HC Deb 07 December 1995 vol 268 cc506-93

[Relevant documents: The Twenty-fourth Report of the Select Committee on European Legislation, Session 1994-95, on the 1996 Intergovernmental Conference: the Agenda; Democracy and Efficiency; the Role of National Parliaments (HC 239-1), and the Government's reply (Cm 3051); European Parliament-Resolution A4-0102/95 on the functioning of the Treaty on European Union with a view to the 1996 Intergovernmental Conference; Report of the Council on the functioning of the Treaty on European Union (Cm 2866); Report by the Commission on the operation of the Treaty on European Union (SEC(95)73I); Report by the Court of Auditors on the operation of the Treaty on European Union and the Report of the Court of Justice on certain aspects of the application of the Treaty on European Union; the White Paper on Developments in the European Union January-June 1995 (Cm 3130); and the Minutes of Evidence taken by the Foreign Affairs Committee on 30th November (HC 72-i).]

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Burns.]

4.7 pm

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Malcolm Rifkind)

The debate provides Members with an opportunity to comment on a range of issues affecting the European Union. I intend to concentrate on the forthcoming European Council summit in Madrid. I shall have a few comments to make, which I hope will be helpful, to the hon. Member for Livingston (Mr. Cook), the Opposition's spokesman, so that we may help to clarify certain of the Opposition's policies. I think that that will be of benefit to the House and the country.

First, I shall concentrate on the forthcoming summit in Madrid. The next few years will be as important as any in the EU's 40-year history. We shall face challenges such as enlargement to the east and south, hard decisions on a single currency, the development of Europe's security architecture, and fundamental reform of the common agricultural policy. Underlying all that is the need to restore Europe's global competitiveness and its ability to create jobs. Only if the EU can contribute to that goal can we rebuild people's confidence in a way that is relevant to their concerns.

Next week's Madrid European Council will focus on many of the issues to which I have referred. It is clear that the intergovernmental conference will be a major item on the agenda next week. I welcome the close interest that the House has taken in the preparations, and especially the reports from the Select Committees on European Legislation and on Foreign Affairs. Members will have seen the Government's response to the Committees' reports.

My hon. Friend the Member for Boothferry (Mr. Davis), the Minister of State, has kept the House closely in touch with developments in the study group. He will talk in more detail later about these developments if he is successful in catching your eye, Madam Speaker. Keeping Parliament informed is a priority for the Government. As my right hon. Friend the Prime Minister said earlier this afternoon, we are considering whether to publish a White Paper early next year setting out the Government's approach to the intergovernmental conference.

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

I am grateful to the Secretary of State for showing his characteristic courtesy. Does he agree with Commissioner Kinnock that, as far as eastern European countries are concerned, the prospect of membership of the European Union is exceedingly distant?

Mr. Rifkind

I am not sure that I necessarily agree with Commissioner Kinnock. It very much depends. It is undoubtedly true that negotiations on enlargement will take a number of years; they did for Spain and Portugal, so it is hardly likely that they will take less than the five or six years that were required for those countries when we come to the countries of central and eastern Europe. But time will tell, and I will have something further to say on enlargement later.

Mr. Barry Sheerman (Huddersfield)

The Secretary of State talks about fully communicating and informing Members of Parliament. Is not what we need as domestic politicians more involvement in what is going on in Europe, and proper, positive involvement, not just information?

Mr. Rifkind

I am glad that the hon. Gentleman proposes to support the Government in their view that national Parliaments should be more involved in the consideration and scrutiny of European proposals, and that will be one of the items for the intergovernmental conference.

Mr. Mike Gapes (Ilford, South)


Mr. Rifkind

No, if the hon. Gentleman will forgive me.

The study group, which has been meeting since June to prepare options on the issues that the IGC will address, issued its report earlier this week. Although the membership of the study group does not precisely reflect that of the IGC, the report is a good preliminary indication of the likely agenda, and the current balance of member states' views.

The report says that next year's IGC will not entail a radical rewrite of the Maastricht treaty or aim to turn the European Union into a super-state, but will concentrate on practical steps to make Europe more relevant to people, and to make the Union work better and to prepare it for enlargement. These are fine words, and I endorse them, but it is not enough to assert these things: we need to deliver them. Our Government's realistic, practical agenda for the IGC will, I believe, do that.

With so many major challenges facing us over the next few years, people could be forgiven for asking why the European Union is embarking on another IGC so soon after Maastricht came into force. If it heralds a long period of navel-gazing and institutional tinkering, people will feel that the European Union is fiddling while Europe burns. But if the IGC strengthens practical European co-operation where necessary, and shows with renewed determination that the European Union should stay out of areas where it is not necessary, people will be prepared to welcome that. That is what our approach is designed to deliver.

I shall now comment on European Union enlargement, which the hon. Member for Greenock and Port Glasgow raised with me.

None of the challenges that I mentioned earlier is more important than the historic mission to re-embrace the countries of central and eastern Europe. We must welcome them back fully into our family of democracies. In extending to our neighbours to the east the security and prosperity that we have enjoyed for 50 years, we will enhance the security and prosperity of the whole of Europe. That is why we are so firmly committed to enlargement.

It is clear that enlargement will not simply happen overnight: both the candidate countries and the European Union have plenty to do first. The European Union must take sensible decisions about the negotiating process. We expect at least some of the countries of central and eastern Europe that are ready and willing to begin negotiations alongside Cyprus and Malta, six months after the IGC.

But we also want to ensure that the enlargement process is smooth and sustainable. That means that the European Union will have to decide which associated countries have made most progress towards readiness for membership. The Commission's Opinions will be a vital ingredient in that process, and I welcome its intention to produce the Opinions shortly after the IGC. Meanwhile, we must continue to encourage the associated countries to keep up the progress that is being made in preparing to take on EU membership, particularly in preparations to join the internal market.

There are other major issues, too. The IGC must address the institutional needs of an enlarged European Union, and there are important policy implications. The Commission has just published two important reports, which will launch a very important debate on reform of the common agricultural policy and the structural funds. I welcome its analysis that, as we have long been saying, extending an unreformed CAP to an enlarged European Union would breach commitments under the general agreement on tariffs and trade on subsidised agricultural exports.

Mr. Tim Renton (Mid-Sussex)

I agree with my right hon. and learned Friend on the importance of enlargement for Cyprus and Malta and for countries of eastern Europe. However, as he says, enlargement will require institutional change. Does he not perceive that some of that institutional change will be an extension—a wise extension—of qualified majority voting? Otherwise, the possibility of a small country using its veto to block progress until there is a reform of the CAP that suits it will surely be all too great.

Mr. Rifkind

I do not agree with my right hon. Friend. Of course there will be implications for the size of the Commission as the Community enlarges. It is ludicrous to imagine that, as the Commission enlarges, each new member state, including very small countries, will automatically have a Commissioner, and that nothing else will change. The Commission itself clearly has to be reformed, and I recognise that fact. I also recognise that the weighting attached to the voting rights of individual countries may have to reflect an enlarged European Union. But I do not accept the argument that the case for enlargement points towards an increase in qualified majority voting.

I say that for this reason. The Community is already 15-strong. We already have qualified majority voting in many areas. Where we have the need for unanimity, it is almost invariably because there is a need for it because of the importance of the issues concerned. If one considers the European Union, despite small countries such as Luxembourg, that has not prevented progress from being made. If one considers other international organisations, NATO, for example, has never had qualified majority voting at any time in its history. It has always proceeded by consensus, and has always managed to reach agreement acceptable to all member states.

Therefore, the Government's view is clear. We do not believe that there is a case for an increase in qualified majority voting, and we do not believe that the enlargement of the European Union changes that in any meaningful or significant way.

Mr. Peter Shore (Bethnal Green and Stepney)

I accept the Secretary of State's view that there should be no extension of qualified majority voting to take account of enlargement, but will he say something about the directly relevant point of what should constitute a blocking minority in an enlarged Community?

Mr. Rifkind

Yes. As I mentioned, I accept that there is a case for what is often referred to as a re-weighting of the voting strength of individual countries, because it clearly would be ludicrous if a country such as Malta, with a tiny population, had a voting strength which was more comparable with that of Belgium, Greece or the Netherlands. Likewise, one must take account of the larger countries, which have considerably increased voting weight. That is already recognised to some extent in the existing voting rights and the voting weight of respective member states. I have no doubt that further work needs to be done on that, and the British Government are willing to support that approach.

Several hon. Members


Mr. Rifkind

If hon. Members will forgive me for a moment, I am sure that they will have an opportunity to intervene later in my remarks.

It has also been pointed out by the Commission, in the work that has been done on enlargement, that, unless the CAP is reformed, the European Union will face the prospect of yet more food mountains. That is why the report concludes that the status quo for the CAP is not an option. That is welcome news, even if it does not go far enough for us. I should also add that the status quo is not an option for the structural funds, either. Reform will be needed so that the Union can enlarge successfully and affordably.

Those are difficult issues. We must tackle them and tackle them soon. That is not because we have somehow gone cool on enlargement—quite the opposite. If we put these problems to one side now, they will certainly come back to obstruct progress later. We are serious about enlargement to the east, and keen to see the process begin as soon as it reasonably can. That is why we want to bring all the questions into the open now, starting at the Madrid European Council next week.

Mr. Bernard Jenkin (Colchester, North)

On the question of enlargement, is it not a huge task to expect the former Soviet bloc countries to sign up to the whole of the acquis communautaire? In view of my right hon. Friend the Prime Minister's exhortation to have a multi-speed, multi-track Europe, should we not be seeking to give those countries the opportunity to join aspects of activities of the European Union, not necessarily to compel them to join all of them?

Mr. Rifkind

I do not underestimate the complexity of the issues, but I must say two things to my hon. Friend. First, the countries themselves wish to sign up to the whole of the acquis; they are not asking for a differentiated approach. Secondly, the complexity that my hon. Friend rightly identifies will be relevant to the length of the transition that may be required for individual countries.

However, the countries that have expressed the greatest interest—the Czech Republic, Poland and Hungary—have said that they wish to become full members of the European Union, and they are prepared to make the internal changes because they are trying to move to a market economy as quickly as possible.

Mr. Menzies Campbell (Fife, North-East)

Following the answer that the Foreign Secretary gave one of his own Back Benchers, the hon. Member for Colchester, North (Mr. Jenkin), may I ask him whether it is not a measure of the success of the European Union that so many former members of the Warsaw pact want to sign up not just to parts of the treaty, but to all of it?

Mr. Rifkind

That is an entirely reasonable comment. Despite being controversial in many respects in many countries, the European Union is seen as a positive force for European progress.

The Government and British businesses are wholly committed to maximising the gains to British citizens and British business from membership of the European Union. The achievement of that goal is not a zero-sum game; as Europe prospers, so does the United Kingdom. The Government have an economic agenda for Britain and for Europe. We want, and are working, to sharpen the competitive edge of European businesses. Successful businesses create jobs; uncompetitive businesses shed jobs. We want less regulation and fewer burdens on business, completion of the single market, liberalisation of the telecommunications and energy sectors, and more free trade.

It is fashionable to knock Brussels. It is the bureaucratic capital of the world, and the home of red tape. Much of the criticism is justified, but under the new Commission things may now be changing. Jacques Santer made that clear in his speech to the Guildhall earlier this year. He is committed to "less action, but better action". Sir Leon Brittan made it clear in his speech to the CBI three weeks ago when he said:

the tide of social legislation has all but dried up … the emphasis is now on job creation". At Madrid, our Prime Minister will again reinforce the message. We want progress on enhancing competitiveness, improving the quality and reducing the quantity of legislation, deregulating labour markets to make them more responsive, creating jobs and reducing unemployment. We want less rhetoric and more action, and we shall continue to push strongly for that.

Let me give two examples of the way in which the battle is being won. First, there is the legislative burden. In 1990—only five years ago—the Commission proposed 185 pieces of primary legislation; by 1993, that figure was down to 75, in 1995 it is down further to 43, and the Commission estimates that next year it will be down to 21.

Mr. Michael Spicer (South Worcestershire)

One of the reasons why that admirable trend may be happening is the increasing power of the European Court. Lord Denning's "onrush of European law" is beginning to become a reality. Does my right hon. and learned Friend accept that some of the reforms may increase the Court's credibility? We want to restrict and limit it to interpreting the treaty of Rome, rather than making laws that replace some of the Commission's laws.

Mr. Rifkind

I agree with my hon. Friend that the proper task of the European Court is to interpret the treaty when there is a genuine legal dispute concerning its provisions. We are giving thought to proposals to improve the workings of the Court. We think it unfortunate, for example, that no appeals procedure exists. However controversial or expensive for a member state the Court's judgments may be, there is no opportunity for a second consideration. That is quite unlike the procedures that are available in national courts.

We also need to look afresh at the European Court's powers to impose heavy damages on member states retrospectively, even when some infraction of a directive may have been carried out in good faith and with no intent to disregard the significance of that directive. Important reforms can be made in a constructive way, and we intend to take the lead in promoting such an approach.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Is not the problem that, in interpreting, as my right hon. and learned Friend says, the treaty, the judges consider it with the eye of continental lawyers? They do not narrowly construe just one section of one Act; they consider what they believe to be the general purpose of the treaty. The result is that the thing is always skewed in a federal direction.

Mr. Rifkind

I must confess that I am very nervous when my hon. Friend refers to the judges interpreting these matters in a continental fashion, as the British judge, Judge David Edward, is my old devil master, at whose knees I learned such knowledge as I have of Scottish law. I would not dare make such an accusation in regard to any judgments in which he was personally involved.

One of the European Court's strengths is that it has brought together different traditions and different legal systems, and sought to apply the European legal profession's accumulated wisdom in determining such matters, but I accept my hon. Friend's point to some extent. Of course, if the bulk of the judges come from countries with a continental judicial tradition, that is bound to influence the way in which they deal with particular matters. That is another reason why some appeal system is required within the European Court: if, for whatever reason, there has been an imbalance, it is unhealthy if that cannot be rectified in any way.

I mentioned the dramatic and welcome decline in primary legislation in the past five years. We should like similar progress in secondary legislation emerging from Brussels. The quality of legislation also needs to improve, with greater consultation, especially with businesses, before specific legislation is even considered.

Mr. John Butterfill (Bournemouth, West)

Before my right hon. and learned Friend leaves the point about an appeals procedure, has he considered how that might be structured, and whether, if disputes on subsidiarity were involved, it might be better if an appeal were referred to a body drawn from the national Parliaments of the European Union rather than from another series of judges?

Mr. Rifkind

There are various ways in which subsidiarity can be given greater primacy. Our view is that we should like it entrenched in treaty form, to ensure that such matters are given much greater weight. That is what we will seek to do.

The other area in which there has been good progress is in the fight against fraud. The United Kingdom secured significant changes at Maastricht, including an enhanced role for the European Court of Auditors and for the European Parliament in that respect. That is also an area where further work is required. Further detailed examination of the ways in which fraud can be more effectively dealt with should be given the prominence it deserves.

The UK lives by trade and by investment. That is why the Government are fully committed to working towards open markets around the world, whether within the European Union, across the Atlantic or elsewhere. With our European partners, we took a leading role in the 1995 World Trade Organisation negotiations on financial services liberalisation. We shall press hard for a good outcome to the negotiations currently under way within the WTO for liberalisation of telecommunications and maritime services. We must keep up the momentum for dismantling barriers to trade and investment wherever they exist.

Market access is crucial, whether for the European Union's neighbours to the east or for the Mediterranean countries. Britain is the strongest supporter in the EU of open markets, and that is why we want over time to create a Mediterranean free trade area, covering, in particular, agriculture, where many Mediterranean partners enjoy a comparative advantage.

That is why we have been pressing for increased access for agricultural and other goods from central and eastern Europe. That is important if those countries are to develop their economies in a free-market fashion that we would wish to welcome.

That challenge has not yet been responded to satisfactorily by member states as a whole. Last month, European Union Foreign Ministers considered a European Commission proposal for a five-year programme to increase quotas for goods from eastern European countries by 10 per cent. a year. That would have been a modest help in allowing them to develop those sectors of their economy that are most competitive. We strongly supported the Commission's efforts. We made it clear that the quantities of extra goods involved were tiny. It was absurd that the Commission's proposals were opposed by some member states.

Let me give just one or two examples of what some member states felt obliged to oppose. At present, Bulgaria can send four lorryloads of strawberry jam to the European Union each year. The Commission proposes that, by the end of the century, it should be able to send an extra two lorry loads. That was opposed. In five years' time, Poland would be allowed to send an extra four tonnes of lettuces to the European Union each month. That was opposed. Slovakia's quota for ham exports should be raised by 12 kg per day per member state. That was opposed. An extra 40 lb of Polish sweet peppers per member state per day was opposed. A total of 40 g more Czech duck meat annually for each man, woman and child in the Community by 1999 was considered unacceptable. According to the Commission's proposals, in five years' time all the associated countries of eastern Europe would have been able to export additional cereals equivalent to 0.3 per cent. of German production, yet Germany opposed that request.

Those proposals for increases over five years were opposed by a number of countries, including Germany and several Mediterranean countries. I am not sure how other member states can proudly claim to be helping the central Europeans when they are so miserly about access to our markets. It defies belief that a few jars of Bulgarian jam could represent a serious threat to the economies of western Europe.

Mr. Richard Burden (Birmingham, Northfield)

Since the Foreign Secretary is obviously opposed to petty opposition from member states, can he tell me why his Government are opposing a proposal by Sweden to make full employment an objective of the European treaty? Does he oppose full employment in Europe, or is his opposition petty?

Mr. Rifkind

Britain's position stems from the fact that we have the lowest levels of unemployment of any major country in the European Union. One of the reasons for that low level is that we believe that employment policy can best be determined by national Governments answerable to national Parliaments. We have rejected the social chapter precisely because it results in higher unemployment and lost jobs. If the hon. Gentleman is concerned about these matters, he should speak to the Opposition Front-Bench spokesmen, and tell them to abandon the policy that is so damaging to the employment requirements of this country.

Economic and monetary union will feature prominently at Madrid. The Prime Minister made it clear at the informal Heads of Government meeting in Majorca in September that a number of important issues had yet to be examined properly. Although the Prime Minister secured for Britain an option on whether to join stage 3 of economic and monetary union, the questions to which the Prime Minister referred, and will refer again at Madrid, are of the utmost importance not only to Britain but to all member states.

Mr. Quentin Davies (Stamford and Spalding)

Was it not a remarkable triumph of diplomacy to negotiate that option on the single currency at Maastricht, and to gain along with it the right to play a full part in the discussions on the future shape and management of the single currency? Is it not right that those two abilities—the option and the right to take part in discussions—represent considerable assets for this country, and that one would have to be completely barmy to suggest simply throwing them away?

Mr. Rifkind

That is right. It was a negotiating triumph by my right hon. Friend the Prime Minister, and it illustrates most clearly a point to which I shall return—that, just occasionally, the United Kingdom has to be prepared to be on its own if it is properly to protect British interests.

It is clear that, if EMU is to go ahead on 1 January 1999, only a minority of member states will be ready. Many will not have met the convergence criteria in the treaty of Maastricht. What will be the relationship between those within and those outside EMU? What effect might that have on the functioning of the single market, Community spending and the institutional framework of European decision-making? Much more work needs to be done on those and other issues before any clear picture emerges about what stage 3 might look like.

Mr. John Redwood (Wokingham)

Will my right hon. and learned Friend tell the House what the British Government will be expecting by way of currency convergence and stability to meet the Maastricht treaty 109J for those countries and currencies which are seeking to join?

Mr. Rifkind

Those are exactly the issues on which the work has not been done. We will be arguing strongly that, whether it is because of an inability to join EMU or an unwillingness to do so, it is clear that more than half the member states of the Union would not be part of a single currency if it were to be formed in 1999. Therefore, it is crucial that the work should begin now, not in 1997 or 1998, on the implications for the relationship between the "ins" and the "outs" in such a situation.

At Madrid, the Heads of Government will also consider the reference scenario for the transition to stage 3, the name of the currency, and German proposals for a fiscal stability pact in stage 3 to reinforce budgetary discipline among those member states which participate in the single currency. In its present form, the recommendation on a reference scenario which ECOFIN will submit to Madrid is broadly acceptable to the UK.

The decision on the name, as my right hon. Friend the Prime Minister said in his speech to the Guildhall, is a potential distraction from the more important issues which we want discussed at Madrid—although I imagine that those who support a single currency will want it to have a name with some popular resonance.

Mr. Gapes

If a single currency is established by a minority of countries and Britain stays out of it, would that not be extremely damaging to the British economy and to our role in international financial institutions, especially if those countries take retaliatory action against other countries that are not part of the system?

Mr. Rifkind

Those matters are clearly among the issues that the United Kingdom will have to consider and on which it will have to reach a decision—looking not only at the alleged advantages but at the alleged disadvantages, and coming to a judgment on where British interests lie. We will give very serious consideration to that.

On fiscal stability, the Government's record—notably the recent Budget—speaks for itself. The Government's fiscal policy is directed at maintaining sound public finances. As to the detail of the German proposals, that will be a matter for the Heads of Government to address. As my right hon. and learned Friend the Chancellor emphasised in his Budget speech, we will continue to pursue economic policies that will have the effect of achieving the convergence criteria set out in Maastricht by the end of 1997. These policies make sound economic sense in themselves.

Mr. Edward Leigh (Gainsborough and Horncastle)

Given the obvious difficulties that some of our partners, such as Italy and Belgium, will have in meeting the convergence criteria, does my right hon. and learned Friend think that, in a spirit of fraternal friendship with those countries, it is time to suggest that they might dust down the idea so ably put forward by our own Prime Minister several years ago, that the ecu should trade not necessarily as a single currency, but as a common currency? That would be a market-based, gradualist solution that might well have many attractions, both for our party and for other countries.

Mr. Rifkind

My right hon. Friend the Prime Minister's views are well known. We must leave it to other countries to come gradually to their own conclusions on whether they might be relevant to their circumstances. My right hon. Friend has always said that he believes that there is strength in that sort of approach. Perhaps, at some stage, it might commend itself to others as well.

With regard to Madrid, I want finally to deal with the immediate issues facing the EU on the question of the customs union between it and Turkey. We are anxious to ensure that the EU remains outward-looking. The Foreign Affairs Council on 30 October took a formal decision to implement a customs union. I very much hope the European Parliament will give its assent next week.

Customs union will reinforce the EU's relations with a very important neighbour. Turkey is a key partner in a volatile region, and customs union will help to maintain its western orientation. It will also bring important benefits to British business, as Turkey liberalises its import regime and brings its legislation into line with the EU on intellectual property protection, competition policy and state aids.

Turkey has made real progress on a number of human rights issues identified by the European Parliament in recent months. There have been constitutional and local government reforms, the release of certain Members of Parliament, and reforms to article 8 of the anti-terror law. Some 150 jailed writers and academics have benefited. When she visited London recently, Prime Minister Ciller of Turkey made it clear that she is committed to continuing the process after the forthcoming general elections. We very much welcome that.

Having commented on the Government's approach towards the Madrid summit, I want to refer to the views expressed in an interesting and memorable way by the Opposition. What has struck me as most significant has been the extent to which both the Leader of the Opposition and the hon. Member for Livingston, the shadow Foreign Secretary, have emphasised that a British Government led by them would not be isolated in Europe. They have made their views on that clear in a most unambiguous way.

The Leader of the Opposition said on 4 October 1994:

Under my leadership, I will never allow this country to be isolated or left behind in Europe. He said on 20 May:

My belief is that the drift towards isolation in Europe must stop and must be replaced by a policy of constructive engagement. The hon. Member for Livingston said at the Labour party conference on 3 October:

The Government's isolation in Europe has cost Britain dear. Labour has a positive agenda for reform in Europe, a people's agenda, that will strengthen Britain's influence and benefit the people of Britain. I have been giving some thought to what the Leader of the Opposition and the hon. Member for Livingston might mean by not being isolated in Europe. It is a very powerful position to adopt. One has tried to work out how they intend to achieve it. So far as I can tell—unless the hon. Member for Livingston corrects me—there are only two ways in which they could achieve it.

Either they are saying that, over the past 16 years, if they had been the Government, they would have agreed with the rest of the European Union on all the issues on which the British Government stood alone. That is one possible way in which we could have avoided isolation. Alternatively, they are saying, "Well, no, we would not necessarily have agreed. But we would have allowed ourselves to be out-voted, allowed majority voting, and removed the veto. So, even if we disagreed, we would have come to terms with what is being proposed."

I thought that that latter approach was Labour policy because, at the time of its party conference, it produced a policy document that seemed to suggest that it was preparing to abandon the veto and unanimity requirements. In that document, published in October, it said, quite explicitly: "We reject permanent opt-outs." That is very clear. In the same document, it said:

Labour therefore accepts that it is in Britain's interests to extend qualified majority voting in some cases such as certain areas of social policy, industrial policy, regional policy and environmental policy. That seems quite clear. Labour is saying that we would not be isolated, because we would have no permanent opt-outs, and QMV would operate in all those areas.

At least, I thought it was clear, until I started listening to the speeches. Despite putting those statements in their document, Labour Members have been extraordinarily shy in sharing those observations with the general public. Unless one goes to the actual text, one would not know that what I have cited is Labour party policy.

On the very day that the policy document was published, the hon. Member for Livingston made a speech to his party conference. He made no reference to having no permanent opt-outs or to abandoning qualified majority voting in those four areas. He has made a speech in the House on European policy since then, and, despite requests from Conservative Members, he did not make a single reference to ending qualified majority voting or having no permanent opt-outs. The leader of the Labour party, in his famed address to the Confederation of British Industry, made no reference to those matters, nor did he in a major speech on European policy on Thursday.

So we have to ask ourselves whether that lack of reference is because of shyness. Did the Leader of the Opposition and the hon. Member for Livingston forget that that was their policy? Have they not read their own document? Or is it tactics? Do they like to have a commitment on paper to end Britain's ability to protect its interests, and hope that no one notices because they make no reference to it in their speeches?

If that is their policy, as spelled out in the document, we are entitled to ask—I say this in the friendliest possible way to the hon. Member for Livingston—why they are so coy about informing the House and the public on the implications of it and why they hold it so dear. Why is it a policy that dare not call itself by its name? Why is the hon. Gentleman so reluctant to speak to the policy to which his party has committed itself? We will be listening very carefully to his speech to find out whether what I have said is indeed the case.

Mr. Nigel Forman (Carshalton and Wallington)

Is it possible that, in addition to the powerful points that my right hon. and learned Friend has just made, there is a third interpretation of Labour policy—that it totally exaggerates the degree to which this country has been isolated over the past 16 years in the European Union? Indeed, in many respects, we have forged effective alliances in order to advance our national interests, especially in the single market.

Mr. Rifkind

That may indeed be the case. I come to the second possibility that I mentioned. It could be argued by the Labour party that what it meant when it said that Britain would not have been isolated is that it would have agreed with the various policies in which Britain has, under this Government, stood out. Let us look at that question.

It may be that the Labour party had the social chapter in mind. Indeed, we would have been entitled to assume that it was prepared to go unreservedly into the social chapter. But there again, the Leader of Opposition sought to assure the CBI conference when he said:

The social chapter is not detailed legislation … Each piece of legislation will be judged on its merit. I have no intention whatever of agreeing to anything and everything that emerges from the EU. Proposals are just that: proposals. And they will be examined, with you, on their merits. What happens if, having been examined, those proposals turn out to be against British interests? Would a Labour Government stand out alone against such proposals? Would they be able to, given that qualified majority voting applies to the social chapter? We have had no statement from the hon. Member for Livingston on that.

My hon. Friend the Member for Carshalton and Wallington (Mr. Forman) referred to the areas in which Britain has been isolated over the past 16 years. If the Labour party claimed that it would not have carried forward a policy which would have led to our isolation, I should remind it and the hon. Member for Livingston about some of the issues on which we fought for British interests, even though it required isolation.

It took several years of very splendid isolation from my right hon. Friend the former Prime Minister, Lady Thatcher, to win the British budget rebate, for example. It has been worth £18 billion to British taxpayers since it was won. When the hon. Member for Livingston comes to the Dispatch Box, will he inform the House whether a Labour Government would have been prepared to be isolated, standing alone in Europe, in order to win that British budget rebate? Indeed, would a Labour Government be prepared to continue to be isolated in defending that British budget rebate, when other member states might seek to have it terminated?

If the hon. Member wants to give me that assurance, I shall happily give way. Will the hon. Gentleman assure the House that a Labour Government would be prepared to accept isolation to defend the British budget rebate? Would he care to give the House an assurance?

Mr. Robin Cook (Livingston)

May I assure the right hon. and learned Gentleman that I hope to catch Madam Speaker's eye? I shall be making my own speech in my own good time.

Mr. Rifkind

Very well. We have given the hon. Gentleman adequate notice of the information that the House is entitled to know. Would a Labour Government be prepared to accept isolation in order to defend the British budget rebate? That is question No. 1. As he is noting it down, will he note down a number of other similar questions?

The second question is on the Schengen frontier controls. On that, virtually all the member states have accepted that they are going to have open frontiers, that they will not have the sort of controls which we have to combat terrorism, illegal immigration and drug smuggling. The only other country that does not take that majority view is Ireland, because it is so linked to the UK that it could not do so unless the British Government changed their policy. So we are isolated—I have to acknowledge that.

Since the hon. Member for Livingston is noting down these points, will he note down and also inform the House whether a Labour Government would be prepared to see Britain isolated for as long as was required in order to protect frontier controls? Can he make a clear statement on that—no fudge, no equivocation—to the House and the country?

While we are on the subject, will the hon. Gentleman also express some views on his attitude towards defence policy? We may very well be isolated, with many member states saying that the Western European Union should be subordinated to the European Union. A number of countries appear to wish that as a long-term objective. Is that what the hon. Gentleman believes? Or would he be prepared to see Britain isolated, if that was required?

What about qualified majority voting on common foreign and security policy? Would a Labour Government acknowledge the need to go for QMV on that matter? Would the hon. Gentleman be prepared to see Britain isolated on that matter?

Those are not unreasonable questions to put to the hon. Gentleman. I put them to him, as I said, in the spirit of trying to have a constructive dialogue across the Floor of the House, so that the House and the country may have a clearer understanding of a policy, to the clarification of which the Labour party up to now does not appear to have given the highest priority in presenting its views.

Mr. David Nicholson (Taunton)

Does my right hon. and learned Friend agree that many of the issues on which Britain has been isolated—and rightly isolated—have been those on which people, business men and sometimes politicians in other community states have looked to Britain to fight their corner? Indeed,, some years later, they come round to thank us for having done so, and take up that very position themselves.

Mr. Rifkind

My hon. Friend is entirely correct. Other countries sometimes like to do good by stealth. They give us promises of support which are sometimes less visible on the day than we would like. That is the way of the world, and it does not deter us from what we believe necessary. I shall make a final remark on the Opposition's policy, because it deserves some comment.

Mr. Mark Robinson (Somerton and Frome)

Does my right hon. and learned Friend believe that we could have got a rebate and an opt-out if we had gone into negotiations with our hands tied behind our backs, saying that we were not prepared to be isolated?

Mr. Rifkind

The answer to that is self-evident. Securing the rebate required a great deal of determination and a long period of unpopularity, but the £18 billion from which British taxpayers have benefited as a result makes that isolation entirely justified. That is why we are entitled to ensure that the rebate is protected in years to come.

My next comments also refer to the extraordinary and perhaps historic speech that the Leader of the Opposition made last Thursday. He devoted many minutes to describing the Labour party's policy on Europe. Quite apart from the matters with which I have just dealt, he sought to impress on his audience and on the British public the Labour party's determination, if it formed a Government, to have an exciting new agenda—bringing forward new ideas that others had not brought forward—to give British leadership to Europe.

The Leader of the Opposition said:

We need to be able to set a positive agenda of our own in Europe. For too long we have been reacting to the ideas of others. I waited with eager and bated breath to know what exciting new ideas the Leader of the Opposition and the Labour party would put forward. Here they are, and I quote the words of the right hon. Member for Sedgefield (Mr. Blair).

The right hon. Gentleman said:

First the enlargement of the European Union to include … Central and Eastern Europe. There is an exciting new policy, which no one has ever thought of. The right hon. Gentleman also pledged that

a Labour Government will open negotiations with the first group of these countries in the first half of 1998". As Europe is considering opening negotiations in 1997, this is not quite the exciting new agenda that we thought the right hon. Gentleman had in mind.

What is the second original idea that the Leader of the Opposition has in mind? Again, I read what he said:

Second we need to make a serious effort to reform the CAP". Why did the Government not think of that? This is exciting stuff. The Leader of the Opposition brought a third idea to the attention of an excited nation. He said:

Third we need to achieve stronger economic growth … open competition in aviation, energy and telecommunications and a tougher approach to unfair state aids. Of course we welcome the fact that the Labour party and its leader have endorsed what has been Government policy for some considerable period. I am especially pleased that the Leader of the Opposition added, as another exciting, new, innovative idea, the desirability of a renaissance of the Atlantic community. I was personally interested in hearing that, and we unreservedly welcome it.

A lot of hot air is coming from the Labour party. There is a desire to deceive the electorate about Labour's true policy on the European Union. I say, again in a spirit of generosity, to the hon. Member for Livingston that I may be wrong. He now has the opportunity to explain at the Dispatch Box the extent to which a Labour Government would be able to avoid isolation, how they would go about that, and which policies they would abandon to avoid isolation. He has the opportunity to give us some greater insights into the exciting new agenda which the Leader of the Opposition has promised us. We all wait with bated breath.

4.52 pm
Mr. Robin Cook (Livingston)

The Foreign Secretary has given the House two speeches. Those of us observing carefully could spot the join—or should I say the absence of join?—between the two speeches when he switched from Foreign Office notepaper to his own. I am bound to say that his own speech was infinitely more interesting, entertaining and parliamentary than the departmental brief. I look forward, therefore, with enthusiasm to the day, which is coming soon, when the right hon. and learned Gentleman will be able to go straight to the political speech without having a departmental brief in front of him.

The right hon. and learned Gentleman referred to Labour's white paper on European policy. I fully intend to answer each and all of the questions he posed to me. I hope that he will be able to tick them off on the little exam sheet that he has in front of him as we proceed.

Before seeing whether I get a pass mark in my examination on my white paper, I draw the attention of the House to the fact that what we are seeing is a reversal of roles between those on the two Front Benches. Those who purport to be the Government are quizzing us on the contents of our white paper while they have yet to decide whether they will have a White Paper on European issues. This morning, I heard the hon. Member for Southend, East (Sir T. Taylor) announce that there would be a White Paper on Europe.

Sir Teddy Taylor (Southend, East)


Mr. Cook

I heard the hon. Gentleman say on the radio that he had extracted an understanding that there would be a White Paper.

Sir Teddy Taylor


Mr. Cook

Although I do not want the hon. Gentleman to retreat so soon from what we all heard him say this morning, I shall give way.

Sir Teddy Taylor

There was no such statement. I simply said that if there were to be a White Paper, which I expected and hoped for, it would be welcomed very much by hon. Members on both sides of the House. I said that one of the main advantages of a White Paper would be that if we set out our policies clearly and precisely, we could show the wide difference between ourselves and the hon. Gentleman, who simply wants to pass over more power, freedom, authority and responsibility to Brussels. Does he agree that what he said was untrue and should be withdrawn?

Mr. Cook

If the hon. Gentleman requires any supporting evidence of my statement, he has only to glance up to an area of the House above us, which I cannot refer to without being declared out of order. He should look at the expressions of incredulity on the faces of those who reported him on the radio this morning and on television last night.

So enthused was I by what the hon. Gentleman had told the BBC that on the way to the "Today" programme this morning in my car I found myself composing a little observation—that the Euro-sceptics are now so in charge of the Conservative party that what the hon. Gentleman announces at 7 am the Government will confirm by 4 pm. During the "Today" programme, at 8.15 am, the Foreign Secretary said that the Government had the matter under consideration.

The hon. Member for Southend, East need not be so modest or so shy and retiring. The reality is that he knows that his side of the debate has won the Tory party. He keeps telling us so; he said at the Tory party conference that his side had won. The right hon. Member for Kingston upon Thames (Mr. Lamont) said:

There is no doubt that the Conservative party has shifted decisively in the Eurosceptic direction". I predict that the shift towards Euro-scepticism will continue. What better proof could we have than the fact that the first time we hear that the Government are thinking of a White Paper is when the Euro-sceptics tell us so.

Even the right hon. Member for Billericay (Mrs. Gorman)—I am sorry I have promoted her. No doubt one day, given the continued drift towards Euro-scepticism, she will become a right hon. Lady. Even the hon. Member for Billericay, after the Foreign Secretary's speech at the Conservative conference, said that the Foreign Secretary showed some signs of common sense. It is a measure of the extent to which Euro-scepticism has entered the mainstream of the Tory party that the hon. Lady is regarded as an expert on common sense.

Mr. William Cash (Stafford)

Does the hon. Gentleman accept that the Labour party was completely up to its eyes in the exchange rate mechanism? Does he agree that Labour too has accepted all the implications that went with the disaster that the ERM contained? Does he agree that it led to massive unemployment, the loss of homes and the loss of businesses, as would any commitment to a single currency or any movement towards monetary union, which Labour accepts? Does he not accept, therefore, that the Labour party is riddled with hypocrisy and is misleading the British people about its aspirations to European integration?

Mr. Cook

The hon. Gentleman has been reminded by his Foreign Secretary that we have a document that went to our conference. It repeated verbatim the words that went to our conference three years ago. Throughout that period, we have consistently said that the test of convergence for the single currency has to be convergence of the real economy—industry, jobs, productivity and output—and not just the financial criteria to which Conservative Members signed up in the Maastricht treaty.

I come back to the point made by the hon. Member for Stafford (Mr. Cash) because it deserves a full answer. I cannot understand why he and a number of his colleagues feel that the problems in France are a source of smugness for them. First, if the problems are related to the Maastricht treaty, those are their own criteria, which their Ministers negotiated and voted for at Maastricht, and presented to the House.

Secondly, I cannot understand why the hon. Gentleman, who occupies the right wing of the Tory party, feels that he can take satisfaction in the fact that cutting welfare benefits and rolling back the public sector is as unpopular in France as it has been in Britain, and has made the French Government almost, but not quite, as unpopular as the Government of Britain, whom he supports.

Finally, as the hon. Gentleman follows such matters closely I am sure that, far from being smug about the extent to which the present criteria are causing pain, he will note that only last week the Chancellor of the Exchequer, representing the Government that he supports, went to ECOFIN and supported even tighter measures for the future of the single currency, supported by fines that the Chancellor described as draconian—but as he said that they would not infringe sovereignty, presumably they were all right.

If we have seen one hilarious spectacle in Britain as a consequence of what has been happening in France, it has been the right hon. Member for Wokingham (Mr. Redwood) writing in The Guardian to express his anxiety about the effects of cuts in welfare benefits.

Mr. Jenkin


Mr. Cook

I shall give way to the hon. Gentleman, and then I must make progress.

Mr. Jenkin

I congratulate the hon. Gentleman on all the hard work that he has put in with the leader of his party since that person committed the Labour party to membership of the single European currency earlier this year.

Hon. Members

Is that it?

Mr. Cook

I confess that the hon. Gentleman's question must be too deep for me, because I did not manage to follow it. However, for his benefit—possibly I was too deep for him—I shall repeat what I said to his hon. Friend. For three years our policy on the single currency has not changed. For three years we have said that the test of whether Britain should join must be based on progress in the real economy, especially convergence in real industrial performance. I understand why Conservative Members do not wish to take that into account, because today's figures show that in the past month industrial production in Britain has fallen by a full 1 per cent.

Mr. Shore

I am interested to hear what my hon. Friend is saying about convergence in the real economy. We all know that convergence in the real economy, as distinct from convergence in the monetary economy, is not written into the Maastricht treaty, and that there are no clauses, let alone protocols or other additions, to that effect. I therefore invite my hon. Friend to make it plain that we shall not join the European currency or enter the third stage of the exchange rate mechanism unless and until there is an equivalent treaty obligation, writing in the objectives of output, full employment and other real world criteria that he says should be there. Presumably our acceptance would be contingent on those.

Mr. Cook

I can give my right hon. Friend two assurances. First, when we say that those are our conditions, that is what we mean: those are our conditions. Indeed, I managed to get on to the front page of one of our respected newspapers by saying that we would not necessarily join if our conditions were not met. That seems to me to be absolutely simple English. If those are our conditions, we shall join when they are met—and we shall not necessarily join if they are not met

Secondly, I assure my right hon. Friend that we support the Swedish proposal to write into the treaty of union a commitment on employment. I agree that alongside a commitment to monetary union we need to set objectives for macroeconomic management. It is indeed regrettable that the Government have refused to support that proposal, which now has majority support in the European Union.

Mr. Redwood

Does the hon. Gentleman think that the French level of unemployment and the budget reductions being proposed by the French Government are a price worth paying for currency union?

Mr. Cook

I personally would have some doubt whether, if I were a Frenchman—[Laughter.] Hon. Members must contain their hilarity. I personally have grave doubts whether the macroeconomic management in France has necessarily been in the interests of the French economy and of French industry. That is a matter for the French people to decide at elections. They chose their Government but, as rapidly as the British people, they have decided that they rather wish they had not chosen them. Given the outcome, I well understand that.

I gather that the right hon. Member for Wokingham will launch another interesting campaign next week. He represents, although now from the Back Benches, the ascendant tendency in the Conservative party. As I said earlier, the Euro-sceptics are in charge.

Mr. Cash

And right.

Mr. Cook

They are certainly on the right of the party; I have no difficulty in concurring with that proposition—and they are in charge.

There is now no hoop so tight that Ministers would not slim down their beliefs in order to squeeze them through it. There is the occasional straggler, such as the Chancellor of the Exchequer, who has not yet slimmed down enough to pass through anybody's hoop. Last month he described the demand that there be a commitment to "no single currency in the next Parliament" as barking mad. Right on cue, the right hon. Member for Wokingham proposed to launch a campaign with just such a demand.

By and large, however, such people are only stragglers. In the European debate the Tory party now has the unity of the prison camp, and the hon. Member for Southend, East and the hon. Member for Billericay have the keys. We shall have to wait for the speech—

Mrs. Edwina Currie (South Derbyshire)

Will the hon. Gentleman give way?

Mr. Cook

I shall certainly give way to the hon. Lady, in the absence—no, gallantry forbids me to explain why I give way to her, but what I was talking about is a perfect subject for the hon. Member for Billericay. However, I shall respond to the hon. Member for Southend, East first. I look forward to his speech, because as he has announced that there will be a White Paper, the whole Chamber will want to hear him tell us what will be in it, because we did not hear that from the Foreign Secretary.

Mrs. Currie

The hon. Gentleman will know that I am the chairman of the Conservative Group for Europe, a nationwide organisation of Conservatives who are very pro-Europe, and who actively campaign. Many of those people are also members of the European Movement, an all-party group. I hope that the hon. Gentleman will acknowledge that it is not true that all Conservatives are anti-Europe—far from it.

Mr. Cook

I ask the hon. Lady to be patient and stay to listen—although I am not entirely sure whether she encouraged some of her hon. Friends, who I would have thought might agree with her views, to stay and hear further exchanges, because they are now leaving the Chamber. What she says suggests that there may have been some truth in the observation by my right hon. Friend the Leader of the Opposition that the war was not over on the Tory Benches. If the hon. Lady cares to wait until the end of my speech she may hear something that I wish to address to her and to those of her hon. Friends who share her views.

Mr. Graham Riddick (Colne Valley)

Will the hon. Gentleman give way?

Mr. Cook

No, I really must make progress. If the hon. Gentleman is patient I may reward him later, but I must make some progress with my speech or I shall be in trouble with the Chair.

The Foreign Secretary said, very properly, that the Labour party has produced a white paper setting out our views. [Interruption.] It is quite white. It went through our conference unanimously. I shall give the right hon. and learned Gentleman a challenge, as he offered so many challenges to me. When he produces his White Paper on Europe, let him put it to the Conservative conference and see whether he gets unanimous support for it there.

I shall take the precaution of being present at the conference in the flesh to see what really happens. I shall not rely on Conservative central office sending me a video of it afterwards, since we have discovered how central office took its revenge on the Secretary of State for Defence by editing out his applause. I want to see the uncut version, and see what support there is for any White Paper on Europe that the Government can cobble together.

The Foreign Secretary is right that the Labour party has a White Paper setting out our commitments on Europe and making it plain that we do not favour a federal super-state, but are committed to working together in an association of European countries that come together as independent member states. That is the only way in which we can give our people a stronger economy and a higher quality of environment, and achieve greater freedom for our citizens.

Mr. Michael Fabricant (Mid-Staffordshire)

Will the hon. Gentleman give way, on that very point'?

Mr. Cook

No, I shall answer the Foreign Secretary now. With respect to the hon. Member for Mid-Staffordshire (Mr. Fabricant), he has not yet quite arrived at the seniority of his right hon. and learned Friend. [HON. MEMBERS: "Nor have you."] I fear that I can offer hon. Members good odds on my taking over from the right hon. and learned Gentleman in the future.

The Foreign Secretary asked me a series of questions about the budget rebate, immigration and foreign and security policy, but he has not read our proposals to the party conference with the greatest care. If he turns to page 11, he will see that we specifically restate our commitment to maintain the principle of unanimity for decision-making on budgetary policy, taxation, external border controls and foreign and security issues—every single one of the issues on which the Foreign Secretary challenged me. It is explicit in our document that we will preserve the principle of unanimity, with which goes the clear implication that, if necessary, we would be prepared to use the veto in any of those areas.

Mr. Rifkind

I am glad that we have extracted from the hon. Gentleman in this House—as opposed to in documents—a statement of the Labour party's position. If we accept what he says, does that not mean that the Labour party would be isolated in Europe on the budget rebate? Does he think that he would get support from the other member states on that matter? On frontier controls, does he accept that a Labour Government would be isolated in Europe? On the opt-out of the single currency that my right hon. Friend the Prime Minister negotiated, does he accept that a Labour Government would be isolated in Europe? That is what he seems to be telling the House. If that is so, how does he reconcile that with the fine words that he and the Leader of the Opposition have used that a Labour Government would never be isolated in Europe?

Mr. Cook

If the right hon. and learned Gentleman consults the speech that I made in March, he will see that I said that of course there are occasions when one must opt for isolation—[Interruption.] That is by no means a new revelation from me, as I think 600 people were present and heard my original speech, including the right hon. and learned Gentleman's predecessor as Foreign Secretary. Isolation may sometimes be the necessary price if one is right. It should not be—as it is with the Conservative Government—an ambition for the conduct of foreign policy.

The area of difference between the Foreign Secretary and me relates to those other areas dealt with on the page of the document to which he refers. Since he has raised the matters, let me return to them. First, we will preserve the principle of unanimity in those areas. Secondly, if I may say so to the right hon. and learned Gentleman, it is a piece of brass neck for the Government to say that they have discovered a new principle and that they are opposed to any extension of qualified majority voting. This is the Government who came to the House and carried through a vast extension of qualified majority voting. They recommended it to the House and voted for it in the House. They put the measure through. Why did they do it?

The Minister of State, Foreign and Commonwealth Office gave an interesting explanation in answering questions last week. He said that it was necessary to introduce qualified majority voting to make progress on the reform of the single market, because otherwise proposals could be blocked by any one country.

The Minister of State, Foreign and Commonwealth Office (Mr. David Davis)

indicated assent.

Mr. Cook

If that is the argument—and I am glad to see that the Minister agrees—that the Government are going to use to justify the extension of qualified majority voting, which they steered through at a time when there were 12 members of the EU, how much more vigorously correct is that argument when we contemplate the enlargement that will take the EU not from 12 members to 15 but from 15 to 25 and beyond?

Mr. Rifkind

The hon. Gentleman has been good enough to inform the House that a Labour Government of which he would be a part would accept that Britain occasionally would have to be isolated if British interests were to be defended. How does he reconcile that with the speech made by his right hon. Friend the Leader of the Opposition who—as I said earlier—said

Under my leadership, I will never allow this country to be isolated … in Europe."? Not "sometimes" or "from time to time" but "never". How does the hon. Gentleman reconcile that statement with what he has now informed the House—that isolation is sometimes necessary?

Mr. Cook

I can understand the Foreign Secretary's difficulty. He, after all, belongs to a party that is totally isolated in Europe and has no sister party throughout Europe.

Mr. Fabricant

The hon. Gentleman is isolated.

Mr. Cook

I have to say to the hon. Gentleman that neither I nor my party is isolated. We have sister parties in every country of the European Union with which we discuss our position and with which we form alliances. I am perfectly confident that when we take office—as we will—those parties will work with us on a common project of constructive engagement in Europe.

I can assure the Foreign Secretary that one of our first acts in this area when we take office will be to end the shameful isolation into which the Government have boxed Britain over the social chapter, on which their only ally throughout the European Union is the French National Front.

Mr. Riddick

Will the hon. Gentleman give way?

Mr. Robert G. Hughes (Harrow, West)

Will the hon. Gentleman give way?

Mr. Robin Cook

I will give way in a moment to the hon. Member for Colne Valley (Mr. Riddick), who has been waiting for some time to intervene.

I would rather have the 22 sister parties with which we work—all of which support the social chapter—than the French National Front, who oppose it.

Mr. Riddick

Does the hon. Gentleman agree that the opt-out from the single currency, which the Prime Minister successfully negotiated, is in Britain's interests—yes or no?

Mr. Cook

At Maastricht, the Prime Minister negotiated the criteria that are set out in the Maastricht treaty. Labour's position is that we will join the single currency and end the opt-out when our tests of convergence are met, but those tests of convergence are not the financial criteria that have caused so much difficulty in France but those of the real economy. We will end that opt-out when we have finally managed, by an industrial programme, to turn around the industry that we will receive from the Conservative party and when we believe that the British economy is ready to compete with the German economy.

I wish to return to the subject of qualified majority voting.

Mr. Michael Spicer

Will the hon. Gentleman give way?

Mr. Cook

No, I will not give way again. I wish to continue my argument with the Foreign Secretary, rather than with all the Conservative Members behind him.

Mr. Spicer

He should give way.

Mr. Cook

I am sorry if the hon. Gentleman thinks it unwise for me to focus on the Foreign Secretary rather than on the rest of the Government. That would tend to suggest poor confidence in the Foreign Secretary.

The Minister of State's argument was that we should have accepted qualified majority voting when there were only 12 members of the EU. We now face a situation where there may be over 20. The least convincing part of the Foreign Secretary's speech was that where he claimed to be on the side of enlargement. It is dishonest to argue for enlargement of the EU while arguing against changing any of its institutions to allow that. [HON. MEMBERS: "He did not say that."] He did indeed say exactly that.

Mr. Rifkind

I am glad that the hon. Gentleman found the rest of my speech convincing. That is a happy acknowledgement from him, but he must listen to what I say. I made it clear that I took the view that changes would be necessary in the Commission, as it would be absurd if the Commission were to be expanded every time a new member state joined. I accepted that there was a need for the re-weighting of votes to take account of larger and smaller states. The one point I did not, and do not, accept is that there is a need to assume an increase in qualified majority voting, because most of the issues on which we have unanimity require unanimity because they go to the heart of ensuring that member states' vital interests are not affected by the decisions of the Community.

Mr. Cook

The Foreign Secretary might as well be honest about it to the nation and state that what he is defending is not a British veto but a veto for every new country that comes into the EU. He is defending a Slovakian veto, possibly a Bulgarian veto and certainly a Maltese veto. How is it possibly in Britain's interests that each of those countries should have a veto over areas where we may wish to achieve reform and where we may find—on the Minister of State's own doctrine—that those countries are the ones who are blocking changes that are in Britain's interests?

If the Foreign Secretary wants to sound genuinely enthusiastic about enlargement, he must recognise that there is no prospect of the EU enlarging on the basis of everybody sitting around a table, clutching a veto. If the right hon. and learned Gentleman is sincere about wanting those countries in the EU and if he thinks that that would be good for Britain and for Europe, why is he saying to the House that he must keep the veto because those countries will never agree with Britain? I cannot say that I have a deep understanding of it, but I am familiar with how the Government have so often managed to find themselves the odd one out among 15 members. But do they plan on the United Kingdom being the odd one out when there are 25 member countries in the European Union, from Lithuania to Lisbon and from Sweden to Sicily? Will we use our veto to stop what all those other countries have agreed? Are the Government saying that, even in those circumstances, they do not think that they could find a couple of allies to provide a blocking minority? Given the recent record, the Foreign Secretary may be right to say that.

When the right hon. and learned Gentleman produces the White Paper he may discover that if it is acceptable to the hon. Member for Southend, East it will not be acceptable to those other countries. That is why the Labour party document, which was presented and accepted unanimously at our conference, most certainly does not leave us isolated in Europe. Our document has broad support in Europe. It gives a clear commitment that we will support jobs as a priority for the European agenda; we will write a commitment to full employment and sustainable development into the treaty of European Union.

We will provide measures fundamentally to reform the common agricultural policy, which has failed to happen so far, so that it ceases to be a means of subsidising unnecessary production and becomes a basis for supporting the income of people in rural economies. That will also bring us into line with other European countries that have recognised—which our Government refuse to do—that the way to achieve competitiveness is not through low wages and low skills but through high investment, technological advances and high skills. A proper social partnership between management and the work force, which is at the heart of the social chapter, would bring us closer to achieving that goal.

Mr. Robert G. Hughes

Will the hon Gentleman give way?

Mr. Cook

I will give way to the hon. Gentleman and then I must move towards my close.

Mr. Hughes

The hon. Gentleman has talked about qualified majority voting and about the social chapter. Will he confirm that under QMV it is absolutely impossible to pick and choose what will he put into practice and what will not?

Mr. Cook

If the hon. Gentleman looks at what has been said in the reflection group, to which the Minister of State, Foreign and Commonwealth Office, the hon. Member for Boothferry (Mr. Davis) has signed up, he will see that it rejects the idea of an à la carte Europe. Not only that, many of his other hon. Friends have previously rejected it. The words "pick and choose" were derided in a book six years ago by a very distinguished member of the Government who is now the Deputy Prime Minister and First Secretary of State. He made it plain then that we could not have a pick-and-choose Europe. The reason why it is impossible for the Government to find allies when faced with something that they do not want is precisely because the rest of Europe knows that the Government's approach is on a purely pick-and-choose basis.

Several hon. Members


Mr. Cook

I shall not give way as I must proceed. I want to ensure that I cover the remarks of the hon. Member for South Derbyshire (Mrs. Currie) before I conclude.

The other point that the Secretary of State is fond of making is that we can proceed by a trade arrangement with other countries that will provide us with an alternative to Europe. Indeed, the right hon. and learned Gentleman is fond of parading a commitment to the transatlantic free trade area. [HON. MEMBERS:"Hear, hear."] The hon. Members who have just shouted and the Secretary of State know perfectly well that the route to a transatlantic free trade area lies through Brussels. We may well have a special understanding with America, but it does not want Britain to have less influence in Europe. The United States wants a Britain that is part of Europe and can provide a role in Europe.

On last week's "On the Record" a spokesman from the state department said:

We would regret a lessening of Britain's power in Europe. Our own dealings with Britain would be less relevant, less vital if Britain's own role was diminished. Our relationship with the United States and any of the other great powers outside Europe will be determined by how influential we are inside Europe. It is not a formula for success with the rest of the world to be as rude as possible to our immediate neighbours.

There was a time when Ministers would not have waited for that message to be made by the Opposition, but would have been prepared to tell that truth to their Back Benchers. It is a curious feature of Ministers that they have the courage to be isolated in Brussels, but that courage appears to evaporate between Calais and Dover and they show no such boldness in talking about the reality of Britain's need for allies when they confront their Back Benchers. They are prepared to isolate Britain in Europe, but not prepared to isolate themselves in the Conservative party.

Mr. Michael Colvin (Romsey and Waterside)

Will the hon. Gentleman give way?

Mr. Cook

No, I must proceed. Those Ministers know that the process of isolation on which they have embarked does not match up to the need for co-operation in the modern world. They know that the majority of British exports go to the continent. The Confederation of British Industry has recorded by a majority of three out of five in its recent survey that the recent statements by the Government have been unhelpful in promoting business interests in Europe, our majority market.

Those Ministers know that we cannot protect our environment by concentrating only on national measures: they know that we have to work in co-operation with our partners in Europe. They also know that the most positive development in international politics, both inside and outside Europe, has been the growth in democracy and, with it, the parallel demand for proper human rights. But, at that very moment, voices from the Conservative Back Benches suggest that Britain should withdraw from the European Court of Human Rights although Britain helped to create it. In Britain, some quarters of the Tory party no longer want to live by the standards of that court.

Mr. Butterfill

I am sure that the hon. Gentleman is aware that the European Court of Human Rights is not an institution of the European Community, but the function of a separate treaty which, to our eternal regret, a Labour Government sponsored.

Mr. Cook

Absolutely. My case—I am not sure whether the hon. Gentleman entirely apprehended it—is that we support the European Court of Human Rights. Conservative spokesmen are arguing the case for decoupling from it.

It has not always been so—there was a time when current senior members of the Government would have argued with Conservative Back Benchers who argue for isolation. I do not know where the Deputy Prime Minister is today, but I know that we never hear those views argued from the Dispatch Box, nor did we hear them from the Foreign Secretary today. If we hear them at all, it is occasionally from voices such as the hon. Member for South Derbyshire and other Tory Back Benchers who know that it is foolish to boast that we must be successful if we are isolated.

Those Conservative Members know that we cannot make a success of our membership of the European Union if we constantly talk as though we wanted it to be a failure. They know that if we have pride and a sense of national identity we need not express it in hostility to the ambitions of other countries and contempt for their politicians—[HON. MEMBERS: "Soundbite politics."] With the greatest respect, I think that I have been speaking for longer than a soundbite. Those Conservative Members know that the Euro-sceptics in the Tory party are the tail wagging the dog. They know that they are a minority, even in a Tory party which itself has only a bare majority in Parliament.

There is a majority in the House for constructive engagement in Europe. There will be no vote tonight—there has been no vote on most nights this week and there will be no vote on most nights next week, as the Government trickle out the most threadbare programme that I have seen in any parliamentary Session in my 22 years in the House. But we shall not complete the year of the intergovernmental conference without a vote on Europe.

There will come a night when those Conservative Members who know that the hon. Member for Southend, East does not speak for all their party will wish to demonstrate. As the hon. Member for South Derbyshire said, there are others who disagree with her. Those Conservative Members will then have to ask themselves whether to vote for what they believe will be right for Britain and Europe or to vote for what they know is wrong as a policy for their party. When they are ready to answer that question, we shall he ready to give them an opportunity to demonstrate their answer and to show that there is a majority in Parliament in favour of Britain's future in Europe and only a minority committed to Britain's future as an isolated island on the margins of Europe and in the backwaters of the global economy.

5.29 pm
Sir Edward Heath (Old Bexley and Sidcup)

I am grateful for the opportunity to make a brief speech in this debate.

I ask my right hon. and learned Friend the Foreign Secretary and, through him, the Prime Minister in no circumstances to make a statement on the position of the British Government before the conference next summer. I have had many experiences of international negotiations and five years of negotiating in Europe. It is impossible for any Prime Minister or leader to lay down beforehand what he must get from negotiation.

In this Parliament, we have long had a tradition, which has been broken occasionally in recent years, that the Prime Minister and the Government decide what they are going to negotiate and what will or will not be acceptable. Having made their judgment and negotiated, they come back to both Houses for their approval. If we do not approve, that is the end of the Government.

I beg the Foreign Secretary and the Prime Minister not to make statements at any time before the negotiations, however much they are provoked, about their intentions.

Mr. Cash

Will my right hon. Friend give way?

Sir Edward Heath

No, I must be brief.

The House and the present members of the European Union know that the first six members had an enormous advantage because, in each country, every political party supported membership. As the number of members increased—it is now 15—in all countries except one, Britain, all parties supported membership. One country that wanted to join was Norway, but it did not have three—party support for membership. It held a referendum, and the Government who had negotiated lost.

I believe that our position can be consolidated for the first time—if we go the right way about it. All three major parties will be agreed about our membership of the European Union. That is essential, because Britain has no future outside the European Union. The statement of an American spokesman just quoted by the hon. Member for Livingston (Mr. Cook) shows that very clearly, and those of us who have had discussions with the leaders of the other members of the Union, and with Americans, know it vividly. Before that statement, President Clinton had announced that he was not interested in a transatlantic free trade area.

I must tell my right hon. and learned Friend the Foreign Secretary, whom I greatly admire, that I wish he had not started his first speech as Foreign Secretary by asking for a transatlantic free trade area. The first reason is that the Americans are not interested—they have enough to do to sort out the North American Free Trade Area, especially with Mexico's problems. Secondly, the Americans do not want a transatlantic free trade area, and Europe knows that they do not. Thirdly, from our point of view, his speech made Europe think immediately that we are again trying to ride two horses—that we are not really wholehearted about Europe and that we want to be able to play both sides of the Atlantic together. That is damaging to us.

We should remember that the last negotiation on trade took six years to complete. It was a tough negotiation, and it went only part of the way. The effects of that negotiation will take some time to be felt in business, in trade and in Governments. Further such negotiations will not be possible, even if they were desirable, for many years to come. In the meantime, we must continue the development of the European Union. I hope that too much emphasis will not be placed on a transatlantic alliance, because it raises doubts in the minds of every leader of the Union countries about our real intentions.

There is a possibility of the three parties working out agreements to give us strength in the European Union. I do not believe that this is a matter for party-political warfare before a general election, and I wish that it had not happened in the past. My task in 1960 would have been infinitely easier, and probably successful, if I had been able to persuade Hugh Gaitskell to give me his support. I offered him, as Leader of the Opposition, full information on Privy Council terms from the time I started negotiating, but he refused it. Then, of course, he made his brilliant party conference speech utterly opposing the negotiations. I hope that, with the right attitudes, we will be able to reach agreement.

Mr. Nigel Spearing (Newham, South)

Will the right hon. Gentleman give way?

Sir Edward Heath

No, I am sorry.

There are no answers to many of the questions that have been asked so far in this debate. It is not possible to give answers to such challenges or to say what one would do in certain circumstances or why one has not committed oneself. It is not possible, in the circumstances of a major negotiation in Europe, to commit oneself beforehand. It is very unwise to. I hope that we shall adjust our attitude to Europe, because the present situation does not help anybody and doubtless damages us abroad and in the European Union.

We have to ask what the purpose of isolation is. If we are negotiating satisfactorily, we know that if we want our own way—as people say, in our own interests—we must negotiate with other people about their interests. That is what negotiation is all about. Stating our interest, and saying that that is that, is not a means of negotiation. We must ask ourselves what we are isolating ourselves for.

At times, isolation has been deplorable for us. We were isolated on Black Wednesday, when sterling was devalued by 15 per cent. Nobody was prepared to help us because of our attitude on so many other subjects. We were isolated when the Prime Minister, on his own, tried to change the voting system. Nobody else would support the proposal, so it went down the drain. Those are not examples of desirable isolation. There might be cases in which it is desirable, but we have to ask clearly why we are making ourselves isolated on a particular point.

Other matters have been discussed on which we have tended to be isolated—the military activities of the Western European Union, for example. We tend to take the attitude, which others do not, that nothing more must be established in Brussels and that all these activities must be spread around. That cannot be efficient or operationally successful, so we have to ask ourselves why we are taking that attitude instead of moving forward logically and naturally.

Finally, I shall say a few words about a common currency and the opt-outs on it and the social chapter. The effects of the social chapter have been exaggerated out of all proportion. British firms who have subsidiaries in the Union are implementing the social chapter completely. They are extending it to their people here. They have no worries about that.

This country had minimum wage arrangements from 1909 until they were abolished by the Government two or three years ago. We had them through party Governments, through wartime coalitions, through the national Governments of the 1930s, and through the post-war Governments of the two different parties. They were abolished only two years ago. What harm were they doing us all that time? We had times of great prosperity and of problems, but they were not due to our arrangements for minimum wages. The problem can be grossly exaggerated and that does not produce any worthwhile result.

Various requirements, which I think are unrealistic, are being made for the single currency. The requirement is for each member country to be in the same economic position. The hon. Member for Livingston went further than others have done in that respect. It will never happen. It does not happen in the United States. Consider the differences between California, New York and President Clinton's home state: they are enormous. The same will be true of Europe. The pattern can be fitted together successfully into a common currency.

Mr. Andrew Mackinlay (Thurrock)

Ministers seem to be getting aggravated.

Sir Edward Heath

I am keeping calm.

The most persuasive point is the fact that there is no single market in the world with more than one currency. Imagine the United States with 51 currencies. Imagine Japan with separate currencies for its constituent islands. It is unthinkable, and the reason is that, with more than one currency, member states cheat by manoeuvering their currencies to deal with their problems at any given time. Indeed, that is what we were accused of on Black Wednesday.

If we are to keep a single market, we must move to a single currency as speedily as possible.

The Foreign Secretary spoke of the huge number of regulations emanating from the Commission from 1990 onwards, and of how the Government have managed to reduce the number since then. The simple explanation is that all those regulations paved the way for the single market. Altogether, 272 regulations were needed to get the single market going. They were therefore desirable, and the Commission cannot be blamed for them. After all, we played a major part in bringing the single market about.

Similarly, for every regulation issued on the single market, 12 were abolished in the member countries—another beneficial effect. The people of this country have been misled about the number of regulations pouring out of Brussels and by the idea that we have somehow succeeded in stemming the flow.

Business and industry in the United Kingdom want a single currency. I know that some of my hon. Friends have issued a statement in which they claim to want to re-educate business. I sometimes feel that we might do better to take more notice of what business people think and want, instead of believing that we can do everything on our own and re-educate business leaders. [Interruption.] There seems to be a lot of noise behind me.

Public opinion polls also show that 82 per cent. of business men in this country want a single currency. Why? They know that they will have to send out only one invoice, not 15. That means less expense; it means that they can cut prices and have far less trouble in general. Secondly, they know that speculators would never dare touch a single currency. The trouble with one group going ahead with a single currency, leaving others outside it, is that the speculators will operate against those outside, and that can only be damaging for everyone.

The quicker a single currency is achieved, the better. The decision is continually put off by this country, but the other member countries draw their own conclusions from that: that we are not prepared to take a full part in a single currency or a single market within the European Union.

Ever since its creation, the Community has moved forward in leaps and bounds, sometimes of six years, sometimes of 10, sometimes of eight. That is what must happen now with the single currency; it will require a major leap forward. We cannot just shuffle the problem around, tinkering with various solutions. The whole process must be thoroughly worked out and then put into operation. My point concerns speed; we must not wait for 1999 or 2001 or 2010. If we do, the single market will disintegrate. We shall then lose all the fruits of the work done ever since 1950.

The other member countries will not stand for this. If we are left out, we will find ourselves not splendidly isolated but open to attack from every quarter, and in the end we will lose not just the single market but the European Union. I have seen a great deal of the Union, from its creation onwards, and I have listened to the views of its leaders. It is vital that we understand their point of view. We are kidding ourselves if we believe that they all really want to follow whatever we do. Nothing could be further from the truth. They just think how lucky they are to be saved from our position.

I beg the Foreign Secretary not just to announce what we intend to do and then hope that everyone else will follow. I am sure he will not do that. In any case, it would not happen; it would not work. It would damage our interests enormously. What we need to do is to keep this country, as the Prime Minister said, at the heart of Europe. That means working with the other member countries and negotiating and discussing all the time—not insisting on getting our way for the sake of British policy and British interests. The interests of the Union are our interests and, incidentally, ours are the Union's in the long term.

I think it important that the points I have made be taken into account.

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

The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) always speaks with great authority on European matters, and with good reason. There is always an element of good sense in what he has to say, but I disagree with him on a number of points, and I had better say what they are.

First, however, I shall say what I agree with the right hon. Gentleman about. I agree that the whole argument about the social chapter has been ludicrously exaggerated. Its importance has been so absurdly overestimated because it meets the convenience of Government and Opposition Front Benchers, who need a bogus political fight on an unimportant part of the treaty so that they can avoid discussing the major, important parts of a treaty on which they are agreed. The really important parts of that treaty deal with economic and monetary union, and with the single currency to which the right hon. Gentleman quite properly addressed most of his speech.

My sources of information differ from those of the right hon. Gentleman. He says that British business and industry are in favour of a single currency. I have with me a survey by the Institute of Export, dated 6 November. Of 1,100 replies to the question,

Do you wish to see a single currency in the European Union?", a majority, 54 per cent. of exporters, said no; 36 per cent. said yes; and 10 per cent. were undecided. Whatever that shows, it does not show a majority in favour.

The right hon. Gentleman must also know that it is possible to have a market with open trade without a single currency. Canada, Mexico and the United States operate an open frontier policy under NAFTA for visible and invisible trade, without a single currency and without the slightest prospect of one. I therefore reject the right hon. Gentleman's link between a single market, or an open market, and a single currency.

Sir Edward Heath

I quoted the CBI's figures for industry, and public opinion polls reported in the press. North America does not have a single market; it is a free trade area—in part.

Mr. Shore

We could spend some time on the precise difference between a free trade area and a single market, but not today. I think the right hon. Gentleman accepts the CBI's figures too easily. I do not believe that it accurately represented its questionnaire and the replies to it.

Mr. Jenkin

The CBI's previous survey showed that only 14 per cent. of respondents were in favour of further European integration. That prompts the rather important question: how do we impose a single currency that does not involve further integration on the whole of Europe? This conflict rather suggests that the business men answering the questionnaires are confused by the phrasing of the questions.

Mr. Shore

That may be the explanation.

My major concern, which I believe is shared by my right hon. and hon. Friends, relates to the third stage of economic and monetary union. So far in this debate, there has been no mention of events on the other side of the English channel—a violent deflationary move by the French Government at a time when France is suffering from persistently high unemployment of more than 11 per cent. The total number of unemployed throughout the Union is 18 million. Why are deflationary measures being introduced not only on a large scale in France but elsewhere in Europe? The reason is that all the countries of Europe are trying to meet the convergence criteria laid down in the Maastricht treaty. The French made no pretence of concealment. They feel that they must reach their 3 per cent. target by 1997 to qualify for monetary union membership in 1999.

The French borrowing requirement was 5.6 per cent. of gross domestic product in 1994 and 5 per cent. in 1995, That leaves a gap of 2 per cent. to close in the two years remaining, which roughly works out at a mixture of tax increases and public spending cuts of £20 billion. France is not the only country to have to deflate. Italy, Spain and many other European states are way above the 3 per cent. of GDP threshold and are strongly deflating their economies by cutting public expenditure and raising taxes to converge in the time scale envisaged. If EU countries that I have not mentioned have no difficulty reaching the 3 per cent. criterion, they are caught on the 60 per cent. of national debt criterion. Only two countries could meet the Maastricht treaty criteria—Luxembourg and Germany. The rest are faced with finding some way of conforming to the criteria.

I have not mentioned Britain, but I will. The Foreign Secretary took it all too easily, saying, "Britain's going to be there. We're going to conform." The newly published Red Book shows that in 1995-96, Britain had a 4 per cent. public sector borrowing requirement, representing £29 billion of expenditure. The new forecast for 1996-97 is £22.5 billion and 3 per cent. PSBR. However, the British PSBR is not the same as the general Government borrowing requirement that is used in measuring convergence under the Maastricht treaty. The major difference is that we count into our accounts and PSBR the receipts from assets. The difference between our PSBR and the measure used to conform under the treaty is roughly equivalent to 1.1 per cent. of GDP. Our PSBR target for 1996-97, which is the last year before convergence, is 3 per cent., but it will be more than 4 per cent. by the European Union's accepted measure. Our forecast for 1997-98 is 2 per cent., but on my interpretation it is bound to be at least 3 per cent. and may be more.

It is not the case that Britain will conform just like that. We too face considerable cuts in public expenditure or increases in taxation if Britain is to conform to the rules of the Maastricht treaty and the convergence provisions. European monetary union is not an easy option for the UK either, which also has major problems of high unemployment—although I willingly concede that the figure is not as high as in France, Spain, Italy and certain other EU states.

As to my own party's approach, I will refer to arguments used in the past and those deployed by my hon. Friend the Member for Livingston (Mr. Cook) this afternoon. When we debated the Maastricht treaty, Labour's Front Bench spokesman argued, "The targets of 3 per cent. and 60 per cent. are just guidelines or approximations. There is plenty of flexibility. If things get difficult, there will be no holding us to account on 3 per cent. and 60 per cent." I wonder what the people who made that argument have to say about Herr Waigel's stability pact, which was proposed to the French on 13 November. It allows for a 1 per cent. GDP borrowing requirement, and it argues for and claims an automatic fine on any country that exceeds the 3 per cent. GDP borrowing requirement. If that rule had been in force, and taking into account our behaviour over the past two years, we would have already paid the European Union a fine of £16 billion, which does not make sense. I hope that I have dealt with the ludicrously optimistic argument used in the Maastricht debate, unfortunately, by the individuals who spoke for the Labour party at that time.

Another get-out is used in the document that went before the Labour party conference in October, which has been quoted. It invests a great deal in supporting the Delors white paper, as though it offsets in some way the deflationary effects in not only Britain but Europe generally of converging with the treaty criteria. Dare I mention those famous trans-European networks and other things? The sum total of all those expenditures in relation to stimulating the GDP, output and employment of the European Union is negligible. It does not meet the needs in terms of quantity, amount—although the figures are confused—or the time scale in which those expenditures will take place. In general, they comprise large investment that will take years to come to fruition.

My hon. Friend the Member for Livingston spoke helpfully about convergence in the real economy. He was insistent, when answering the questions that I put to him, that there will have to be convergence in the real economy. When I pointed out that nothing about that appears in the Maastricht treaty, he said, "That's too bad for the Maastricht treaty. We are going to have our convergence, otherwise we will not sign up." That is most welcome.

My hon. Friend mentioned that the Swedes have proposed that employment criteria should be written into the revised treaty. I like that idea, but one must be realistic about the degree of support that it will enjoy. Sweden may vote in favour. The incoming British Labour Minister will vote for it. What about the rest? I am sorry that my hon. Friend the Member for Livingston is not in his place. Is he not aware that during the negotiations on the Maastricht treaty there were allegedly socialist Governments in France, Spain and Italy? I would not like to say where those Governments are now when it comes to the law. However, three major socialist Governments who were involved in the Maastricht treaty were unable to secure agreement on the articulation of a high level of employment, let alone full employment, anywhere in the treaty. Why does my hon. Friend the Member for Livingston think that we have only to clap the Swedes on the back and say, "We are with you"? Does he think that in no time we shall be able to convince the other member states to write in the new convergence criteria in the real economy, including a commitment to full employment?

I find that events and comments are moving helpfully against the single currency. Our experience in the exchange rate mechanism in September 1992 is still vivid in our minds. I assure the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), who preceded me, that it was not a matter of letting Britain be isolated. In a sense, thank heavens that we were not supported at the then rate of exchange. Imagine that there had been funds available in Europe to prop up the pound at 2.95 against the deutschmark. What would be the level of unemployment in Britain now? The ERM was folly and thank heavens we escaped from it. Are we to expose ourselves to it again? We would have to do so two years before the move to a single currency. We have seen what it has done to France. Political disorders, let alone economic, may ensue. We would be mad to countenance such a move.

I am not sure about tactics but I would keep our opt-out. We might weaken our position in saying no to joining a single currency on the present criteria if we do not maintain our opt-out.

It is interesting to see opinion on the move in Britain and elsewhere. An influential commentator from the Labour party's point of view is an excellent journalist who writes in The Guardian, Will Hutton. He is the author of "The State We Are In", a well-received book. Will Hutton convinced himself—no doubt he hoped to convince some of my colleagues on the Opposition Front Bench—that we should join a single currency. He is generally an enthusiastic Euro. It is interesting that he has now come to a different conclusion. On 2 November, he wrote:

The deflationary effects of the Maastricht ambition to create a single currency must not become so overriding that they create the very social division and friction they were intended to heal. There is some foresight there. He continued:

If Maastricht is seen to be the cause of the dismantling of the welfare system and the social wage upon which millions of the poorest in Europe have come to depend, then it will spark inevitable populist backlashes." Will Hutton sensibly adds: The creation of a single currency by 1999 with its convergence criteria needs to be put aside—in its place might be a parallel currency and a loose exchange mechanism, but anything more would be destabilising. I welcome the conversion of an influential columnist and writer in my party.

Published in November, again, were the opinions of two gentlemen whom I greatly respect. Brian Hopkin was chief economic adviser to the Government during my time, 1974-79, and possibly slightly before the Labour Government took office. He wrote an article with Brian Reddaway, who is a professor of economics at Cambridge. The argument is summarised as follows:

if, as proposed under Maastricht, a single European currency were created and an Independent European Central Bank given control over monetary policy, the arrangement would be likely to disintegrate, or require drastic reconstruction, because the results of its operation would be found intolerable". That is the opinion of two men of considerable distinction. Their opinions are well worth recording.

I hope that my Front Bench colleagues, as well as Ministers, will think again, and extremely hard, about their commitment to a European single currency. I know that we have set a condition. It could be an important one because it could be the way out of the commitment. The condition of convergence in the real economy is very much worth having. Let us adhere to that. Let us not weaken our position in any way in subsequent legislation.

The intergovernmental conference that is about to open in Madrid will last for at least 18 months. My Front Bench colleagues should be aware that the victors at the next general election will go to Madrid to negotiate the final settlement. That is where a special responsibility falls. That applies to the Government who are playing their hand now and to my Front Bench colleagues, upon whom will fall the great burden and duty of getting things right in the kind of Europe with which we can live as opposed to the Europe that would destroy so much of that in which we believe.

6.6 pm

Mr. David Howell (Guildford)

It is a pleasure to take up the remarks of the right hon. Member for Bethnal Green and Stepney (Mr. Shore). He has brought the debate about Europe several stages nearer to reality after the acrobatic performance of the Opposition spokesman, the hon. Member for Livingston (Mr. Cook), who was so brilliantly exposed by my right hon. and learned Friend the Foreign Secretary. I was pleased that the right hon. Member for Bethnal Green and Stepney began by reminding us that while we all debate the lesser matters that come before Euro summits, as the stage army moves from one capital to another, there are some seismic shifts taking place within the European scene. The situation would be comic if it were not rather worrying for those of us like myself who believe strongly in European unity but who think that the rush to Madrid is to get to the name of the new currency.

I do not know which journalist it was, but he had a real touch when he reminded us in the press of the adage that the more sickly the child the quicker the christening. That is very much a summary of where we are now in terms of the great emu bird or chicklet which, in my view, will never fly. If it does, it will fall rapidly to the ground. More of that in a moment.

The right hon. Gentleman reminded us that the deal, the arrangement or the settlement, even that which prevails from Maastricht, has now begun to unravel. It is not a matter of thinking about France alone, although that country is certainly in all our minds. The tensions are colossal. The agonies of decision facing the French political establishment must be awful. Whichever way it turns, whether it gives in or not, it will be faced with endless pressures and difficulties.

It is not only France that is in difficulties. In Austria, a veering to the hard right continues at great speed. Who knows what the elections in a few days' time will produce? There is almost extreme vocal opposition to the European Union and all its workings.

The situation in Sweden, as has been mentioned, is one of grave hostility to the European Union, which it has joined, and now it proposes—it is probably completely impractical but it is a measure of its desperation—to bung in a series of extra provisions to the Maastricht criteria which, they say, will somehow restore the popularity of the European Union. It will not.

The reflections group, in which my hon. Friend the Minister played such a distinguished and excellent part, has just reported, and if the proposition is that the Maastricht treaty should be revised, that would require a referendum in some countries. France is not compelled to hold one, but several other countries are and the referendums will be lost. If we continue on the present path and the state of flux continues in Europe, ahead lies the prospect of a severe threat to the single market, and the European unity that my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) spoke about and for which he had fought would be at risk—not from the Euro-sceptics, the Euro-critics and others who say that things are going too fast but from those who have fanatically pressed ahead with federalist confections.

I was interested to read a comment in the Italian press yesterday about the reflections group. When Italian officials were asked whether they were worried that, apparently, the British had been isolated—in the commentary there was much talk about one country not liking this and another not liking that—the answer was that that was not the worry. The countries that stood against these matters had played a positive part and the real enemy was the fundamentalists. The people who are really the wreckers are those who press for extreme measures in the European system and propose the great leap forward—another terrifying analogy, as we all know where great leaps forward invariably lead—in it.

Those are the things that the House should now be worried about—certainly those of us who support the European process in broad terms, as I have always done. Some items threaten to destroy the European system. That threat gets more dangerous all the time, and if it is not curbed by the British Government, among others, speaking out bravely and boldly—I hope that they will have a White Paper of principle, not on the negotiating detail, as that would be absurd—we shall look grimly on the disintegration of European stability, which has never been in the interests of this country and for which we have fought over hundreds of years, long before anyone thought of the Common Market or the European Union. I am talking about the single currency, which is a very divisive project indeed.

The proposition is that new barriers should be put up to cope with the interface between the countries that are inside the inner core and those that are outside. There is also the proposition for stability pacts and fines, and compensation for the French textile and motor industry, because they would not be able to cope with the competition from the more competitive currencies. There is also the theory that the Italians, who were one of the founder members of the European Common Market, as it was, may be excluded unless there is a fudge. The German electorate is determined that there should not be a fudge, and if there is, it will take its money out of the deutschmark and into the Swiss franc, and so on.

Those are divisive issues on their own, and unless, as I think the Prime Minister said yesterday, they are handled with the greatest sensitivity and care—much more than any indication from some of the blind enthusiasts for the single currency—they will do irreversible damage to the European ideal and to the European single market. They will also blow back on another aspect about which one is entitled to have increasing worries—the European budget and financial structure. We have already heard that enlargement—enthusiasm for it in Brussels seems to be disappearing rather fast—with the present common agricultural policy would add £18 billion to £21 billion a year to the cost for all European contributors to the system, which, of course, would be an intolerable burden. We know also that if we go ahead with monetary union, which would rule out any kind of limited flexibility in exchange rates, the structural and cohesion funds would be vastly increased. We are talking about the prospect of doubling the cost of Europe to the contributors. I do not believe that any Government who tried to double the cost of the European project and impose it on their electorate would survive very long. They would be rapidly turned out of office. These are divisive issues, and the worst thing of all is the threat that they pose to the enlargement process.

I hope that no one will say—I am afraid that they will—that the British position, because it appears to be isolated, is anything other than extremely positive. The hon. Member for Livingston got into a bit of a fix when nailed by my right hon. Friend over the fact that the Labour party, apparently, is against being isolated in principle, but when it comes to the detail he is prepared to be isolated on one or two things. I give him a little comfort in that in a race one is isolated if one is running behind, but also if one is running ahead. We need to do a great deal of running ahead. We should not he reluctant as a Government, Parliament or country to be prepared to run ahead, without having our European credentials automatically questioned, and to make an angry and vigorously positive case for creating the kind of Europe that will stay together and not be rent by these bitter arguments and be undermined by absurd, overcentralisation and false economic arguments of the kind that say that a single market must have a single currency. That is an utterly out-of-date proposition, belonging more to the 19th century and to ancient monetary doctrines than to the modern world.

I believe that the positive position for Britain is there to be made. We have our commitment to enlargement. It is not an afterthought. We are not just saying that it would be nice to bring in the new democracies. The central purpose of the European Union is that it should embrace the whole of Europe. Any backsliding on that must be utterly rejected. If it is said that we cannot do it because we cannot reform the CAP, we must reform the CAP. If it said that we cannot do it because the structural and cohesion funds are wrong, that they would be too expensive, we must look again at the whole structure of those funds.

We must apply our minds much more vigorously than some of our colleagues are prepared to do to enlargement in the IGC. We must apply our minds to subsidiarity much more vigorously, which in my book always meant much more than just saying, "No more centralisation". It means unravelling some of the existing competencies and commitments to centralisation. I know that the debate is between the parties, and it may be slightly blown up and exaggerated, but I have never understood why social policy, which is so sensitive and needs to be so carefully geared to the details and instances of shop floor operation, is amenable to the generalisations and grand principles that are spreading across the European Union. I know that there are some ideas in the social chapter that the Opposition like, but the proposition that our social policy should be "desubsidiarised" and centralised in this way always seemed to me to be miles away from the reality. Subsidiarity is a matter on which we have a lot more to say, and I hope that we will say it with great vigour.

Then we come to the European Court of Justice, about which my hon. Friend managed to make some excellent references in the reflections group report. Clearly, there must be changes to make it a genuinely balanced court of adjudication and much more sensitive to national judicial systems than it is at present.

On the Commission itself, we have tiptoed around the issue of whether its powers are properly defined. Can we stop the "communitisation" that is stretching out into the pillars of justice, home affairs and common foreign security policy in a way that is very undesirable and is very unpopular in Europe? It is not just Britain that thinks that it is unpopular; many countries do and it should be resisted.

Then we come to the matter, which really is one for us in the House, of how we fit national Parliaments into the scheme of things. Everyone pays lip service to that. It is in the Maastricht treaty and in every speech that is made by a political leader, but nothing much comes out of it.

I was full of admiration for the excellent comments in the report of the Select Committee on European Legislation. I see that its Chairman, the hon. Member for Clydesdale (Mr. Hood), has a speech there, so he will probably be speaking on it in a moment. His Committee made an interesting proposition to the effect

that national parliaments might suggest amendment or rejection of legislative proposals, and that if a prescribed proportion of parliaments made such suggestions, this would have implications for the decision-making procedure in the Council. In other words—I leave the hon. Gentleman to explain it in more detail—if certain legislative instruments or potential legislative instruments were put before all the national Parliaments, before they were rushed on into the statute law of each member state, and a number of Parliaments gave the thumbs down, those propositions would be rejected. That is an ingenious and good start, not bringing national Parliaments into the European legislative process but asserting our own legislative rights and powers before measures suddenly turn up on our own statute book.

Britain has put forward a range of extremely positive European ideas. If, when we first put forward a new idea we are isolated because we are ahead of the pack, so what? It is an absurd line of attack by the Opposition to criticise the concept of isolation. It is necessary to be isolated to make any progress with new ideas. The British stand, as reflected in the reflections group, and as I hope will be reflected in the IGC, is one of innovation, is pro-European, is pointing the way to keeping Europe together, and is in contrast to those who pretend to be good Europeans and parade their ideas as good Europeans, but in fact are proposing measures which would divide Europe, destroy the single market and undermine everything that we have fought for over the years.

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

The machinations of the right hon. Member for Guildford (Mr. Howell), the Chairman of the Select Committee on Foreign Affairs, in his position as a senior Back-Bench Conservative Member of Parliament, are a fair reflection of the difficulties within the Conservative party. Although the right hon. Gentleman and the Foreign Secretary are fundamentally pro-Europeans, it was also self-evident from the Foreign Secretary's speech that they must dress up their pro-Europeanism these days in fundamentally sceptical language.

It is rather depressing to watch that going on. The net result is that the sceptics are more and more driving policy, and that is bad for the Tory party, for the Government and for the country.

Mrs. Currie

It may be an entirely rare occurrence, but I must point out to the hon. Gentleman that there is not a single Euro-sceptic on the Conservative Benches. There may be on the Opposition Benches, but not here.

Mr. Kennedy

There are certainly Euro-sceptics, if that is a term of description, endearment or abuse to which they would answer, on the Labour Back Benches, but there is an important Euro-sceptic on the Conservative Benches, and that is the Minister of State, Foreign and Commonwealth Office, the hon. Member for Boothferry (Mr. Davis), who will be replying to the debate. That is the most fundamentally depressing of all.

The people in the reflections group taking the decisions and making the interventions on behalf of Britain—in this case, the Minister of State—are delivering speeches there that are targeted not at fellow Ministers in the reflections group but, unfortunately, at the domestic Conservative audience back at Westminster and the other parts of the Tory party across the country. That is fundamentally depressing and not helpful.

The Foreign Secretary and his shadow go back a long way. They have been debating with each other and enjoying debating with each other since their earlier political incarnations, when they were both operating at elected level in Edinburgh. The mutual sophistry showed through. The position of those on the Front Benches of the Labour party and the Conservative party is somewhat cynically similar on many matters.

For example, on the issue of enlargement, the Conservatives will the ends. They say that they are in favour of enlargement. They do not appear willing to will the means, which will have to be a logical extension of qualified majority voting.

The Labour party says, as the hon. Member for Livingston (Mr. Cook) did this afternoon, that it wishes to see the achievement of a single currency, but the means by which that would be achieved are means that it knows will not be realised. The Swedish proposal is unlikely, for the reasons that the right hon. Gentleman outlined with great lucidity, to be in the ascendancy in the Union.

Even if it was, there are unlikely to be the further criteria that the Labour party has been saying should be written in. It knows that the criteria will never formally be on the agenda, so it is easy for a Labour Front-Bench spokesman to keep both ends happy by saying that the Labour party wills the objective, knowing that the hurdle that would have to be crossed to obtain that objective never will be crossed. Therefore, we have a degree of mutual cynicism which is not helping the debate in the House.

As we approach the IGC, I hope that the debate will be helped by two sets of events which have not been discussed in this debate at all—one is Northern Ireland and the other is Scotland. Britain has an unwritten constitution. It is deeply unsatisfactory, but it is there, and it is unwritten. The Prime Minister, along with others, is making valiant efforts in favour of the Northern Ireland peace process. We wish him well, and we hope that that meets with success.

If it does, the Government's stated position is that they would wish to see some form of elected body re-established in Northern Ireland. I agree with them. That is a good policy, for which it is worth aiming. But if that success is attained, the minute some form of elected political legislative body is reinstituted in Northern Ireland, the status and rights of Northern Ireland Members vis-a-vis other Members of the House are affected.

Equally, Scotland last week saw the Labour party, the Liberal Democrats and others launch the Scottish Constitutional Convention blueprint for re-establishing a Scottish Parliament within the United Kingdom. If we go down that route, it will have major constitutional implications for the rest of the United Kingdom. Therefore, I welcome the fact that those other items are on the British political agenda. They will be deeply relevant to the IGC.

However much Ministers may wish to persuade us that it is not the case, Europe is developing in a decentralised way. We want to encourage that tendency. The great chance of the IGC is to give Europe and the European project a firm push in the direction of more decentralisation, more democracy and more diversity across the nations and the regions of Europe. That means the very principle to which the Government pay lip service, subsidiarity, being applied not just at European level but within the member states of the European Union.

For example, it means that subsidiarity is not a principle that ceases to have any constitutional, political or legal validity the minute one crosses the English channel. It is a principle which the Government are willing to apply in the context of Northern Ireland, and which the Liberal Democrats and the Labour party would wish to see applied in the context of the English regions, Scotland and Wales. It needs to be applied within the United Kingdom and throughout the United Kingdom. Therefore, I hope that the IGC will be a heaven-sent opportunity to move the debate in that direction.

Unlike the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), I would welcome it if the Government were to produce a White Paper setting out their vision of Britain's future in Europe. It may be a rather short one, if that is the task that they are setting themselves. There was no hint of vision in what the Foreign Secretary said today. If they bring such a publication forward, it would be in Britain's best interests if it contained four important principles.

The first is unequivocal support for United Kingdom participation in the development of Europe, deepening it and in due course widening it. The second is a determination to play our part as a country in making the European Union more decentralised, more democratic. The third is an active role for Britain, which we have effectively, in large measure, so far eschewed in preparation for a single currency.

The right hon. Member for Guildford is right to say that no one can predict deadlines for the likely developments on a single currency. In many ways, the most significant feature of the Chancellor's Budget statement was his specific reference to the Maastricht criteria. He is clearly not ruling out the possibility, which is a sensible stance. Given what the Prime Minister said at Question Time this afternoon, however, it is clear that, if the process takes place, it would be insane for this country not to be part of it.

Mr. Austin Mitchell (Great Grimsby)


Mr. Kennedy

Trying to run the pound sterling alongside a single European currency while we were still part of a single market would have as much validity as an attempt by Manhattan to run a separate dollar from the rest of the United States. That is not the real world.

Mr. Mitchell

Does the hon. Gentleman not accept that, in a single market, the only way in which a laggardly economy—or one that is not competing with the most successful—can insulate itself and take shocks that would otherwise result in unemployment is through the exchange rate? That is the current experience of Canada and Mexico in the single market in the North American Free Trade Area; it was also the experience of Ireland, which cut its ties in 1979 when sterling was rising too far in a defective single market.

Mr. Kennedy

That last example is the worst that could be cited. In fact, Ireland is rather enthusiastic about the project, and wants to be part of a single currency in due course.

Competitive devaluation—or the prospect or option of such devaluation—is hardly a good basis on which to run an economy. It is not part of any Government's policy to keep competitive devaluation in the back locker to use when all else has failed; that should not be what democratic Governments are about, whatever their political complexion.

The single currency is often associated with the loss of sovereignty. In real political day-to-day terms, the country would experience a far greater loss of sovereignty and clout internationally if a single currency were introduced and we were not part of it, than if there were not such a currency at all.

Fourthly, as well as playing an active role in European monetary union, we should learn the lessons of Maastricht, which have been referred to. The House did not cover itself in glory during that exercise. There was never any proper debate; the right hon. Member for Bethnal Green and Stepney (Mr. Shore) and I sat through hours of discussion, and all too often—whichever section of the treaty was being dealt with—we would hear a defensive speech from a Minister and a cagey speech from the Opposition Front Bench, but no real debate, because there was no difference between the Front Benches in regard to the fundamentals. The debate would then take place on the Back Benches.

There are two lessons to be learned from that. First—I voted for this at the time, and I hope that, if the IGC proves to have constitutional implications, we will pursue the policy—we should have had a referendum on the Maastricht treaty. The matter should have been debated openly, in public. The House failed to achieve that at the time.

Secondly, some of the Labour party's clever tactics—or so they appeared then—may now be viewed with some dismay in retrospect, and seen for the mistakes they were. By concentrating on the social chapter—which served both Front Benches only too well—and building up the Conservative Euro-sceptics, Labour helped to create a monster that is now increasingly out of control and doing immense damage to our position in Europe.

It would be good to see the Government taking a far more positive role, but I do not for a moment think they will. They are locked into a vortex of Euro-scepticism, in which the only audience that counts is the section behind them and the electorate; they are not concerned with the long-term interests and future of Britain, and Britain within Europe.

Mr. Spearing

Will the hon. Gentleman give way?

Mr. Kennedy

Yes, although I was about to end my speech.

Mr. Spearing

I am glad that the hon. Gentleman has given way, because my intervention relates to his party. There are sceptics and divisions in both the two main parties, but—with, perhaps, one exception—the hon. Gentleman's party wishes to "move ahead". Given all the troubles and difficulties that we see directly across the channel—and perhaps in other European countries as they try to meet the required terms—why is a single currency so essential? We have had first the common market and then the single market, with all their supposed benefits; why must people press ahead, as the hon. Gentleman is, to achieve something that leads to so much trouble, dissent and perhaps disunity?

Mr. Kennedy

I do not want to become involved in a long discussion about the current problems in French politics, but I believe that there is more to those problems than the Maastricht convergence criteria.

Let us consider the credibility difficulties experienced by our Government over the tax issue since the last election, when they had to go back on their promises. Those difficulties pale into insignificance in comparison with the credibility problems of the Gaullist Administration, who promised 18 impossible things before breakfast in the run-up to the election, and have disallowed each and every one of them at a rate of knots since that election. I believe that France's difficulties have much more to do with that than with the perception being peddled in some quarters that the French citizenry have suddenly taken to the streets because of the Maastricht convergence criteria.

Let me also tell the hon. Member for Newham, South (Mr. Spearing) that anyone who talks to those involved in business and industry will be left in no doubt that the superficial attractions of competitive devaluation are outweighed by the long-term steadiness of knowing what the exchange rate will be in relation to other currencies. For many a small business, that still makes the difference between boom and bust.

I am not talking about the ICIs and Shells of this world, but about the small business sector. I believe that, in due course, it is that sector that will drive the single currency issue forward. As and when the currency arrives, we should be part of it.

I advocate a positive and constructive role for the IGC, but I am not at all optimistic. I think that, if the IGC does prove to have constitutional implications for the country, we should reconsider the possibility of a referendum to make the debate public, and to marginalise—as we are not managing to do in the House of Commons—that part of the Tory party, in particular, that seems to exert excessive influence on the Government of the day.

6.36 pm
Mr. Michael Colvin (Romsey and Waterside)

I must take issue with the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy)—as he would probably expect me to—following his suggestion that the "sceptic" element is now driving our party policy. He knows very well, as, I think, does the whole House, that there is a good streak of scepticism in every hon. Member, just as there is in the country as a whole. Everyone has reservations about aspects of the European Union. It is a question of degree: there is a measure of scepticism in everyone.

I also take issue with my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath). In discussing the single currency, he used the analogy of the United States and Japan, pointing out that both those great economic areas had a single market and a single currency. They also have one Government, however, and we do not want that in Europe. We are happy to have a single market and to trade as we do; we are happy to have political links. What we do not want is a single currency that could lead rapidly to a single Government. I do not think that the British people would vote for that, although I accept that it is Liberal party policy. Much has been said today about the possibility of a White Paper on the future development of the European Union. Hon. Members may recall—certainly, my hon. Friends will—the publication of two documents a long time ago. One was called "The Right Approach"; the other was called "The Right Approach to the Economy". Both were published by the Conservative research department. Those two documents set our party on the road to victory in the late 1970s.

A sequel has now been published, entitled "The Right Approach to Europe". That document, also produced by the Conservative research department, was on the bookstalls before this year's Conservative party conference. It set out clearly the principles on which our party is addressing the European Union's development, and led to the considerable degree of agreement at that conference, when many political opponents were expecting and hoping for a split right down the middle. Today's debate has shown a split over Europe, not in the Conservative party, but clearly in Labour party, whose Front-Bench team seems to be split in two.

Our party conference debates also demonstrated that clear blue water exists between the Conservative party and the other parties on the important issue of the development of European union. The policies that the Conservative party has adopted go much more with the grain of public opinion than those of any other.

The choice before the British people is absolutely clear: if one wants a federal Europe, one votes Liberal Democrat; if one wants a centralised Europe, run out of Brussels, one votes Labour; and if one wants a Europe of nation states, working together when appropriate, but where the major decisions affecting Britain's future are taken in Britain, one votes only Conservative.

I and the country at large will endorse that if it ever comes to a vote, but, before anyone gets too excited, I should say that, when the time comes to visit the hustings, there will not be all that many votes on the question of Europe. If, however, it is one more issue where Conservative Members are more with the grain of public opinion than our opponents, one or two critical marginal constituencies will fall to us rather than to the other two main parties.

Most of today's speeches have concentrated on the politics and economics of the European Union, and some speeches will no doubt touch on foreign policy, too, but I want to concentrate on security—both the architecture for security and the mechanics for it. I hope that hon. Members will note that I use the word "security", not "defence", because common foreign and security policy will be discussed at the intergovernmental conference, and the thing about security is that it stretches beyond merely defence.

My right hon. and learned Friend the Foreign Secretary made an interesting suggestion during his speech. In discussing economic development, he referred to the possibility of a European Mediterranean free trade area. That is precisely what I mean.

To give an example on the question of the security of Europe, the Select Committee on Defence has been considering the future of the North Atlantic Treaty Organisation and its southern flank. We realise that, in discussing the security of Europe, we must look beyond the boundaries of the European Community and of NATO. If we cannot within the European Union have generous and free policies on trade, we will not succeed in meeting the economic needs of developing nations outside our area.

Without that success, we will not be able to avoid the political and economic conditions that can eventually lead to economic breakdown, to civil disobedience, to internal conflict, to terrorist activity, to insurrection and then, as sure as night follows day, to external military adventures. When we discuss security, therefore, we must think in terms of the European Union doing its best to help the developing countries on our borders.

That is probably the most effective way of preventing strife, and will do more to defend Europe's nation states than having just a mass of military weaponry and men under arms. That matter was dealt with on 26 and 27 November during the Barcelona conference of Ministers. I should like to hear what is said about that matter in the winding-up speech.

In discussing the question of security, there is also the matter of the spread of drugs and of mass immigration—both extremely sensitive matters. North Africa is a region of considerable insecurity. Countries there, in common with many others, have problems of over-population and of shortage of water. In trying to anticipate from where trouble may come, one will find that there is a common denominator in and a close link between shortage of water and over-population, and potential flashpoints for strife.

What do we want to emerge from the intergovernmental conference in relation to security? The first question involves the Western European Union's future development. I regret that we ever changed the name of the European Economic Community to the European Union, because there is a great deal of confusion in people's minds, and they automatically connect the two. The WEU is not new—we should remind ourselves of that. It is based on the Brussels Treaty Organisation of 1948. It was modified in 1954, and it includes a mutual security undertaking, exactly like that involving NATO in article V of the Washington treaty.

Admittedly, the WEU had become a bit moribund, but it was reactivated in 1984 as the European pillar of NATO. The Maastricht treaty gives the WEU a dual role—first, as that NATO pillar, and secondly, as the European Union's defence component. We must decide the extent to which it is complementary to the NATO commitments, or if there is a danger that it will result in the duplication and undermining of NATO.

The types of task that the WEU expects its military capabilities to be employed on were set out in the 1992 Petersburg declaration. Those are crisis management, combat operations, peacekeeping, including embargoes and sanctions enforcement, humanitarian rescue missions and evacuations. Those tasks could effectively be undertaken by European Union member states, either singly or in partnership. They do not need the WEU to provide a co-ordinating authority for those tasks to be done.

It is significant that many of those tasks cannot be undertaken without help from NATO, in particular the United States of America. For some of them to be achieved, one needs intelligence and surveillance. Often, one needs heavy lift, either by air or by sea, and logistical support. My first conclusion, therefore, is that there should be no new WEU full membership without full membership of NATO. The WEU has 14 members and four observers—Ireland, Austria, Sweden and Finland, which are all already European Union members. Of course, those four countries jealously guard their neutrality. How would they feel if there were a common EU defence policy? They would not be too happy.

What about the nine countries that are associate WEU members—the Visegrad four, the three Baltic countries, Bulgaria, Romania—and, of course, with the United States and Canada, the only two non-WEU NATO members, sitting on the sidelines? It is significant that, if the EU and WEU were merged, as some people advocate—it seems that it is beginning to emerge that the Labour party supports such a merger—and if it were necessary for new WEU members already to be full NATO members, the United States of America would effectively have a veto over additional applications to join the EU, which is totally dotty.

The other thing that must be decided at the IGC is whether the EU and the WEU integrate, or whether there should at least be a subordination of the WEU to the EU. Again, the Labour party seems to be split on that matter. The hon. Member for Livingston (Mr. Cook) did not answer the direct question put to him by my right hon. and learned Friend the Foreign Secretary. Perhaps we will hear an answer in the winding-up speech.

It is suggested that the United Kingdom stands alone in opposing a merger between the European Union and the WEU. That is not so. There is a great deal of reservation among other member states. When the Select Committee on Defence was in the Iberian peninsula recently, we were interested to hear from our Portuguese friends—Britain's oldest ally—who said:

The fundamental rule we believe should be retained is the principle of national sovereignty in defence issues … we cannot imagine how declarations of war could be decided by majority voting. That sets out the matter clearly—NATO and the WEU already operate by consensus, not by majority voting. It is impractical to have a merger of the WEU and the EU.

The IGC could also help with the clarification of the different security organisations that exist currently, and to establish what their roles should be. We have the WEU. We had the CSCE—the conference on security and co-operation in Europe, which is now the OSCE—the Organisation for Security and Co-operation in Europe—because it is an operating body. Under NATO, we have the North Atlantic Co-operation Council, the North Atlantic Council and the partnership for peace. It has been suggested that we might have a CSC-Med, which might not be a bad idea. There is scope for a fresh look at the different structures we require for security in the light of the peace dividend and the collapse of the iron curtain.

There could be a little tidying up of some of the force structures. The combined joint task forces were launched at last year's NATO summit for Euro-led missions. There is the EuroCorps, EuroFor, EuroMarFor and FAWEU—the forces available to the WEU. There are many different structures, and there is a great deal of overlap. There are many different headquarters, and a large number of staff.

One of the problems may be that, although we got rid of a lot of soldiers, sailors and airmen when we rationalised our armed forces across Europe, we are left with too many generals, air marshals and admirals. I sometimes feel that they do not have enough to do except sit in headquarters trying to invent new enemies. It is extremely urgent to clarify the European security and defence identity.

The problem with NATO is that it has effectively concluded its mission. It succeeded in keeping the Americans in, as we say, and keeping the Soviet Union out. I am glad that France is now back on many of the NATO committees. That might begin to undermine the argument that the main role of the WEU is to keep the French on side. The time has come to review all those various organisations. NATO in particular needs to think about its future role. It has 60 different headquarters in its area of activity, which cannot be economic. The time has come for a full review.

The best way to prevent war—that is what security is all about—is through trade and economic growth. We should never forget that that has been the principal objective of the European Union from the days of the founding fathers.

My last thought is about the recently announced appointment of Mr. Javier Solana as Secretary-General of NATO. That is as good an example of poacher turned gamekeeper as I have ever known. It probably shows in political terms a greater U-turn than that performed by the right hon. Member for Sedgefield (Mr. Blair). If Mr. Solana can persuade his countrymen to vote to come within the integrated military structure of NATO, he will have earned his place as the Secretary-General of one of the most important defence structures in existence.

6.54 pm
Mr. Jimmy Hood (Clydesdale)

As Chairman of the Select Committee on European Legislation, I welcome this debate. Although there has not been much mention of our report so far, I am sure that the Minister would like to say a few things when he replies to the debate.

In my brief contribution I hope to be as pragmatic as usual. I am tempted to deal with some of the issues that have been raised in earlier contributions, but I feel that it would be more helpful if I confine my remarks strictly to the report. That may provide more emphasis for the issues that we have addressed during our inquiries.

I want to thank my Committee and its staff for the work that they have put into preparing the report. My Committee has 16 members—nine Government members and seven Opposition members. There is a wide range of views, from that of the Euro-sceptics to that of the Euro-fanatics and the Euro-agnostics—of course I am referring only to Government members when I say that. In spite of that wide range of views, there has been tremendous co-operation during our work and during preparation for the publication of our findings, and I should like to record my appreciation for the excellent work carried out by my colleagues.

It is important that we recognise the tremendous work of our staff, including the clerks, advisers, and the secretariat. It is not usual to name individuals, but I want to mention my senior clerk, Robert Rogers, whose expertise in European legislation has no equal. Our findings owe a great deal to his valuable contribution. I record my appreciation for the work carried out by Robert. The debate comes at an opportune time and I hope that it will help to meet the great need to involve more parliamentarians in the scrutiny process and/or educate right hon. and hon. Members on how best they can contribute to and involve themselves in that process.

Democracy and transparency will be the two key themes of the 1996 IGC. How do we make the European Union more responsive to its citizens and how do we make it more understandable and accessible? The Select Committee's report, which is before the House today, shows just how bad things are. Part IV reveals a litany of failure. For example, it shows how European legislation appears to be made in a private club and how the Council is prepared to discuss laws on the basis of an unofficial text, which would be unthinkable in our national Parliaments. It shows how translation and transmission delays often mean that proposals arrive in national Parliaments after laws have been approved. It shows how, time and again, the Commission fails to meet deadlines for the production of proposals and how proper discussion in member states is prevented. It shows how important matters appear on the agenda of the Council of Ministers at the last moment. It shows how documents travel not by e-mail but by snail mail, because there is no proper electronic transfer system that links the European institutions and all the national Governments and Parliaments. On a day when a probe from the earth has reached Jupiter, surely that is not too much to ask.

What about the jargon and the Euro-speak? I think of them as the dry rot of the European Union, because they can ruin any idea, no matter how good, and any proposal, no matter how sound. As we say in our report:

If the Union is to move closer to the citizen, then it must speak in a language that the citizen recognises as his or her own. Our report is uncompromising on all those issues because we do not believe that there is room for compromise where the interests of the people of this country are so fundamentally affected. I am delighted to say that our views have been widely endorsed. We sent our report to every Parliament, to every European Affairs Committee and to every Foreign Minister in the Union. Last month, at a meeting of all the European Affairs Committees in Madrid, there was widespread support for both our criticisms and our proposals.

I want to pick up on a key recommendation. We see national Parliaments as a focus for democratic legitimacy in the Union. Without their full involvement and consultation, the Union would lose its way. We suggest that there should be a minimum period of four weeks between any proposal with legislative implications arriving in every national Parliament—in the correct language and in an official text—and that proposal being considered by the Council. Let us try to bring some sanity and order to the way that Europe does its business.

It may surprise the Minister, but I want to compliment the Government. The Minister took our four-week proposal to the reflections group; he argued for it and the group endorsed it. It is clear from my conversations with Carlos Westendorp, the able chairman of the group, and from the group's final report, that the importance of orderly decision making, proper information and the role of national Parliaments are well understood by the group. I hope that they will also be well understood by the IGC.

The Minister may think that Christmas has come three weeks early, but I want to say two other nice things about the Government. First, I thank them for arranging this debate today. It will not, of course, clear the five documents that we have recommended for debate, because this is only an Adjournment debate. However, there will be a further debate in European Standing Committee B after Christmas. That will also be a good opportunity to consider the outcome of the Madrid European Council.

Secondly, I thank the Minister for the Government's constructive reply to our report. It shows a real appreciation of the problems and, I hope, a real willingness to tackle them. The Government have asked for further views from my Committee on a number of aspects and we hope to respond soon.

However, I must sound a warning. The problems are not to be solved by rhetoric. When the Maastricht treaty was being negotiated, somebody must have said—it was probably in the middle of the night—"Hang on a minute, what about national Parliaments? Will not they feel left out?" So the national Governments stuck on to the Maastricht treaty a declaration on the role of national Parliaments. It sounds wonderful. It states:

The Governments of the Member States will ensure that National Parliaments receive Commission proposals for legislation in good time for information or possible examination. In fact, as our report shows, that turned out to be a sham. The declaration is routinely ignored by the very Governments who agreed it so solemnly. High-flown commitments, intentions and undertakings will no longer do. Better ways of doing business must be legally enforceable and must give national Parliaments their full and proper role.

I hope that the House will forgive me if I end with a short advertisement for the Committee that I have the honour to chair. Some hon. Members are critical of our European scrutiny system, although I suspect that most of them do not read the reports that they criticise. I am not sure that many of them attend the Standing Committees; certainly, not many of them have attended tonight's debate.

The House of Commons Select Committee on European Legislation examines well over 1,000 documents a year. It assesses their legal and political importance, their financial implications, their likely effects on British interests, how well they are drafted, whether they are consistent with other Union policies, and so on. We are in constant dialogue with Government Departments to get the information that we need and we try to ensure that the Departments observe their obligations to this House. We co-operate closely with our sister Committee in the other place. We produce a report virtually every week that the House sits and we report substantively on more than 400 documents each year. Those reports are key sources of information for both hon. Members and their constituents. I hope that that will be the case with our IGC report and its extensive glossary.

We recommend 70 or 80 documents for debate every year, but it often appears that the excellent system of European Standing Committees, in which Ministers can be questioned for an hour on their policy on a particular European proposal and then have that policy debated, is greatly underused. Some hon. Members might not realise that any hon. Member can attend and speak in any European Standing Committee. We often say that our parliamentary opportunities are limited, but I have just referred to one that is definitely underused. My Committee is continuing with the next stage of our work that relates to the IGC. We will be looking at the effectiveness of the European scrutiny system in the House and determining what improvements can be made. I hope that hon. Members on both sides of the House will feel free to tell us their ideas.

I have some bad news for the Minister, but as he has had three compliments already he has not done too badly out of the deal. One of the areas on which my Committee will be focusing is the performance of Departments, which has been steadily declining over the past couple of years. Indeed, in some Departments the performance is nothing short of lamentable. I know that we will have the full support of Ministers, as well as the House, in that aspect of our work.

The matters that I have discussed this evening are not glamorous; some may think them unimportant. However, unless the Union works in an orderly, professional way, involving its citizens and their representatives in national Parliaments, the grander ideas for the future of Europe will come to nothing. In our report, we said that there seemed to be three in-trays in Europe: one labelled "difficult"; the second labelled "too difficult"; and the third labelled "exciting and visionary". The problem is that only the third in-tray is ever emptied. We must be prepared for the hard work of dealing with the first two in-trays as well.

7.9 pm

Mr. Ray Whitney (Wycombe)

I am sure that the whole House is very grateful to the hon. Member for Clydesdale (Mr. Hood), not only for his speech this evening but for his work, the work of his Committee and the work of those he has enumerated who support it. We are also grateful for the impact that the Committee has already made, not only in the House but in the European Union as a whole, including the reflection group, on which we are represented by my hon. Friend the Minister.

Clearly, virtually everyone—indeed, those who take any interest in the European Union are almost unanimous on it—agrees on the need to take the operation of the Union closer to the people and to make it better understood. Obviously, the much enhanced and improved role of national Parliaments will be vital in that process. Therefore, the Committee's recommendations are obviously of great importance.

I should like to make a plea at this stage in our venture into the European Union to—almost—start again. We have gone through two or three very difficult years, not only, without doubt, in the Conservative party but in the nation as a whole. There is a frenzy and a froth related to European issues which is extremely unhelpful and, indeed, unhealthy. I offer three little words as our criteria for approaching the next stage of development of the European Union. They are: clarity, calmness and honesty—qualities that have been singularly poorly adhered to over the past year or two.

In particular, of course, we have had problems in our own ranks. One of the reasons is that we have been playing games with the media and the media have been playing games with us. Sadly, the words "calmness", "clarity" and "honesty" do not spring to mind when one thinks of the British media in their present state or of the European Union. I very much hope that all of us who genuinely want to develop a really constructive relationship with our European partners will stop playing games with the media. Of course, the media like playing games with us because that sells papers, it is much more fun and it makes a good story out of something that is otherwise workmanlike and mundane.

One of the problems with the media lies, of course, in ownership. It is often said, when talking about the European Union, that there is a group of foreigners who are working extremely hard to damage British interests. That may be true, but the people about whom we ought to be talking are not Belgians in Brussels, or Germans or French; I happen to think that we ought to be talking about an Australian—who took United States nationality for commercial reasons—a Canadian, and a gentlemen who is a dual citizen of Britain and France and a Member of the European Parliament for a French constituency.

Those gentleman have very strong views on Britain and Europe; they are hostile to Britain's constructive relationship with the EU. Because of their power and the influence that they wield, they are able to do great damage. All of us who want to ensure that we develop a fruitful relationship—we may have our differences on how we get there—should be extremely careful not to give those gentlemen, shall we say, the weapons with which they can go about their own affairs.

These gentlemen constantly drip, drip, drip vitriol and disinformation into the British people. The harm caused is obvious to us all and we should do everything that we can to stop it. If we could—I agree that it is an optimistic objective—introduce some clarity, calmness and honesty in the media, and our dealings with them, that would certainly be an immense step forward.

We should apply the same principles to our European partners too. We should not lacerate ourselves, and either think that we are always right, as some of us tend to do, or think that we are always in the wrong, and that those on the other side of the net always get it right. Certainly, mistakes are continuing to be made among our partners, although many of the mistakes of what I would call the Maastricht frenzy were quickly recognised. Many continental European politicians were the first to say that such mistakes must be avoided and—as I said—that we must get closer to the people.

We must look very carefully at any initiative that exists. Of course the one at the forefront of all our minds at the moment is the single currency. Above all, with an issue of that nature, nothing is more needed than a good deal of calmness and a great deal of clarity and honesty. I certainly believe that the prima facie case for a single currency is extremely strong. We need not elaborate on that in this debate. Of course there are downsides to it, but my instincts are that it makes a great deal of sense and has many advantages.

I also believe—here I certainly agree with the line taken by my right hon. Friends on the Front Bench—that the difficulties inherent in this grand project have not fully and honestly been faced by any of us or by its protagonists in other countries.

There has been much talk about the convergence criteria. I believe that they are essential. The sort of thing advanced by the Labour party is unrealistic. The criteria of Maastricht—inflation, interest rates, budget deficit and public debt—are good and necessary. I say to the right hon. Member for Bethnal Green and Stepney (Mr. Shore), with whom I regularly joust in these debates, that yes, we could argue about the pace of restructuring that is now applied in France, but that does not negate the desirability of those criteria, which any self-respecting, good-housekeeping Conservative considers entirely right. If one were an unreconstructed Keynesian, I could well imagine that those criteria would not seem desirable, but there are not many unreconstructed Keynesians left—although I think that at least three of them are in the Chamber this evening.

France's problems lie in the legacy of 14 years of socialist presidencies, not with the fact that it is trying to get its house in order now. Perhaps the problems are mainly caused by the pace at which it is trying to do that and the style that it is adopting. I submit, to anyone who has any doubts, that we as Conservatives should not be in the least hostile to those criteria because, regardless of a single currency proposal, we should aim to meet the targets that they represent. I am happy to say that, given the way in which the economy is developing, there is every reason to expect that, in the next year or two, we shall indeed meet those criteria.

On the single currency and my themes of clarity, calmness and honesty, an issue that has not been addressed, which my right hon. Friend the Prime Minister regularly seeks to put on the agenda, is the relationship—as, when and if a single currency group is created—between the first tier and the second tier, between the inner core and the outer core. Clearly, there are many problems—competitive devaluation, different standards of living and, possibly, the reintroduction of tariffs. What do those problems mean for the single market? There are many serious questions to be answered and they should be looked at positively. I believe instinctively that a single currency is the right way forward, but that is not to say that we should sweep those questions under the carpet and ignore them.

When we talk about British interests, which we must always do in this connection, we should never forget the challenges, to put it mildly—the threats to Britain—of a core single currency bloc with Britain left outside. What Britain needs is what every economy needs, but our position is slightly different because we depend on international trade and its impact on the City. What we need above all is stability and low interest rates. Those two targets would be achieved within the single currency and it would be quite impossible to achieve them outside.

When we approach the matter, let us cut out the emotion. Yes, we must look at the sovereignty issue, but we should all recognise that any British Chancellor of the Exchequer, when he stands at the Dispatch Box to deliver his Budget, is not sovereign in any sense; he cannot ignore what is going on in the rest of the world, the balance of trade, interest rates and currency movements. We must use the wonderful word "sovereignty" with the greatest care and the greatest honesty so that we do not send up a great flame of emotion about the concept of sovereignty when we look at issues and interests that are vital to our nation.

I have a suggestion for a number of those who seem to take pride in the title "Euro-sceptic". I have always thought of it as a negative label. One wonders what they are sceptical about. I should like them to approach the issues again, with the criteria of clarity, calmness and honesty. I have always asked those of the sceptic persuasion, from whichever side of the political divide they come, the same question. We know what they are against and we know what they do not believe in. Over the years, we have heard many times what they are against and what they do not believe in. What we really need to know is what they do believe in and what they do support. Do they, for example, believe that this country can hold its own with the continental economies? Do they believe that we need to live in a country in which our national unit of currency is constantly devalued? I do not believe that.

I believe that we can look the Germans and the other economies in the face. We do not need to rely on constant and competitive devaluations. Do the Euro-sceptics believe that? That is the kernel of it. I believe that there are many areas of national activity—not only the economy but security, the environment and many other issues—where Britain's best interests are served by constructive collaboration with our European partners. Do the Euro-sceptics believe that? If not, what do they suggest instead?

I believe that the United Kingdom's political powers and interests are better served by working in conjunction with our European partners. That seems so obvious that it is hardly worth debating. One gets the impression—a false impression with some—that the constant negative carping means that we lose sight of the crucial positive. I say to Ministers that we need more from them. We need more emphasis on the benefits that Britain obtains from membership of the European Union and on the benefits that we can obtain in future.

I know the problems that Ministers have. When I raise the point with them, they say, "Our speeches are balanced. We have a nice paragraph or two about how we want to be in Europe and about how we are getting benefits. We then go into the corrective bits, because who would argue that there are not things to be corrected in Europe? However, the media only pick up the carping, the negative bits and the nagging at the European Union." That may well be the case, but it is all the more reason for Ministers to redouble their efforts to remind people that mcmbership of the European Union is of fundamental importance to our country. Such a reminder is needed now because of the intense and negative campaign to which our constituents have been subjected for three or four years.

People have genuinely forgotten the huge achievements of peace, security, international co-operation and economic co-operation, and the potential of this huge market. They have forgotten that in all the rigmarole about lollipop ladies who have to carry signs in German and maps of Britain which have "Mercia" written on them—all that nonsense. There is a task for Ministers. It is a task we all share as Back Benchers, but people need to hear about the positive aspects from the Government. I quote a leading spokesman, of whom our party is very proud, who stated 20 years ago:

We are inextricably a part of Europe … Europe is where we are and where we have always been. Those are the words of the now Baroness Thatcher on 16 April 1975. Those words were right then and they are right now.

7.26 pm
Mr. Austin Mitchell (Great Grimsby)

It was good to have the routine, ritual recitation of regular clichés by the hon. Member for Wycombe (Mr. Whitney)—the debate would not have been the same without them. There is a routine in these debates: the Euro-sceptics versus the old septics in the hon. Gentleman's case.

Although these debates have always been an exchange of stereotypes, I sense that they are becoming more serious, more realistic and more accurate—all accusations from which I exempt the hon. Gentleman. He is still crazy after all these years—a Foreign Office clock stopped in 1972. Indeed, he is the best manifestation I know of the lemming mentality. If people in Brussels jump over a cliff, we must follow them because we cannot be left behind. It would be uncommunautaire not to jump over any available cliff Europe jumps over.

The hon. Member for Wycombe told us about the benefits of membership before we went into Europe and it turned out to be a disaster. He told us about the joys of the exchange rate mechanism before we went in and it turned out to be a disaster. He now praises monetary union in the same terms. We view his arguments in the same light as we do the consequences of his other arguments.

I am afraid that what the hon. Gentleman talks about—the Labour party talks about this too in a sense—is a mystical Europe, a Europe of dreams and a Europe that does not exist. We are talking about Europe as we would like it to be, not about the club to which we belong, which is basically a coalition between France and Germany to force their interests on the Community and to bribe a peripheral Club Med of smaller states to go along with what they want. It is a hard commercial relationship and the consequences of our lack of success in that hard commercial relationship are now coming through to the British electorate.

What the hon. Member for Wycombe called the frenzy, the froth and the negativity is the process of discovery of the pain and consequences of membership. It is still all disguised by the usual litany of lies. Membership of the European Community has polluted politics in this country. Failure must be portrayed as success and the advocates of going in will never admit that they are wrong, so they must say that we are doing well although we are manifestly not.

I have a point for the hon. Member for Wycombe and the Euro-enthusiasts who still survive in this country. I see that the hon. Member for South Derbyshire (Mrs. Currie) is with us, so some Euro-enthusiasts still survive; she is perfectly preserved, I might add. They should tell us the truth.

As I see it, the consequences of membership have been disastrous for this country. The White Paper told us that there would be no benefit from membership unless the growth rate increased substantially, yet it actually fell with our membership. Unemployment has quadrupled, and imports' share of our market has trebled since we joined. We have therefore got ourselves into a trade deficit in visible trade, and also a massive public deficit, because we have shrunk the tax base and destroyed more of our industrial base than any of our competitors.

What caused all that? Was it due to the far-sighted efforts of a Conservative Government who have been in power for 16 years, or was it due to the consequences of our membership of that malign Community, so weighted against us? Conservative Euro-enthusiasts should tell us which one did the damage. Why are we in this mess? Was it their Government, or was it their enthusiasm for Europe, that gave us all those benefits?

Economically, we have had our worst years since we entered that relationship, and now the politics of hypocrisy are emerging. The reality is that both parties are split. It is a foolish game for either major party to pretend that it is united on the issue. It is also foolish to trade the insults and stereotypes that we have heard today.

Both parties will stand up for Britain and will do their best in the negotiations, but both will be overruled, because to stay in and to belong they will have to go along with whatever folly is demanded, whether that be the Maastricht treaty or whatever emerges from the intergovernmental conference. We are always told, "Move along, or be left behind." Although both parties would stand up for Britain if they were in power, in fact they are always dragged along behind, and simply because people try to disguise that we are left talking about a Europe that is not real. It is like talking about a cloud of gas.

It is interesting to see how attitudes to Europe have changed. In the 1970s we were told that membership of the European Community—or the Common Market, as it then was—was a great bulwark against Bennery. Apparently the treaty of Rome, a capitalist treaty, would stop the forces of socialism in this country. But now we are told that that same Community really represents socialism creeping across the channel from Brussels. What was a bulwark against Benn has become a tide of socialism dragging this country down.

Both sides are confused, so the politics of hypocrisy are emerging on both sides of the political divide—and they are at their worst when people talk about monetary union. Europe has gone down the path of monetary union because that was the only way to build union. The politicians cannot get the democratic consent of electorates, because electorates will not vote for union, and they cannot get agreement between Governments because in the process of deal-making and discussions inside Europe Governments tend to construct a camel. They therefore decided to go down the monetary road.

Lord Jenkins of Hillhead avows as much in his autobiography—or his "alibiography", as it might be called. In 1979 Europe began to go down that road because it was the only road open. The logic is quite clearly that if we have a single currency we shall need the institutions to manage it, and the huge redistribution system that will be necessary to remove the consequences—that is, the damage that monetary union will do to the backward regions and the weaker economies.

The redistribution system will have to be monstrous and enormous. In a nation state one can move money around. If Scotland or the north is not doing too well, we can have a regional policy, unemployment benefit and public spending on roads and other infrastructure in the area. But Europe cannot do that. Europe is not a nation state and it controls only about 1 per cent. of Europe's GDP. If we had a single currency we would need the machinery to redistribute money on an enormous scale to offset the disastrous consequences of monetary union for the poorer areas.

That bill would have to be paid, as the bill had to be paid to merge the currencies of East and West Germany. The Germans were prepared to pay that bill, for kith and kin, but there is no set of institutions or relationships that would pay the bill after monetary union. That is the unspoken bill that will come to us at the end of the whole process, but everyone keeps quiet about it.

Mr. Spearing

I was given to understand that one of the reasons why West Germany was keen on the union of the then single market was that that would enable it to provide support for its southern areas at the expense of the north. Does my hon. Friend agree that where there is more competition, which is supposed to be one of the benefits of a single market, the better-off areas get even richer and the worse-off areas get even poorer? That involves not simply the recirculation that my hon. Friend mentioned, but a centralised financial and political power to collect the money and redistribute it.

Mr. Mitchell

That is a consequence of a single market, too, but it would be compounded by a single currency. In a single market a country can at least cushion itself and take shocks on the exchange rate rather than putting people out of work. That cannot be done with a single currency, so the machinery and scale of redistribution will have to be much bigger.

With all those disadvantages, there is only one consolation about monetary union: the simple fact that it will not work. It will rip the weaker economies apart. That realisation is growing—but not, as other hon. Members have pointed out, among the elite of Europe. There is a deep gulf between the people of Europe, who feel apprehensive, worried and anxious, and are being hit by the consequences of the move to a single currency, and the elite. That is happening in France, in particular, but it is happening in Italy and Belgium too. The people are being hit by rising unemployment and cuts in public spending, but the elite maintains its enthusiasm undiminished, because it is immune from the consequences. The elite is losing touch with reality.

The result is that Governments approach the issues backwards. Look at Italy. It did well out of leaving the exchange rate mechanism, because its exchange rate came down. The Italians also wisely decided to send many politicians to prison, which destroyed confidence in the currency, and the lira fell even further. Italian manufactured exports then became enormously competitive, and a deficit in trade has been turned into a surplus within two years.

Italy is now trying to bring the exchange rate back up, because the Prime Minister is a former reserve banker and the Italian Government are desperate to get into monetary union—all unaware of the fact that the terms of convergence for monetary union were deliberately written by the Germans so as to exclude Italy. Italy is almost the last nation that the Germans want to let in, yet Italy is now trying to submit itself to targets and to hurdles that were deliberately built high to prevent it from jumping them.

The Labour party says that monetary union might be a good thing, but that we must change the terms of convergence so that there is real convergence— in fact, we must rewrite the treaty. That, too, is a Europe of dreams, a Europe that does not exist. Those terms will not be changed. The harsh convergence criteria were put in deliberately because they were the minimum acceptable to the Bundesbank. They will not be changed, because the Bundesbank and Germany do not want them changed, and the German politicians will not be able to change them.

It is no use the Swedes talking about a full employment policy, or our talking about real convergence; it is no use trying to pursue escapist dreams in that fashion. The terms will not be changed, and we are simply indulging in wishful thinking if we think that they will be.

France gives us another example of a country walking backwards. President Chirac was elected on a platform whose main plank was the fight against unemployment. Yet he has now turned that into a fight against his own people. He has declared war on the social security system, on the trade unions and on the people of France. Probably in the end he will win. There is no doubt that elites are powerful in France. France has a strong executive Government and it can win through.

For the French elite, the desire to maintain the franc fort, which it sees as the key to France's relationship with Germany, is crucial. There has been such an investment in pain and misery there over the years, with such low growth and such high unemployment, that the elite will not suddenly admit that it was all a terrible mistake and say to the electorate, "Sorry, we have been pursuing the impossible for eight or 10 years. It was a mistake, so let's begin all over again."

Germany is in the process of walking backwards as its politicians discover that its people do not want monetary union because they do not want give up the deutschmark, and the Bundesbank does not want monetary union because it does not want to give up control of German economic policy. German politicians are now pressing for tougher conditions in an attempt to propitiate the German people and the Bundesbank.

All this walking backwards means that monetary union will not happen. Look what happened to Commissioner Kinnock, who said that the king had no clothes. Retribution descended on his innocent head after his innocuous statement on something that should have been obvious to everybody.

My point is not that monetary union will not happen—it may happen. The elite in France will want to stick to Germany, and a group of "deutschmark states" may form with France around Germany. But that is the only way in which monetary union will happen. If it is pursued as a policy for Europe without a test of how much the elite of Europe is prepared to listen to the people, it will be disastrous. I do not know whether monetary union will happen—it may, or it may not—but it will he disastrous if it does and our future will lie on the outside, pursuing our own interests.

Whether monetary union happens or not, enormous efforts will be put into trying to make it happen. We will have to go through the preliminary stages, which are causing the problem, to the point where everybody will finally accept that it cannot happen. The domesday machine is now out of control and is grinding down the people of Europe. The preliminaries to monetary union are causing unemployment and leading to cuts in Government spending, which are leading to low growth. Europe, which was supposed to be the train to take us to growth, is dragging us back. Thanks to Europe's ruinous economic policies, it is worse off than we are.

Europe is not working. Monetary union cannot work, yet it is being pursued through all its stages, which will inflict pain. What is happening in monetary union is also happening in every other sphere of European activity, including enlargement. Our Government are attached to the idea of enlargement, whereas the German Government want it for rather less altruistic reasons, but nothing is happening. The best way to help the emerging democracies in eastern Europe is to help their agriculture. We cannot do so, however, because of the enormous effect that that would have on the common agricultural policy.

Such selfishness precludes us not only from helping those countries in the most effective way, but from giving them full membership of the Union. That would have to involve membership of the common agricultural policy, which would almost certainly double the burdens of the CAP. That would bring the CAP crashing to the ground, but it has not materialised so far.

The measures will be a barrier against the eastern European states joining the EU. They will not be able to join the CAP, nor will they be able to join the common fisheries policy. Some of the countries concerned—Poland, Bulgaria, Latvia and Estonia—have big fishing fleets. Where will they fish? They will not have waters, and we cannot compensate them as we did the Spanish in our waters. We cannot therefore enthusiastically welcome those countries on that basis.

We cannot subsidise the eastern European countries on the scale that we subsidise Greece, Spain, Portugal and Ireland, as those countries might object to our doing so. No progress has been made on enlargement. However many platitudes we preach and however desirable we say that enlargement is, it is being put in limbo, and nothing will happen.

Nothing can be decided on the institutional changes either, because the European Parliament is in a power struggle with the Commission, the Commission is in a power struggle with the Council of Ministers, France and Germany are in a power struggle with the other countries and the elite is in a power struggle with the people. This is not building an exciting and idealistic venture—it is wrestling in blancmange. It is a living tableau by Damien Hirst of a wrestling match smothered in blancmange. That is what we are being asked by hon, Members such as the hon. Member for Wycombe to give our allegiance to.

I am not sure how the IGC will work out. For a start, what is it? Is it a 3,000-mile service for a car from hell that is shorter on one side than the other? Is it a fundamental reconstruction of the Union? Nobody seems to know—nobody has any idea. It will be very difficult, if not impossible. to get any agreement. France and Germany cannot let the conference fail and they cannot allow monetary union to be postponed. President Chirac cannot say after all the current events in France that monetary union should be postponed, and so the consequences will be pursued.

I will conclude on this point. The IGC will be a messy, but it will be no use the countries involved postponing any outcome or decisions while they wait for a Labour Government in this country. The advent of a Labour Government has been postponed. We will win power, but it is clear that there must be another Budget next November. We shall not win power until April 1997 as the election will be put back to that date.

It is no use those countries thinking that they can postpone the outcome of the IGC in a typical European fashion until there is a Labour Government who will be a soft touch. We will not be a soft touch when it comes to the negotiations, as that is in the interests of the British people and the interests of the Labour party.

It is essential that we pursue our job in government, which is to conquer unemployment, rebuild the industrial base of this country, generate economic growth and maximise the living standards of our people. We cannot accept anything—monetary union, cuts in Government spending, restrictions on growth, insistence that we should cut the public sector deficit—which gets in the way of the job that the Labour Government will be taking on in April 1997.

7.46 pm
Mr. Mark Robinson (Somerton and Frome)

In following the hon. Member for Great Grimsby (Mr. Mitchell), I cannot help but notice the irony. Here we are debating Europe, with all the arguments about Euro-scepticism, but where are the sceptics now? Every Opposition Back-Bencher in the Chamber is a Euro-sceptic, whereas all my hon. Friends who are present have a more positive view of the EC. We are told time and again that the Labour party is united on Europe, but we must realise that it is not and that Labour has its differences just as differences are expressed by Conservative Members.

My right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) stressed the need for Britain to be at the heart of Europe, which, I am glad to say, is where we are and where the Prime Minister wishes us to remain. In my view, what matters more than anything is that the European Union is developed in a way that is not just pragmatic and realistic but is broadly capable of carrying the peoples of Europe with it. That means the acceptance of Community institutions to standards of democratic accountability, with the European Parliament effectively carrying out its role as the Union's scrutineer, given that there is a difference in the relationships between the European Parliament and the Council of Ministers and between the British Government and this House—or indeed between any member state and its Parliament.

As part of that realism, we must reflect on how the Union almost came unstuck over the Maastricht treaty, which encompassed much ambition combined with what many people would have said was gobbledegook. Many members of the public across Europe found the treaty hard to understand. That is why I was glad to see some opening words of refreshing realism in the reflection group report, issued on 5 December which said:

And yet, for a growing number of Europeans, the rationale for Community integration is not self-evident". The report goes on to say certain things which all of us can accept. It says that the Union is not and does not want to be a super-state, and adds that the IGC must make the Union more relevant to its citizens. It also states:

The conference must also make the Union more transparent and closer to the citizens. It could be argued that such hesitancy is reflected throughout the report, in which my hon. Friend the Minister of State, Foreign and Commonwealth Office, the hon. Member for Boothferry (Mr. Davis), has played an important part. The report is punctuated by phrases such as, "Many of us think that", "Some of us also felt", "One of us"—I cannot think who—believes". I shall leave it to the House to decide who that might have been and to reflect on the uncertainty that seems to be permeating member states. That is very different from the conditions that existed in the run-up to the Maastricht treaty.

It is clear that the number of doubters out in the country has grown-often because of their worries about smaller aspects such as excessive bureaucracy and the absurdity of what has become known as the daft directives, with which we used to be plagued. There is also a feeling that the competency and tentacles of the Union stretch too far in an over-zealous bid for excessive regulation.

Many of those charges are often unfair, but the mud sticks. The most common sentiment expressed to me by doubters—rather than sceptics—in my constituency is that the Union should be about free trade, not a relentless search for a federal super-state. The reflection group report seems to have started to share that view. My response is that Britain has been the driving force behind the creation of the single market and we must not lose sight of the outstanding work that still remains to be done.

Equally important is the development of the concept of subsidiarity, which involves ensuring that decisions should be taken where they are most suited. The problem is that the lines have often become blurred because, for years, member states preferred to agree on matters that they did not think were so important and on which they could agree most easily. As a result, we have taken the Community further in some sectors than we would wish. The argument about the development of subsidiarity is an attempt to ensure that competencies are placed where they can best be dealt with.

Democracy is precious to all member states, but especially to the aspirant states in eastern Europe, which have had so little time to enjoy their new-found freedoms. That is why I was delighted to hear strong support from my right hon. and learned Friend the Foreign Secretary this afternoon for the process of enlargement.

I visited Poland, the Czech Republic and Slovakia recently and it was impossible not to be struck by the strong commitment to membership. As the realisation sinks in that the fruits of democracy, particularly in the context of economic growth, are hard to come by, it is no longer a bar to office in those countries to have been associated with earlier regimes. Yet the new president of Poland, whatever his past, is firmly committed to membership of the European Union and of the North Atlantic Treaty Organisation. That ambition is not remote, but focuses on the immediate years following the turn of the millennium.

I was therefore glad to hear the recognition that my right hon. and learned Friend the Foreign Secretary gave to the reform of the common agricultural policy, which is fundamental. I was disappointed, however, not to see any mention of it in the chapter entitled "Enabling the Union to work better and preparing it for enlargement" in the reflection group's report. I can find no reference to reform of the CAP in the document.

Mr. David Davis

The subject was discussed at some length in the reflection group but as the group was aiming solely at the intergovernmental conference, which deals with institutional matters rather than policy matters, it was not given the priority that would normally be expected. That was simply an organisational matter, but nobody considered the subject unimportant.

Mr. Robinson

I am grateful and encouraged by my hon. Friend's explanation. As I studied the report, I could not help feeling that there was a danger that southern member states might have an interest in ensuring that discussion of the reform of the CAP was left out of the process. I am glad to hear that the subject remains on the agenda. If it were not, I fear that aspirations for further enlargement would be difficult to achieve. There is a strong feeling in this country that the CAP needs to be reformed and revised, and needs to work better for the Community's producers, of which our farmers remain among the best and most competitive in Europe. They should be allowed to have the freedom to exercise that competitiveness.

I sense that Europe is not in the mood for an outcome to the IGC that makes radical changes in the Union and its sister organisations such as the Western European Union. We need consolidation and considered improvement in the development of the single market and in the fight against drugs, terrorism and cross-border crime. We need the sensible development of arrangements that will build on the progress that has been made over the years in the development of a common foreign policy. We also need to strengthen our capacity in European security and defence policies. I was glad that the reflection group paper emphasised the need to strengthen further relations between the European Union and WEU—discussion should remain there at present.

We can be sure that a Conservative Government will always be prepared to exercise their right to disagree, even if they do so alone. The long-term health of the European Union has already been strengthened by some characteristics that have flowed from constructive belligerence. If we apply that in 1996 we shall have a better chance of achieving a satisfactory outcome to the IGC—and a much better chance than the one offered by the Labour party were it to follow the policy of the Leader of the Opposition and insist on never being seen to stand alone.

That policy has been slightly blown apart this afternoon because, in his opening speech, the shadow Foreign Secretary made it clear that he was prepared to see Labour stand alone on some issues. It remains to be seen whether his line was cleared in advance with the Leader of the Opposition. One of the Labour party's typically nice—sounding policy phrases—"We will never stand alone"—has this afternoon been smashed on the rocks.

Much emphasis is placed on the importance of qualified majority voting, particularly by smaller states. We have managed to come a long way without the use of QMV and any change in the voting system will have to be significant and fundamental. The change must cover not simply the way in which votes are cast, but the weight of individual member states, particularly in terms of their economic contribution to the Community. If we are to encourage into the Community—as I believe we should—some of the very small states such as Malta and, I hope, Cyprus, we will clearly have to find a more rational structure for our decision making.

Changes to the system of qualified majority voting should be undertaken only in the context of significant structural change. If we achieve such change, then, and only then, can we consider the competencies to which QMV should be applied. I would add only that there will always be room for a veto in certain areas of Community policy, where vital issues of strategic importance are involved. If such arrangements are not made, the danger is that the Union will start to unravel. We all want to avoid the work of the past 50 years coming to grief because of an over-zealous approach to the decision-making process and to the institutions of the Community. The Community has always done best when it has moved forward on the basis of rational consensus.

Some would say that we made great strides during the years leading up to the Maastricht treaty and beyond, but perhaps now is the time for a little more measured reflection. Now is the time to see where we can go with the enlargement process and to bring in the countries of eastern Europe that so keenly want to join. They will be good for the Community; they have had to fight for their democracy, and they will not give up their freedoms lightly. They will bring with them an element of common sense of the same sort as the other new members have brought to Community discussions in the past 12 months.

There is much to play for at the intergovernmental conference in 1996. Britain must be at the heart of the negotiations. It must be the voice of reason and common sense. If we succeed in that, we shall be able once again to help the Community to develop in a way that its peoples will understand and accept: that is the key. If we do not carry the peoples of Europe with us while developing the Community, the long-term viability of its institutions will ultimately be threatened.

8.1 pm

Mr. Nigel Spearing (Newham, South)

I echo wholeheartedly the closing sentiments of the hon. Member for Somerton and Frome (Mr. Robinson). He traced a fairly objective picture of what is going on at the Moment; but I suggest to him that developments in the European Union are not the real problem that we face.

Everyone asks what sort of Europe we want—I do not, but others do. That suggests that we can start afresh, but I fear that it is impossible. We can only build on the combined treaties; we can develop only as far as they permit. We are not building the edifice from scratch. The foundations are already in place, and they limit the actions that we can take. To that extent I dissent from the hon. Gentleman's closing remarks. Things are not as he described them, much as people who want to avoid the issues pretend they are.

The hon. Gentleman seemed to have some faith in the idea of subsidiarity, a somewhat mystical concept. As I told the Minister in the course of a Select Committee investigation chaired by my hon. Friend the Member for Clydesdale (Mr. Hood)—he has already produced an excellent summary of the report—subsidiarity does not apply to anything over which the Community has exclusive jurisdiction. That represents an enormous area, including the single market. Huge amounts of legislation deal with the single market under article 100A and the definitions of an area without internal frontiers. Subsidiarity therefore does not operate over most of the treaty's provisions.

In so far as subsidiarity is claimed to be able to operate, to use a phrase I have used before, it is to be tested by a comparison of probabilities, estimates and complex predictions, in a context of unknown future conditions. It cannot, of course, be justiciable. It is impossible to judge the future; courts can judge only on the present and the past. Here, however, we are dealing with a matter of complex prediction and political judgment.

I maintain that subsidiarity, despite all the conferences held about it, is not the viable protection it is often claimed to he. That, too, adds to the general air of disillusionment. As a member of the relevant Committee I am privileged to possess a copy of the report by the reflection group. I would sum it up as saying that things are not working, that the Union does not have the confidence of the people of Europe, and that something must be done about that: more centralisation. Perhaps the Minister will put me right if I have misinterpreted the report, but it seems to suggest more centralisation on top of what the Maastricht treaty, which is still in the early stages of development, provides.

These events seem to creep up on us and surprise us all, as I have said in this House for 15 years. We sign treaties, only to find two or three years later that events have moved on. A good example of that came in the past 10 days, headlined in all the newspapers and the subject of a spat on the "Today" programme. It had to do with something that the Home Secretary had prevented from happening at a meeting of the Home Affairs Council. Apparently he did not agree to an otherwise unanimous decision on a certain statement about racism and xenophobia.

Even I, who try to follow these things, learned only after further investigation what it was all about. We had not seen the relevant document in the Scrutiny Committee, set up by this House to look into such matters. It appears that the document had been drafted by the Commission under the home affairs and justice pillar. It may have been thought that that was an intergovernmental subject over which the Commission has no jurisdiction. But the treaty says that the Commission can produce proposals on six topics: asylum policy, rules governing the crossing by persons of the external borders of the member states, immigration policy—with three sub-divisions—combating drug addiction, combating fraud on an international scale, judicial co-operation in civil matters. Under article K.3.2, action may be taken under qualified majority voting at the instigation of the Commission.

As some of us have pointed out before in late-night debates, this is yet another example of how even politicians can be taken by surprise. And the problem is that most official documents to do with the EC mean hardly anything to the general population. That is why the media do not report them much—they are meaningless and hence not useful for news purposes, however important they may be in law.

After reading the report of the reflection group I went down my local high street and looked at the faces of the electorate. I doubt whether more than two or three lines in the report would be comprehensible to the average citizen, even the well-informed citizen. That is the communication gap on which the reflection group has quite properly remarked. But if the conference called to review certain aspects of the treaty goes in for more complications and centralisation. or for embroideririńg still further the powers of the centralised institutions, serious disillusion will set in.

The hon. Member for Somerton and Frome wondered why so many countries on the eastern border of the present Union want to become members. I suspect that it is not because they know everything about the treaties. I will mention later the problems in relation to our Scandinavian friends, who recently became members. First, I will add to the remarks of my hon. Friend the Member for Clydesdale about scrutiny in this place.

The Select Committee's report, which my hon. Friend summarised well, shows how far we have to go. The document that the Home Secretary was dealing with not long ago did not come before the Select Committee on European Legislation, even though legislation might flow from it. It can certainly do so under article K.3.2. The document might have gone to the Home Affairs Select Committee, but I am fairly sure that that Committee did not have an opportunity to tell the Home Secretary what it thought.

I do not often see eye to eye with the Home Secretary, and I may not do so even on this matter. However, are we saying that everything will depend on the swift, snap judgment of the Home Secretary of the day—whoever he may be and from whatever party, advised by a few civil servants in the course of a few hours, 10 days or a fortnight of notice being given of a particular statement at the Council of Ministers? Are we saying that that will be done in the case of important policing matters relating to the international movement of peoples? That is the current position.

There has been a great deal of improvement in our scrutiny procedures, particularly in respect of the pillars and the Foreign Affairs Committee. Today, we heard distinguished contributions from its Chairman and from my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore). However, I do not think that they can get at the single European foreign policy, which is to be determined by 15 people—of whom our Foreign Secretary is one. I do not think that they could keep up. The distance between even Members of Parliament, let alone our 50,000 or 60,000 electors each, and the real decision-making that used to happen in this place is growing wider and wider. No wonder the general population, in whichever country of the European Union, is disillusioned.

Was there ever any confidence in the first place? The European Union's great boast is that it represents all that is best in western European democracy. One characteristic of democracy is not only the plethora of words ending "ity" in the reflection group report, but information and visibility. Where do we find that? Did we find it on entry? There may have been White Papers at the time of accession in 1971 and 1972, but it was claimed then by the Prime Ministers of two parties that no law could be passed and be directly applicable to this country if a British Minister said no. Strictly speaking, that was being over-economical with the truth. That was a reference to the so-called Luxembourg agreement, which was not in the treaty, has hardly been used since and is not really effective.

At the time of the one referendum held in this country, we were told that the risk of economic and monetary union had been removed by negotiation. Denmark held two referendums. The result of the first was roughly 50-50. The second, which just went the other way, was based on a few words after the Edinburgh summit that did not change a word of the treaty. Can we say that that is really democratic? The result of the referendum in France was virtually 50-50. Was that wholehearted consent, on the basis of what was known at the time—not as things turned out later?

Some members of the Select Committee on European Legislation had the opportunity to meet our friends from Sweden and Finland. The Finns are on the northern margins of the Union. A high proportion of that country's population live within the Arctic circle. The Finns told us time and time again that their overriding purpose in joining the European Union was security. Of course it was, given the instability further east. We would be in that position too. However, it is little known in this country that to meet the rigorous terms that were virtually imposed on the Finns by the European Union, Finland now has a Government that is more than a coalition. It comprises all parties from what would be the middle of the Conservative party in this country to the greens on the far left. The Finns can comply with the disciplines that the treaties will impose on them only by having a national Government of that sort. Some of us said at the beginning that the treaties were defective because they begin to destroy the normal operations of parties and Parliaments. I suggest that that has happened in Finland. Would it have such a Government otherwise?

The Finns are planning to reduce substantially support for agriculture. While it is true that a considerable sum will come from the European Union for a few years, special arrangements have been made to allow Finland to continue national aid because a large proportion of its population are in the northern areas. Even on the best estimates, there will still be a cut in incomes for the farming community, where unemployment is already high in Finland. Why are such coercive conditions placed on applicant members, who virtually have no choice? Is that democratic? Is that really power from the bottom up, which is what democracy is about?

Many years ago, Sweden was looked upon by people on the left of centre as the ideal nation of societies, because socialism is really about that. Today, Sweden is having to give up that which was regarded for many years as a remarkable if not ideal state on the world stage. Sweden managed to retain its political neutrality and to produce a unique relationship between capital and labour and production. Sweden played a distinguished independent role in world peace organisations. It was able to do so—as was Norway, in the middle east—by virtue of its independence. From the beginning, the Riksdag created a central bank—as a public service that was seen as a community organisation. In the past few years, because of some form of misjudgment, the banks created a lot of private credit, which I presume will not be stopped by the treaty of union. I suppose that one can stop public credit or borrowing being created but that private credit can go up to the sky. That does not seem to matter. It is just another little matter of the criteria.

We learnt from distinguished sources that the Swedish people were assured that joining the European Union did not mean that they were committed to economic and monetary union—that there would have to be a debate and a vote in the Riksdag if the nature of the currency were to be changed. I have been told—this is subject to further information—that when they took the first vote many people in Sweden thought that they were under no obligation to join any economic and monetary union. I put it no higher than that. They thought that they had an opt-out of the sort negotiated by the United Kingdom. If that is incorrect, I stand to be corrected. We have, however, been told that on good authority by Swedish people. How can any organisation claiming to be fundamentally democratic insist on such condition for potential member states who wish to join? It is not surprising that since joining many things having emerged and the balance of consent in Sweden has moved from a small yes to a rather more substantial no. That bodes badly for intra-Community relations.

Austria has never featured prominently in newspaper headlines. It managed to keep its nose clean to both east and west. Indeed, it had to. It is a remarkable country with many remarkably ingenious people. Large areas of Austria are used for alpine agriculture while others contain innovative and skilful industry. I have been told that since joining the Community Austria's industry has been disrupted and that alpine farmers are in difficulties.

Why is that? Prices in Austria for food and other forms of agricultural production were much higher than comparable prices within the Community. That had to be if Austria was to continue to sustain the cost of agriculture in alpine pastures and the upland areas generally. Prices in Sweden, Norway and Finland are much higher than those on the world scale because those countries had to do the same thing.

There is now widespread discontent in Austria, especially in view of a long period of coalition government when conditions were not so difficult. That may encourage nationalist feelings in the forthcoming election, the results of which we shall know on 17 December. I fear sometimes that nationalist feelings are the motivation of some Conservative Members.

Many of my right hon. and hon. Friends and I who have always been doubtful about European treaties from the first, or have seen little or no merit in them, have adopted that approach because we do not believe that they are inherently international. They lead to erosion and cause doubts within national democratic structures. That may not have been obvious to some but it is becoming more and more obvious as we proceed.

The intergovernmental conference, if it moves further down the road of centrality and further away from people's representatives and begins to undermine or destroy the effective power of elected people, will further cause disillusion. If treaties do not allow policies to be adumbrated and agreed to by a Government in this place, or by national parliaments everywhere, the democratic choice of the people is automatically destroyed. That choice has been destroyed in this place. Let us hope that wiser counsels will prevail and that on-going centralisation will not be pursued. Let us hope also that we develop or change the Community's institutions in a way that reflects democracy and not, in my judgment, attacks it.

8.23 pm
Mrs. Edwina Currie (South Derbyshire)

I take up the remarks of the hon. Member for Newham, South (Mr. Spearing) with some respect. I know that he is pro-European, not anti. As he said at the beginning of his remarks, he is stuck with the institutions that we have in Europe. That is his dislike.

The hon. Gentleman will recall that we last crossed swords in debate on 1 November at the English Speaking Union. I took on both the hon. Gentleman and the hon. Member for Great Grimsby (Mr. Mitchell). I beat them hands down. I had a 2:1 majority, even among the former colonials of the ESU. It is clear that the arguments of the hon. Member for Newham, South were listened to and rejected.

Many of those who speak against Europe and are hostile to some of the European institutions adopt a rather different attitude, which was probably inadvertently revealed by Mr. Bretherton of the Board of Trade back in 1955. As he was pulled out of the Messina talks by the then Conservative Government, he wrote to his French counterpart as follows:

I leave Messina happy because even if you continue talking, you will not agree; even if you agree, nothing will result; even if something results, it will be a disaster. Three years later the treaty of Rome was signed and the United Kingdom had excluded itself from the beginning of the first great European movement. I consider that to be the greatest mistake that the United Kingdom ever made. Had we been in at the start we could have had a far greater influence. We could have helped to form European institutions and many of the complaints that the United Kingdom has justifiably made since would not have been necessary.

That has been our attitude to many institutions. We refused to join the set-up called the exchange rate mechanism of the European monetary system, which was established in 1980. We still talk as if our removal from it in 1992 smashed the whole operation. That is not true. Many of our Community colleagues have had the benefits of closer monetary co-operation for about 15 years, and three more countries joined the EMS in January.

It appears that monetary union and the potential single currency will be discussed at Milan and beyond. Colleagues may be interested to hear outside opinions on the British stance before I move on to my opinions.

Last Friday, 1 December, Citibank in Germany held a seminar in Berlin that was addressed by Count Otto von Lambsdorff, the former Commissioner. He said, first, that he had not the least doubt that the United Kingdom will fulfil the convergence criteria. He paid the Government a great compliment. Thus we would be qualified to join the single currency.

Secondly, Count Otto von Lambsdorff suggested that Britain would then refuse to join the single currency. I think that he is probably right about that. Thirdly, he said that he had not the least doubt that later Britain would apply to join. It was his view, fourthly—this was his advice to the gathering of more than 350 bankers and industrialists—that Britain's reluctance to join should not stop the rest of its partners going ahead with a single currency and getting involved if that was what they wished.

We should start discussing a single currency on the assumption that currency union will happen. It may not happen exactly to the Maastricht criteria or exactly to that timetable, but it will happen. It will happen in Europe sooner or later. Not all member countries of the EU will join. Those which join will press ahead without the others. One question, of course, will be whether it is a workable currency union. Of course. Even so, we should consider whether we should join. We hear many arguments about why we should not and I thought that I might adumbrate a few arguments to explain why we should.

There should he no debate about the wisdom of the convergence criteria. We helped write them into the Maastricht treaty. It is good to have low inflation, low interest rates, a stable exchange rate, low Government debt and small budget deficits. I would prefer there to be no budget deficits. As a good Tory I believe in sound currency and sound finance. I see my hon. Friend the Minister nodding vigorously. I take it that those are his beliefs. In any event, it is Government policy. Nothing should stand in our way when it comes to the convergence criteria.

If that is so, to what does opposition to our joining the ERM amount? There are a number of consequences, including loss of flexibility, sovereignty and political control. These are serious issues. I set to one side the dislike of foreigners, misplaced nationalism and a distaste for co-operating with our neighbours and recognising some of them as equals. These are genuine emotions. They certainly exist in the United Kingdom, as they do in other countries. We must discount them because at least in part they are not rational. They are probably not amenable to rational debate whereas I hope that the serious arguments about flexibility are.

We are told that we cannot have a currency union while there are great differences in the economies of the different member states and their regions. It is said that these discrepancies would somehow be dangerous. That argument has been well advanced on several occasions this evening. As economies converge, many of the present differences will disappear. The United Kingdom, having been on the fringe of the economies of Europe is, I hope, moving into a middle-range economy, meaning that we shall neither be the richest nor the poorest. It is a fact that coexistence within currency unions happens all the time between widely different economic areas. That is a simple matter of fact. The United Kingdom is a currency union and has been for a very long time. The city of Liverpool, with an unemployment rate that varies between 15 and 20 per cent., depending on which bit one looks at, has the same currency as, for example, Hampshire, which has an unemployment rate of below 5 per cent. It has the same interest rates. People go to the banks and borrow at the same levels. The Welsh economy shares the same central banking arrangements as England. Technically, Scotland has a separate central bank, but Scottish money is legal tender in England, despite the fact that I can get more quickly from London to Brussels than I can from London to Inverness. The unemployment rate in south Derbyshire, at 5 per cent., co-exists almost exactly with an unemployment rate in Derby, South of 15 per cent. We use the same currency, go to the same banks, have the same interest rates—we manage. Therefore, much of that argument is spurious.

More broadly, the United States, a country with 250 million people, has a single currency, and not a single soul there would recommend that there should be diverse currencies because of different economic conditions. Indeed, nobody there would suggest that a single state would be stronger if it had its own currency, even though some of the states are bigger than those in the European Union.

We are told that currency union enforces political union, which is often a concern of Conservative Members. That is nonsense. The Scots and English have different legal systems; they have different education systems. I happen to think that the Scottish education system is far better than the English one. Ulster and Wales have different types of criminal court; they have a different age of consent. What a 16-year-old girl can get up to in Caernarfon—not a 16-year-old boy—is illegal in Coleraine, where the age of consent is 17. In Wales, she can do it in Welsh as well.

In the United States, in one state one will hang. In another, one will be electrocuted. In a third, one will be given psychoanalysis—assuming that one has committed a homicide, of course. Banking laws differ from state to state more than they do across Europe, and so do official languages in places such as Miami and New York. There is absolutely no reason why countries in a currency union should have to change their social systems or legal arrangements, and we should remind the harmonisers of that when they try to get too enthusiastic. Aspects of our culture are inviolable and do not need to change.

What about the loss of flexibility? Flexibility to do what? To fiddle with the exchange rate, of course, because the whole essence of going into a currency union is fixed exchange rates. I am all in favour of flexibility if that means a little rise here and a little fall there, but that is not what floating exchange rates have meant in the United Kingdom. What we have instead is falling exchange rates, for more than 40 years.

When I was born at the end of the war, £1 sterling would buy DM16. When we applied to join the European Union in the early 1960s, it was DM11. When we got in, it was DM8. When Margaret Thatcher became Prime Minister of this country in 1979, it was DM4. Now it is about DM2.20. We have had a continuous steady process, under all Governments, of a falling exchange rate. All that we can really say with any certainty is that the rate of decline since 1979, where it has halved, is marginally better than in the previous 16 years, where the pound dropped by two thirds. It is a tragedy and a disgrace, for the British disease is no longer wildcat strikes, poor delivery dates and bad management but debasing our currency, as though we were a third-world country. It beggars our nation, devalues the efforts of our people and it is about time that we stopped.

The other loss of flexibility and of sovereignty which is often mentioned, is our ability to control taxation and public spending. Again, that was enunciated several times by Opposition Members. It was that fear that made Labour anti-European for many years. It is a curious irony that the same fear seems to imbue many of my colleagues. But none of it is true. Under the currency union as proposed by the Maastricht treaty, a country could tax as much as it liked, and it could spend as much as it liked. What it could not do was spend more than it taxed to a substantial degree to push up Government borrowing and start printing money. That would lose control of inflation and therefore it is a bad idea. But who in the House wants huge Government deficits? Who in this country advocates printing money? The very fact that every single time the Labour party opens its mouth and we pose the question: "Who is going to pay for this, or are you just going to push up borrowing?", and then see the uncomfortable squirming shows how important the question is for the nation at large.

What do those fears boil down to? That a British Chancellor would no longer be able to allow sterling to depreciate year by year, little by little and that a British Chancellor would no longer be able to spend wildly beyond the taxpayers' ability to pay, either temporarily or in the long term? Both of those seem to me to be commendable outcomes and very strong arguments for being in and not out. Of course, we could behave in that commendable fashion anyway, but we do not and we never have, not in my lifetime. I suspect that only if we had to would we impose on ourselves the necessary discipline and competence.

There is one additional huge advantage were we to join a future well-run single currency, and that will come not so much from stability but credibility. It would be assumed by the markets that British Governments would behave themselves and run the economy responsibly, that we had given up devaluation as an instrument of economic management, and so there is every chance that interest rates would be lower, as they are indeed in other countries that have strong currencies. Observance of the rules would mean that lower inflation, which is entirely beneficial, would be part of our scene. Our voters might then have a more secure attitude to the future and a greater sense of prosperity, and certainty in prosperity. The feel-good factor might return, and would not that be wonderful? Those, as I see them, are the positive arguments for joining.

I conclude with my fears about what will happen if we do not. If we chose not to join a well-run currency union, and our colleagues in the rest of Europe chose to do so, we would not be the stronger nation. We would be weaker. Two thirds of our trade would then be with countries that were relieved of substantial expenses associated with currency risks. Their prices would benefit. That is one of the reasons why they would want to do it. We would not have a stranger currency as a result but a weaker one. I fear in the long run for sterling. The markets would infer that British Governments, possibly of all colours, wished to retain the option of devaluation, and they would react accordingly. We would have signalled that we were not willing to be at the very heart of Europe, and thus we would put at risk future inward investment into the UK, both from the rest of Europe and the United States and Japan.

I have the European Toyota factory in my constituency. I do not think that it would move. I think that the company would keep its promises and stay with us for our lifetime, but the next European Toyota factory might decide to go closer to the heart of Europe. What we would have announced by a decision not to go in, to exercise this opt-out, would be that we believed that our country was a timorous, narrow-minded and backward-looking nation, lacking confidence in its competence to hold its own in open competition, and in so doing we would deliberately have given up our role as one of the leaders of the free Europe that we helped to create 50 years ago.

If we want a Europe that is dominated by Germany, with France and other client countries trotting docilely along behind, the quickest way to ensure such an outcome is to opt out. I hope instead that we will be courageous and join when the time comes.

8.28 pm
Mr. Mike Gapes (Ilford, South)

It is a pleasure to follow the hon. Member for South Derbyshire (Mrs. Currie), and I agree with her conclusion. She revealed today, quite clearly, that despite all the efforts of the Foreign Secretary, what was written in The European on 23 November is basically true—he feels that he just has to hold together the fragile unity in his party. The article reads:

The Euro-sceptic wing, confident that it has brow-beaten the Cabinet into accepting a hardline stance, has ceased the remorseless attrition against the Tories' more fervent Europeans. There now exists a fragile truce; Malcolm Rifkind, the new foreign secretary, is the embodiment of that truce. What we have just heard shows that the truce will not necessarily last for ever because people on the pro-European, perhaps realist, wing of the Conservative party will in time—I hope—reveal the fact that they are not very happy. What we have just heard is an example of that.

It is clear that, despite some of what we have heard. there is a consensus in Britain, and in the House, that Britain's future lies in Europe. The argument is surely about how best to pursue that future in Europe and what are the best ways forward during the next few years.

There has been a strange crossover in the Labour and Conservative parties. The Labour party was, historically, seen to be the anti-European party—Hugh Gaitskell has already been referred to—the party that stood out against the capitalist west European club and for the Commonwealth, our relations with the third world and a vision of a wider world.

The Conservative party had its xenophobic wing and the little Englander nationalism, which is still there, but it also had close links with business. It was probably the only political party to have such links 15 or 20 years ago. That has changed recently, but it could have been thought to represent the interests of British business in its public statements.

Nowadays, the CBI and the Conservative party are increasingly at variance. Many British business people are worried about the Government's stance, for the reasons that the hon. Member for South Derbyshire has just spelt out. They are worried that Britain will be outside the process in Europe, that there will be speculation against our currency, that we will lose inward investment and that we will suffer the job consequences of that.

As a London Member of Parliament with many constituents who travel to central London to work in various financial institutions, I am worried about the long-term consequences for the City of London—not today, not tomorrow, not next year nor in five years' time, but in 15, 20 or 30 years' time when information technology and the transferring of financial institutions' information becomes so vital to our economies that we in London may lose out to Frankfurt or some other European centre. That might not happen—none of us can predict the future accurately—but Britain is taking a big risk if it stays out of these major developments.

There is clearly a great deal of cynicism among the general public about all things European. Very few people—they could be counted on the fingers of one hand if we had one finger—understand the minutiae of the so-called decision-making processes in the European Union. That is a real problem because it means that none of us can really get a grip on jargon such as comitology, co-decision and so on. Even people in the institutions themselves do not really understand it. That means that we cannot be sure who makes decisions, how they are made and how they can be changed.

My hon. Friend the Member for Newham, South (Mr. Spearing) said that power had been lost by this Parliament to the European Union's institutions. I do not agree. Parliament lost power many years ago—to our Executive, and our Executive is now conspiring with Executives in other countries to do things behind closed doors, to make deals, to work things out, and neither this Parliament nor national Parliaments in other European countries nor the European Parliament have the ability to keep a check on it. That is why this absurd structure has been built up. That must be considered if we are to restore public confidence, to obtain real accountability and to deal with the democratic deficit.

There is an associated issue of great and fundamental concern. In the European Union today, there are 20 million unemployed people. Different parts of our continent have seen the rise of extremist, nationalist, racist and xenophobic parties and organisations. Fortunately, perhaps because of our electoral system, that is not happening in Britain in quite the same way as it is elsewhere, but it is clearly not sufficient for us to dismiss such issues and say that it does not really matter to us that the far right has growing support in Austria, that the national front in France consistently has between 12 and 15 per cent. of the vote in elections or that neo-Nazis from Germany have been going to Croatia to help in the civil war in former Yugoslavia.

When I saw that the Government were blocking proposals for action against racism and xenophobia, I was appalled. If we are saying that we have superior national legislation against it and that we do not need a European Union-wide approach, where is our law that makes it an offence to deny the holocaust? If the Home Secretary and other Ministers present such legislation in the next year, I might be convinced, but if they are not prepared to do so, I shall be suspicious that they have another agenda, and that it is that they do not want to upset the right wing and the xenophobic and racist vote in Britain.

Mrs. Currie

I am sure that the hon. Gentleman realises that many hon. Members, including people of Jewish origin such as myself, would be deeply frightened at the thought of our stopping free speech in that way. It must be possible to hear an opinion so that it can be destroyed by argument.

Mr. Gapes

I hear what the hon. Lady says, but I draw to her attention the comments of the Board of Deputies of British Jews and other organisations from the Jewish community in the past week. I think that she will agree that they take a different view. It seems that the hon. Lady thinks that they are wrong, but I happen to agree with them and believe that they have a serious point.

Several measures before the European Union can begin to combat the cynicism and difficulties that are being experienced throughout the European Union. The Swedish Government's proposals to counter unemployment deserve serious support and consideration. We might argue about the small print, we might well say that there are different approaches, but it is completely wrong for our Government to dismiss them and say that we are not interested. I hope that, when the Government changes in the near future, we shall have a much more positive approach.

Europe is not just a single market. It is not just a free trade area. It has not been since its inception and it is absurd for people to pretend that we can somehow transform it into one. Neither by undermining the acquis communautaire, which was called for by the hon. Member for Colchester, North (Mr. Jenkin), nor by restricting and blocking any attempt to change will we succeed.

The Government say that they want enlargement. It is not possible to enlarge the European Union from 15 to 20 or 25 countries without doing something about accountability and the decision-making processes. Without such change, we would end up with deadlock. It is absurd that a country as small as Luxembourg can effectively block measures to deal with fraud. It would be absurd if countries in southern Europe, benefiting financially from tobacco subsidies, could block reform of the CAP that sought to eliminate that scandal. It would be absurd if countries could prevent progress towards enlargement because they could prevent changes in the budgetary relationship and distribution.

We currently spend 50 per cent. of all European Union money on the common agricultural policy. That is far too much. In a country such as ours, with a largely urban manufacturing population—only a small percentage of the population is employed in agriculture or in agriculture-related industries—it is nonsensical that the vast majority should pay so much to subsidise agricultural systems elsewhere as well as in their own country.

During the past few months, there have been changes in world market prices that affect the future of stockpiles of various products. Nevertheless, the CAP as a system must go. The Foreign Secretary conceded that when he said that it could not be extended to Poland, Hungary and the other agricultural applicant countries. If that is the case we shall need allies to secure change. That is why we need to build a coalition with other countries, and why reform of the institutional framework will become necessary.

Enlargement will not be confined to the Visegrad countries. It is wrong to view those four countries as a bloc. This week, I met the Leader of Slovakia's Opposition, and was worried by what I was told about the authoritarian behaviour of Mr. Meciar towards his opponents. Because of its high growth rate, Slovakia might become economically capable of joining the European Union with the other applicants, but I do not think that we should allow into the Union countries that have not become accustomed to the concept of a democratic Opposition who have a right to protest, a right to vote down Governments if they can secure the majority in Parliament and a right to campaign against Government policies.

The Estonians have also just applied to join the European Union. As one who has visited Estonia a number of times, I am still not convinced—despite the economic growth and development that has taken place in the country in the past few years—that adequate safeguards for dealing with the substantial Russian-speaking minority yet exist. Again, we must be very careful: the European Union must be clear about its democratic standards and its standards in regard to respect for minorities.

Far more serious is the fact that there can he no question of allowing Croatia into the European Union, because of the abuses of human rights there, the expulsion of 200,000 people from Krajina and the other atrocities that have been perpetrated at the behest of President Tudjman. I know that today's debate is not about Yugoslavia, but the Government should consider seriously whether they are prepared to refer senior figures in Croatia—including President Tudjman—to the war crimes tribunal on the basis of what has gone on in recent months.

Increasingly important in world politics and in Europe are arguments about self-determination, nationalism and the rights of minorities. The European Union potentially provides a way in which to deal with those problems: recognition of the rights of regions, and of the fact that diversity and different structures are possible within an institution that brings people together. That must be handled sensitively and carefully, however. It would be a big mistake to imagine that any country can be allowed into the European Union, regardless of other factors.

The European Union is a magnet: everyone wants to join it. Despite the litany of horrors that we have heard from some hon. Members on both sides of the House, the overwhelming view in eastern and central Europe is that people want to be part of the European Union, for very good reasons. They see the Union as a source of stability, prosperity and democracy. That is why it is about time that we stopped arguing about the institutional framework, and started to argue about the vision of the Europe that we wish to create—a Europe based on co-operation and diversity. It is not sufficient to argue that all that we need do is say, "No, no, no." We had a Prime Minister who did that a few years ago, and look what happened to her.

I believe that, in the next year, when the time comes, the British public will say that they want to participate actively at the centre of the decisions that will be made about the future of our country. They will not be content with a Government who decide to block all initiatives from elsewhere. For that reason, I am confident that the IGC will have a positive outcome that is in the interests of the country, our people and the prosperity and peace of all Europe.

8.55 pm
Mr. Edward Garnier (Harborough)

I shall try to gallop through my speech in order not to trespass too much on the time of the Front-Bench spokesmen. I hope that, in galloping, I shall not garble, but in my part of Leicestershire we are quite used to galloping.

My right hon. and learned Friend the Foreign Secretary said that he did not want a radical rewriting of the treaties governing the European Union and the IGC; he wanted practical steps towards improvement in the workings of the Union. It is not good enough for the hon. Member for Ilford, South (Mr. Gapes) simply to complain about, for example, Lady Thatcher's attitude to the European Union—or the European Community, as it was in those days—or about what he believes to be the Conservative party's attitude towards the institutions. Only through the proper working of those institutions can we secure the co-operation between nations on which the hon. Gentleman seems so keen. I urge him to lay aside the mantra of attacking the Conservative party on the issue; it must be realised that the best way in which to achieve what is best for Britain and for Europe is to ensure proper arrangement in the institutions.

I, too, welcome the enlargement of the European Union to include the countries of eastern and central Europe, but we and they have a great deal to do before their accession. What we must not do is promise them more than we can deliver, or raise expectations that cannot be fulfilled. I want Cyprus and Malta to enter the European Union, but Malta in particular must be prepared to recognise its duty to assist in enforcing British court orders by convention and out of respect for the comity of nations, which it seems remarkably reluctant to do. In this respect, I refer to the case of my constituent, Mrs. Anna Bergmann, who is the beneficiary of a financial settlement order from the High Court's family division in London, made against her ex-husband who is now resident in Malta.

The Madrid summit will take place next week on 15 and 16 December. It is to be chaired—I may be wrong but, anyhow, it does not matter—by Carlos Westendorp, the Spanish Foreign Affairs Minister. He in particular reminds us of the historic links between Spain and the low countries, places that were once linked through a common Crown and are now members of the same European Union. If we and they are not too careful, however, they may eventually be linked again—and more closely—as separate provinces within a United States of Europe, having to fend and contend with a single currency.

Whether Mr. Westendorp's Government will be in power long enough to witness the conclusions of the intergovernmental conference is debatable. What is more certain is that his British counterpart, my hon. Friend the Minister of State, Foreign and Commonwealth Office, will be in office, not only when the IGC convenes next year, but when it completes its deliberations.

The reflection group, which has been preparing for the IGC, has been meeting since 3 June and my hon. Friend the Minister has been travelling to and from Europe to attend its meetings. Unlike some representatives of the member states, however, he is not only a member of our legislature, but a politically accountable and aware Minister. He knows, as all Ministers must know, what his fellow parliamentarians want to come out of the IGC. As important, if not even more important, he knows from his constituents what the British people require and what they do not want from the IGC.

Unlike many mainland European politicians, who have been elected by proportional representation and put into government by post-election backroom deals, and who represent a party list rather than individual constituents, our Ministers in every Department engaged in European Union affairs are closely in tune and in touch with our country's citizens. They do not pay lip service to the democratic process, but daily must respect it and respond to it.

The major fault of European federal enthusiasts, of the integrationists, is that they belong to that school of politics that sees no real need to listen to or to consult the public because they know what is best for the people. They have decided, for example, that there will be a unified single currency by a given date. In France, the political elite seems prepared to destroy social harmony in order to meet the convergence criteria, no matter what the consequences, long or short term. The elitism of so much of continental political thought and practice, although sometimes majestic to behold, is not always beneficial to the state or to the people whom the politicians believe they are governing.

In the few minutes left to me in the debate, I want to concentrate on just one of the five subjects considéred by the reflection group: common foreign and security policy. In its first report on the CFSP, the group identified as the problem with that policy, as presently constituted, the separation of the European Union's external policy dimension and its external economic dimension. Whereas the bulk of, if not all, decisions on economic matters can be taken by qualified majority voting, CFSP decisions require unanimity.

That is not a problem, but a strength, as it recognises the delicate nature of security issues for each member state and underscores my view that no Government have a right to delegate their people's allegiance to the sovereign. By that, I mean not simply the Queen or the monarchy, or the Crown in Parliament: I mean that intangible concept of nationhood, which I accept is easier to recognise than to define, but which applies to all democratic states.

I am saying not that it is wrong to ask our fellow citizens to fight for Europe, for liberal democracy or against totalitarianism, but that it is for this Parliament, or at any rate a Government supported by this Parliament as representing the popular will, to hold to itself the decisions about which battles to fight and which wars to wage.

We, or at least my parents, my grandparents and their generations, have fought for freedom and for Europe. They have been soldiers in allied armies and in other military formations commanded by foreign generals, but that does not mean a loss of statehood or of national determination in time of war. It represents the consequence of a national decision to act on security matters in and for the national interest. Even now, and obviously, the historical and geographical links that differ from country to country—one takes the most obvious examples of France and the United Kingdom—demonstrate that there are interests that we and, for example, the French have which go well beyond the shores of Europe. That surely must allow us to take our own decisions unfettered by a common foreign and security policy.

For the IGC to amend the treaty of Rome to "cure" the problem that I identified earlier, because member states are worried that the CFSP's lack of qualified majority voting is a cause of its ineffectiveness, is badly to misunderstand the question. A CFSP cannot be dealt with suitably if some aspects remain subject to unanimity and some are made subject to QMV. I urge my hon. Friend the Minister not to retreat into that sort of compromise which, no matter how comfortable and attractive it might seem at 5 o'clock in the morning in the IGC meeting room, is a dangerously flawed solution.

Soon, thousands of NATO troops will have been deployed in Bosnia. They will include troops from Britain, France, America and even Germany. There, in my submission, is the evidence we need to demonstrate that a CFSP in Europe is for Governments acting in their own national interests but in concert, making decisions based on shared analyses and shared intelligence and doing something together because they all believe it to be right and achievable.

An intergovernmental foreign and security policy, not a European Union foreign and security policy, works. I urge my hon. Friend the Minister in his meetings, and his colleagues in their meetings at Cabinet level, to pursue such a policy. As my right hon. and learned Friend the Foreign Secretary said at the outset, the IGC should be about practicalities, not about wish lists or pipe dreams. I urge my hon. Friend the Minister to steel himself to that task in the months that remain before the IGC.

9.6 pm

Ms Joyce Quin (Gateshead, East)

Like all European debates this has been predictably wide ranging because of the nature of the subject. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) said that these debates were sometimes seen as routine. However, in this debate hon. Members on both sides of the House have dealt with many new elements of the changing European situation, particularly the opening up of the European Union to the countries of central and eastern Europe. Hon. Members have also mentioned the changing economic circumstances which are affecting the major countries in the European Union now.

Sharp differences of view have been expressed on both sides of the House and, occasionally, on the same side of the House. Hon. Members have also mentioned matters of widespread and common concern. Virtually all hon. Members talked about the need for the intergovernmental process to be seen as relevant to the citizens of the countries represented in the European Union. A thread running through many speeches was that an intergovernmental conference which seemed to be a Maastricht mark 2 would not be widely welcomed and that we want to avoid any huge gap between the so-called political elites of Europe and the populations of Europe. We need to take that to heart. Presumably, when the Minister replies to the debate and reports on the activities of the reflection group, he will refer to that.

There was widespread support for the comments of my hon. Friend the Member for Clydesdale (Mr. Hood). He referred to the report of the Select Committee on European Legislation and mentioned some of the important aspects of the way in which the House looks at European legislation and how that could be improved in the future. He said that the report contained a litany of failures and, in many ways, that is so. He said that the report talks about the undue secrecy involved in European deliberations, the frustration of dealing with unofficial texts rather than with official and properly translated documents, the frustrating delays facing the Select Committee on European Legislation and European Standing Committees A and B when looking at European legislation and, allied to the delays, the inadequate time that they have to consider what are sometimes very important matters.

My hon. Friend the Member for Clydesdale also, quite rightly, called for much more efficient and swift communication between European institutions. It seems absurd, with modern technology, that some communications procedures seem to take so long. That does not help the important business of scrutiny.

The Government frequently hide in scrutiny Committees—especially European Standing Committees A and B—matters that should be debated on the Floor of the House. In European Standing Committee B recently. I have been dealing with enlargement and other wide-ranging issues which, despite the useful work done in the Committee, should be dealt with on the Floor of the House. However, the Government sometimes do not want to parade their divisions in front of us.

We want the Government to go further and push for much greater openness within the European decision-making process. We want them to agree with our view that, when the Council of Ministers makes decisions as a legislature, it should do so openly so that the people can have full knowledge of how votes were cast at the critical time. We certainly support the proposals for greater openness from some of the other Governments in the EU, especially from the Swedish Government, but also from the Dutch and Danish Governments. We rejoice that there have been some successes in ensuring that more documents are available, not just to national Parliaments but to the wider public. That is essential if people are to see the European project as more relevant and if they are to be more directly connected with it.

Many hon. Members on both sides of the House referred in considerable detail to economic and monetary union and the proposed single currency, including the Foreign Secretary, my hon. Friend the Member for Livingston (Mr. Cook), the right hon. Member for Guildford (Mr. Howell) and my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore).

Many hon. Members referred to the convergence criteria, the reaction to them by different countries—not just Britain—and the question of how those criteria might or might not be met. The hon. Member for South Derbyshire (Mrs. Currie) predicted that Britain would fulfil the criteria, but not join the single currency. I do not know whether she was thinking that that would happen under her Government or under a future Government. However, it was significant that at Question Time today the Prime Minister once again refused to be specific. He also refused to rule out joining a single currency, as he was urged to do by many of his right hon. and hon. Friends.

There are difficulties with the move towards the creation of a single currency. Many hon. Members referred to the position in France. However, it is not just the constraint of trying to meet the convergence criteria that is causing difficulty in France; some of the policies and commitments entered into by the French Government, in particular the difficult to reconcile promises that they made during the French election, have caused problems. They promised to increase public spending, especially on unemployment and education, while at the same time taking action to cut the budget deficit. They promised to raise public sector wages, while at the same time cutting taxation. Many of the protests in France relate to some of those matters, not simply to possible strictures arising from the convergence criteria.

There was considerable discussion about the convergence criteria and the need, to which my hon. Friend the Member for Livingston rightly referred, to achieve real convergence, to tackle the problem of unemployment in Europe and to ensure that we can go forward in a climate that is conducive to economic growth, not economic cuts. During the debate on how strict or flexible the criteria could be, it would be advisable to stress other parts of the Maastricht treaty in arguing for policies to promote employment. For example, article 2 of the Maastricht treaty talks about sustainable and non-inflationary growth, a high degree of convergence of economic performance, high levels of employment and social protection, and so on. We must use some of those arguments in approaching the convergence criteria.

Mr. Shore

The significant difference though, is that those rather few references of an encouraging kind are in general terms. They are not in quantifiable figures as are the convergence criteria, which are in the treaty, the protocols and other associated documents. There really is a world of difference between just a reference to the desirability of growth and strict criteria of a quantitative kind which impose strong deflationary obligations on member states.

Ms Quin

I greatly respect my right hon. Friend, but I should point out that article 2 is right at the beginning of the treaty of Maastricht. It is one of its basic commitments. I am glad that my hon. Friend the Member for Livingston referred to the way in which article 2 could be supplemented by other action in the EU. He specifically referred to the proposals of the Swedish Government and others.

Obviously, in the European Union, there will be a very keen debate between people who favour different economic approaches. It is true that in Germany they have talked about tightening up the criteria even further, although the treaty would not provide any great solace in that respect. At the same time, there are genuine concerns among countries that have always been in the vanguard of the European project, such as Italy, France and Belgium, that the criteria could cause difficulty.

During the intergovernmental conference and beyond, there will be some very pertinent debates on those subjects. I would certainly closely align our views, as did my hon. Friend the Member for Livingston, with those of the Swedish Government and others who are supporting them on the subject, to try to give much greater priority to the all-important task of fighting unemployment.

We also believe, as my hon. Friend the Member for Livingston said, that it is important to build on some of the initiatives in the Delors package, which were agreed by countries, although, sadly, they were watered down, largely at the insistence, or at least the keen encouragement, of the British Government and their representatives.

Many hon. Members on both sides of the House have referred to enlargement to include the countries of central and eastern Europe. Like all hon. Members who have spoken, the Labour party and I are very much in favour of it. It is important, however, to go beyond the general expressions of welcome for the idea of enlargement and to start to grapple with some of the practical problems that it brings with it.

Despite the fact that the Foreign Secretary's speech was controversial—at least, half of it was—we all felt great sympathy with him on one matter: some of the petty and mean-minded protectionist instincts that certain countries have shown towards the countries of central and eastern Europe. I noted that most of the examples, if not all, that the Foreign Secretary gave related to agriculture. That shows that the battle over the accession of countries of central and eastern Europe will largely be fought over agricultural policy.

We certainly consider that battle an opportunity to reform the common agricultural policy in the way that we have argued for a long time—to give agricultural support to those who actually need it, and not encourage large-scale production at very high consumer prices. We should find a way forward which is much more respectful of the natural environment, the future of which concerns us all, right across Europe. We should also try to ensure that the policy operates in such a way that it does not distort world markets and harm the exporting possibilities of developing countries, as has happened for far too many years. The discussions about enlargement to the countries of central and eastern Europe provide an opportunity.

We share the Government's keenness to pursue this approach. However, I agreed with my hon. Friend the Member for Ilford, South (Mr. Gapes) when he said that enlargement should not be seen as a dilution of the European Union into a free trade area. We are talking not about a free trade area but about trying to construct a system of co-operation across Europe which suits the citizens of our countries and Europe as a whole.

There have been sharp divisions on certain aspects of European policy in this debate. That was especially evident in the interventions during the Foreign Secretary's speech, especially those by Conservative Members. The intervention by the right hon. Member for Mid-Sussex (Mr. Renton) contrasted sharply with those by the hon. Member for Wolverhampton, South-West (Mr. Budgen) and the right hon. Member for Wokingham (Mr. Redwood).

Today seems to have been an active day for each Euro-tendency within the Conservative party. As my hon. Friend the Member for Livingston said, we started the day with the announcement by the Euro-sceptics of a White Paper whose existence has seemed to become more dubious during the day, but which still seems to be on track to be published at some time in the future.

We have also heard today about pro-European Conservative Members of the European Parliament challenging the Government's increasingly sceptical approach with a series of policy papers calling for a substantial move towards integration. Those co-ordinated publications are intended to reinforce the attempts by Members of the European Parliament to challenge what they see as a dangerous drift towards isolationism by the Conservative Government. The challenge seems somewhat doomed because, as other hon. Members have pointed out, it seems to be the Euro-sceptics who have the upper hand in the Government's deliberations. As has also been pointed out, we have the prospect next week of the right hon. Member for Wokingham launching his new campaign to try to extract from the Government specific commitments against the moves towards a single currency.

Throughout it all, the Prime Minister remains steadfastly and resolutely indecisive. He tries to be at the heart of Europe while pursuing an actively isolationist stance, no doubt ending up somewhere in the middle of the Atlantic.

There are different points of view on both sides of the House, as we have seen in this debate; I accept that. What concerns us, however, is that the divisions within the Government ranks, even within the Cabinet, are weakening Britain's position in Europe. They are losing us influence in Europe and we seem continually to be negotiating with one hand tied firmly behind our back.

I reiterate the point made by my hon. Friend the Member for Livingston about the strong and solid support which our white paper on the future of the European Union and the preparations for the intergovernmental conference received at the Labour party conference in October. That is in stark contrast to the disunity shown by Cabinet Ministers on this important issue.

The debate has allowed us to clear up some deliberate misconceptions about Labour's policy expressed by Conservative Ministers. It was good to hear the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) talk in sensible terms about the social chapter. He did not talk with what the hon. Member for Wycombe (Mr. Whitney) rightly described as the frenzy and froth of European debates. The social chapter is important; it is a general commitment to giving people at work and citizens in the European Union a fair deal at their place of work. That is extremely important.

However, the social chapter does not represent a huge raft of specific measures, although more measures may be proposed under it. At present we are talking about no more than two specific measures, and so far the chief legislative measure has been the European works council directive.

We must draw the contrast between what the Government are saying and what British businesses are doing. Today, we read in one of the newspapers that the Engineering Employers Federation is to urge its members to adopt the European works council directive in spite of Britain's opt-out from the social chapter of the Maastricht treaty.

The federation has found that none of its member companies intends to exclude its British workers from any procedures or systems that it is bound under the directive to introduce in its operations elsewhere in the European Union. That gives the lie to many of the extravagant claims made by the Government about the directive.

Reference has been made to the speech by my right hon. Friend the leader of the Labour party at the Confederation of British Industry conference, and to me the words that he said there represented common sense. He talked about considering the proposals that come from Europe, which we do in any sphere—social, environmental, economic or whatever—anyway, and about negotiating about them with our European partners. That is the route that virtually all proposed legislation in Europe already takes.

Of course it is sensible to consider the proposals closely and to consult the various people who will be affected by them. If we do so, it is more likely that the legislation passed will be in people's interests, and will be workable and easy to implement in our different countries.

The world prosperity league has been mentioned many times lately, and I must point out that countries that have done well in recent years and also over a longer period, ever since the end of the second world war, have on the whole, although not always, been those that have treated their work forces well in many different ways. It is absurd to demonise European social policy and the social chapter, as Conservative Members so often do.

Today at Question Time, the Prime Minister said that Labour favoured massive new powers for the European Parliament. Nothing in our document backs up that idea. Members of the European Parliament themselves have not been calling for massive new powers. They know that they were given new powers under the Maastricht treaty, and that it will take time for those to be fully tested and tried out. The proposals in our document for streamlining the European Parliament and making it more effective are largely welcomed by them.

We feel that there are areas in which the European Parliament and national parliaments should work together to complement each other in the important scrutiny in which they are both involved. My hon. Friend the Member for Newham, South (Mr. Spearing) said how inaccessible to the House are some of the matters considered under the third pillar, dealing with justice and home affairs.

The Labour party firmly believes that that important pillar should remain intergovernmental, but the issues covered by it should be debated in our national parliaments, and we should know what is going on in that important aspect of policy. We should not suddenly be surprised at the last minute by a fundamental decision that the Council of Ministers may have taken in that area.

I strongly support what my hon. Friend the Member for Ilford, South said about the disgraceful conduct of the Home Secretary in vetoing action at European level against racism and xenophobia. Those are important matters. We know that there are problems of increased racism and xenophobia in many parts of the European Union. We believe that, just as the EU has a good record in opposing discrimination against women in the large single market, it should be similarly vigorous in trying to prevent discrimination on racial grounds. It is simply unforgivable for the Government to be smug about the fact that we have some good provisions in this country and to say that therefore there is no need to take any further action at a European level.

The Minister of State, the hon. Member for Boothferry (Mr. Davis), has become known as Mr. No in Europe because of his obstructionist and negative attitude; yet, as my hon. Friend the Member for Livingston pointed out, last week at Foreign Office questions the Minister—who had said that he was against qualified majority voting on principle—said that he favoured the massive extension of qualified majority voting when we accepted the Single European Act because it was in Britain's interests. That is precisely the point. The Opposition think that in the rather modest areas where we favour qualified majority voting—such as social and environmental issues—it is in Britain's interests. In that sense, we are taking exactly the same point of view as the Minister of State. He seems to accept that the single market is in Britain's interests, but that no social or environmental policy is. I am afraid that I cannot agree with him on that.

Finally, Labour firmly believes that its approach to the European Union will give the British people a better deal out of our European Union membership. We believe that our approach to economic, social, environmental and agricultural questions in Europe will give the British people that fairer deal, and will also—happily—be in the interests of the long-term development of Europe as a whole. The sooner we are in a position to deliver that good deal to the British people and end the European failures of the present Government, the better.

I did not agree with the prediction of the hon. and learned Member for Harborough (Mr. Garnier) that the present Government will still be in power at the end of the intergovernmental process. We very much look forward to helping to complete that process when we are in government. I believe that, once again, the points that have been made in this debate have shown clearly that Britain's influence and position in Europe will only be improved under Labour.

9.31 pm
The Minister of State, Foreign and Commonwealth Office (Mr. David Davis)

This has been a serious and reflective debate—perhaps, as the hon. Member for Great Grimsby (Mr. Mitchell) said, more so than usual. It has certainly not been a routine debate. That, in part, is because it has taken place at a timely moment—two days after the signature of the study group report on the IGC, and a week before the European Council in Madrid that will preface the IGC. These two events offer an illuminating perspective from which to gauge the recent change in attitude within the EU.

Ten years ago, it would have been unthinkable that subjects such as subsidiarity and deregulation would have featured prominently on the European Council agenda. A study group report that extolled the virtues of national parliaments and nation states and made no overt reference to federalism would have been equally inconceivable. Yet those are today's realities. The change has come about to a very large extent because the United Kingdom has been resolute in pressing our vision of an effective, responsible and flexible European Union.

Let us be clear: we need an effective European Union. We need a Europe that can deliver the single market, a Europe that can promote effective co-operation on cross-border issues and a Europe that will keep up the effort to contribute to opening markets, both within the Union and outside it. We want a Europe that recognises that it must win back people's confidence. I take the point made in the excellent speech of my hon. Friend the Member for Wycombe (Mr. Whitney) about the need to handle the public's perception of the Union. He made some wise and insightful comments.

We need a Europe that will not interfere where it is not needed and will not undermine national sovereignty. We need an effective Europe with an institutional structure that harnesses the strength and diversity of member states, and I stress "diversity", which was recognised in the reflection group report. Britain's agenda for Europe concentrates on the real issues—job creation, encouraging enterprise, scrapping unnecessary regulations and making a real and effective effort to tackle the fraud and waste that damages public respect for the Union. It concentrates on enhancing Europe's security through practical measures, rather than through doctrinal Euro-waffle and Euro-theology. The British people have no time for arcane and obscure institutional irrelevances—what the hon. Member for Clydesdale (Mr. Hood) rightly called the dry rot of Europe.

We need a flexible Europe that builds on the innovative, intergovernmental arrangements created at Maastricht instead of trying to dismantle them. We need a European Union that recognises that the structures that work well for the single market would not work for foreign security policy or for a number of other policies. We need a flexible Europe that can cope with countries with different traditions, different histories and, certainly, differing economic circumstances.

I began by noting that what was once unthinkable—at least outside London—now obtains in at least some parts of mainstream European thinking. As the problems facing Europe change, we are often the first to face up to the new realities. It is not always comfortable and it is not always politically expedient, but being in a minority has never deterred us before. My right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) made a powerful speech in which he mentioned being one of a minority. He said, rightly, that when we are isolated we must know the purpose for standing out; I agree. We must consider each proposal on its merits and, as my right hon. and learned Friend the Foreign Secretary said, in the light of our national interest. If we had been deterred by being in a minority we would have forgotten about ensuring that the principle of subsidiarity was accepted in the treaty; we would have abandoned enlargement; we would have given up our competitiveness and we certainly would not have had a Commission President whose motto is "Less action, but better action."

Within this framework we have developed our approach to the IGC. My right hon. and learned Friend the Foreign Secretary has outlined our general approach. During the study group meetings it has been noticeable that some of the wilder ideas that emerged two or three years ago have failed to surface. No one ran with the idea of exclusive hard cores; no one mentioned the prospect of the Council becoming a second Chamber of the European Parliament.

Hon. Members should not get me wrong: the federalists have not given up; the federalist impulse has not disappeared and there are still many who fight hard for more centralisation and more power for Brussels. Those points were made in the excellent speech of the right hon. Member for Bethnal Green and Stepney (Mr. Shore) and picked up, in his usual assiduous way, by the hon. Member for Newham, South (Mr. Spearing), who mentioned some of issues in the study group's report.

The balance is changing—the changes are sometimes driven by popular opinion in member states and by circumstances. The debate has moved on from what became known as the fundamentalist agenda. My right hon. Friend the Member for Guildford (Mr. Howell) was right when he quoted the Italian press—albeit that it may have been too flattering about me. When the Italian press interviewed members of the study group and asked whether they were concerned about the "Obstructionism of Britain", they replied that they were not at all concerned. They said that Britain was constructive and that the biggest problem arose from the fundamentalists. I should say to my hon. Friend the Member for Wycombe that it was interesting that virtually every member of the British press asked the same questions and was disappointed with the answers, so his adage is doubly relevant.

It is not surprising, therefore, that I found significant support in the group for many key UK themes. We were supported on subsidiarity, on competitiveness, on the role of national parliaments, on enlargement and on relevance to the citizen—a point that came up time and again, partly because we pushed it very hard. There were also matters on which there was no consensus, but in those cases we were frequently one of a majority or one of a large minority—one such example involved common foreign and security policy. Some of our views on this were put rather well by my hon. and learned Friend the Member for Harborough (Mr. Gamier). In our view, a more effective common foreign policy can be achieved by improved CFSP machinery and by the exercise of more political will to use it. It will not be achieved, as some would like, by voting models that override the key concerns of minorities, replacing a common policy with a majority one—a single loud voice with a babble. That would allow foreign policy questions to isolate and ostracise members of the Union, thereby internalising what were external problems before.

My hon. Friend the Member for Romsey and Waterside (Mr. Colvin) made a number of important points on defence, WEU and security issues. He said that there should be no membership of WEU without prior membership of NATO. I could not agree more. Membership of WEU requires the sort of security guarantees that only NATO can deliver. A country cannot logically be a full member of WEU, therefore, without also joining NATO.

My hon. Friend highlighted the combination of special circumstances: the situation of the neutrals, the need to preserve sovereignty in defence and the need to preserve and reinforce NATO. These led to the careful design of the policy proposal that my right hon. and learned Friend the Secretary of State published earlier this year on WEU and its relationship with the EU. It is a policy that I believe will gain supporters in Europe as the IGC progresses.

As for the so-called third pillar—justice and home affairs—we have argued, and will continue to argue, for improved co-operation in the fight against drugs and international crime. The federalists—the centralisers—wanted to communitise some of these areas, arguing that the third pillar had not worked. We do not believe that. It is new, and much has been achieved in practical terms in the past two years, besides four major conventions and a deal of useful co-operation behind the scenes between national law enforcement agencies. I think that about 600 items of information have already been exchanged in connection with international crime. There is still scope for streamlining decision-making procedures in this area, but it must remain firmly intergovernmental.

I also argued in the study group for a European Union that is more relevant and acceptable to people. People rightly say that there is still too much over-regulatory, ambiguous and intrusive legislation from Brussels. To deal with it, we need further to entrench subsidiarity, to prevent interference in matters that should be ours to decide. My right hon. Friend the Member for Guildford made some excellent points in this connection; I agreed with much of what he said.

The Commission must also be obliged to consult more widely before preparing major new harmonising legislation. We shall pursue our efforts to deregulate in Europe, in parallel with, and if necessary within, the IGC.

We need to reform the European Court of Justice, not to weaken it, which is an occasional misapprehension. We must make its judgments more appropriate and more acceptable, and we have submitted a paper to the study group to that effect.

I also explained to the group the priority that the Government attach to improving democracy in the European Union, with a bigger role for national parliaments and a bigger say for member states following enlargement, in terms of the weighting of votes. The hon. Member for Clydesdale talked about his Scrutiny Committee, which has made extremely positive proposals that were well received by the study group. I took the liberty of recommending the proposal that declaration 13 be incorporated in the treaty. I am glad to say that that was later agreed by the Cabinet committee that gives me orders. That would help to meet the points that the hon. Gentleman raised in respect of timing and of proper information being passed to the Scrutiny Committee and other Committees of this House before measures are taken in Europe.

It is a pity that the hon. Member for Clydesdale is no longer here, because I should like to thank him for his compliments. I look forward to the Committee's next proposals in response to the points that we have made. I reinforce the hon. Gentleman's point that declarations are not good enough—action and performance matter, and we need practical measures.

The hon. Member for Gateshead, East (Ms Quin) mentioned transparency. A new code of conduct was adopted in October, under which most of the minutes made when the Council is dealing with legislation are made available. We were at the forefront of securing that change, but complete openness would probably be counterproductive in areas where negotiations take place. It could have the effect of driving negotiations into the corridor, which would be exactly the opposite of that intended. Nevertheless, we understand only too well the hon. Lady's point.

People in Britain—and increasingly in other member states—emphatically do not want more transfers of power away from national Governments to the centre. The British Government will not accept further extension of majority voting, any watering down of intergovernmentalism of the pillars or massive new powers for the European Parliament.

Mr. Shore

We all welcome the four weeks' notice of any Commission proposal before it is debated as it allows the House to deal with it. Another proposal that could be valuable in the same direction appeared in a recent Select Committee report from the other place, which was published on 3 November and which related to the third pillar. There was a general feeling that far too many decisions could be made in the House of Lords without adequate discussion in this House. The Select Committee recommended that a Council decision on a third pillar instrument should be invalidated unless the national parliament of each member state had been offered, in accordance with the procedures applicable in each member state, an opportunity to express its view. That procedure would make a valuable addition. What does the Minister think?

Mr. Davis

We are reviewing some of the proposals of the Scrutiny Committee and Foreign Affairs Committee, and of the Select Committee in the other place. It is a complex area and we must devise proposals that work for every Parliament in Europe. We know only too well how getting that wrong could have perverse effects. We have been considering the issues for some months but because they are complex and the effects in different constitutional arrangements are difficult to predict, we are taking time to reach a conclusion.

The appearance of isolation is not always what it seems. I will give an example. We were the only member state opposed in principle to the extension of qualified majority voting. If one looks closer at the report, one sees that some people link their support for more QMV to the reweighting of votes between smaller and larger states. That is not an enthusiasm for more qualified majority voting but a negotiating stance or linkage, prior to the intergovernmental conference. I do not want to be drawn in to debating our negotiating tactics but, in my judgment, the situation will change over the year, with different states taking different stances to achieve what they want.

Even people who appear to support more QMV in principle often have trouble with the practical implications. I draw the attention of the House to paragraph 65 of the report. Behind all the jargon lies the point that some member states do not wish to abandon the remaining unanimity requirements in certain areas, unless another member state is willing to pay for the consequences. That will not come easily. I highlight that so that the House will understand that the issue is not so clear-cut as perhaps the British press and the press elsewhere made it appear. Even if the United Kingdom were to withdraw from the debate, which I can assure the House it will not, the remaining member states would find it rather difficult to square their differences in some instances.

It is not Britain's occasional isolationism that undermines its national interests. On the contrary, we have achieved much in the past precisely because we have been willing to be isolated. It is not merely being tough-minded in our tactics. In the past, we have secured vital opt-outs by being willing to be isolated. The hon. Member for Livingston (Mr. Cook) did not comment on whether he thought the opt-out that we obtained on the single currency was good or bad when he was asked about that.

Our national interest would be undermined, however, by Labour's socialist surrenders to Brussels. It has said as much itself in terms of surrendering the veto on social, industrial, regional and environmental policies. It would surrender our hard-fought social chapter opt-out and any permanent opt-outs. Such action would undermine Britain's sovereignty in what I consider to he supine acquiescence to creeping federalism.

It is not difficult to see the consequences. It is difficult, however, to understand why Labour pursues such a line. Perhaps the leader of the Labour party feels that his party would win some credit by adopting such a policy and not letting Britain become isolated. I do not think so. Perhaps he feels that he would be seen as more communautaire.

It is a policy born solely of ignorance. If even one member of the Opposition Front Bench had served on the Council of Ministers, he or she would know that no other nation in Europe fears being isolated when its national interest is at stake. Do Labour Members think that France would hesitate? Do they think that Spain would'? Do they believe that any member state would surrender its policy through fear of being in a minority?

Mr. Spearing

Look at GATT.

Mr. Davis


Labour's policy of compliance would purchase nothing but it could cost everything. No wonder some federalists in Europe are hoping for a Labour Government. Such an Administration would lead to the most foolish and pointless surrender that it is possible to imagine.

Labour would like to cover up its weaknesses. We know that only a few weeks ago its leader told the CBI that a Labour Government would merely pick and choose those elements of the social chapter that were good for Britain. As most of the social chapter is decided by qualified majority voting and as those parts that are not now would be if Labour had its way, the leader of the Labour party would not have any choice.

That point was made clearly by Adair Turner, the director general of the CBI, who was speaking only last weekend. He said:

If you sign up to the social chapter you can't actually be sure that you will have your way because some directives will be covered by qualified majority voting. There is, however, a way to pick and choose, and that is available to the Labour party if it wants to have it as its policy. The way to pick and choose is actually not to sign up to the social chapter. In effect, that is the CBI speaking in response to the speech delivered by the leader of the Labour party.

There are implications. Several hon. Members, however, have tried to suggest that the social chapter is not especially important or serious. When we fought and won our opt-out of the social chapter, Jacques Delors did not like it. I think that he said that it would make Britain a paradise for investment. He was right. Many of his fellow travellers in Europe recognised that he was right. They knew that Britain had already won far more than its share of inward investment in Europe. They knew that the more that they increased the burden of the social chapter the more advantage we would have. As a result, they became much more cautious about using it. They tried to put some of their proposed legislation into other articles, including health and safety. Other proposals have been held back, at least for the moment.

Again, I refer to the director general of the CBI, speaking only last weekend:

We oppose this because of our broad belief that the continent does now have a major problem with inflexible labour markets and high social costs, and because of our fear that once we accept the social chapter there will be an ever-creeping tendency to extend its operation. One effect of the opt-out has been to limit the growth of the social chapter, or to curb the enthusiasm of the social engineers. But if the opt-out disappeared—if Labour destroyed it—the limits on the social chapter would disappear. Much more would go into it. That would damage not only Britain's ability but Europe's too.

The Labour leader, speaking last weekend, claimed to have a new agenda for Europe. It was, he said, enlargement, competition and CAP reform. Had he been promoting that agenda some years ago, he would, given his other views, have discovered something of an uncomfortable fact. Enlargement was, of course, already a British position, a minority position; competitiveness was already a British position, a minority position; and CAP reform was already a British position, again, a minority position. He tries to claim those positions, because he thinks that they are popular, but they are popular today only because we stood up for them yesterday.

The Labour leader has made it clear that there is no issue on which he is prepared to stand alone, and, accordingly, no President of the Commission is ever likely to say of him what Jacques Santer has said of us:

Very often it is British initiatives that end up being Europe's mainstream policy. The Government have a clear vision for Europe: a Europe of effective co-operation between sovereign nations; a Europe responsive to ordinary people's concerns; and a Europe flexible enough to do its work in the most appropriate way. From that vision, we draw our agenda for the intergovernmental conference. The Government's agenda is realistic and positive. It will serve Britain's interests and Europe's too. That last point needs emphasising.

The European debate is not a contest between the needs of the United Kingdom and the needs of Europe. Advancing the interests of the British people is not simply about saying yes or no to ideas or proposals from our partners. The Government's approach offers more: a model for Europe that can meet the different needs of all its peoples. Some members of the Union will want to co-operate more closely in some areas, and our vision recognises that. All members of the Union will want the business that they do together to be done efficiently and to good effect. Our vision encourages that.

Above all, members of the Union will have to confront the challenges that enlargement poses—the hard questions that closer monetary co-operation sets. Our approach reflects that, too. The issues are difficult, as my hon. Friend the Member for Somerton and Frome (Mr. Robinson) elicited only too clearly. I repeat the point that I made to him: the reason why these policy issues were not within the reflection group report was not that their importance was underestimated. They are issues to be dealt with not within the IGC but in parallel to it.

Some may prefer not to face these difficult issues today, but wishing them away is not an option. Asking the questions and finding the right answers is vital to Europe's future success. We do not shy away from the task. Indeed, we cannot afford to do so, because our national interest demands that we anticipate and confront these challenges.

My hon. Friend the Member for South Derbyshire (Mrs. Currie) eloquently raised the challenge of European monetary union. Our caution about signing up to rigid timetables and our freedom to opt out or opt in on stage 3 of EMU has been clearly vindicated by events throughout Europe. Although he perhaps did not intend to do so, that point was reinforced firmly by the right hon. Member for Bethnal Green and Stepney in an extraordinarily effective speech on this issue. Indeed, it was also reinforced by my hon. and learned Friend the Member for Harborough.

The hard questions that we have been raising all along about EMU are now becoming the currency of discussion within the European Union, as my right hon. Friend the Prime Minister's meeting with his Italian counterpart demonstrated yesterday.

In other areas, too, the positions that we have taken seem increasingly justified. We welcome the French decision this week to draw closer to NATO. That is further confirmation that the alliance remains the bedrock of our security. The objective of European defence co-operation must be to keep the alliance strong.

The kind of union that we want to see is one in which all its members can feel comfortable and from which all its members can profit. It is a union that recognises that Europe and Europe's interests do not end at the frontiers of the 15 member states. There is a wider Europe slowly being reunited. To the north and the east there is a wider Europe of nations coming to terms with their new freedom. It is for us to ensure that they succeed in that transition. It is also for us to power the drive for global free trade that promises new prosperity for all—not least those new members. The countries of Europe must rise to these tasks, not turning inwards, not tinkering with institutions, but looking to the world beyond. We will continue to pursue that broader vision because—

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

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