two Front Benches on issues that I referred to in my earlier speech. I shall not discuss them again. In any event, I do not have time to do so. On economic, social, environmental and regional policies, for example, there are considerable differences that will no doubt be aired again, and possibly again and again, in coming weeks.

In the spirit of consensus, I conclude by saying that, as we have all taken part in the debate, we presumably feel united in recognising the importance of Europe. Let us hope that we shall be able to raise public interest in these matters during the forthcoming European election campaign. After all, we are talking about matters that are extremely important for the development and future well-being of our country.

9.40 pm
Mr. Heathcoat-Amory

The debate has revealed a number of rather predictable differences in the House but agreement that the events of the past 12 months have been especially important for Europe. The effect of those events will be long lasting. Four of them stand out: the entry into force of the Maastricht treaty, the successful conclusion of the Uruguay round at GATT, the enlargement negotiations, and a new resolve on the part of the European Union to tackle the underlying causes of unemployment and the loss of competitiveness. All four of those issues have been referred to extensively during the debate.

I, too, welcome the new hon. Member for Rotherham (Mr. MacShane). He impressed us all with his confidence when making his speech. He pleased us as well with his well-phrased tributes both to his predecessor and to the leader of his party, whose sudden death last week so shocked us all.

I am sorry that in the remaining minutes of the debate I shall probably not be able to answer all the questions asked and respond to all the points raised, especially by the right hon. Member for Strangford (Mr. Taylor), who had a long list of questions, and by the hon. Member for Caernarfon (Mr. Wigley), who made several points about Wales. As for the Committee of the Regions, I can give the hon. Member for Caernarfon the assurance that those councillors who lost their seats in the recent election will continue to serve out their term. That was made clear when they were appointed to the committee. I think that it would be wrong so soon into the new term for them to be discharged.

If the economy has not dominated the debate, it has certainly been referred to by many hon. Members. The economies of all member states will face a new challenge when the new world trade liberalisation package comes into effect. The point was well made by the right hon. Member for Llanelli (Mr. Davies), who rightly said that, whether we like it or not, we are facing a global trading environment and we must prepare ourselves for it. The fact that 20 million people are out of work in the European Union is a warning that something is wrong with the European employment model. The United Kingdom is the only major country where unemployment is below 10 per cent.

Over the past 20 years it is striking that similar growth rates in the United States and Europe have delivered over four times as many jobs in the United States as in Europe. That stark fact is telling us something. That is why we as a Government have taken such a prominent part in the debate on growth, competitiveness and employment. That is why we were the first country to submit a document setting out an analysis of the problem and our views on what should be done about it. It is all too easy to diagnose a problem; what is difficult is to prescribe solutions. We are certain that we must not shrink from taking necessary measures to correct what has gone wrong in the European labour market.

That means, at least in part, a move to greater deregulation and the promotion of labour market flexibility. It also means that we must look carefully at social costs and their effect on employment. That has nothing whatever to do with creating a sweatshop economy either in this country or in Europe. That is a scare that we can do without. The Conservative party wants a highly trained, adaptable, well-paid work force, but we know that social protection must be earned.

We believe in investment, in good training and high productivity, but employment is not just about high technology and big firms. It is about what happens to and in small firms and partnerships employing two or three workers, often part time. It is beyond dispute that excessive regulations and high non-wage labour costs have a direct effect on those firms' ability to employ people. That is why we are adamant about preserving and protecting our opt-out from the social chapter. That point was well made by my hon. Friend the Member for Gillingham (Mr. Couchman). That is why, at our insistence, the member states of the Union and the Commission are now studying urgently the relationship between regulations and employment.

We are committed to action. If it can be shown that overregulation is one of the causes of European unemployment, we must insist that something is done about it. If we do not get it right—if we do not get more jobs for each unit of economic growth—not only will the political ambitions of the Union be seen to be increasingly hollow, but the social consequences in member states may be extremely serious.

Questions were asked about the agreement on qualified majority voting reached during the enlargement negotiations. I am somewhat surprised that Opposition Members should be so open in saying that they would not even have tried to stand up for British interests. Of course the result was a compromise—that is often true in negotiations—but the fact that it is so unpopular with a number of other member states and with the Commission shows that we did safeguard our main concerns.

The hon. Member for Gateshead, East (Ms Quin) asked about the legality of the agreement. It is legally binding in the Council of Ministers and it obliges the chairman to take any necessary initiative to achieve a decision on the basis of no more than 23 votes against.

Ms Quin

I asked the Minister whether the agreement was justiciable, as the Prime Minister claimed, in the European Court of Justice.

Mr. Heathcoat-Amory

All matters are justiciable in the European Court of Justice ultimately. What is clear about this decision of the Council is that it is binding on members of the Council of Ministers. The hon. Lady need not just take that from me, because Dr. Kinkel, the German Foreign Minister, said immediately after the agreement was reached: Germany itself will regard the Decision as binding on the Council and has no doubt that all other member states of the Union will also fully respect the procedures foreseen. The agreement is an interim one and will remain in place until something different is agreed at the next IGC. We also achieved an agreement that the IGC will address the issue of voting strength and the voting thresholds in the Council of Ministers.

The hon. Member for Gateshead, East also asked whether the agreement could be invoked by a single member state. I gave the answer to that question in European Standing Committee B last week, but for the benefit of the House, let me repeat it. Yes, it can. The question of who triggers it does not arise, because there is a clear obligation on the presidency to seek the necessary agreement wherever the necessary minority votes becomes clear.

Like several other hon. Members, the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) mentioned the national veto. He said that he wanted 'greater co-opération"—those were his words—in defence and foreign policy. We can all agree with that and there is strong support on the Conservative Benches, notably from my hon. Friend the Member for Stamford and Spalding (Mr. Davies), for making a success of the intergovernmental pillars of the union, especially in foreign and security affairs.

However, the hon. Member for Ross, Cromarty and Skye said that his party would give up the national veto. He, could hardly say otherwise, because spokesmen from his party are on record as saying that. He tried to water it down by saying that we should seek allies so that we should never find ourselves in a minority of one. He also said that the qualified majority voting compromise that we had reached should be of assistance in that, and I am grateful for his support.

However, in the hard world of international diplomacy, essential interests have to be protected against any eventuality. It may be impossible to find allies for our cause on some issues. I know that the Liberal Democrats are the innocents abroad, but Conservative Members know that there are aspects in which vital national interests are at stake, and in which the requirements of unanimity must apply.

Mr. Charles Kennedy

I am grateful to the Minister for giving way, and I do not think that he deliberately seeks to misrepresent what I said. He will be aware that I was not describing Liberal Democrat policy. I was making a statement of fact, in terms of the way in which the institutions of the European Union operate, that there would be four additional hurdles involving the Parliament and various other institutions and considerations, before we ever reach the stage at which a proposal coming forward would leave Britain isolated. Is he denying any of those four factual hurdles?

Mr. Heathcoat-Amory

I said that the hon. Gentleman had tried to water it down. He has now invented some procedural hurdles which, he says, will prevent us ever being in the position of having to invoke the national veto. I was arguing that there are eventualities that we must foresee. It is not always possible to find allies to support essential national interests—and we are speaking here not simply of foreign affairs and defence but of taxation, immigration policy and changes to the treaty in future.

I therefore envisage a situation in which it may be necessary for Britain to invoke a veto and I am pointing out, for the benefit of the House and the wider public, that the Liberal Democrats have willingly abandoned that national veto, although the hon. Member for Ross, Cromarty and Skye is in good company.

I can help the right hon. Member for Bethnal Green and Stepney (Mr. Shore), who said that he had not heard of the European socialist manifesto. I can enlighten him because, for accuracy, I have brought a copy to the House. I can confirm one surprise. It is called, 'The Socialist Manifesto'—surprising, because the Labour party excised the word 'socialist' from its last general election manifesto, but it is in the European one. The second fact about it is that the Labour party, the party of which the right hon. Gentleman is a member, is formally signed up to what is in it. All Labour candidates for membership of the European Parliament are fully and explicitly committed to what is in it.

On the subject of the way in which decisions are taken, I remind the House of the following quote: We want majority voting in the Council to be the rule. That means not only that the Labour party is dissatisfied with the present arrangements and wants to go further, but that the rule must be majority voting. The hon. Member for Gateshead, East tried to retreat from that by saying that the Labour party manifesto would make it clear that Labour will retain the national veto. Either the Labour party is saying different things in different documents or it is in a muddle and is trying to reconcile a commitment to phase out the veto with a commitment to retain it.

I shall strike a slightly less partisan note in welcoming the support of the hon. Member for Gateshead, East for enlargement. Hon. Members on both sides of the House support enlargement and welcome the prospect of the four new EFTA states joining the European Union early next year.

Mr. Radice

Will the Minister give way?

Mr. Heathcoat-Amory

I was about to refer to the hon. Gentleman and answer a point that he made in his speech.

Both the hon. Gentleman and the hon. Member for Ross, Cromarty and Skye suggested that the debate about qualified majority voting had endangered enlargement. That is not the case. A number of detailed agricultural drafting points, including the drawing up of the treaty, continued for some time after the qualified majority voting issue had been settled and the European Parliament still had time to scrutinise the treaty and give its assent, by a large majority, earlier this month.

Mr. Radice

On a slightly different point, if the European Union were enlarged to take in the Visigrad countries, would more majority voting be necessary?

Mr. Heathcoat-Amory

That is exactly the sort of issue that we shall discuss in 1996. What we are deciding today and what we have negotiated over the past few months is how to make a success of the current round of enlargement.

Enlargement confirms our vision of the European Union as an outward-looking, diverse and dynamic organisation based, as my right hon. Friend the Member for Guildford (Mr. Howell) said, on the primacy of the nation state. This round of enlargement is also a door to further enlargement to the east. The hon. Member for Durham, North (Mr. Radice) will agree that those will not be easy issues. Matters for 1996 include not only institutional change but structural funds and the future of the common agricultural policy.

The EFTA states that are applying to join felt that their membership of a free trade zone—the European economic area—was insufficient. Those who want the European Union to be simply a free trade area must face the fact that the experience of those countries led them to believe that their interests were better served within the European Union. They wanted not just to be part of a free trade area but to influence the rules and trade policy of the organisation. They did not wish simply to be spectators from without.

My right hon. Friend the Member for Horsham (Sir P. Hordern) made the good point that the right of British Airways to start an air service between Orly and London airports depends on enforcing trade rules of which we are part. Were we to leave the European Union and become offshore participants, we could not enforce those free trade rules of which we are the beneficiaries.

As for 1996, we cannot look into the future this evening, but we know that the Europe of today is in flux. The end of the cold war has freed the bonds of Europe and the security organisations of the west are still adapting to that change. We have not had an opportunity this evening to discuss the Western European Union or NATO, but those organisations are adapting to the new security outlook in Europe. The Maastricht debate, both here and on the continent, showed that the high water mark of a centralised federalism has passed and the tide has now turned.

The freeing up of world trade, referred to frequently in this debate, poses another challenge to the European Union. It shows again the folly of rigid centralism and too much intervention. The number of unemployed in Europe forces us to look at market structures just as hard as we have looked at political structures.

The prospect of four new member states coming in next year forces us to look at, and to focus attention on, the sort of Europe that we are creating. The prospect of enlarging further to the east raises other questions, not just about the east. The small states of Cyprus and Malta have applied to join. Although we cannot foresee the institutional changes that may be required, we know that the possible accession of so-called micro-states raises questions again about how many Commissioners there should be, and how many votes there should be in the Council of Ministers and how they should be organised. We clearly believe on this side of the House that, if we have the confidence and the determination to play a full part in this European Union, we can build a Union in which this House and this country can feel at home.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.