Europe and a Referendum

HC Deb 13 February 1995 vol 254 cc668-768

Mr. William Cash (Stafford)

On a point of order, Madam Speaker. You did not indicate which amendments, if any, might be discussed. I tabled a manuscript amendment relating to the issue of a single currency before the intergovernmental conference. Could you please give an indication whether my amendment, or any of the others, is to be considered?

Several hon. Members

rose—

Madam Speaker

Order. I am sure that I can cope without any further help. I would always announce which amendments I had selected if, in fact, I had selected any. I am sure that the hon. Gentleman and the whole House knows that. In this case, in order not to waste the time of the House—I am not one to do so—I have not selected any amendments.

3.39 pm

Mr. Paddy Ashdown (Yeovil)

I beg to move, That this House believes that the popular assent of the people of the United Kingdom should be sought through a referendum before any substantial alteration of the present constitutional settlement between the European Union and its Member States. There are two basic reasons which support this proposition. The first turns on principle and the second on practicality.

First, the matter of principle. Throughout the whole debate on Europe, we have heard much of the importance of the sovereignty of Parliament. But sovereignty does not lie with this institution. It lies with the people of this country. The powers that we have are not ours as of right, to give away as we wish. They are vested in us through the democratic process by the people of this country. Those powers should be redistributed only with the consent of the people from whom they come.

Those who argue the case for the indivisible sovereignty of Parliament seem to believe that sovereignty is an item, a single thing which resides in a single place—in a little box behind the Speaker's Chair, perhaps. But sovereignty does not reside in a single place. The people can vest their power wherever it is of benefit to them to do so. I would argue that there should be much more power at local level, some in Westminster and some—where it is beneficial and to the advantage of the people in the country—in the institutions of Europe. The point is that it is their sovereignty we are dealing with, not ours.

That is why I argued for a referendum before the Maastricht treaty was acceded to, and it is why we argue today for a referendum if there is to be any further shift in the constitutional settlement between Britain and Europe.

The second reason for a referendum on Europe has to do less with principle and more with politics. Anthony Sampson once wrote: Britain joined Europe not in a fit of absence of mind, as she was said to have acquired her Empire, but by a process of deliberate deception". If that is so, it will no longer do. The debate about Europe has been a politicians' debate which has excluded the people whom Europe is supposed to serve.

Maastricht was a politicians' treaty, drawn up in the gilded palaces of Europe, couched in language most people could not understand and many Cabinet Ministers did not even bother to read, and passed through the House in a charade of indecipherable late-night procedures and funny hats. Little wonder that many people see Europe as a conspiracy by the politicians and bureaucrats from which they have been excluded.

Those who believe in the constructive continuing development of Europe should, with some humility, recognise that we nearly lost the whole enterprise as a result of that arrogance. Another attempt to take the people of Europe into a process of further integration, either depending on their ignorance or against their will, could be fatal to the whole European project.

Next time, we have to engage our electorates in the debate and carry them with us. If that means that we address their aspirations and anxieties more effectively, so much the better. If it also means that the political classes have to explain the benefits of what we seek to do in terms that they can understand, better still.

Mr. Tony Marlow (Northampton, North)

The right hon. Gentleman mentioned the future transfer of power, and he has said that people's sovereignty has been transferred by the Maastricht treaty without their being consulted. As a good democrat, does he believe that we should have a referendum now to agree to those powers which have been transferred?

Mr. Ashdown

The hon. Gentleman is a bit behind the times. The Maastricht treaty has been put into effect, and the right time for a referendurn on it was before the treaty was acceded to.

I do not underestimate either the pain or the difficulty which may face us in the process of European integration, not least through the single currency, if that comes—I believe it will. That is why the decisions we make need to be ones which have the positive assent of our people, and not ones which—because they are taken without consultation by one Government—can be as easily reversed by the next when the going gets tough.

We will no doubt hear arguments from all sides during the debate against a referendum. I shall give the most common of them.

First, there is the argument advanced by those who would otherwise share my views on the importance of Europe to this country. They tell me that it will be embarrassing to go into the Lobby with people who wish to use a referendum to wreck Britain's future in Europe rather than enhance it—people such as the hon. Members for Stafford (Mr. Cash) or for Southend, East (Sir T. Taylor). That may be so, but ideas should not be judged by the company that they keep. It is perfectly possible to disagree about Europe, but agree about democracy.

Mr. William Cash (Stafford)

Will the right hon. Gentleman give way?

Mr. Ashdown

I shall give way to the hon. Gentleman in a minute if he will first let me develop my argument a little further.

To tell the truth—and addressing the hon. Gentleman directly—I have a sneaking admiration for him and his hon. Friends. At least they are honestly arguing the anti-European case in which they so passionately believe. That is more than can be said for those shadowy figures, including some in the Cabinet, who share the same views, play to the same audiences and raise the same scaremongering fears, but hide behind the claim that they really support our infinitely flexible Prime Minister and his infinitely flexible vision of "Britain at the heart of Europe". If a referendum flushed out those closet Europhobes, it would be doing us all a great favour.

Mr. Cash

The right hon. Gentleman made a deliberate slur on me. Without in any way taking umbrage at what he said, I must ask him whether he would accept that I voted yes for the referendum in 1975, yes for the Single European Act in 1986 and yes for the European Economic Area. The reason why I would not support the Maastricht treaty and the Act that followed it was simply that they form the blueprint for European government—the sort of thing that we cannot allow in this country without damaging the very things that the right hon. Gentleman talked about at the beginning of his remarks.

Mr. Ashdown

The hon. Gentleman makes his own point in his own way, and I have no doubt that he will seek to elaborate on it in his speech. If I misrepresented his view, I apologise.

What is unquestionably the case is that the hon. Gentleman's view, which is openly and honestly expressed—and with which I passionately disagree—is held in a hidden, camouflaged fashion within the Cabinet and the Government. It is those people—not the hon. Gentleman, who has been courageous in stating his position—who need to be flushed out. We all know where they stand—they are on the same side and hold the same views as the hon. Gentleman, but are less forthright about such matters. They are content, for reasons at which we can only guess, to hide their opinions within the Cabinet of the present Government.

The next argument to be advanced is that such matters are too complicated for ordinary people to understand, let alone vote on. Frankly, that argument tells us more about those who use it than about the electorate, in which they seem to have so little confidence. Do we really have such a low opinion of the British electorate that we believe that they should be denied the right to vote on issues that the Irish, French, Danes, Austrians, Swedes, Norwegians and Swiss have been allowed to decide on?

Then there are those who say that referendums are alien to our parliamentary democracy.

Mr. Ray Whitney (Wycombe)

Will the right hon. Gentleman give way?

Mr. Ashdown

If the hon. Gentleman will give me a few more minutes, I shall be happy to give way to him. But I cannot do so at present.

Mr. Roger Knapman (Stroud)

Will the right hon. Gentleman give way?

Mr. Ashdown

If the hon. Gentleman will forgive me, I shall give way to him in a moment.

There are those who say that referendums are alien lo parliamentary democracy. But Britain has had three referendums over the past 20 years without seeming to be much the worse for them. Nearly all democracies, with a few exceptions, have used national referendums at some time or another.

Then there are those who say that we cannot have a referendum because it is impossible to frame the question. That ignores the fact that similar questions have already been posed, debated and answered before in this country—just as they have in no fewer than seven other European countries over the past three years.

The matter of the question is, it seems to me, very simply answered. Parliament should first debate and pass any treaty and then that can be put to the British people for their assent. If, whatever the Prime Minister's forlorn hopes to the contrary, constructive steps forward are proposed after the next IGC which substantially alter our constitutional relationship with Europe, the package as a whole should be put to the British people for their consent.

Mr. Donald Anderson (Swansea, East)

rose—

Mr. Ashdown

If the hon. Gentleman will allow me to make a little progress, I shall give way later.

Lastly, some people who, like me, want constructive, sensible European integration to continue, argue that we had better not have a referendum because we would lose it. Nothing more clearly reveals how far on to the defensive the pro-European voice in the country has been driven by weak leadership, the frightened silence of Conservative Europeans and the withdrawal of Britain's business interests from this vital debate.

Several hon. Members

rose—

Mr. Ashdown

I give way to the hon. Member for Stroud (Mr. Knapman), who was, I think, first.

Mr. Knapman

In view of all that the right hon. Gentleman says and his enthusiasm for referendums, why did so many Liberals not vote for the referendum proposals during the passage of the Maastricht treaty?

Mr. Ashdown

It was a free vote at that stage. [HoN. MEMBERS: "Oh!"] The hon. Gentleman has some cheek, considering how divided and split the Conservative party is on the whole issue of Europe. However, one thing is unquestionably clear—that the words of the motion are precisely the words on which the Liberal Democrats fought the European elections last year, and we fought them on a united basis, which is more than can be said for any single European policy of Conservative Members. The Conservative party is divided from end to end.

Several hon. Members

rose—

Mr. Ashdown

I intend to make a little progress.

The battleground of Europe has been ceded to a tiny minority of the Tory right. What is driving Britain's policy on Europe now is not the long-term interests of the country, but what Lord Howe has recently called—I use his words precisely—the short term tactical considerations of party management". Lord Howe wrote: In the search for party unity at any price, UK foreign policy is being dragged into a ghetto of sentimentality and self-delusion. Exactly. Europe is far too important an issue for Britain for it to be left to an internal spat in the Conservative party and the minor mathematics of the Conservative Whips. The debate must now be widened beyond the confines of the Conservative party, to include the public at large; that is the purpose of the motion.

However, to argue the case for Europe is not to defend everything that Europe does, any more than to be proud of Britain is to defend the archaic, undemocratic way in which the country is governed. Of course Europe can be undemocratic and insufficiently accountable, but it is much less undemocratic and unaccountable than many parts of the quango state created by the present Government since they came to power.

Of course Europe can be too over-centralised, but why does it not stick in the throat of a Conservative Minister who says that, when the Conservative Government have torn the heart out of local government in Britain and refused to allow any form of self-government in Scotland or for Wales?

Mr. Hugh Dykes (Harrow, East)

The right hon. Gentleman is giving way to quite a few interventions, for obvious reasons, and I am sure that there will be more.

At least the Liberal Democrat party shares with the vast majority of the parliamentary Conservative party, and the Conservative party outside Parliament, a strong enthusiasm for those European developments. Does the right hon. Gentleman agree that many members of the public would accept the second part of his thesis—that, whatever the thoughts about whether there should be a referendum and the effects that it would have on the House, at least the great public debate that would unfold would get us away from the poison against Europe that is seen in The Daily Telegraph, The Times, The Sun and the Daily Star, and we would have a proper, balanced debate, showing the real arguments for Europe?

Mr. Ashdown

I very much agree with the hon. Gentleman, and I admire his courage for making those arguments in the House and outside. It appears that he is almost as unpopular with Conservative Back Benchers as I am, and I feel a certain fellow feeling for him in consequence. I will allow one more intervention from the Opposition side of the House and then I shall not give way again as I wish to give other hon. Members a chance to speak in the debate.

Mr. Donald Anderson

I am grateful to the right hon. Gentleman for giving way. The motion refers to a referendum before any substantial alteration". Who but the Government of the day will decide whether an alteration is sufficiently substantial?

Mr. Ashdown

The answer is: this House. I will now make a little progress with my speech.

Of course, as we have argued on many occasions, Europe's institutions and programmes need reform—starting with the common agricultural policy. But it is sheer hypocrisy to argue one day, as the Government do, that the CAP must be reformed and then to vote the next day against any extension of majority voting to enable that to happen.

There is no such thing as a "steady state" European Union. If the process of European co-operation is not moving forward, it will start to move backwards, as those who seek to block it know very well. Listen to the words of Sir Leon Brittan, who, writing in the Daily Telegraph last week about the single market, said: The European market is not an achievement that Britain can assume will never unravel, for the forces of protectionism and narrow national interest will always seek to gnaw away at it". There is a different, more positive view of Europe, and it needs to be heard more in this country. It is a vision of Europe which is democratic and decentralised and which co-ordinates the things that it should be co-ordinating, such as defence and foreign affairs, rather than interfering where it should not in things that are done better by nations, regions and local communities. It is a Europe which recognises, preserves and celebrates its cultural diversity and its national differences. It is a Europe which is made up of nation states which choose to pool elements of their sovereignty to create something larger because it is in the interests of their citizens to do so.

Perhaps our mistake these last three decades has been to try to sell Europe to our people as a purely economic affair, to be measured solely in pounds and pence, jobs and prosperity. Of course, Europe has brought huge economic benefits for British business and British consumers, as the Chancellor made quite plain only last week. But that purely economic emphasis tends to make people look on Europe as a sort of communal kitty, which we keep eyeing nervously to check that someone else is not taking out more money than we are.

In reality, the European ideal is much bigger than that. For Europe, the idea of European union is the biggest political idea this century and the most important safeguard of our prosperity, peace and stability in the next century. But it is an idea which is now being forced into retreat through weak leadership and the want of people to stand up and defend it.

As nationalism rises within the nations of the European Union and conflict deepens in the collapsed Soviet empire to the east, we will either find the political will to lock ourselves together more tightly in Europe, or we will have neither stability within our borders nor peace around them.

Sir Terence Higgins (Worthing)

Will the right hon. Gentleman give way?

Mr. Ashdown

I am sorry, but I must make progress.

The tragedy is that Europe could be losing its strength and cohesion just at the moment when we need it most. Many of the problems which now confront us in Europe are ones that we cannot solve alone, such as the creation of a safe and clean environment, the preservation of peace, the maintenance of a strong economy in the face of the global market and international currency speculation, and the widening of opportunities for our citizens and our children.

Those who see Europe as merely a collection of co-operating states—as so many do on the Government Benches as well as many in the Labour party—should reflect that that is exactly what they argued for in the 1930s with futile, and ultimately disastrous, consequences.

At the end of a thousand years in which Europe has been the engine and the cockpit for war—first on our own territory, then by export elsewhere in the world—can we find a different way? We began this half-century with Dresden and the gas chambers of Auschwitz. We finish it with ethnic cleansing in Bosnia. The question before Lis—and we had better answer it pretty quickly—is whether we have time to do better than we have done so far. That is why Europe matters. That is why it is time to bring Europe's people into the process of shaping Europe's future.

4 pm

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

The right hon. Member for Yeovil (Mr. Ashdown) started by saying that his speech would be about principle and practicality. Much of what I heard was simply political opportunism. I will elaborate on that point at some length later. First, I will put the debate in the context of the Government's view of Europe and where we will be in the next year or two.

The Government start with the conviction that membership of the European Union is in our national interest—that we are confidently and constructively part of Europe. Much is said about the European Union's problems and shortcomings, and I would be the last to deny that they exist. I will take the opportunity to set out our approach to some of those problems.

Before I start to do that, we should not forget the justifications for joining the Community and for remaining part of it. As the right hon. Gentleman mentioned at the end of his speech, 50 years ago Europe was a continent of ruined cities, exhausted peoples and broken economies. From those ruins, we have created a Europe that is infinitely safer and more prosperous than anything that our forebears could receive—a Europe in which many of the old conflicts have been replaced by co-operation.

The European Community, NATO and free market economies have ensured that Europe acts now as a magnet to the countries of the east and offers the prospect of extending stability and prosperity throughout our continent. A wider Europe is the best instrument for eliminating instability in central and eastern Europe.

Europe is crucial to our prosperity. We are a trading nation and have been for centuries. The single market has been good for trade and good for Britain. Half our visible trade is with Europe. Companies in Japan, Korea and the United States choose to invest in the UK—including in Derbyshire—and to create hundreds of thousands of jobs, because we're in business in Europe.

Mr. Dennis Skinner (Bolsover)

Name one.

Mr. Davis

Toyota.

Mr. Skinner

When Toyota was welcomed into Derbyshire, hon. Members on both sides of the House claimed credit for this, that and the other council attracting that company to the county. I made it clear to the Speaker and to the House on that occasion that I did not welcome Toyota because it would finish up with a single union deal that would result in a lack of union membership. I have been proved right.

It has resulted also in thousands of car workers losing their jobs elsewhere. The Minister must face the fact that he is dealing with a motion from the same Liberal party that in November 1992 allowed the Government to escape. They were on their knees. The Prime Minister was looking around for allies, and "Paddy Backdown" saved him that night and allowed the Government to continue in office.

Mr. Davis

I must admit that there have been times in my ministerial career when I have wished that the hon. Member for Bolsover (Mr. Skinner) was a Member of the European Parliament rather than this Parliament, but today is not one of those days. I am glad to hear that the hon. Gentleman is not interested in jobs for his constituents.

Mr. Skinner

I was not talking about my constituency. The Minister does not even know what he is talking about.

Mr. Michael Fabricant (Mid-Staffordshire)

On that very point, is the Minister aware that, only two days ago, Toyota announced the employment of an additional 1,300 people, many of whom will come from the constituency of Bolsover?

Mr. Davis

My hon. Friend makes my point very well.

Mr. Andrew Mackinlay (Thurrock)

Is the Minister going to mention the referendum?

Mr. Davis

Indeed.

There are other areas where acting together has enhanced our influence in the world. Above all, it provided the collective strength for success in trade negotiations with other big players such as the United States and Japan. That strength clinched us the Uruguay round deal in 1993, which was a real breakthrough in trade liberalisation, opening countless doors for British business.

Not everything is right with Europe—far from it—but, unlike the Opposition parties, who seem to accept everything in Europe uncritically, we recognise that fact. I make the odd exception for some Opposition Members. We have to do two things. First, we must set out our vision of the European Union and secondly, we need to develop a detailed approach to the particular issues facing Europe today.

We have a clear view of how we want to see Europe developing over the coming months and year. The Prime Minister set out our views eloquently in his Leiden speech.

Mr. Donald Anderson

How can the Government claim to be at the heart of Europe if, in advance of the intergovernmental conference, they have said, "No, no, no, no," to the issues to be debated?

Mr. Davis

Perhaps the hon. Gentleman should wait and hear precisely the point that I am about to develop.

The Prime Minister set out our views eloquently in his Leiden speech. We want a Europe that does not impose undue conformity, but one that encourages flexibility; a Europe capable of including more than 20 nation states. We want a Europe that is built by nation states, not designed to supersede them; a Commission that is the servant of the Community, not its master; a European Parliament with a defined role which is complementary to national parliaments, not in competition with them. That is why subsidiarity is important. It means that the Community and its institutions work with the grain of history, with the grain of national interest, not against it.

Mr. Marlow

I am very pleased to read that my hon. Friend is on the threshold of becoming a member of the Cabinet, because I think that he would make a very good Cabinet Minister. It is the rule with Cabinet Ministers that they all have their own particular spin on the European issue, especially the single European currency. Would it be possible, to use the Prime Minister's words, to be part of EMU and, at the same time, to have flexibility?

Mr. Davis

I wonder whether my hon. Friend was complimenting me when he said that he thought I was on the threshold of the Cabinet. It is not necessarily clear. Also, I am not entirely clear what my hon. Friend means by flexibility within EMU. Does he mean within monetary union?

Mr. Marlow

My hon. Friend says that the Prime Minister says that the sort of Europe we want is one in which nation states have flexibility. Would that degree of flexibility be consistent with Britain participating in economic and monetary union?

Mr. Davis

That is the classical hypothetical question, which, as the Prime Minister has said, since my hon. Friend is referring to his words, will not be addressed in this Parliament and quite possibly will not be addressed in the next Parliament.

Dame Elaine Kellett-Bowman (Lancaster)

Did my hon. Friend have the pleasure of hearing the disagreement between Labour Members on the 1 o'clock news, during which Mike Elliott, the Labour spokesman in the European Parliament, appeared to be recommending a common immigration policy and the hon. Member for Blackburn (Mr. Straw) immediately slapped him down and disowned him, and said that Mr. Elliott misunderstood the situation? Can anybody enlighten us about where Labour stands on this very important subject?

Mr. Davis

If my hon. Friend will wait—

Mr. Mackinlay

When are you going to mention a referendum?

Mr. Davis

If all hon. Members will wait, I shall come to that issue.

We want a Europe that is outward-looking. Enlargement to the east will underpin stability, prosperity and democracy in central Europe. [Interruption.] I note that those on the Front Bench below the Gangway do not think this important, but it is one of the key issues that will dictate the peace of our generation and of subsequent generations. We need to open our markets to our neighbours to the east, and to others around the world. That is because importing their goods is the best way of exporting stability; and exporting our goods is the best way of modernising their economies.

We want a Europe which the ordinary people of Britain can understand and feel comfortable with. That Europe is built on a Conservative vision. It is a Europe committed to free trade and fair competition: a Europe flexible enough and robust enough to encompass the nations to the east. We want a Europe that can advance by co-operation to achieve shared objectives and shared aims.

As the Labour party is making so much fuss, I might add that the Conservative party needs no lecturing about Britain's interest in a successful Europe. I shall take no lectures from Labour Members, given that their leader, in his 1983 election address, called for Britain to pull out of the European Union.

While he was performing somersaults, we pressed hard and successfully for the single European market. We won the argument for bringing our continent together by enlarging the European Union. We helped the EU to throw its weight behind free trade in the agreement on Gatt. Our efforts have helped to bring the EU's spending under better control. We enshrined, for the first time, the principle of subsidiarity in the Community's work, and we set the Community on the long road to reform of the common agricultural policy.

Mr. Dykes

Does my hon. Friend agree that one of the striking features of the creation of the single market was the fact that Britain was in the forefront of advancing those policies and, quite rightly, of insisting on the use of majority voting? That was the only way to get through the decisions necessary for harmonisation of the single market. Should not the same mechanism apply to other main areas of decision making?

Mr. Davis

The first half of my hon. Friend's comments was correct. That was precisely why Margaret Thatcher supported the idea of allowing QMV—to push past the protectionist road blocks in the way of a single market. My hon. Friend will find that I return to his second point in a moment.

These achievements have been of major benefit, not only to Britain but to Europe, too. Our domestic debate often shrouds those successes in fog, but when the fog clears, we shall see that most of the significant landmarks of this age will have our fingerprints on them.

These successes have been won by a mixture of hard graft, tenacity and skilful negotiation, and by confidence in ourselves and in our case. They have meant digging in and taking some flak—the right hon. Member for Yeovil should understand that. There may be occasions when we need to do so again: that is not the end of the world. It is called negotiation. It is what all Governments do, and what the British people expect of their Government. Negotiation means arguing hard for our point of view and building alliances where we can. It does not mean biting our tongues for fear that others may disagree with us.

Against this background, let us look at the substance of the Liberal Democrat motion. The 1996 IGC is at the crux of that motion, so it may help if I start by setting out the likely timetable. A study group of representatives of Foreign Ministers will prepare the ground for the IGC. I shall represent the Foreign Secretary. Spain will chair the group's first meeting in Messina on 2 June, and we expect it to meet regularly throughout the second half of this year.

The group will have before it reports from the Council, the European Parliament and the Commission. Others are, of course, free to put their views to the study group. I hope that Committees of this House will do so—

Mr. Mackinlay

Are you going to mention a referendum?

Mr. Davis

We expect the study group to report to the Madrid European Council in December, which in turn may well convene the IGC, to start early in 1996 under the Italian presidency.

The evidence of past IGCs is that mastery of complexity is a key to success in the negotiations, as our Prime Minister has demonstrated. We shall therefore review carefully all the various policy options within our objectives between now and the IGC.

It is a paradox that we are debating vital issues on such an irrelevant motion, albeit a paradox and an irrelevance only too characteristic of the Liberal party. The motion calls for a referendum before any substantial alteration of the present constitutional settlement between the European Union and its Member States. Such a substantial change would require the assent of every member state, and it would not get it.

I shall quote what my right hon. Friend the Prime Minister had to say during "Breakfast with Frost" in January: I do not believe anything is going to happen in that conference that would remotely justify a referendum, I do not think it is going to deal with constitutional matters … if anything that involved significant constitutional change were raised in the 1996 Intergovernmental Conference, we, the British, would not accept it, so the question of a referendum would not arise.

Sir Norman Fowler (Sutton Coldfield)

I accept what my hon. Friend has said about the IGC, but would he accept that different factors apply to a single currency? Will he confirm that the option of a referendum on any decision on a single currency remains open to the Government?

Mr. Davis

I was quoting my right hon. Friend the Prime Minister, and I shall continue to do so. He said on another occasion—this is 1994— I made it clear that I did not rule out a referendum. One will have to wait and see precisely what the circumstances are. I think it is wise to wait and see precisely what those circumstances are. I have indicated that in certain circumstances it might be appropriate to have a referendum, and if they are, we will."—[Official Report, 12 December 1994; Vol. 251, c. 620.]

Mr. Menzies Campbell (Fife, North-East)

If the Minister is so concerned about paradox, perhaps he will explain to the House the paradox between the views of the Chancellor of the Exchequer about a single European currency and those of the Chief Secretary to the Treasury.

Mr. Davis

I shall put an alternative paradox to the hon. and learned Gentleman. During the Maastricht debate, the leader of the Liberal party, the man who is proposing the case that is set out in the motion, said that he did not support the opt-out on European monetary union. Had that opt-out not been available, the question would not have been capable of arising. I hardly think that that is an easy paradox.

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

I am interested in my hon. Friend's references to the comments of my right hon. Friend the Prime Minister during his interview with David Frost. In the interview, on 8 January, my right hon. Friend went on: I would certainly keep open the option of a referendum in 1996. But the only reason for anybody offering a referendum on the IGC in 1996 would be if they were prepared to accept constitutional change in the negotiations. My right hon. Friend then listed examples of constitutional change. Among them was a firm commitment to a single currency. Will my hon. Friend confirm that the Government still stand by what was said in the Frost interview—that the option of a referendum is still open on a single currency, and that the Government regard a single currency as a matter of constitutional change?

Mr. Davis

It is a pretty easy question when a Minister of State is asked whether he agrees with the Prime Minister. I think that that is the case still—[Interruption.] It bears on what the Liberals are up to. How is it that, in the midst of the real debate on Europe, they can find such a non-motion on a non-issue? I suppose that the answer lies in the point made by my hon. Friend.

Mr. Mackinlay

Will the Minister give way?

Mr. Davis

I shall do so shortly.

My right hon. Friend the Prime Minister said that anyone offering a referendum would do so only if he were prepared to accept such constitutional change. That is what the Liberals want. They want a great leap forward to a federal future. That is not what we want, and we are not negotiating for that. It is not what the British people want. The irony is that the Liberals want a referendum to save themselves from themselves.

The Liberal Democrats' unthinking federalism is not just limited to constitutional reform. They would renounce our opt-out on the social chapter. They would increase the cost and burdens on business. Jacques Delors said that the opt-out on the social chapter would make the United Kingdom an investors' paradise. The Liberal Democrats' policies would have precisely the opposite effect. There is little doubt how the British people would react to such a portfolio of policies. It would be less a referendum than a rejection slip—and rightly so. The Government's targets for 1996 do not include that at all.

Mr. Mackinlay

We heard from the hon. Member for Milton Keynes, South-West (Mr. Legg) and the right hon. Member for Saffron Walden—[Hors. MEMBERS: "Sutton Coldfield"]—(Sir N. Fowler). Sorry—scout jamboree 1957. The Minister was challenged to clarify whether the Prime Minister's utterances earlier this year are still operational. We listened carefully to what he said; he said, "I think so".

That really will not do. Can the Minister assure us that, when a Minister replies this evening, the position of the Prime Minister will be clarified, as to whether the promise of a referendum is still on the cards, in the circumstances outlined by the hon. Member for Milton Keynes, South-West? Can we have that clarification this evening?

Mr. Davis

I read to the House the words of the Prime Minister in December 1994. Those words still apply.

I have never heard my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) referred to before as the hon. Member for the scout jamboree 1957.

The Government's targets for 1996 include entrenching the role of the nation state, through better balanced weighting of qualified majority voting, through developing subsidiarity, through enhancing the role of the national Parliaments.

On qualified majority voting, we need a system that better reflects the population levels of the member states. There is a growing recognition throughout the Union that the existing arrangements are undemocratic. Why should each Belgian vote in the Council represent 2 million people, while ours represents 6 million?

We have made good progress on subsidiarity. In 1990, there were 185 new legislative initiatives. Last year, there were just 47. All new Commission proposals must pass tough subsidiarity tests. The extensive programme of repealing and amending existing legislation is progressing well. We are considering how the process can be moved further in the right direction in 1996.

Mr. Simon Hughes (Southwark and Bermondsey)

I am concerned that the Minister may not mention referendums at all unless we pursue him a bit and prompt him to give us some answers. I want to ask him the constitutional question.

Given that it may be the case that having a common European currency is of such importance that we may, according to the Government, have a referendum, and the Government are not quite sure, does the Minister accept on behalf of the Government that if—as is inevitably part of the European constitution—powers are handed over from this place to a European decision-making body, it is better that they are handed over with the assent of the people by vote rather than by a decision made, behind closed doors, by representatives of Ministers, who currently take the decisions regularly to transfer powers from this country to Europe as a whole? Is it better that the people decide or that Ministers decide? That is the constitutional question, irrespective of whether we are applying to the single currency or any other specific agenda item this year, next year or over the next decade.

Mr. Davis

The hon. Gentleman's memory is becoming incredibly short. That is why my right hon. Friend the Prime Minister said: I made it clear that I did not rule out a referendum."—[Official Report, 12 December 1994; Vol. 251, c. 620.] My right hon. Friend the Prime Minister said in his speech at Leiden last September: People will continue to see national Parliaments as their democratic focus. It is national parliamentary democracy that confers legitimacy on the European Council". This House, probably more than any other in the European Union, knows how important it is that Ministers in the Council are accountable to their national Parliaments. But we should also be looking at ways to ensure that we can involve parliaments more directly in the Community process. We want the voices of national Parliaments to be heard clearly in the democratic functioning of the Union.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

May I follow the Minister's earlier comments about the referendum to their logical conclusion? The more slavishly he sticks to the text of the Prime Minister's various speeches, which hinted at different things in different places, the more confused he seems to become.

The Minister described today's debate as something of an irrelevance, saying that the referendum issue would not come up. It would not come up because the Government would not accept any package at the intergovernmental conference that they considered to be of constitutional import. Is the hon. Gentleman saying that, if the Government do not get their way, and there are constitutional implications, the referendum will be off the agenda on grounds of irrelevance? What would the Government do in such circumstances? Would they leave open the option of exiting from the European Union on the present membership basis?

Mr. Davis

The hon. Gentleman pretends to be the Liberals' spokesman on Europe, but he does not realise that we have a veto on treaty changes. That is the point with which we embarked on this issue, and it brings me neatly to what I want to say next. We shall always push Europe in a decentralised, intergovernmental direction, which is the opposite of the thrust of Liberal Democrat policy.

Mr. Cash

Will my hon. Friend give way?>

Mr. Davis

In a moment.

If the Liberal party were in power—which is, admittedly, a scenario imaginable only in a world of fantasy politics—it would deliver a European policy unequivocally federalist in tone, strategy and content: a policy that, directly and indirectly, would funnel power away from the nation state and towards supranational institutions.

Let us look at one or two of the Liberal party's policies. Let us consider its policies on national vetoes and sovereignty. The Liberals have made a number of attempts—including some today—to confuse the issue on the question of the national veto; so let me quote from a speech made by the leader of the Liberal party in Torquay little more than a year ago, in December 1993. I am sure that the right hon. Gentleman remembers it well. He said: We want to see the European Parliament catch up with the Council of Ministers in power, with equal law-making rights over more issues. And we want the Ministers to make decisions in public without single nation vetoes. Nothing could be clearer. Now, however, the Liberals try to cover up what they know is an unpopular policy. They talk of a double majority—a mechanism that would make little difference.

Mr. Ashdown

We are used to the present Government saying contradictory things, but the Minister cannot say two contradictory things in the space of five minutes. A few moments ago, he told us that he wanted the veto to take into account populations in Europe. The double veto is designed to do precisely that. Do we take it that the Minister is rejecting the idea, or that he is accepting it? So far, he has said both within five minutes.

Mr. Davis

That was another wonderful demonstration of the Liberal party's ignorance. One option relates to qualified majority voting, to which the veto, by definition, does not apply; the other relates to circumstances in which the common consent of all nations is necessary, to which the veto does apply. One involves majority voting, while the other involves the veto. They are clearly very different.

Mr. Spearing

At the beginning of his speech, the right hon. Member for Yeovil (Mr. Ashdown) referred eloquently to matters relating to the will of the people. If qualified majority voting operates—as it does—in regard to all matters relating to agriculture and fisheries, and if the Liberals wish to extend it, it may be impossible to execute the will of the people, the will of the Government or the will of our Parliament.

Does the Minister agree that a veto is not a veto if the treaty compels the taking of action by common accord—and thus, an obligation to take action, which no one can prevent, although it may be possible to prevent a specific method of implementing it?

Mr. Davis

As ever, the hon. Gentleman's facts are correct. The veto is, however, the only way in which the Government can, and always do, exercise their rights on behalf of the people.

Mr. Cash

Does my hon. Friend agree that one of the main reasons for a referendum on this issue is that, in the Maastricht treaty, we did not veto economic and monetary union and a single currency? Parliament was whipped through on this issue. The Government were unable to arrive at a satisfactory conclusion, and that has put the British people in this mess and in the confusion that has followed. Therefore, it follows that the matter must be referred back to the people to allow them to make up their minds.

Mr. Davis

No, I do not agree with my hon. Friend. He was referring to a single European currency, which was the point of the opt-out. We shall return to Parliament with that point in future.

Mr. Dykes

These are important points, and we must be clear on them. Would my hon. Friend crystallise this matter again? We expect the other member states to come up with proposals for the further steps under Maastricht at the intergovernmental conference which will involve constitutional change and certification of the move to a single currency. Is my hon. Friend saying that the Government will formally veto those suggestions?

Mr. Davis

I am saying that we will maintain our stance against centralising measures at the intergovernmental conference. We will block them if they come up.

Several hon. Members

rose—

Mr. Davis

I should like to make some progress.

The Liberal Democrat party has tried to cover its line on vetoes. We have already heard about the rather strange notion of the double majority and Liberals talk about vetoes on executive decisions as if legislation did not matter. The Government want to entrench the position of the nation state, and the Liberal Democrats want to undermine it. When we press a little we discover why that is the case.

Perhaps the House would like to know where the right hon. Member for Yeovil stands on the issue of the United Kingdom's sovereignty. Speaking in, I think, the Maastricht debate, the right hon. Gentleman said: I do not believe that the nation state is anything other than a relatively recent historical invention. I do not believe that it will always remain … throughout this decade and the next century the importance of notion of the nation state will decline, …At the same time, advanced democracies will witness the rise in the importance of community and regional identity and supranational institutions."—[Official Report, 20 May 1992; Vol.208, c. 292.] There we have the view of the Liberal party. [HoN. MEMBERS: "Hear, hear."]. Liberal Democrat Members obviously agree.

On "The Frost Programme" in May 1994, the right hon. Gentleman was more succinct. [Interruption.] In that case, this is probably appropriate. He simply said: I don't believe in the sovereignty of Parliament. It would be astonishing for a junior Member to say that, let alone the leader of a once great party which he has reduced to an irrelevant splinter group.

Liberal Democrats know that these policies are unpopular, and that is why they obfuscate and equivocate over them. They try to conceal unpopular policies behind the populist gambit of the referendum.

Liberal Democrat policies are not just unpopular: they are wrong. Liberals are transfixed by an outmoded and increasingly irrelevant commitment to full-blooded federalism. That that commitment is outmoded is not just my opinion, because it was reiterated by the Prime Minister of France only a month or two ago. When he was asked, "Should Europe move towards a federal system?", he answered: Its time has passed: an enlarged Europe comprising a greater number of states could not be federal. The Liberals are not just out of touch in Britain: they are out of touch in Europe too. The motion is relevant only if Liberal policies were to be carried out, which is a notion based not just on a hypothesis but on a virtual impossibility.

Labour is little better. Like the Liberals, Labour Front-Bench spokesmen blindly accept whatever is in vogue in Brussels. We know, because they failed to hide it during the European elections, that they would negotiate away our veto. We also know, because the right hon. Member for Sedgefield (Mr. Blair) has told us, that Labour would blindly opt for the single currency. Labour Members never cease to remind us that they would join the social chapter at the first available opportunity. What a choice to put before the British people in a referendum. That is not a question the Labour party wants to be asked, let alone to answer. That is not the price it wants to pay for staying in the European Union.

The changes would not take long to enact—just a few simple signatures on a few simple documents and the next Labour Government, or even a Lib-Lab Government, would be the last British Government who were responsible to this House and the people of the United Kingdom who sent us here. That is a proposition that the British people will never support and it is why they will back the Conservative party and the Prime Minister not in a referendum, but at the next general election.

4.35 pm

Ms Joyce Quin (Gateshead, East)

The motion is curious and ill-defined; it is as notable for what it does not say as for what it does say. Having listened to the right hon. Member for Yeovil (Mr. Ashdown), I am still confused about some of the motion and about what it means in practice.

As my hon. Friend the Member for Swansea, East (Mr. Anderson) said in an intervention, the motion refers to substantial changes but does not define them. It would be good to hear from the authors of the motion what exactly they mean by substantial changes.

It is clear that, in introducing the motion, the Liberal Democrats have shied away from the debate on a single currency. The motion does not make clear whether a single currency would be the subject of a referendum. Perhaps the right hon. Member for Yeovil would like to tell the House whether it would be included.

Mr. Charles Kennedy

I can clarify that point—indeed, I clarified it last Wednesday with the shadow Foreign Secretary when I showed him the proposed wording of our motion. We wanted to achieve as much support as possible in the House, so I said that the wording could be altered if necessary. He specifically asked me the same question as the hon. Lady has just asked: whether the motion ruled out a referendum on a single currency. I gave the clear answer, "Of course it does not." I do not know whether the shadow Foreign Secretary passed on that information to her. Perhaps he did not, which would explain why she is confused today.

Ms Quin

The confusion arises from the fact that I have had at least three different answers from Liberal Democrats on whether a single currency would be the subject of a referendum. That confusion among Liberal Democrats certainly existed throughout the weekend and this morning.

Sir Norman Fowler

If the motion did include a single currency, what would the Labour party say? Would it support a referendum?

Ms Quin

Our position is clear. We believe that people should be consulted. Whether that would be through a referendum or an election would depend on the timing. This is one reason why the motion does not accord with Labour party policy, a point that I had intended to make later in my speech.

Mr. Marlow

Supposing that, by some mischance, the Labour party won the next election; supposing that the issue of a single currency had not been resolved by that stage; and supposing that two years later there was a proposal for a single currency, would the then Labour Government say that there should be a referendum?

Ms Quin

Three supposes in a row make a tall order. Obviously, we will look at the position when and if it arises—[Interruption.]

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. Hon. Members must settle down and listen to the hon. Lady.

Ms Quin

What I said is good sense, because we do not know what the outcome of these matters will be. It would be difficult to commit ourselves in advance on what consultation there should be, although the Liberal Democrats seem prepared to do so.

Mr. Peter Shore (Bethnal Green and Stepney)

My hon. Friend has been given the thankless task of explaining why the Labour party is not operating a three-line Whip this afternoon. It will not do to say that Labour's position is, as it were, an option between a general election and a referendum, and we all know why. We have been through this so many times before that it hardly needs reiterating, but a general election is, inevitably, about a hundred and one issues, including the record of the Conservative Government in the past 15 years. It is not about a single currency or major constitutional changes. Only a referendum can address that issue. In all intellectual honesty, my hon. Friend should admit it.

Ms Quin

I must be a masochist, because I welcome the opportunity to explain Labour policy on these matters. No great change may result from the 1996 intergovernmental conference, and the only change may be that of a Labour Government to take us into the social chapter. As that would be a clear issue between the two main parties at the general election, there would be no need for a referendum on that issue. An awful lot depends on what comes out of the IGC process. Although I sympathise with the idea of holding referendums on these issues, I have explained Labour party policy. I do not have the authority to stand at this Dispatch Box and change policy on the hoof, even if I wanted to.

Some interesting discussions have taken place between various members of the Liberal Democratic party on the tabling of the motion. Some are obviously keener on referendums than others. Some are keener on having one on the single currency. There are differences of view. That is why the motion is ill-defined and why a bit of a fudge has been presented to us today.

Ms Liz Lynne (Rochdale)

Is the hon. Lady saying that her view on the referendum is different from her party's?

Ms Quin

No. Often, there can be good reasons for holding referendums. That is my party's view, but it has not committed itself necessarily to holding a referendum on the outcome of the IGCs, as we are talking about conferences that will begin next year and may last up to 18 months. We do not know what its outcome will be.

Mr. Dykes

The hon. Lady has confirmed finally and conclusively that Opposition Front Benchers support the Government's position, stating that there may be a referendum, depending on what is proposed. That is 100 per cent. support for the Government's position. Why did not the Labour party do the same thing when the Maastricht treaty went through the House, so that we could have avoided the terrible turmoil in the House and outside about divisions that are sometimes artificial?

Ms Quin

I confirm the position as I have explained it to the House. That does not mean that the Labour party agrees with Government policy on Europe. Its agreement with the Government is of a strictly limited variety. One of the difficulties of holding a referendum on the Maastricht treaty was that two versions of the treaty were available—the treaty that was available to all other European countries except the United Kingdom, and the version that had been negotiated with two opt-outs by the Prime Minister. That made the treaty a difficult subject to submit to a referendum. That is one of the arguments that I should like to deal with later if I can make some progress.

Several hon. Members

rose—

Ms Quin

It seems as if progress will be difficult.

Many aspects should be taken into account in relation to what sort of referendum we should hold, and what sort of questions we should raise. Many of those aspects need to be decided before dealing with a motion such as this.

Mr. Legg

Will the hon. Lady confirm that Labour's position is that it supports the opt-out from monetary union, which the Prime Minister negotiated at Maastricht?

Ms Quin

We believe that the opt-out did not create any advantage for the Government; it made them seem semi-detached from Europe. No doubt exists in my mind that the nature of the economic opt-out negotiated by the Prime Minister was one of the reasons, if not the principal reason, why London was not successful in its attempt to attract the European Monetary Institute. [Interruption.] I hear some dissent to that proposal, but it was reported on German television on the day that it was announced that the European Monetary Institute would be sited in Frankfurt.

Mr. Tim Renton (Mid-Sussex)

Is the hon. Lady saying, in answer to my hon. Friend the Member for Milton Keynes, South-West (Mr. Legg), that the Labour party would prefer there not to be an opt-out on the single currency? Is that her position and that of Opposition Front Benchers?

Ms Quin

We have said that, if we had been in government at that time, we would have negotiated our views on the way forward in relation to economic and monetary union. Obviously, we would have taken a different line from the Government. As we know, they talk a great deal about flexibility and other such concepts, but they have done little to tackle unemployment or to try to promote economic growth in Europe.

We wanted those conditions to be attached to moves towards European monetary union. As we have the opt-out—[interruption.] I hope that Conservative Members will give me a chance to explain my views rather than constantly interrupting. Obviously, they are interested not in answers but in making political points.

The Labour party believes that, when it takes office, it will be able to negotiate with other countries on some of its economic priorities, which are laid out in our policy document entitled "Prosperity through Co-operation". I recommend that Conservative Members read it as it would answer the questions that they keep raising and as they seem incapable of understanding the responses that I have already given.

Sir Teddy Taylor (Southend, East)

rose—

Ms Quin

If the hon. Gentleman will forgive me, I shall not give way, as I should like to make some progress with my speech. I have given way many times already, and my original speech has hardly begun. Therefore, I shall endeavour to make some quick progress.

If the Liberal Democrats had wanted to maximise support for the motion, they would have gone about things differently. As from last Wednesday, when the shadow Cabinet said that it would not support the motion, Liberal Democrats knew that they had a problem, yet nothing seems to have been done to resolve it. I know, through contacting some of the other minority parties in the House, that little progress was made in trying to get their support. I spoke to the hon. Member for Newry and Armagh (Mr. Mallon) just an hour or so ago. He said that, to his knowledge, the Liberal Democrats had made no contact with his party, and that he had had no information about the motion.

Mr. Charles Kennedy

I would not normally intervene twice in the hon. Lady's speech, but the conjecture that is being dredged up as something to do with parliamentary debate is bizarre. Will she confirm that the essential problem that the Liberal Democrats faced in the past few days, in framing the motion and in seeking as much support as we could get for it, was that her party, which has far and away the largest number of Members of Parliament who can contribute to the cause, is the obvious place from which to gain more support? People outside will not understand why, after the shadow Foreign Secretary said last Monday, "We must take every and any opportunity to inflict defeat on the Government, not least over European policy," the Labour party, when the opportunity arises, officially sits on its hands.

Ms Quin

The hon. Gentleman confirms what I said—that contact, if any, with other parties was strictly limited. I can only repeat that the Social Democratic and Labour party told me that this afternoon.

Mr. Skinner

I have a copy of today's Evening Standard. There is further confusion. It has been admitted that a memorandum has been drawn up by the foreign affairs spokesman for the Liberal party, who was angry that he was getting the blame for not having taken part in proper discussions with my hon. Friend the shadow Foreign Secretary. It is reported in the Evening Standard that the Liberal spokesman has made it clear to the Liberal party leadership that he has been misled because he was told not to raise the referendum issue with my hon. Friend the shadow Foreign Secretary until Russell Johnston and Roy Jenkins had been squared. That says one hell of a lot. I support the referendum.

Ms Quin

I am grateful to my hon. Friend for quoting extensively from the article in today's Evening Standard. The two members of the Liberal party to whom he referred are not, shall we say, terribly enthusiastic about the idea of a referendum, which explains quite a bit in the report.

Sir Teddy Taylor

Does the hon. Lady agree that one of the problems with having a referendum is that the scene is constantly changing? Only a few moments ago, I received notification from Brussels that plans to ban all passport controls between European countries, including Britain, will be tabled by the Commission later this year. Is she aware that, if Britain objects in any way, we shall face a challenge in the European Court of Justice. The argument is that article 7a of the treaty states clearly that a single market is an area without internal frontiers in which freedom of movement of people is guaranteed.

Does it not mean that the scene is constantly changing when only this morning some of our bright chaps were saying that there was no problem and nothing would happen, while I have here an unambiguous statement to the effect that proposals will be considered to abolish passport controls within the European Union and that, were we to object, we would be taken to the European Court of Justice? The hon. Lady knows what would happen if we were taken to the European Court of Justice on this issue—we should not have a hope.

Mr. Deputy Speaker

Order. I have been very tolerant about mini-speeches disguised as interventions. I know that this is a very important debate but I shall now expect interventions to be brief and to the point.

Ms Quin

Proposals have to be agreed, and I think it is rather doubtful that the ones to which the hon. Gentleman refers will be agreed in that form. When I was travelling recently on the continent, I had to show my passport several times, so it seems that border controls are a long way from being removed. Indeed, I hope that many of the safeguards, which the hon. Gentleman and I would probably think are important, will remain in place.

There are times when the Opposition parties are able to join together effectively to defeat the Government. My hon. Friend the Member for Bolsover (Mr. Skinner) rightly referred to some of the opportunities that arose during the Maastricht debate, when we did not always receive the support of the Liberal Democrats. There have been occasions recently when the Government have been threatened on their legislative programme or in respect of their adherence to international treaties.

Such an occasion arose just before Christmas, when we debated increased contributions to the European Union budget. More recent examples occurred when we debated the European fisheries policy and, of course, when the Government were defeated over value added tax on fuel. We believe that we should take opportunities of this kind, but they nevertheless need to be better prepared in future.

Labour's position on the motion is that we believe that it is essential for people to be consulted on any major shift in our relations with the European Union. We accept that the most likely occasion for such a shift to occur will be at the outcome of the intergovernmental conferences. Such consultation may take the form of a referendum, but, because of the uncertain timing of the next general election and the fact that we do not know whether an election would involve a widespread debate on any significant change in our relationships with the European Union, we are not at this stage committing ourselves firmly as to whether a referendum will be necessary. It is something that we are clearly duty bound to keep under review.

Several hon. Members

rose—

Ms Quin

I am not going to give way; I have done so many times already.

We are sensitive to the fact that people must not feel left out in the cold over the debate on Europe. After all, it was the Labour Government who gave people the previous referendum. After the high-handed way in which the Conservatives have run the country for the past 15 years, we can particularly appreciate the dangers to our political system of ignoring public opinion on such a fundamental issue.

Although this debate is about Europe, it is also about referendums and the role that they can play in our democracy. The right hon. Member for Yeovil said that some think of a referendum as an alien concept that is not a usual part of the British political system. It is certainly true that referendums have been much more widely used in Europe than in our country, which is rather ironic as so many of the people who are especially keen on the idea of a referendum at the moment are those who distrust European traditions.

However, we need to consider the role of referendums and whether we want increasing use to be made of them and, if so, why. Perhaps we should have a referendum on whether we should have recourse to referendums in future. There are arguments for changing our democracy and for having a different approach.

I do not know whether any other hon. Members listened to "Analysis" on Radio 4 yesterday. People were discussing the revolution in information technology and how it theoretically makes it possible for us to have a more participatory form of democracy—for example, by using technology to give people a say and a vote, either in a consultative way or in a binding way on the Government of the day. That is certainly a very interesting idea. Do we want to follow Switzerland and have referendums with considerable frequency, or do we want to copy the example of California, where there have been many difficulties with the frequent use of referendums?

Mr. Mackinlay

Does my hon. Friend understand that many in the new Labour party would see it as a virtue if we said that people should be consulted on major constitutional issues? What is wrong with that? It was not part of British culture to allow working class people to vote until we changed that in this place. Nor were women allowed to become Members of Parliament until we changed that in this place. It would be a good idea to allow people to decide major constitutional issues as a matter of course.

Ms Quin

I am more than willing for that to be discussed widely within the Labour party. My hon. Friend will know that our democracy commission is examining such issues at the moment. None the less—

Mr. Marlow

Will the hon. Lady give way?

Ms Quin

I have already given way to the hon. Gentleman and to many others, and many hon. Members want to speak.

It is much too early to say whether the IGCs and their conclusions should be the subject of a referendum. We do not yet know whether the IGCs will lead to substantial changes, although some people feel that it is unlikely. There is some merit in that line of argument, partly because the European Union has recently been enlarged to include 15 countries and the new countries are still adapting to the European Union. Indeed, the transition process will not have been completed by the time of the IGCs.

We are also talking about enlarging the European Union to include the countries of central and eastern Europe, about which my party is very enthusiastic. I believe that such enlargement commands widespread support in the House. It would be disastrous—certainly for political reasons—if we sent a negative political signal to the countries of central and eastern Europe and, having encouraged changes in those countries, seemed to be turning our backs on them.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

Is my hon. Friend seriously saying that she expects the countries of eastern Europe to be able to meet the convergence terms, which are not only part of the next IGC but automatically part of the arrangements for our move towards a single currency?

Ms Quin

It is unlikely that most of them could meet the criteria, but the Czech Republic, for example, has said that it thinks it might be in a position to do so. There is no uniformity among the countries of central and eastern Europe which are very different and have different traditions.

Several hon. Members

rose—

Mr. Deputy Speaker

Order. The hon. Lady has made it clear that she will not give way.

Ms Quin

The Labour party has hopes for the outcome of the intergovernmental conferences, and I shall briefly refer to them. Obviously we are keen on the idea of an enlargement of the European Union that would include not only the countries of central and eastern Europe, but Cyprus and Malta. I think that that was the point that the hon. Member for Lancaster (Dame E. Kellett-Bowman) wanted me to make.

Existing applications are not thought to raise any economic difficulties, and progress should be possible with them. The Labour party also hopes that we can achieve the reform of the common agriculture policy in the discussions about the IGCs.

Sir Teddy Taylor

No chance.

Ms Quin

The hon. Gentleman shouts from a sedentary position, but he will know that the consequences of trying to adapt the existing common agriculture policy to the countries of central and eastern Europe are so mind-boggling that it would be simply impossible for that policy to continue along the same lines. Therefore, we have a huge opportunity at the IGCs to put forward ideas for a new type of agricultural system in Europe.

We also believe that the IGCs could give a boost to the social dimension in the EU, and that will be far easier in the future with a Labour Government than it has been in the past under the Conservatives. We believe progress can be made also on environmental issues and the economy—crucially on jobs and on promoting economic growth—and that that can be done with a Government who take a different view from the present Government. The programme that we would propose to the IGCs would be positive and realistic, and it would be very much in Britain's interests.

It is impossible to say what the Government's approach will be while the battle is raging between the Europhobes and the Europhiles, even within the inner sanctum of the Cabinet. The Secretary of State for Employment has apparently said that three things have been decided in respect of the IGCs by the Cabinet. The Government will say no to any change in the unanimity rules, there will be no worsening of the formula for qualified majority voting, and no new powers will be given to the European institutions.

I do not know whether the Minister can confirm that that is the official view of the Cabinet, but I questioned the Foreign Secretary on the matter and he seemed to suggest that that was not so. I have written to the right hon. Gentleman to try to get a formal response to clear up some of the confusion arising out of the pronouncements of the Secretary of State for Employment.

The hon. and learned Member for Fife, North-East (Mr. Campbell) mentioned the difference of view between the Chancellor and the Chief Secretary to the Treasury. I noticed in one of the newspapers today that the Chancellor is asking the panel of wise men to come up with answers about the implications for Britain of a single currency. I know that the original wise men brought welcome gifts with them, but I am not sure that the outcome of the deliberations by the six wise men will be welcomed by the Chancellor. One thing is true: if it is welcome news for the Chancellor, it will not be welcome news for the shadow Chief Secretary—for the Chief Secretary, rather. [Laughter.] I suppose that something which pleases the Government is very unlikely to please us.

The divisions within the Conservative ranks may be entertaining, but they are profoundly bad news for Britain. I believe that Britain has been isolated and marginalised, and that it is losing out as a result. All the events of the past few weeks—indeed, the past few years, as far as the Tory divisions on Europe are concerned—provide ample reason why we need not only a change in strategy towards Europe by the Government, but a change of Government.

5.3 pm

Mr. Tim Renton (Mid-Sussex)

I confess that I have found the debate rather disappointing so far. The Observer yesterday carried the exciting headline: Bring down the Tories tomorrow". Under that headline was an article by the right hon. Member for Yeovil (Mr. Ashdown), which contained most of what he said to us in his speech earlier this afternoon. A sense of impending doom brought me hurrying to the Chamber to make quite certain that I registered my vote—faithfully, as always—with the Government.

In looking to see those who have been rallied by the article to support the Liberal Democrats in their attempt to bring down the Tory Government, we see that, at the last count, there were 11 Labour Members present. So much for the concern of the Labour party to bring down the Government. So much also for the thought that the parties opposite have any common policy at all on the issue of the Common Market or on referendums.

We heard a typical little spat between the right hon. Member for Bethnal Green and Stepney (Mr. Shore) and the hon. Member for Gateshead (Ms Quin), in which some of the divisions in the Labour party became clear.

Mr. Robert Maclennan (Caithness and Sutherland)

Will the right hon. Gentleman give way?

Mr. Renton

No, I am not giving way. Lots of hon. Members want to speak, and I am sure that Mr. Deputy Speaker would like me to make progress with my remarks.

My position is quite clear. I have always been opposed to national referendums. I made a speech on the subject in the House on 22 November 1974—the first time that I won an Adjournment debate on a Friday—and I still recommend its contents to colleagues. The speech contained good historical examples of the way in which referendums have been distorted in other countries, often by the way in which the question was phrased or distorted to get the answer that the Government of the day wanted to achieve.

The hon. Member for Gateshead asked why so many other countries have referendums more frequently than we do. The answer is because they have referendums written into their constitutions. In Ireland, Denmark and Australia, the need to call referendums is a constitutional matter contained in a written constitution.

Mr. Mackinlay

Very good it is, too.

Mr. Renton

What the hon. Gentleman says is fine if we wish to have a written constitution. I do not, for the simple reason echoed by Enoch Powell in a debate in April 1972 on the original European Communities Bill, when he said that the sole responsibility of the Executive is to Parliament and of Parliament to the people. I believe strongly that hon. Members are elected as representatives of a sovereign people to take difficult decisions on their behalf. If we—in the eyes of the sovereign people—get those decisions wrong, they can throw us out at the next election. That is the basis on which our Parliament is formed.

In the years I have been in the House—

Mr. Marlow

Will my right hon. Friend give way?

Mr. Renton

No. I congratulate my hon. Friend on the number of times he has intervened in the debate during the past two hours, but I do not propose to give way to him. I hope that he will have a chance to catch your eye, Mr. Deputy Speaker.

Sir Teddy Taylor

What about Scottish devolution?

Mr. Renton

I shall come to Scottish devolution in a moment, if my hon. Friend can wait.

All of us who have been in the House for a long time have taken difficult decisions on many issues. Those include moral issues, such as capital punishment and changes in the abortion laws, and constitutional issues such as the treaty of Maastricht, the Single European Act 1986 and—before I came here—the treaty of Rome. I agree strongly with Burke, who when speaking to the electorate of Bristol said: Your representative owes you not his industry only, but his judgment. And he betrays, instead of serving you, if he sacrifices it to your opinion". That is not a popular view. [Interruption.] It is obviously not popular with the hon. Member for Thurrock (Mr. Mackinlay), who keeps intervening from a sedentary position. The hon. Gentleman would run in front of people and in front of the opinion of the day, and that is wrong. If the House is to retain respect, we must have the courage at times to follow our own judgment and, having listened carefully, not to be swayed from that.

On the matter of the referendum in 1975, I remind the House that the noble Lord Wilson made it plain when that referendum was introduced—the only national referendum which we have had—that it was not to be treated as a precedent, and that it would be considered as an isolated referendum—required, of course, to bring unity to the Labour party of the day.

Mr. Cash

It did not.

Mr. Renton

It did not, but that is what it was hoped to achieve. I remember a constituent who was opposed to referendums saying, in plainer language than that we use in the House, "If you have a dog, you don't bark yourself."

Against that background of my opposition to referendums, I should like to talk about one or two instances of what would happen were the Liberal Democrat motion passed today—if there were to be, in the words of the motion, any substantial alteration of the present constitutional settlement between the European Union and its Member States"— in which case, a referendum would be required.

There is one issue over which, under the terms of the motion, a referendum should be required, and which has not yet been touched on in the debate. It involves what Liberals, Labour and Scottish nationalists are currently saying about their determination to have a Scottish Parliament. The current constitutional arrangements—the treaty of Rome, the Maastricht treaty and the Single European Act—are between the United Kingdom, as a unitary state, and the European Union. It is clear that the current argument among Opposition Members is about how much power should be devolved from the House to a Scottish Parliament. It is not a question of whether that should happen, but how much power should be devolved.

As we heard in the debates over the weekend, the Labour party says that it should be possible to hold the line at a Scottish Assembly. The Scottish nationalists are, more realistically, saying that a Scottish Assembly would be only the first step and their ultimate aim would be full independence for Scotland. Either way, those devolution arguments signify a substantial change in the present form of the United Kingdom—as a unitary state. That devolution should therefore be subject to a referendum.

As that devolution would affect everyone on this island, it is clear that the referendum on it should be a national one, not just for the Scots but for the English, Welsh and Cornish as well. Why? Because the Liberals and Labour are both committed to some form of regional government in England that would mean devolution to the English regions to match the devolution to Edinburgh. Logically, they have to be committed to that, because it is the only way of answering the famous question by the hon. Member for Linlithgow (Mr. Dalyell) about why Scottish Members of Parliament who are unable to vote on many Scottish matters should, once matters have been devolved to an Edinburgh Parliament, vote in Westminster on comparable matters affecting the English.

The only logical answer—as is certainly realised among some Labour Members—is that comparable powers have to be devolved to English regional Assemblies comparable with those that are passed to an Edinburgh Parliament. However, the Labour party shrinks from saying that because it knows that it would be deeply unpopular. [HON. MEMBERS: "Some of us are saying it."] I am delighted if some Labour Members are—I certainly read in yesterday's edition of The Independent on Sunday that the shadow Home Secretary, the hon. Member for Blackburn (Mr. Straw), was to announce that devolution in England would only involve English councillors sitting on regional bodies—they would not be elected. That would simply create another discussion body like the European Parliament. It would be seen as a fudge and as a means of getting the Labour party off the hook in terms of Scottish devolution.

Mr. Mackinlay

That has nothing to do with the issue.

Mr. Renton

Indeed it has. It is about constitutional change—from a United Kingdom as a unitary state to a United Kingdom that is split into three, four or more regions. The logical conclusion is that the introduction of English regional authorities with powers equal to the Scottish Assembly would constitute a constitutional change that must, under the terms of the Liberal Democrat motion, be subject to a national referendum. I trust that that will be Liberal Democrat policy.

Mr. Charles Kennedy

The right hon. Gentleman seems to be talking about what he wishes the Labour party's policy was rather than what the Liberal Democrat policy is—but that is a different matter. I shall pursue the logic of what he is saying about holding a UK-wide referendum for constitutional change affecting any of the constituent parts of the existing United Kingdom—the obvious one being Scotland and devolution.

The right hon. Gentleman must surely recognise that Scotland has a distinct legal system that creates a different state of affairs. Is he saying that, if the peace process in Northern Ireland leads to a referendum—as the Prime Minister has indicated—such a referendum would have to be balloted in Wales, Scotland and England to decide whether the settlement, if reached—we all hope that it will be—is acceptable? That is the logic of the right hon. Gentleman's argument.

Mr. Renton

The hon. Gentleman is deeply ignorant of the politics of Northern Ireland. Before Stormont was abolished, Northern Ireland had its own legislature and its own Prime Minister. We know perfectly well that it did, and to make a comparison between what is currently being discussed in Northern Ireland—where Stormont has not sat for 22 years—and the situation in Scotland—where two Parliaments were bound together between Scotland and England under the Act of Union of 1707— is to show an astonishing lack of knowledge of the history of the United Kingdom.

Mr. Iain Duncan Smith (Chingford)

Will my night hon. Friend give way?

Mr. Renton

No, I cannot give way. I am sure that my hon. Friend will be able to make his own speech later.

The other issue that I shall touch on relates to a referendum on what I can only refer to as the Cabinet's friend: single currency. Obviously, there is already a European Monetary Institute, to which the United Kingdom makes financial contributions. That will probably lead to a European central bank—that is all in hand under the provisions of the Maastricht treaty. We may regret that, although the early stages of the Maastricht treaty passed through the House with a large majority. Those are not key issues of constitutional change—they will happen in any event.

I congratulate my hon. Friend the Minister of State on dancing so elegantly on the point of a pin when addressing the House earlier. I congratulate him on his wisdom in frequently repeating the words of my right hon. Friend the Prime Minister that the issue revolves around our option to join the single currency some time after 1997. As hon. Members have said that is not a matter for today, but for three years' time.

I understand that, were the motion to be agreed, we could be having a discussion on that subject and a consequential referendum in about 1998. I do not think that we should be too horrified at that prospect; the details of the effects of a single currency are not yet known. As my right hon. Friend the Prime Minister has repeatedly said, it would be foolish to take decisions about that until we have seen the shape of the decisions taken as the European Monetary Institute gets to work in the years and months ahead.

One or two of the probable consequences of an inner core of European countries joining the single currency are that long-term interest rates for those who join will fall by at least 1 per cent. [Interruption.] I expected that remark to be popular with some hon. Members. The German long bond rate—

Sir Teddy Taylor

Remember all the promises given when we joined the Common Market.

Mr. Renton

If my hon. Friend will be quiet for a moment, I shall explain to him and he will, hopefully, understand.

The German long bond rate is currently 1.5 per cent. lower than the British long-term gilt rate because there is thought to be no fear of the German mark devaluing. If, and when, a long ecu bond is established, there will be no risk of devaluation to it, and therefore, it is thought—of course it is only a hypothesis at the moment—the long-term interest rate for people who use that ecu bond will be at least 1 per cent. less than the rate of a sterling bond—

Mr. Marlow

rose—

Mr. Renton

I will not give way. I told my hon. Friend that I would not.

Mr. Legg

Will my right hon. Friend give way?

Mr. Renton

My hon. Friend also has plenty of time to make his own speech.

Once an independent European central bank is established, that is also likely to lead to lower inflation for its members.

My right hon. Friend the President of the Board of Trade said in the House last Wednesday that he reckoned that, in the last year for which figures were available, almost 100,000 jobs had been created or saved in this country by the flow of inward investment into this country. If we were to join a single currency—it is only a hypothesis—that inward investment would continue.

As for the ordinary tourists, they at least would be aware that, when they went abroad on holiday, if they had ecus in their pockets they would not have to change their money into foreign currencies, and change it back again; they would avoid Thomas Cook or American Express's commission and the difference between the buying and selling rate. [Interruption.] I was expecting those remarks to be well received behind me. That could save them 4 or 5 per cent. on the cost of their holidays.

So when the question is asked in the referendum—if that ever happens—if the question were summarised, "Would you like to join a single currency in which interest rates are 1 per cent. lower, inflation is lower, there are 100,000 new jobs in this country every year and you will save 5 per cent. on the cost of your European holiday each year?" it is quite possible that the majority would vote in favour. Certainly that would be a possibility.

I leave hon. Members with the following thought. That would be a particular possibility at a time when Westminster—as we read in the newspapers—is held in very low esteem and it is quite feasible that the electorate would not worry too much about power passing from this Chamber over such issues as money supply to an independent central bank, on which we were represented, of course, but which would be well outside the daily reach and control of politicians.

Mr. Duncan Smith

Will my right hon. Friend give way?

Mr. Renton

I am sure that my hon. Friend will have plenty of time to catch your eye, Mr. Deputy Speaker.

In conclusion, I remain opposed to referendums, as I said at the beginning of my remarks, but when we are able to put all the facts, in two or three or four years' time, about single currencies before the British people, I believe that the arguments of lower inflation, lower interest rates, higher employment due to inward investment and the value of an independent central bank may well win the day.

5.22 pm

Mr. Tony Benn (Chesterfield)

One of the reasons why the House is held in low public regard is that, during a debate of this type, which is of major importance, the place is empty. One of the reasons why the place is empty is that we have not told the public the truth about the issue in Parliament. The truth is that all the party leaders agree about it.

The Liberal party has always been enthusiastic for a federal Europe; the Labour party, as far as I can make out from the latest lunchtime broadcasts, is also very much in favour of a federal Europe; the Government are pretending not to be, in order to deal with certain difficulties that they have, but does anyone really doubt that, if a Conservative Government were in power when the question of a common currency came along, a Conservative Government would go along with it? Therefore, let us not pretend that there is any difference.

On the other hand, there are wide differences of opinion in all parties. We should discuss those seriously because, when we discuss the future of Europe, we are also discussing the way in which Britain is governed. If we change the relationship between the electors, Parliament and the Community—or the Union, as it now is—we alter the rights of the electors, and that is what this debate should be about.

I am deeply disappointed that the Labour party has decided to abstain on the matter. In 1972–23 years ago—I moved, on behalf of the Opposition, an amendment to the European Communities Bill calling for a referendum. Actually, I go back to 1968, when I first mentioned the electronic possibilities for representation that were mentioned by my hon. Friend the Member for Gateshead, East (Ms Quin).

The Liberal party was opposed to a referendum then, but I do not make a point about that, because the truth is that people are moving now to a different opinion about the rights of the electors in respect of their Government, and I welcome that; but I am disappointed that the Labour party has decided to abstain tonight, because the Labour party introduced the referendum.

Fifty members of the Labour party who were in Parliament when I moved the amendment in 1972 remain in Parliament. I went through that Division Lobby. The deputy leader of the Labour party and the previous, deputy leader of the Labour party, my right hon. Friends the Members for Kingston upon Hull, East (Mr. Prescott) and for Derby, South (Mrs. Beckett), voted for a referendum—and so, I might add, did Roy Jenkins and one or two others, because they were then members of a Government that had come out in favour of it.

I wish to say something else about the disgraceful way in which this debate is reported in the press, and commented on in the House, as though there were Europhobes and Europhiles. I was born a European; I shall die a European; I lost relatives and friends in both world wars and I want to see peace in Europe as much as anybody else, and I bitterly resent the idea that. if one objects to the Maastricht treaty and the way in which it transforms the government of Britain, that makes one a Euro-sceptic, any more than hostility to the present Government makes one an Anglo-sceptic. Is it not possible to have a different opinion of the way in which Europe should be governed? I shall discuss that in a moment.

The truth is that a common currency and a central bank would fundamentally alter the constitution of Britain. Why do we call the Prime Minister the First Lord of the Treasury if the Treasury is not at the core of Government? The Chancellor of the Exchequer is only No. 2; he is a Minister of State in the Treasury. If there is to be a central bank, the First Lord of the Treasury will be in Frankfurt. For anyone to suggest that having the First Lord of the Treasury in Frankfurt would not alter the constitution of the country would be deliberately to mislead the public.

Of course, as a result of that, there will be rate capping from Frankfurt, because people in Frankfurt will determine the interest rates, the amount of borrowing and the levels of taxation. I am not working hard for a Labour Government so that the leader of the Labour party, instead of being First Lord of the Treasury, will be the chairman of the British municipal corporation, pleading with Frankfurt to obtain permission to do something about unemployment.

We should consider the matter not only in theoretical terms. The right hon. Member for Mid-Sussex (Mr. Renton) said that, if one goes on holiday to Spain, one will not have to change one's currency. There are 4 million unemployed people in Britain who cannot contemplate going to Spain. The reality is that, if we lose control of tax rates, borrowing and interest rates, we cannot tackle unemployment.

The single currency in Britain has not solved the problem of unemployment in Britain. I might just say to those who think that the single currency is a miracle that we have always had a single currency since the United Kingdom came into being. We have had terrible areas of mass unemployment—what used to be called the "depressed areas", which we changed to the "development areas"—all with a single currency, all with a central bank. So let no one think that a mechanism for handling a currency automatically solves the social problem.

Finley Peter Dunne was right when he said: One of the strangest things about life is that the poor, who need money the most, are the very ones that never have it. It is a question of distribution of wealth; that is how to tackle unemployment.

I know that this is not primarily an economic debate, but it is a very important debate bearing on economics. Unemployment is the discipline of a capitalist system. It is different in other countries. In Islam, for example, if one breaks the law, one's hand may be cut off; in Russia, one was sent to the Lubyanka or Siberia; but unemployment performs an essential function in a capitalist society. It lowers wages, undermines the unions, boosts profits, limits imports and prevents unemployed people from going abroad to spend foreign currency. Unemployment is the instrument.

We are told that a common currency will somehow bring about full employment. Unemployment benefit in this country costs the electors £26 billion a year in tax. No Government would spend £26 billion a year on unemployment benefit if unemployment was not absolutely central to their policy. A former Chancellor once said that it is a "price worth paying". He meant that it was worth paying £26 billion to the unemployed tf it would frighten other people into doing what they were told.

I am from a generation—I make no apology for i t—which remembers hearing the voice of Hitler on the radio. When I was a young man I heard him speaking from Nuremberg; I saw Mosley march in the streets of London one Sunday in 1935. Unemployment is the seed bed of fascism. If there is mass unemployment, people will turn on Jews—we have seen the Auschwitz tragedy—and they will turn on trade unions, socialists, communists and gays. Governments try to divert people's attention from the fact that unemployment means that the system is wrong.

We are told that there are 20 million unemployed people in the European Union today. In 1975 I said that, if Britain joined the European Community, there would be higher unemployment, and Roy Jenkins said that it was not possible to take me seriously as an economic Minister. There are now 20 million people unemployed in the European Union. Anyone who thinks that that problem can be solved by taking power away from Mr. George and the Chancellor and sending it to Frankfurt needs his or her head examined.

How will we secure jobs for everyone? We have had full employment—I return to my recollections of the 1930s and of the war. How did we achieve full employment when so many people were unemployed in the 1930s? We did not achieve it through market forces. The Government took unemployed people off the dole and put them into factories to produce guns, tanks and ships. Instead of receiving the dole, people earned a wage and paid their taxes and, along with a little borrowing, that paid for the war. Market forces were not involved granny never bought a tank, my dad never owned a Spitfire and my aunt never owned a Sten gun. The Government spent money to achieve full employment.

Think of the things that need to be done in Britain today—homes need to be built, school books need to be printed and teachers, nurses and doctors need to be recruited. Why can we not use untapped human resources to meet unmet need? But that is not profitable, and if it is not profitable it is not done. That is why the word "customer" is used so widely. People who have no money cannot be customers. The people who live on the Embankment in cardboard boxes need houses more than anyone else, but they are not "customers" because "customers" must have the cash to turn their human need into economic demand.

Unemployment was also dealt with in a very interesting way during the war. When I was nearly 17 I received a letter from the Government—I probably have it among my papers—which said, "Dear Mr. Benn, will you please turn up on your 17th birthday and we'll give you free food, free clothes, free training and free accommodation if you will learn to kill Germans." The Germans had a similar youth training scheme: "If you turn up on your birthday, Herr Braun, we'll give you free clothes, free food, free accommodation and free training if you will learn to kill the British". If we can use planning mechanisms for the purpose of killing, why, in God's name, can we not use them to meet need in our country? We cannot do it unless we drop the philosophy of putting capitalist profit before people.

I turn to a serious political question. If the Labour party comes to power and adopts a common currency and a central bank—as I deeply believe that it intends to do—how will I explain it to my electors in Chesterfield? I have just been reselected as the Labour candidate for Chesterfield; I am only a prospective candidate, but I hope to live to complete my 50 years in Parliament in the year 2000.

What will I say to the people of Chesterfield before polling day? I am bound to say, "Whoever you vote for, you cannot change our trading policy, our agricultural policy, industrial policy, environmental policy—or, if my party has its way, our foreign or defence policies either". What will the electors of Chesterfield do? The principle of parliamentary democracy is that, by voting, people can change the policies of the incoming Government.

The right hon. Member for Mid-Sussex (Mr. Renton) made a very entertaining and inconsequential speech, as is his wont, but I ask him to address that question. As a Conservative candidate, he must tell his electors that, whoever they vote for, they cannot change the policy of an incoming Government. As a consequence, many people will not bother to vote. Why should they, if the members of all three Front Benches agree and their vote will not change anything?

Alternatively, as Lord Tebbit said the other day, the people may riot. Rioting is the historic way in which the disfranchised drew injustices to the attention of Governments who were not responsible to the people through the ballot box. We are striking a deadly blow at this Parliament and everything that it stands for—all the things about which we boast when we show children around this place.

A common currency and a central bank is the ultimate privatisation. Government is privatised because it is handed over to bankers who are not responsible to the people in their power. I believe that a new political class is taking over Europe which does not have confidence in the public and which believes that Commissioners, bankers, civil servants, Foreign Office officials and, dare I say, Members of Parliament know better than the public. The arrogance of that assumption will ultimately lead to real trouble.

The Council of Ministers is the real European Parliament. I served on the Energy Council for five years and I was its president during the British presidency in 1977. It is the only Parliament in the world which meets in secret and which makes laws in secret. I think that, like the Privileges Committee, it should meet in public; but I will not go into that now. Ministers are reduced to petitioners when they go to Brussels because everything has been sewn up by the Committee of Permanent Representatives.

I hope that hon. Members will not misunderstand me when I say that they could not run communism from Moscow and they cannot run capitalism from Brussels. Both systems will break down. If that happens, I fear that we will return to the sort of nationalism that I do not want to see. It will not solve the problems of nationalism.

One has only to look at the cover of The Sun and its headline "Up yours, Delors" to see what I mean. I know Jacques Delors; I met him about 20 years ago at the British embassy in Paris when he was out in the cold and I was a Minister. We had a friendly talk. I fully understand his current position. Why should we blame Delors when we assented to a structure that gave him more power than our Prime Minister?

We see that in the Spanish fishermen issue and in the export of live animals: we are blaming the foreigners instead of blaming the loss of democracy which we conceded. It is not as if the Union comprises a democratic united states of Europe. If the Union was like the United States of America, the first thing that we would do is abolish the Commission. Would the Americans agree to be governed by 15 Commissioners instead of by a President, a Senate and a House of Representatives? Would this country agree to be governed by commissioners representing Scotland, England, Wales and Northern Ireland rather than a Cabinet? Of course we would not. But I suppose that if we preferred to be governed by our own Parliament, we would be called Anglo-sceptics.

The Union does not even comprise the whole of Europe. There are about 50 countries in Europe and the little gang of 15 which is trying to catch them one by one does not constitute Europe. The idea of a convergence between the Albanian economy and the British economy is absolutely mad—although if the Government continue their present policies it may eventuate. Can we imagine a European Parliament where the balance of power is held by the Hungarian greens? Would we accept that? The whole idea is absolutely ridiculous.

Europe needs a new structure. We must harmonise by consent, taking account of the different cultures, histories and religions of Europe. A European assembly should produce conventions to which member states adhere. My right hon. and hon. Friends on the Opposition Front Bench—crowded as it is during this great debate—must think very carefully about what will happen when a Labour Government are elected. The assumption that the Labour party is united on this issue is totally false. The Labour party and the trade unions look favourably upon Brussels because they now receive better treatment from Brussels than from Downing street.

Mrs. Dunwoody

They think they do.

Mr. Benn

They do. But when we are there, imagine how trade unions and the Labour party will react when Labour Ministers say, "We're not allowed to do that. We don't have the power. We've been prevented." There will be major opposition, because it will not be acceptable to the Labour party for a Labour Government to make the sort of excuses made by the Minister of Agriculture, Fisheries and Food over the export of live animals.

In Opposition, the Conservative party will become what is fashionably known as Eurosceptic. The Conservatives have the funny idea that Europe is a socialist conspiracy. If it were, I would not favour it—and it is not anyway. Released from the responsibilities of office and the hopes of patronage, many more Conservative Members in Opposition will see difficulties in a federal Europe, as steered through by my hon. Friend the Member for Gateshead, East (Ms Quin).

The leader of the Liberal party made a speech about the rights of the electorate. I do not need to repeat it because I said the same myself when I moved an amendment in 1972, and I was denounced by Jeremy Thorpe.

Powers are only lent to us. If I am chosen as the Labour candidate for Chesterfield, I will have to tell people there that I will not vote for a common currency or central bank. Whatever my view might be, I cannot do so because I have no moral authority to come to the House and hand over the powers of the electorate. I have said in the past and say again: that would be a theft of public rights.

I want the electorate to know how things stand before a general election. For all I know, after tonight's Division there might be an early election. One never knows—I always live in hope that the Labour party might come to power in the House to which it has been elected. If there is an early election, every right hon. and hon. Member must ask, "Do you regard a general election as a substitute for a referendum, when all the party leaders agree?" How could that argument possibly be made? If the parties disagree, it might be an arguable proposition. It is important to make that clear.

We talk so much about democracy but never discuss it. One principle of democracy is that no Parliament can bind its successor. A new Parliament once could repeal all the laws passed before—but not now. If an outgoing Government assented in Brussels to a law, either against their veto or by voting for it, an incoming Government could not change that law. Tom Paine said that the dead have no right to control the living.

Mr. Renton

What about Edmund Burke?

Mr. Benn

Do not give me Edmund Burke. He was my predecessor as a Member of Parliament for Bristol for six years and visited it four times. His great contribution to democracy was to call the public "the swinish multitude", and that remark prompted Tom Paine to write "The Rights of Man." If the hon. Gentleman wants to make an historical allusion, he should go away and read the national curriculum, and then he might know more.

Mr. Marlow

rose—

Mr. Benn

I shall not give way, because I do not want to detain the House—and I have reached the last passage of my speech, which I hope will be better even than the earlier ones.

When I was born in 1925, 20 per cent. of the world was governed from this Chamber. I supported all the anti-colonial movements that were nationalist movements, not because I believed in nationalism as a form of xenophobia but because the upside of nationalism is democracy—you govern yourself, which I favour. I will not sit and watch the House, out of a crisis of self-confidence, hand over its functions to others.

We are told that we are a nation of tradition, and traditionally we have always been governed by foreigners. In 55 BC, we were governed by a Roman—Julius Caesar. He had a common currency in the £sd—libri, solidi and denarii. My hon. Friend the Member for Hemsworth (Mr. Enright) is a Latin scholar and will correct me if I am wrong. The Romans stayed for 665 years and then we got rid of them.

We then had William the Conqueror, who was a Frenchman.

Mr. Giles Radice (Durham, North)

He was a Norman.

Mr. Benn

Norman, but a Frenchman in modern parlance. After that, we had William of Orange, who was a Dutchman, and the Hanoverians from Germany. Recently, we have had Jacques Delors, who is also a Frenchman. Is there something about this country that denies us the confidence that we can build a society and work with others in Europe?

The only future for Europe is a recovery of self-confidence in Britain, France, Germany and everywhere else. The lack of self-confidence as well as lack of employment led to fascism. Until we rediscover enough self-confidence to govern ourselves and to work co-operatively, constructively and willingly with other European countries, what we are doing today and will do at the intergovernmental conference will be to dig a great grave and put Parliament in it—so that tourists can come to see it and still be told what it once did, although we shall know in our hearts that it is not doing it any more.

5.44 pm

Sir Terence Higgins (Worthing)

That was a vintage Chesterfield speech. Unlike wine, the more recent one of the right hon. Gentleman's speeches, the more vintage it seems to be.

The motion before the House is as premature as it is cynical. It could not be more premature, because my right hon. Friend the Prime Minister made it absolutely clear that there is no question of anything of a constitutional nature being decided at the intergovernmental conference. In any case, that is some time away. It is not a matter on which we need to decide tonight. None the less, points of principle should be clearly stated.

Even the leader of the Liberal Democrats seemed uncomfortable on realising that he might secure allies from this side of the House or the other who might reasonably be described as Euro-sceptics. I will say more about that later. What is the touchstone of the right hon. Gentleman's sincerity? He appealed in a populist way to consult the people, but he did not make it clear, despite his profound enthusiasm for and commitment to Europe, what he would do if the referendum result was not one that he liked.

Mr. Charles Kennedy

As democrats, we would accept the decision of the people. That is included in the whole exercise. We would be disappointed, but we and the House would have to work within the parameters that then existed.

Sir Terence Higgins

That is an extraordinary view. Is the hon. Gentleman suggesting that a Member of Parliament, having analysed the right answer, consulted his constituents, weighed up the arguments and become profoundly convinced of a particular view, should than accept a referendum that goes the wrong way? That would totally undermine the approach that we as elected representatives should take, which is why I believe that a referendum is fundamentally wrong.

Mr. Austin Mitchell (Great Grimsby)

Will the right hon. Gentleman give way?

Sir Terence Higgins

No, I want to deploy more arguments first.

Some people are passionately anti-European and are in favour of a referendum because they believe that the result would go their way. Having lost the argument on the analysis, they see a referendum as their best hope of effecting a policy change. The Liberal Democrats are fundamentally undermining the basis of the House.

The right hon. Member for Chesterfield (Mr. Benn) referred to Edmund Burke. We are right to take his view that we come to the House as representatives, not delegates. If a referendum goes a particular way, it is not for us to say, "I've been delegated to vote that way." It is our role to analyse the issues and to take into account our constituents' views. Then, we have a duty to make up our minds. Incidentally, Edmund Burke made his famous statement after he was elected to Parliament, not before—which perhaps undermines it.

We are not here to function as a surrogate calculating machine, to vote the way that our constituents would if they could all press a button. We have a much greater responsibility—to consult our constituents and listen to their arguments, but it is the strength of the argument and not the number of people who make it that is important. Then, we must weigh up the arguments and vote as our constituents would if they had the advantage that we do of listening to debates and analysing the issues.

In introducing the motion, the right hon. Member for Yeovil (Mr. Ashdown) effectively read an article which he published in a Sunday paper yesterday, in which he said: We could, at the same time, win a right for the British people to have a part in determining our country's future in Europe. That is what I do all the time. I have a massive mail bag, I consult my constituents, I have interview nights, I attend innumerable constituency functions, and my constituents have an opportunity to express their view. That is a far more sophisticated way in which to assess public opinion and weigh up arguments than an over-simplified referendum, requiring a simple yes or no response, in which the question is always debateable.

Indeed, it is likely that people would not vote about a single currency, for example, in a referendum on the subject. They would vote a straight yes or no on whether we should be in Europe. That is another reason why some of my hon. Friends favour a referendum. The single currency is a highly complex issue, but, nevertheless, it is suggested that one of the issues on which we should have a referendum should be a single currency.

A point that I was going to make has been a little undermined by the speech of the right hon. Member for Chesterfield. I was going to say that, if one went outside and asked people whether they could tell the difference between a single currency and a common currency, I doubt that one in 10 or one in 50 could do so, even though the difference is crucial. I am little unnerved because the right hon. Gentleman, clearly by a slip of the tongue—although he said it two or three times—does not know the difference between a single currency and a common currency. There is a vast difference. It is crucial to realise that the idea that a referendum is a sensible way in which to achieve a real view on such an issue is quite wrong.

In the article yesterday, the right hon. Member for Yeovil said: Other opponents claim the question is too complicated for British people to understand. Of course, one would sound very elitist if one were to take that view. But we are sent here to do that job; to take into account such complicated issues, to take a view and to vote in the House. That is what is meant by representative parliamentary democracy.

Mr. Legg

I refer my right hon. Friend to the views that he propagated in the House on 30 October 1990, when he referred to the single currency. He said: The imposition of a single currency … would rule out for all time the most effective means of adjusting for national differences in costs and prices … that in turn would cause widespread unemployment, which would probably exist on a perpetual basis, and very serious financial imbalances."—[Official Report, 30 October 1990; Vol. 178, c. 878.] By any standard, those seem to be the words of a Euro-sceptic and someone opposed to a single currency. If a Conservative Government sought to impose a single currency through a three-line Whip in the House, would my right hon. Friend defy the Whip?

Mr. Deputy Speaker

Order. Before the right hon. Gentleman replies, may I remind the House that I have already drawn lengthy interventions to its attention. Many hon. Members want to catch the Speaker's eye. Interventions of that nature will mean that some hon. Members will be unsuccessful.

Sir Terence Higgins

My hon. Friend quotes my previous remarks, on which I do not renege for one moment. I agree entirely with what I said. However, I think that I made the qualification at the time that it must depend on the degree of convergence. It is absolutely true, as I said then, that we would be giving up for all time the major means of adjusting for differential movements of costs and prices. There is nothing in what I said then inconsistent with the point made by the Governor of the Bank of England the other day, nor—I believe—does it differ from the position of the Prime Minister.

If one goes for a single currency without an adequate degree of convergence, to which I shall refer in a moment, one of three things is likely to happen. We shall have either endemic unemployment on a greater scale in certain parts of the Community, or substantial subventions from one part of the Community to another, or migration from one part of the Community to another.

I am not reneging on the sentiments of the words that my hon. Friend quoted, but all that would follow if one went ahead before adequate convergence. However, it will be a long time before there is such adequate convergence. A referendum in which we asked the first 50 or 100 people in the street what they thought about the convergence criteria would produce some pretty funny answers.

Mr. Spearing

Irrespective of the merits of a referendum, surely the right hon. Gentleman would agree that, even if convergence were statistically achieved, subsequent divergence could occur, creating the very problems that the hon. Gentleman mentioned? So we would be legislating now for people who come after us. I do not believe, and I hope that the right hon. Gentleman does not believe, that we have the right to do that.

Sir Terence Higgins

That is why it would be no good if the criteria happened to converge at a particular time and we were to say "snap" and go for a single currency. We must be clear that convergence is likely to be sustained. If, in fact, it could not be sustained, we would, of course, experience the three consequences which I enumerated earlier. So convergence would have to be maintained for a considerable period. At what stage Opposition Members suppose that we should have a referendum, I am not at all clear.

If one took the plunge and went ahead with a single currency at some point when all the convergence criteria and, perhaps, some others, had been met for a reasonable period of time, as my hon. Friend so helpfully reminded us, as I said in 1990, it would be irreversible. How one gets out of a single currency is not the least bit clear. I presume that we would suddenly start printing pound notes again, which would be rather inflationary and a little uncomfortable.

We must recognise that we are considering a very serious issue which should be dealt with in the House. Whatever the referendum is on, the decision will be taken in the House. I was somewhat horrified by the intervention of the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy), who said that, if the result of the referendum went contrary to all their profound beliefs, they would none the less go the way of that referendum, even though a referendum, as an instrument of ascertaining public opinion, is fundamentally flawed in the way that I have just described.

The point of timing was raised by the hon. Member for Newham, South (Mr. Spearing). I have already said that we are discussing matters of the future. We may achieve sufficient convergence in a comparatively small number of countries, which may or may not include this country. It is inconceivable that in the next 15 years or less—probably many more—we shall achieve a degree of convergence throughout the entire enlarged Community, which would enable that Community to have a single currency. The problem depends on how large an area convergence covers. The bigger the area, the more difficult it is to achieve a single currency without the consequences and dangers which I have already outlined.

I suspect that a two-speed Europe is inevitable. We will not achieve a single currency that covers all the expanded area in the foreseeable future, even though it may be achieved among a hard core. In that case, a further difficulty arises of whether we are better off being in the hard core or outside it because countries outside it may find that their economic circumstances are significantly better without a social chapter, and so on. However, I am probably straying a little from the motion.

Some say that a referendum can unite political parties. I do not know whether the right hon. Member for Bethnal Green and Stepney (Mr. Shore) would agree that a referendum would be a terribly effective means of achieving that objective. I am not sure whether the previous referendum succeeded in immediately and totally uniting the Labour party.

These are difficult issues. I stress that there are timing problems in respect of a referendum. Would it be held before or after an election, or before or after the IGC? My deeply held conviction is that the idea of a referendum is wrong in principle. It is an alien notion, although some have queried whether it is. It is alien in the sense that although there are some precedents in this country, they are not a tradition here—and for a simple reason which my right hon. Friend the Member for Mid-Sussex (Mr. Renton) pointed out.

Some countries use referendums as part of their constitutions; they have not been part of ours. I believe in our system of representative parliamentary democracy, with Members representing their constituents and taking into account their views. That system is vastly superior. One can understand why a number of countries favour referendums: some of their Members of Parliament do not even represent constituencies. Perhaps some countries in Europe feel that they are better governed from Brussels than from home. Not so with us.

I believe that we should defend our representative system of parliamentary democracy. The idea of a referendum is fundamentally inconsistent with it.

6 pm

Mr. Peter Shore (Bethnal Green and Stepney)

The last two speeches have done much to raise the tone of the debate, in their seriousness, passion and quality of argument. They have come none too soon, because until then the debate had been irrelevant, trivial and, from the point of view of the great majority of people in this country, sickening. Those people have seen the point scoring and the pretence of serious opposition as between the parties as they advance their views and justify their manoeuvrings on this European question.

Today's is an important debate, on which I congratulate the Liberal Democrat party and the right hon. Member for Yeovil (Mr. Ashdown). He has made it possible for us to debate whether the British people should be allowed a vote in a referendum before any further significant transfer of power from the British people, their Parliament and their Government to the European Union is allowed.

My amendment, while endorsing the principle of a referendum, would go a step further by calling for a vote before any further transfer of constitutional power. We have done quite enough of transferring powers, and we should have had a referendum before we accepted the Maastricht treaty a year ago.

I shall have no hesitation about voting for the motion at 10 o'clock tonight. True, we do not yet have a totally clear picture of what constitutional changes await us. What horrors will emerge from the 1996 intergovernmental conference we can as yet only guess at, but one thing is already crystal clear, and it has been a major theme in this debate. The single European currency proposal is written into the Maastricht treaty, and although we have an opt-out, the decision to join or to stay out will be taken no later than 1999.

A single currency and economic and monetary union with Europe, as the right hon. Member for Worthing (Sir T. Higgins) made clear, and as my right hon. Friend the Member for Chesterfield (Mr. Benn) made even more clear, would mean surrendering the Government's and Parliament's powers to determine our interest rates, our exchange rates, our public expenditure and our public borrowing.

In particular, this surrender would mean—I ask my own party to listen carefully to this—the loss of precisely those macro-economic powers that are essential to reducing unemployment and to fostering economic growth, and which are the centrepiece of Labour's economic policy. I refer here to the recent constitutional resolution passed with a two thirds majority at our annual conference, and accepted by the leadership of the Labour party.

I simply do not understand why we do not have a three-line Whip tonight. First, this is an opportunity to force the Government to make a clear choice between the Euro-elitists who want a single currency and are not prepared to allow the electorate a voice or a vote, and—if I may use the term—the Euro-realists, including the Euro-sceptics, who understand that this is a great constitutional issue that cannot be resolved without popular consent. I have no doubt that we could have defeated the Government on this motion tonight.

My second reason for not understanding the position of my party is as follows. Agreement to this motion will ensure that the British people are granted what the vast majority of them want: the right to determine their own future. I have seen many polls—I expect that others have, too—but not long ago the Financial Times conducted the largest poll ever taken of British attitudes to a single currency. The questions were asked not just in Britain but in other European countries too.

People here were asked whether Britain should hold a referendum on whether the European Union should introduce a single currency; 64 per cent. supported the idea of a referendum, and 25 per cent. were against it. I could quote dozens of other opinion polls that make the same point.

The third reason why I cannot understand our position is that there is only a hair's-breadth difference between the meaning of today's motion and statements made repeatedly and recently by Labour party leaders. Speaking in Brussels on 10 January of this year, my right hon. Friend the Leader of the Opposition said: The need to close the gap between governors and governed in Europe is now urgent, and we have made clear that where important constitutional arrangements are at stake the people must have their say. As we have said over and over again, if a referendum is necessary for that to happen we will consider it. We can only move forward if we carry the people with us. The shadow Foreign Secretary has committed himself more recently still either to a general election or to a referendum before adopting a single currency—the same position taken by my hon. Friend the Member for Gateshead, East (Ms Quin) earlier today. She will understand that the shadow Foreign Secretary is far too intelligent not to realise that it is impossible to hold a general election on this issue. There would have to be a referendum for many reasons, including those put by my right hon. Friend the Member for Chesterfield. There is such unanimity between the leaderships of the parties that, in a general election, we could never achieve the expression of opposition necessary to satisfy the needs of our people and of their democracy.

Mr. Duncan Smith

Does the right hon. Gentleman agree that the problem with a referendum would not even arise if there were a clear distinction between the major parties in this House? The public remain confused because they are getting confused messages from the two sides of this House. If that confusion were cleared away, the purpose of this place would then become clear, and its sovereignty would become clear, too.

Mr. Shore

Perhaps, but that would involve our being given a free vote so as clearly to express whether we are in favour of or against the proposition.

Mr. Marlow

Even from my peripheral position, I can guarantee that the Conservative party will not go into the next election with a commitment to a single currency. We would dearly love it if the right hon. Gentleman's party went into the election with such a commitment—but it will not. Thus, as neither of the major parties will go into the next election committed to a single currency, is it not inevitable that, even if the Labour party won the election, it would hold a referendum on a single currency?

Mr. Shore

I wish I thought it was inevitable. I think that it has to be argued for and then accepted. Unfortunately, it has not been accepted by the House of Commons today.

I am glad to see the right hon. Member for Sutton Coldfield (Sir N. Fowler) in his place. This morning he had this to say in The Daily Telegraph: I cannot be the only Tory MP who supports our continued membership of the EC but who also believes that there has now developed an overwhelming case for giving the British people the opportunity to vote. I detect much more sense and wisdom in the right hon. Gentleman's remarks—he has carried heavy responsibilities in the Conservative party—than in those of the Minister this afternoon.

I move on to the basic argument advanced by the right hon. Member for Worthing. There are two overwhelming reasons why a referendum should be granted, the first of which he did not mention. It is that we have an unwritten constitution. We have no special safeguards when constitutional changes, even of the greatest magnitude, are proposed. Countries with written constitutions have entrenched provisions that allow for specially large majorities when there is voting for constitutional change. We have none.

I know that there is a difficulty—we have all faced it before—in adequately defining what is a constitutional issue and what is not. I think we accept, however, that an issue that is not constitutional, in the sense in which I am using the word, is one that comes within our political process in the sense that the decision made upon it can be changed following a change of Government if that be the wish of the people.

A constitutional issue affects the framework of democracy, including the rights and powers of Parliament itself. I put it to the right hon. Member for Worthing that, when we developed our doctrines of an unwritten constitution and the acceptance of simple majority rule in the House, no one in Britain imagined that we would ever turn ourselves into a sort of province of a new state emerging in Europe. That would never have been allowed to happen without a massive entrenchment of the rights of the British people to preserve the British state. which is conterminous with democracy in Britain.

I turn to my second reason for saying that a referendum is essential. There is vast and still growing cynicism among the British public in their attitude to politicians, and to Government and Parliament in their handling of European issues. There is a deep suspicion that there is a virtual conspiracy not to tell the British people the truth either about what has already been surrendered or about further demands that are known already to be in the pipeline.

I shall not bore the House with the contradictory statements on the meaning and significance of a single currency that have been made by many members of the Government, who have followed one another in the bedlam that we have heard over the past week or so. I shall, however, seek to explain why the cynicism is serious, and why we must deal with it by referring to some recent and important matters that have affected the British people. They were touched on by my right hon. Friend the Member for Chesterfield, in his excellent speech.

Did anyone in Britain imagine until the decision was made about the Irish box that there was no power left for the British Government to determine or maintain our right of access to the seas round our island? Did anyone know that we were simply, by a majority vote in the European Council, to have taken from us hundreds of square miles of fishing rights that we had previously enjoyed? Did the British people know that? Did British fishermen know that when the treaties were signed? The answer is no.

An appalling situation has developed over the export of calves for veal. There are many who find it obnoxious that calves should be exported to certain European countries, which treat them in a pretty dreadful way. The Minister of Agriculture, Fisheries and Food shares that feeling. Instead of saying, "I propose to introduce a small piece of legislation under which we shall prohibit the export of British calves to those countries that do not give them humane and decent treatment", he says, "I cannot introduce legislation. I have no power to do so. Please"—

Mrs. Ray Michie (Argyll and Bute)

The Minister does have the power.

Mr. Shore

That is arguable. He says that he does not, because the Europeans have legislated in that area and their directive has precedence over any power possessed by Parliament to put things right. As a Cabinet Minister, he urges the protesters to protest in Brussels, Rome and Paris—everywhere except London. It is a disgrace.

My third illustration is more complicated in some respects. The House will be aware that the hon. Member for Bexhill and Battle (Mr. Wardle), who resigned his position in government two days ago, raised the important issue of what is to be the future of control of immigration as it affects the United Kingdom. The people did not have the faintest idea that our immigration policy—or, much more important, access to the country through the free movement of labour—was as it is in the relevant treaty.

The hon. Member for Bexhill and Battle was drawing attention to the muddle in which we find ourselves over immigration policy because we have abandoned the right to maintain our frontiers against about 300 million fellow Europeans. Under the Single European Act, which passed through the House so precipitately, there is article 8A. A famous sentence reads: The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured". That is a Europe without frontiers.

Article 8a of the Maastricht treaty contains the following provision: Every citizen of the Union shall have the right to move and reside freely within the territory of the Member States". If we open our gates and doors to 300 million fellow Europeans regardless of whether there is a job waiting for any of them at the other end, we cannot let them in and keep others out except on the crudest basis of the colour of their skin, which makes them look different from others who come across the channel by sea or to Heathrow by air.

The words that I have quoted from the treaties are unknown to the people. They are not in favour of a vast swilling of people across the continent of Europe in search of jobs. They rest on the belief that it is better to bring work to people than to cause people to leave their own countries to look for work wherever it may be. That is my third illustration. I could give many more, but I shall not do so.

Mr. Donald Anderson

The bogus nature of my right hon. Friend's third illustration is that citizens of the European Union can already cross frontiers. Indeed, they have been able to do so for some time. The fact that they do not come to the United Kingdom tells us something about our unemployment and the comparative social benefits that they enjoy on the continent.

Mr. Shore

My hon. Friend is mixing up two things. We have always been open to people coming to visit our country. Long may that continue. At the same time, we have clear principles about asylum and the uniting of split families, for example. We are absolutely clear about those issues.

I am talking about a treaty that gives every citizen of a member state the right to reside in another member state, regardless of whether a job is available. That will lead to a continuous search for the best forms of social benefit that are available for the unemployed peoples of Europe. It is the wrong approach. We should be trying to deal with unemployment by stimulating European economies so that jobless totals are reduced. We should be trying to bring work to the workers, not leaving workers to go in search of work.

Mr. Whitney

Will the right hon. Gentleman give way?

Mr. Shore

No. I am coming to a conclusion.

I have mentioned only some elements of the treaties which we have signed which are now coming, as it were, before the British people. It is now inconceivable that we can sign another treaty that transfers any further powers from the House, from the Government and from our people to European institutions, without a clear and precise referendum that gives a chance for our people to say yea or nay.

6.19 pm

Mr. William Cash (Stafford)

The amendment that I tabled today, in manuscript form, dealt with a referendum in the context of a single currency and a federal Europe. I did that quite deliberately, because I wanted it on the record that it is not just a question of what the Liberal Democrat and the Labour proposals amount to, but rather the sovereignty of this place, as addressed—if I may say so—rather inaccurately by my right hon. Friend the Member for Worthing (Sir T. Higgins).

The bottom line is whether we will be able to govern ourselves. That is the key question. When people come to read the speech of the right hon. Member for Chesterfield (Mr. Benn) without prejudice, they will note that he made some significant points.

The difficulty with the argument made by my right hon. Friend the Member for Worthing is that it begs the question about the continuing existence of our own Parliament. If driven by the Whip—as we were in the Maastricht debates—and if without a free vote we are to be told that we can no longer govern ourselves in principle because a single currency is on the agenda, and if we have not agreed in the protocol that deals with the third stage that we will never veto these matters as regards the rest of the European Community, the reality is that we are back to the question that I put to my right hon. Friend the Prime Minister during the confidence motion, when he was good enough to attend for my speech.

I said to him, "What you have done through the Maastricht process is to present to the British people the unnecessary question of whether we must leave the European Community in 1996 or 1999." That is the key question. My right hon. Friend the Member for Worthing is simply repeating the old notion that those who call for a referendum would undermine the parliamentary sovereignty that they say they want to defend.

Exactly the opposite is our case. What we must consider is this. If we allow a single currency and a central bank, and all that goes with that, in principle within the European Community, and allowing for the assumption that we do not want to leave the European Community if it is possible to avoid doing so, we must not undermine the very basis on which we are here by handing over those powers to central, unelected, unaccountable bankers and bureaucrats in the Commission.

We cannot possibly, in my judgment—when one considers the referendum in 1975 and looks at the young people today, who have not been given an opportunity to consider any aspects of these matters within the context of a referendum framework—avoid the fact that 37 per cent. of today's voters have not had an opportunity to express their view. The fact, therefore, is that we are undermining the very people by whom we were elected to this House.

Furthermore, people say that Members of Parliament—my right hon. Friend the Member for Worthing also made the point—would effectively be abdicating their responsibilities. But the fact, as he knows, is that, in order to have a referendum, there must be an Act of Parliament. There is no question of a referendum being foisted on us. It is endorsed by the House beforehand. Hon. Members have the opportunity on 24 February—I hope that hon. Members will turn up to debate the Bill of my hon. Friend the Member for Billericay (Mrs. Gorman)—to express their view on the principle whether the House will allow a referendum to go ahead.

Looking back over past decades, I find that Conservative Governments have been in favour of referendums. For example, Balfour, in 1911, proposed a new clause to the Liberal Government's Parliament Bill. On that occasion, he said: in the Referendum lies our one hope of getting the sort of constitutional security which every other country but our own enjoys". He was relying on a referendum to support his argument with respect to that Bill.

Sir Terence Higgins

That Conservative amendment was defeated. Does my hon. Friend think that the consequences of that defeat were serious?

Mr. Cash

I do not think it matters. We are talking about the principle whether a Conservative Government—or Conservative Opposition—have or have not from time to time considered the principle of a referendum on a major constitutional issue.

In 1972, in Northern Ireland, there was the border poll. Then there was the Labour Government in respect to the European Economic Community. Ministers on both sides—Cabinet and shadow—participated in those debates. They did not turn away and say, "We are not going to have anything to do with this." Then there was the question of the reform of the House of Lords. In 1978, there was the question of devolution in Scotland and Wales.

I do not believe that, in the past 25 years, there has been a single major constitutional issue facing our Parliament that has not been finally resolved by a free vote or a referendum. Not once have we had such a constitutional issue without there being either a free vote, a referendum or both. But, of course, not with Maastricht. As The Times said at the time of the Maastricht debates: Parliament can never be undermined by a referendum, since it is Parliament that decides to call one and Parliament that decides to be bound by the result. That is conclusive.

A further point arises out of the Sheffield university survey, which is getting a good deal of currency at the moment. It was conducted on a private polling basis of Members of Parliament involved in the Maastricht debates. There were a number of questions—21 in all—that dealt with the central issues arising out of Maastricht.

On a national referendum, a question was put that whether there should be a national referendum before the United Kingdom enters a single currency. Some 55 per cent. stated that they strongly agreed, or agreed, with that proposition. On whether Britain should never permit its monetary policy to be determined by an independent European central bank, 61 per cent. of Conservative Back Benchers said that they strongly agreed, or agreed. On whether economic and monetary union was not desirable, the figure was 61 per cent.

That rather makes my point with respect to the argument made by my right hon. Friend the Member for Worthing, because if those are the opinions of our colleagues when they are whipped, what would their position have been had there been a free vote? If they were denied a free vote, one must question the manner in which the whole matter of the fundamental constitutional issue of Maastricht was handled. Was it not just simply, as I said the other day, based on the knowledge, "I know that I am right"?

Is not that now being discovered to be fundamentally flawed, as one decision after another flows in the wake of that treaty? The reality is that only by a referendum can we go back to the people as a matter of principle, whether or not one is in favour of the answers to the question that one will put, and discover what the people outside really think.

There is confusion in the Cabinet. My right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler), today in The Daily Telegraph, advocated a referendum on a single currency. He and I have had many arguments about that question, but he is being driven to the inevitable conclusion that it is essential. My right hon. Friend—ex-party chairman that he is, having held all the important positions, as Secretary of State in God knows how many different Departments—has come to the conclusion that our Cabinet is so severely divided that we must go out and ask the people the answers to those questions.

That is not particularly exceptional. Indeed, I presented a petition during the Maastricht process, when I was joint chairman of the Maastricht Referendum Campaign. In those days, there was much vilification of our arguments. I do not mind that. Part of the process here is to be able to take a knock or two when they come along. But the reality is that I presented a petition to the House, with 250,000 names on it, which came from every quarter of the United Kingdom. People feel strongly about the matter; indeed, they feel much more strongly about it than they did then.

We can take a European view of the position. I remember the Maastricht referendum in France, when I helped Mr. Seguin and Mr. de Villiers. The vote in favour squeezed through by 1 per cent., but there is no chance that that would happen now: it would be at least 60 per cent., or even 65 per cent., against—which would have meant no Maastricht. Would that mean that the French would leave the European Community? These are seminal questions.

When I met Hans Tietmeyer recently, he told me that 60 per cent. of German business men opposed the idea of a single currency. We now learn from Der Spiegel that 64 per cent. of the German electorate are against it.

My right hon. Friend the Member for Worthing and others have referred to the state of affairs in the City of London, and my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) constantly rabbits on about the attitudes of people there. He should consult the Harris survey published a few weeks ago, which showed that, of 250 City executives, 69 per cent.—I think that I am right; it may have been 66 per cent., but it was certainly well over 60 per cent.—said that they wanted a referendum on the single currency.

Those are the arguments on which we are relying. People want to be consulted—and I have considerable sympathy with people who find that they, their Government, their attitudes, their traditions, their businesses and their jobs are being put at risk by a massive experiment. For what purpose is all that taking place?

Mr. Nigel Forman (Carshalton and Wallington)

I believe that, not only tonight but on other occasions, my hon. Friend has advocated a referendum on the principle of a single currency before the Government decide anything about British participation. That obviously deals with a hypothetical situation with important constitutional implications. Given that my hon. Friend is clearly as committed to the future of the House of Commons and our Parliament as I am, however, would it not be simpler to arrange a free vote in the House?

In circumstances that are not hypothetical—that is, when the Government have already adopted and negotiated a position—should there not be a whipped vote? The Government have a right to expect their supporters to support the actions that they have taken.

Mr. Cash

I have often advocated a free vote on these issues. I put the point to the present governor of Hong Kong. I said, "At the party conference, you keep saying, `Trust the people'; why do you not at least trust your Members of Parliament?" In fact, the Government had not the slightest intention of giving us a free vote, any more than they had the slightest intention of giving us a referendum on Maastricht. They were frightened silly that we might win. I do not believe that we might win; I am absolutely certain that we would.

Yes, I believe that there ought to be a free vote. I have argued that any referendum should take place before the next intergovernmental conference, however. As my right hon. Friend the Member for Sutton Coldfield has rightly made clear, the critical issue concerns the single currency: it is the fulcrum of so many arguments about stage 3, the central bank, unaccountability and the survival of our democracy—and thence, by inversion, the status of the House of Commons. That brings us back full circle.

As I said in an intervention on the Minister's speech, our fatal mistake was not vetoing economic and monetary union—which is the single currency in its fulness—when I suggested that we should. My hon. Friend the Member for Carshalton and Wallington (Mr. Forman), who served with me on the manifesto committee, will recall my arguing that, if we did not veto EMU at that stage, we would be marginalised.

He may also remember that, at the end of the proceedings, a summary was produced, featuring the words "We are a European Community of independent sovereign states." Someone turned to me—it may have been my hon. Friend—and asked, "Are you satisfied with those words?" I said, "Yes, I am." Then someone—it may have been my hon. Friend, but I would not wish to accuse him of it—said, "I think that we should take those words out."

I said, "You think what?" A Minister was present. I said, "You are going to take those words out of a summary of a draft Conservative party manifesto?" The answer came, "We are going to take them out." I said, "In that case, we shall have a vote." My recollection is that I was the only person who voted to keep those words in.

People may wonder why I am so keen to ensure that we do not lose our sovereignty, but that is what happened in the innermost precincts of the Foreign Office. My hon. Friend the Member for Carshalton and Wallington has a nice smile on his face, but I must tell him that the smile is now on the face of the tiger. We are not going to give in, irrespective of the agenda that has been set by others.

It is continually put to us, and particularly to me, that it would be foolish now to say what we are going to do. Let us face it: in fact, we shall be spun along until the intergovernmental conference takes place, and then the moment will come. Everything will be wrapped up in the negotiations, and the fundamental argument about monetary union will be conceded. Why? We shall be told, "We made these decisions a long time ago. Now is not the time for us to make a further decision; the matter was decided at Maastricht." I can hear it now.

The real point is that we were deceived over the Maastricht treaty. It may not have been deliberate, but it may well have been fatal. The one thing that the treaty did not do was preserve our ability to remain in the United Kingdom while preserving the integrity and powers of the House of Commons.

I recently had the pleasure—I will describe it as that—of meeting five members of the Bundesbank. They came here at the behest of Chancellor Kohl; they were friends of Mr. Karl Lammers, who tells us repeatedly that sovereign states are no more than an empty shell. They told us that monetary union was at the top of their agenda for the intergovernmental conference. We are being told that it is not on the agenda. Why? Because the Maastricht treaty has already been passed. That is why I want a referendum on the single currency before the next intergovernmental conference.

What do those people propose to do? They propose, they say, not merely to consider the implications and the operational activities, but to build on economic and monetary union. They want a single state based on a single currency. That is the fundamental issue that was dodged at Maastricht, and the fundamental problem that we are dodging through the collusion of those on the two Front Benches. It causes me deep anxiety to find that the position is so fragile.

Then there is the question of the infighting in our own party. I believe that, if we had to make a clear decision—a leadership decision—on a question of this kind, we would resolve it. I dare say that some Conservative Members would be extremely upset if the Prime Minister said no to a single currency now, or said that a referendum would take place. It must be said, however, that, following our membership of the exchange rate mechanism and its debacle, the argument has moved so strongly in our favour that my hon. Friends might reasonably consider that it is time not to redouble their efforts at counter-attack but to subject the arguments to an objective analysis.

I hope and believe that, in my speech to the Young Conservatives on Sunday, I rebutted most of the arguments advanced by my right hon. and learned Friend the Chancellor of the Exchequer. It is mere camouflage to suggest that monetary union and political union are not effectively one and the same.

When my right hon. Friend the Prime Minister returned from the Maastricht negotiations, he made a statement in which he put a number of propositions to the House. I seem to remember that he said that it was game, set and match. He said: Let me set out the main provisions of the agreements we reached. The treaty covers economic and monetary union and political union. It follows the structure for which the United Kingdom has consistently argued."—[Official Report, 11 December 1991; Vol.200, c.859.] In October 1990, when my right hon. Friend was Chancellor of the Exchequer, he said that we would not have a single currency imposed upon us, that we were opposed to that.

However, by February 1992 the then Minister of State at the Foreign Office, my right hon. Friend the Member for Watford (Mr. Garel-Jones), said that the Government did not reject a single currency or the institutions that go with it. Those changes of policy have caused the confusion and the uncertainty, and those problems could be resolved by a referendum.

Mr. Peter Bottomley (Eltham)

Many of us who heard my right hon. Friend the Prime Minister and my right hon. Friend the Member for Watford (Mr. Garel-Jones) did not find their statements incompatible. The Prime Minister said that we would not have it imposed upon us, and that Maastricht gave us an opt-out, and my right hon. Friend the Member for Watford said roughly the same thing. What they said was perfectly compatible and logical, and was in this country's interests.

Mr. Cash

I repeat for the benefit of my hon. Friend that, by not vetoing economic and monetary union at Maastricht, we put ourselves in a difficult and dangerous position. The momentum towards a single currency, the political union for which Karl Lammers and Chancellor Kohl repeatedly call, and the monetary union and single currency which Mr. Balladur says there will be by 1997, show precisely what is going on elsewhere in the European Community. The balance of the argument is substantially in my favour, as is the proof of my resistance and that of some of my hon. Friends to the exchange rate mechanism. Look what that did for us.

Mr. Walter Sweeney (Vale of Glamorgan)

The difficulty for the House is that, although, as my hon. Friend says, the balance of the argument rests with the Euro-sceptics in all parts of the House, the views of the majority of those who participated in the debate on the Maastricht treaty were overruled by party diktat and the party Whip. How would a referendum reverse the ratchet effect of European integration?

Mr. Cash

If we are denied the opportunity to make up our own minds in line with the assumptions—the wrong assumptions, I am afraid—of my right hon. Friend the Member for Worthing, there is no option. We have no right to hand over our Parliament, or rather their Parliament. That is the point, and we have no right to hand it over when that issue arises in principle, as it does on this question in the context of running the economy. Public expenditure on defence, hospitals and schools and other matters will be allocated according to priorities that will be laid down by unelected bankers who have no definition of price stability and cannot guarantee anything.

Mr. Derek Enright (Hemsworth)

Which bankers are elected? I have not come across any recently.

Mr. Cash

I am delighted that the hon. Gentleman should mention that. I do not say that elected or unelected bankers should run the system. The proper decisions on economic priorities should be taken democratically by those who live in a country such as ours. In one general election after another, the British people have shown their will by exercising their free choice. I am arguing not about whether there should be elected judges or bankers, but about the inherent rights of people in a democratic country.

Mr. Legg

Does my hon. Friend accept that the key point is that these bankers would be unaccountable?

Mr. Cash

That is absolutely right. They are unaccountable, and they may not deliver. All our reserves would be transferred to such people. That is unbelievable, and nobody would know that it was happening, were it not for the fact that it is set out in the Maastricht treaty.

I am concerned that a referendum would turn on a single currency, but after six weeks of debate, people would understand what it was all about. They understand it only too well as it is. Anyone who gets into a taxi or enters a pub will find that people know perfectly well what it is about. I say to my right hon. Friend the Member for Worthing that people do not like being told that they are too thick to be able to understand it. They are not.

Sir Terence Higgins

I said no such thing.

Mr. Cash

My right hon. Friend says that he said no such thing, but he was extremely close to it. I was paraphrasing: I shall apologise slightly, although not too much. My right hon. Friend says that, as a Member of Parliament, he has the right to make these decisions, and that, effectively, the average Mr. Joe Public does not. Although we have an important responsibility to discharge, we should also listen to what is being said outside, and opinion polls on referendums are crystal clear.

In general elections, people are asked to vote Conservative or Labour. Do we think that they have examined every detail of our manifestos? The short answer is that, in deciding questions of this kind, people are capable of making up their own minds, and it is extremely patronising for us to suggest otherwise.

Mr. Toby Jessel (Twickenham)

I remind my hon. Friend that referendums were held in Denmark, France, Ireland, Norway and Austria, among other countries. Surely it cannot be argued that the British are intrinsically more stupid than the Irish, the French, the Danes, the Norwegians and the Austrians?

Mr. Cash

I am extremely grateful to my hon. Friend. I could not have put it better. Of course, he is right. The Konrad Adenauer Siftung publishes a monthly paper called "German Comments". When the Danes said no on the first referendum, that paper published a carefully considered editorial which said that a dangerous situation was developing in Europe in that elections were being used as a form of protest.

I found that about as difficult to accept as I found the remarks a few days ago of, I think, Mr. Karl Lammers, who said that he thought monetary union was "the purest form of integration." I get a little edgy when I hear people talking about political systems and purity in the same breath. We should be careful about the language we use in that context.

On 5 December last year, a MORI opinion poll showed that 65 per cent. of the British people wanted a referendum. The issue of a single currency should be dealt with in a referendum before the intergovernmental conference. The Government on their own have no right or authority to make such a decision. I shall vote with the Liberal Democrats, although I do not agree with every word of their motion. However, I agree with the principle that underpins it.

6.48 pm

Mr. Donald Anderson (Swansea, East)

It is a privilege to follow the last three speakers: the hon. Member for Stafford (Mr. Cash), and my right hon. Friends the Members for Chesterfield (Mr. Benn) and for Bethnal Green and Stepney (Mr. Shore). Their views are well known and consistent and they always seek to take the high ground. I felt rather challenged by my right hon. Friend the Member for Bethnal Green and Stepney, who said that one should not become involved in party points and details. When I heard that, I felt like scrapping half my speech.

The principles have been set out. I accept that the hon. Member for Stafford is against the European Union as it is and as it develops. Even if sacks of ecus were delivered personally by Mr. Santer to the hon. Gentleman's constituency, he would reject them because he sees the matter as political and relating to sovereignty. That is a road down which he does not wish to go. I confess that I detected a certain messianic quality in his speech—there was "conspiracy"; there was "deceit"; it was absolutist; we were being let down; it was almost a dolchstoss; they were not listening to us. It was almost, "Let the people speak and they will reject it."

I wonder how far the hon. Gentleman's populism and wish for a referendum would go. Is he willing to listen to the people on capital punishment? He may say that he is not. Is that patronising?

Mr. Sweeney

Surely there is a fundamental distinction between the two issues. One is a constitutional issue, which is irrevocable; the other is something that a subsequent Parliament could repeal or amend at will.

Mr. Anderson

Perhaps the distinction is not as clear-cut as the hon. Gentleman would wish. His point about capital punishment might be true, but what about devolution? If a Parliament were established in Scotland and an Assembly in Wales, is he suggesting that, in practice, it would be possible for any future Government to go back on that? Those changes would have generated their own vested interests in Scotland and Wales.

Does the hon. Gentleman want a referendum on devolution? My understanding is that his party does not. Indeed, Lady Thatcher, whom he admires so much, spoke strongly and voted against referendums for Scotland and Wales in the 1970s. There is always a danger that we might slide from looking at the issue from a point of principle to looking at it in whatever way happens to suit our particular views.

I concede immediately that in the 1970s I was critical of my Government's views on devolution. I and others grasped the idea of a referendum not necessarily because we had thought through the principle, but because at the time it seemed the best and last weapon that we could use. Although my party sees no case for a referendum on devolution now, there is a powerful case that needs to be argued. On balance, I would come down against a referendum on devolution.

My point is that there is no easy dividing line—there is a continuum on that and on other issues. The hon. Member for Stafford tends to see everything in capital letters and in black and white, whereas many of us would prefer to step back a little and accept that there may be an argument for a referendum on a matter as fundamental as a single currency because of the effect it would have on a whole series of economic levers that might be taken away from us. However, that would apply when the rules of the game were being changed, and we would need to go back to seek a wider legitimacy than could be attained purely from the votes in this House. Of course the issue is not as simplistic as hon. Members have suggested.

Mr. Duncan Smith

The debate is getting caught up on the principle. There has been a great deal of debate on that and is all too airy-fairy. The key factor is that this place is effective only when there is a clear difference between the parties—for example, the Opposition oppose and the Government propose. Where there is no such difference, matters become rather difficult. That difference has disappeared on the matter of Europe. There may be certain issues in the middle of the debate, but nothing across the board. Surely that is the sector about which the hon. Gentleman might say there is some issue principle.

Mr. Anderson

The essential principle is that, although the great mass of our people are ready to criticise Europe in the particulars, they accept that our future lies in a closer relationship with the continent. They do not want to be part of a marginalised, off-shore island, despite the arguments that have been made. Where, in that continuum, come the various issues such as a single currency or immigration is a matter for judgment.

I am wary of many of the points that have been made, partly because I am concerned about the motives of some of the Liberal Democrats who introduced the motion. I well understand that they wish to be seen in the driving seat—at least, they want the headlines for today. However, on the question of accountability, it is a matter of record that the right hon. Member for Yeovil (Mr. Ashdown) produced his own views on a referendum out of a hat. They caused considerable surprise to the then Liberal Democrat spokesman on foreign affairs and also to the Liberal Democrat leader in the House of Lords. There was not much consultation—

Mr. Charles Kennedy

I must correct the hon. Gentleman on a point of fact. The motion states that we want a referendum if any major constitutional change is proposed. That is based on a policy document that has been through all the usual machinery and it was debated and approved at our party conference. It is not fair of the hon. Gentleman to suggest that the party has been bounced; that is not so. As he knows, we do not always win the vote at the party conference, but we did manage to win on this issue.

Mr. Anderson

The point I made was that the fons et origo—the origin—of the Liberal Democrat change of policy resulted not from consultation but from a diktat by the party leader, which surprised many of those who claimed to be speaking on behalf of the party.

My other doubt on the principle of referendums is that traditionally, with the exception of Switzerland, it has been a device used by right-wing or populist Governments—

Mr. Malcolm Bruce (Gordon)

Harold Wilson.

Mr. Anderson

I shall deal with that comment in a moment.

First, let us consider the Californian vote on the rights of immigrants. At the time of those referendums it will be the media moguls who will have an interest in, and an influence over, the result. Therefore, we must be wary about the accuracy of the picture a referendum might give of the views of the people at any one time. As the hon. Member for Gordon (Mr. Bruce) said, referendums have been used to cover up divisions. That was certainly the case with my party in the 1970s. Indeed, when there was an agreement to disagree, those who lost did not suddenly say that they had been convinced of the case; they kept up the fight.

If a referendum on a single currency went against the hon. Member for Northampton, North (Mr. Marlow) and others, they would not say, "The people have spoken, long live the people"; they would keep on fighting—and good luck to them. They disagree with a single currency on principle. It is absurd to suggest that somehow we can turn to the people and consult them like an oracle at Delphi and then say that now the people have spoken we can fold our tents because the decision has been made.

Mr. Marlow

If there were to be a referendum on a single currency and if the people were to say yes, they wanted a single currency and the massive loss of sovereignty that would go with that, that would be their decision and, as a democrat, I would have to accept that. However, above and beyond that, is not economic and monetary union irrevocable? If we were part of a single currency, would it ever be possible to come out of it, whatever I might feel?

Mr. Anderson

The hon. Gentleman and others who lost the referendum in 1975 have consistently fought against Europe since then, as has been their right. There is no finality in such arguments. There are objections of principle to referendums. For example, they are but a snapshot of public opinion at any one time. The view could alter in a month or so. There is no finality.

Mr. Forman

Does not history show that there is nothing irrevocable about any political decision, whether made by a Parliament or by the people through a referendum? Is that not a sobering realisation?

Mr. Anderson

Yes. Any future Parliament, whatever the technical and legal position, can, if it so wills, decide to withdraw. That is the reality of any decision. We should also consider the inflexibility that comes from referendums. A formula will be reached—perhaps, let us hypothesise for a moment, on a single currency—in 1997 or so. If, after negotiation, that formula and package deal is put to the people and the people go against it, what happens? Will it be renegotiated? One cannot negotiate with public opinion.

Denmark faced that problem when, by a small majority, it went against the package. People woke up to the danger of being marginalised. A second referendum had to take place, with a rather spurious inclusion of the Edinburgh package, and the Danish people changed their minds. Inevitably, inflexibility exists. One can negotiate only with a Government. One cannot negotiate with public opinion and have a series of referendums to see whether the result achieved was just about right. In any international negotiation, any national Government achieve the best package that they believe they can achieve at any one time.

As I have said, a referendum, in effect, solves nothing. There is no finality. People advancing both sides of the argument will continue to make their arguments. I agree with the three previous hon. Members who have spoken. The elites of Europe have gone far ahead of the public opinions of Europe—that is one of the great problems and real issues that must be faced. That was part of the problem at the time of Maastricht.

The people who negotiated in Brussels had not bothered to take into account the constraints imposed by public opinion. A number of them either nearly had a black eye, as in France, or had a black eye, as in Denmark. We must deal with that problem as Europeans.

Like the hon. Member for Stafford, I was involved in the French referendum. I suspect that we were on different sides at the time, but I hope that he will at least agree about this matter. I think that it was President Mitterand who said, at the time of the referendums, that the French always answer the wrong question.

In that great debate in France, the Maastricht treaty was hardly mentioned. A great feeling of disillusion existed. The geography of the votes showed that people on the fringes of France felt that they were not being consulted. The farmers were against Brussels because of the agricultural policy, which was not an aspect of the Maastricht treaty.

A general feeling existed against immigrants. After the French referendum, it was reported in Le Monde that 85 per cent. of the people who voted no were against further immigration into France. The forces of stability, people who felt that they had been marginalised, and the alienated, voted at a time when they could—

Mr. Austin Mitchell (Great Grimsby)

So what?

Mr. Anderson

The point that I am making is that the questions posed in the Maastricht treaty were addressed by hardly anyone in that debate. Other people saw the referendum as a means of voting against President Mitterand. It was a vote against the President.

Who can doubt that, in the previous referendum in 1979, part of the response of the people of Wales and Scotland was based on the unpopularity of the then Labour Government, rather than on a true appreciation of whether a case existed for or against devolution? All those other extraneous factors come into it. To pretend that we can have an instant democracy and that the question, "Maastricht or not?" can be put to, and decided by, the people is an illusion, because the answer will depend on who puts it, when it is put and how the question is put.

I accept that those are real difficulties. I very much accept the genuine point made by the hon. Member for Stafford and by my right hon. Friends the Member for Chesterfield and for Bethnal Green and Stepney that there must be ways of addressing the malaise in Europe. People at the helm in Europe must ask, so far as they can, how they relate to the real concerns of Europe. We must avoid the tirade in our popular press, where, alas, the diet over the years has been straight bananas and all the absurdities that arise. It never considers the big issues.

I am confident that the Prime Minister and his friends are doing the country a great disservice. They claim that we can be at the centre and at the heart of Europe, when all their policies seek to marginalise us. If we are to pull our weight in Europe, we must be seen as part of a team. We must be seen properly to understand the issues, fighting our corner, as others do. Europe, however, will neither stop nor go away. Even if the Government pretend, for internal party reasons, that they can muddy matters, and if they play the populist card because of the unhappy conjunction of the next election and the intergovernmental conference, they will do this country a great disservice.

We shall have to accommodate ourselves to that great market and that force on the continent. It will not change and we delude ourselves if we think it that will—self-delusion is the worst of all illusions and delusions—and if we pretend that we can, in isolation, somehow change that Europe, which, with all its faults, is dynamic and will move forward.

7.6 pm

Mr. Ray Whitney (Wycombe)

I hope that I will not appear too derogatory to the hon. Member for Swansea, East (Mr. Anderson) or to the House if I say that I have the feeling that we are participating in the umpteenth episode of a long-running soap opera, in which the themes, the arguments, the low audience ratings—judging by the attendance in the Gallery—and almost all the actors are the same. One does not speak in such debates only if one resigns from ministerial office or if one is promoted to one of the Front-Bench teams. The rest of us soldier on, putting our views.

If we are really honest, we must admit that the kaleidoscope of the normal displacement in the House has again been shaken up into a different form. It goes across the House and, sadly, across all the parties. We have the same position this evening, which has been achieved by the Liberal Democratic party, for its own reasons, with its motion. Those reasons have been analysed but the motion has produced another manifestation of weird alliances. They started after the Maastricht Bill was given a Second Reading. The cornerstone of the House's true position on Europe will be seen in that Second Reading debate, after which the Bill was given a massive and overwhelming majority—I think that 244 hon. Members were in favour of it.

Mr. Duncan Smith

My hon. Friend said that the only key test was the vote on Second Reading, but surely the point is that the Bill was discussed line by line in Committee and people then began to understand it. Surely the key point is what developed as a result.

Mr. Whitney

My hon. Friend confirms the overwhelming view on Second Reading. He pre-empts me. We got into trouble in Committee, but why? The House, led by the Labour party, started playing political games. It would say, "Why not? We are in politics to play games." That is fair enough. I accept that point to a degree, but that is the cause of the problem and the reason why my hon. Friend and other hon. Friends were able to have such an influence.

Night by night and on issue after issue, a motley collection of hon. Members traipsed into the Division Lobby—a collection of people who were united only in opposition to the Government and to each proposition—as the Committee worked its way painfully through consideration of the Maastricht Bill over 18 months, or over whatever time it took, but it seemed like 18 months.

Thus, those in the Labour party who professed to be in favour of the Maastricht treaty voted against it and the standard anti-Europeans in the Labour party happily voted against it. The Liberal party, which is very pro-European, also voted against it. [HON. MEMBERS: "No, we did not."] There are two sections in my party—those who honestly and openly profess their opposition to Europe and those who say that they are in favour of Europe, but not a Europe that anyone else seems to recognise.

Mr. Denis MacShane (Rotherham)

I was not a Member of Parliament during the debates on Maastricht and I clearly missed something, although I am getting a re-run now, for which I am deeply grateful. However, I followed the debate very closely from outside. The difference was that the Europe that the other 11, or the other 14, wanted was not that proposed by the Government. Of course, I was delighted that the two main Opposition parties, which, I think, were united on this issue, spoke for all of Europe while the Government spoke for a crazy, opted-out, marginalised version. [Interruption.] I speak for sensible Opposition Members.

Mr. Whitney

As the hon. Member acknowledges, he was not a Member of Parliament at the time. I shall not take him through all our debates, but the two main issues were matters of tactics. The fundamentals professed by members of the two main Front Benches are very clear. The performance which occurred night after night, and which I have described, gave rise to the trouble with which we are all now labouring.

Mr. Charles Kennedy

The hon. Gentleman has a reputation for fair-mindedness. I am sure that he would not want to mislead people, especially those who may have missed some of the grinding, delightful minutiae of the Maastricht process, which the occupant of the Chair probably remembers in far more vivid detail than any of us.

The hon. Gentleman should confirm that, during votes on the 10 o'clock motions when we were debating the paving measure, we took a public pasting for supporting the Government but not for being prepared to go along with Labour's tactics. We supported the Conservatives in order to make progress in debates on the Maastricht treaty. The only issue on which we opposed them was the social chapter.

Mr. Whitney

If the hon. Gentleman is asking me to say that the Liberal Democrats' record is less black than that of the Labour party, I am happy to do so. However, this evening's paradox is due to the Liberals. The point that I tried very hard to point out to the leader of the Liberal party, who is no longer in his seat, was outlined by the hon. Member for Swansea, East (Mr. Anderson). If referendums are of such great value and have such democratic validity—I shall not challenge the notion now but shall return to it briefly later—they cannot be a way of picking and choosing.

I do not accept the distinction that some hon. Members have attempted to make in relation to capital punishment. If the Liberal party and other enthusiasts for referendums say that we must listen to the people, it is perfectly fair to ask where they draw the line. There has been an attempt narrowly to define what is constitutional and what is final, but it is pretty darn final if one is on the wrong end of a judgment of capital punishment. That is another demonstration of the paradoxes involved in debating European issues, and especially referendums.

Another paradox, which has been mentioned, is that many of the people who are now very keen on the referendum device are the very ones who defend and, I might almost say, prate about the sovereignty of Parliament. We witnessed a little exchange of this kind earlier involving my hon. Friend the Member for Stafford (Mr. Cash), who is not here at the moment.

My hon. Friend goes around talking all the time about the sanctity and sovereignty of Parliament but wants to use the demagogic device of the referendum, which at a stroke undermines the sovereignty of Parliament. His defence is that he faces terrible pressures, punishments and torture from the Whips. However, that does not seem to have stopped a number of my hon. Friends. One certainly gets the impression that my hon. Friend is optimistic that it is a lever that can be used to his advantage.

If only all the parties acted responsibly in the fundamental matter of our relationship with our European partners, we could have a free vote; but there could not be a free vote for one party and not for another. However, I am confident that, if there were a free vote, there would be no contest—the vast majority of the House wants Britain at the heart of Europe. That has been proved again and again.

Mr. Fabricant

Many people would not argue that we want to be at the heart of Europe, but the question is, what sort of Europe? Are we talking about the free trading body that we thought we had joined or a European Union into which we fear we have fallen?

Mr. Whitney

We have to offer the people the sort of Europe with which the other 14 members would also live. It is not a great deal of use outlining a concept of Europe shared by one or two hon. Friends and perhaps 50 or 60 Opposition Members but not by our 14 partners. The European Union is a partnership. I should be happy to find the highest common denominator—I might even say the lowest common denominator—that would join us to Europe while keeping in mind the fact that we should go a long way to safeguard the interests of Britain at the heart of Europe. I should like the issue tested on a free vote. Most hon. Members have studied the issues in detail and I believe that they would reach the conclusion that I have reached—Britain has to be at the heart of Europe. The minority view would be routed in such a test.

I claim to be a traditional Conservative but I do not wholly share the traditionally Conservative views expressed so elegantly and eloquently by my right hon. Friends the Members for Worthing (Sir T. Higgins) and for Mid-Sussex (Mr. Renton), although I recognise the force of what they said. Any hon. Member who is tempted by the idea of a referendum should consider their remarks carefully. We are all familiar with the dangers of finding the right question, but how can one find a question that does justice to the complex issues? One could make it appear bogusly simple. For example, one could ask, "Are you in favour of Maastricht, yes or no?" In fact, that is a very complicated question.

It was not enough simply to have read the Maastricht treaty—as we are often reminded, even senior members of Government found it hard to find time to read it—because every other paragraph referred to the treaty of Rome, which one had to read, too. Are we seriously expecting the 50 million or so people in this country to read the treaty of Rome? That is not a patronising question; I am stating the facts.

Let us consider the views of the right hon. Member for Bethnal Green and Stepney (Mr. Shore), who is no longer here to give us his views, and those of the right hon. Member for Chesterfield (Mr. Benn). The noble Lord Wilson called a referendum not because he believed in the sanctity of a referendum, but as a practical device because of the embarrassing state of the Labour party in 1975. For people like me, the result was good. Two to one were in favour of Britain being in the European Community. Did that stop the right hon. Members for Bethnal Green and Stepney or for Chesterfield? Of course it did not. Would defeat stop some of my right hon. and hon. Friends? Of course it would not.

Examples have been quoted frequently of European countries with their own traditions of referendums. The hon. Member for Swansea, East pointed out that the voting in France was only tangentially related to Maastricht, and was much more related to other matters. It must be recognised that referendums are dangerous and can lead to demagoguery, and reference has been made to the issues in California. We could end up—not surprisingly—with referendums on this and that which would be mutually conflicting. The question could be "Do you want to spend more on schools and health?", to which the answer would be yes. Another question could be "Do you want lower taxes?" Again, the answer would be yes.

Dr. Lynne Jones (Birmingham, Selly Oak)

Does the hon. Gentleman accept that there is every difference between referendums on issues that he has just been talking about—as take place in California—and on constitutional issues that are irreversible by any future Government?

Mr. Whitney

I have covered that point, and I am sorry that the hon. Lady was not listening. There are distinctions, but there is not a clear line between one and the other and we must approach the issue of a referendum with great care.

By instinct, I have sympathy with my right hon. Friend the Member for Worthing. When we can get the right circumstances and some reasonably satisfactory answers to the problems to which I have referred—such as the nature of the question—there could be a tactical advantage in looking favourably at the possibility of a referendum. Damage has been done to the national attitude to Britain's membership of the European Union by a concerted campaign by so much of the media and by a small minority in this House. That minority has been given the facilities of the media, and their voices have been magnified to give the impression that their views carry so much weight.

The media's fixation with straight bananas, the complete misrepresentation tonight from the right hon. Member for Bethnal Green and Stepney about the real significance of the fisheries dispute, the latest flurry on the common agriculture policy and—most recently—the matter of immigration are examples of what has happened. Immigration has nothing to do with the European Union. As has been said, the suggestion that 300 million residents of the European Union will start flooding into Britain is—if I may use the word—baloney.

It is crucial that the people of this country are again brought to understand the massive benefit of Britain having a positive relationship with our continental partners. They voted for it by a majority of 2:1 in 1975, and the benefits and arguments for us being in Europe in 1995 and onwards are far greater than they were 20 years ago. It is up to those of us—from whatever party—who understand the issues to make sure that the people of this country understand that again, and that they turn away from the negative path down which they are being led by the media and by some Members of the House.

7.24 pm

Mr. Malcolm Bruce (Gordon)

I shall place my remarks on the importance of a referendum in the context of monetary union. The issue—despite speeches to the contrary—has gone beyond just being a party-political spat. We are in serious danger of permanently damaging Britain's long-term economic future because of the serious divisions within the Government. It is apparent that there are divisions in the Opposition which might be important if they were to be in government.

Our immediate problem, however, is that the conference next year will determine how this country will progress, and the Government are totally incapable of talking in public or in private in any coherent or comprehensible way about exactly what Britain's interests are, let alone how they will defend them.

It is apparent that any possibility of unity within the Government is totally shattered. The Cabinet is at war, and the party is lining up behind respective champions within the Cabinet. Nobody is talking in code or pulling punches, and the arguments are out in the open. The only real way in which the national interest can be resolved is for the debate to be addressed on the specifics and for us to allow people the freedom to develop arguments according to different points of view.

I wish to divert the suggestion that the Liberal Democrats are somehow being opportunistic in the motion. I see nothing wrong with a socialist or new Labour member being opposed—or committed—to the further development of the European Union. Similarly, I see nothing wrong with a Conservative who believes—or does not believe—that we should go further into the European Community. That is a perfectly legitimate debate, and it should be let out of the constraints that it is currently under, because it is doing, and will do, the country considerable damage.

Mr. Forman

Is the hon. Gentleman implying that he and his party would strongly support and seek to deliver a genuinely free vote if some of the great issues of principle were to come before the House of Commons?

Mr. Bruce

We, as a party, have a free vote and we do not have the same constraints of the Whips system. On the particular point about the referendum, my hon. Friend the Member for Ross, Cromarty and Skye (Mr. Kennedy) stated our belief that it is in Britain's interests to help shape further integration within Europe, and we must be a part of that. We wish to have a referendum, and we would campaign to persuade people to say yes. Our objective would be to win. If we lost, however, having secured the principle of the consent of the people for a referendum, we clearly could not be seen to reject it, despite it being our party's intention. I hope that that is a clear answer to the hon. Gentleman. We mean what we say.

There should be genuine consultation, and we should listen to people. That is where the right hon. Member for Worthing (Sir T. Higgins) got into some difficulty. He argued the case for a representative Member of Parliament as if there was no such thing as party discipline and the Whips system. It is exactly because of that discipline that the Government are in such a mess.

Sir Terence Higgins

Is the hon. Gentleman saying that we should have a mandatory referendum, as that is the clear implication of what he has just said?

Mr. Bruce

We are suggesting that there should be a referendum to present to the British people the significant constitutional changes, if they are agreed by the IGC, on the basis of whether they support the changes and Britain's involvement—yes or no. To go to the people in those circumstances and then to suggest that Parliament should disregard the result would be a hopelessly cynical exercise, and we would not propose it on that basis. We accept that we would abide by the decision.

Mr. Duncan Smith

The hon. Gentleman has been talking about the principle of referendums somehow deciding the great issues without all of the divisions which we have, and I take his point. I cannot quite understand how that runs with his party's motion, because the reference to "substantial alteration" is a key problem. We would have to have a big debate before we got anywhere near a referendum about what is substantial and what is not. Should not there be a tighter definition, such as "any alteration, change or decision"?

Mr. Bruce

The issues that we are discussing, such as monetary union, share much common ground. They are significant—the changes and the mechanisms that would be required to make a single currency work are, by any definition, significant. Significant changes are to be made and it would be up to the House to determine them. In our parliamentary democracy, if we are to introduce the doctrine of referendums, short of having a written constitution and many other reforms—which I may support, but which we shall not see between now and next year—all that can be determined is that the issue should be determined in the House and put to the people.

Mr. Spearing

Will the hon. Gentleman give way?

Mr. Bruce

I am sorry, but I should like to make progress.

We are discussing significant changes that have constitutional implications, which is where the Prime Minister has got himself into some degree of contradiction and confusion.

I shall put the fundamental economic issue into context—it sometimes goes by default, but it seems worth stressing. Since 1972, this country's trade with Europe has expanded dramatically. Exports to the other member states of the European Union increased between 1972 and 1993 from 33 per cent. of our total to 53 per cent. and, at the same time—

Mr. Duncan Smith

Will the hon. Gentleman give way?

Mr. Bruce

No, I have already given way to the hon. Gentleman.

At the same time, our imports have increased from 36 per cent. to 50 per cent. Our trade has expanded substantially and has moved slightly favourably. Those are significant figures.

The City of London clearly has an important role within Europe, and the impact of the development of a single currency will have considerable implications for the City of London. One of those implications has not been widely discussed. There is some debate on whether the development of a single currency would weaken the role of the City of London as a major international financial centre and whether Britain's participation in that would have a significant effect.

We have already sold the pass to some extent because we fought so hard for what the Prime Minister is so proud of, but many of us are ashamed of—his opt-out clause on monetary union. The Prime Minister has effectively ensured that Frankfurt has the opportunity to become the headquarters of any European central bank, should a single currency be decided on. That was not the likely outcome when the debate started three or four years ago.

I can speak with some small degree of authority as a member of the Select Committee on Trade and Industry. When we visited the financial centres of Europe to discuss the implications of the single market on financial markets and financial institutions we were told by numerous people in Frankfurt—including senior officials in the Deutsche bank—that the right place for the central bank for a single European currency was the City of London. We know that they have, to some extent, acted in accordance with that judgment.

Those in Frankfurt expected the British Government to fight for that and did not expect any of the other member states seriously to object to it. They said that if we were foolish enough to suggest that we were not willing to fight for that or did not regard it as a major pitch, they would be more than delighted to take the opportunity presented to them. That is exactly what has happened and what the British Government have done. The Government have already seriously damaged Britain's financial interests and the City of London's role.

The next stage that one must consider is that, i f there were a single currency involving the major economies of Europe—with Britain exercising its right to opt out of that single currency—that might lead to, not necessarily the shift of influence from the City of London to Frankfurt, but the fragmentation of London's role as a market across several European financial centres. That would be to the severe detriment, not just of London, but Europe as a whole.

Mr. Fabricant

The hon. Gentleman implies that he is speaking for the City of London, but has not the Governor of the Bank of England spoken out about the disadvantages of a single currency?

Mr. Bruce

The hon. Gentleman should allow me to complete my speech. I am not suggesting that there are no issues to be addressed. Nor did I claim to be speaking on behalf of the City of London; I was simply describing what I saw and heard, and the implications that it seemed legitimate to draw from that.

The other factor that arises out of our role as a trading nation is the benefit that a single currency could bring in a number of specific ways, one or two of which have already been mentioned. First, it would contribute to the reduction of transaction costs. I know that some people will say that that is not a significant factor for large companies, which are able, one way or another, to reduce costs by speculating on the markets to hedge their bets. They would be less able to do that if there were fewer markets in which to speculate.

However, it has been estimated that the overall transaction costs of trade within the European Union is 0.4 per cent. of gross domestic product—not much short of the entire cost of the common agricultural policy. To suggest that that is not significant and to shrug off 0.4 per cent. of the largest market in the world is to forget that small percentages in European terms are large sums of money. We must ensure that we take advantage of them.

There is a much bigger advantage to be gained from the possible efficiency of a single currency: the dynamic that it creates in terms of encouraging trade, increasing trade efficiency and strengthening Europe's competitive edge over its trading partners across the world. It is estimated that that is possibly worth 10 to 15 per cent. of our GDP across Europe. It would be phenomenal if the truth turned out to be even a fraction of that.

Another factor that is forgotten when one talks about small transaction costs for large businesses is the large proportion of transaction costs for small businesses that are trying to export. In the House during debates on trade we continually bemoan the lack of performance, particularly by many of our smaller companies. There is no doubt that the uncertainty of exchange rates and the cost of exchanging is a deterrent for a small business that does not have the resources to absorb that risk and that operates on tight margins. The benefit to trade for small business is much greater than it is for big businesses which, in itself, is something that we should consider.

Mr. Dykes

Against that background, and without wishing to be unpatriotic, it is sobering to reflect that the pound sterling has lost 90 per cent. of its value against the deutschmark since the war. We would avoid those weaknesses in the future if there were still weaknesses in the British economy. Does the hon. Gentleman agree that one of the great advantages would be for consumers? We talk about the elite, a central bank and the City of London, but it would be a great advantage for consumers to be able to tell immediately the price of consumer durables, services, products or goods—

Mr. Marlow

My hon. Friend is yesterday's man.

Mr. Dykes

The heckling is in inverse proportion to the intelligence of the contribution.

I am sorry if my intervention is longer than I intended. It would be a great advantage for the consumer in any city, village or town in the European Union to be able to tell the price of a service or product.

Mr. Bruce

The hon. Gentleman is right. It is not just a matter of improving consumer performance. It would increase the dynamics of the marketplace. People will know the price and what it means. It will enable them to make rational economic decisions. Many of the arguments advanced against the single market are irrational or conveniently ignore the benefits that can be perceived by anybody who travels, not just abroad, but even around these islands. We can go to Scotland and use Scottish notes, to Ireland and use Irish notes. People understand the face value, which enables them to understand the transactions.

Mr. Marlow

Will the hon. Gentleman give way?

Mr. Bruce

No; I shall make a little more progress.

I shall return to some of those economic factors, but it is important that one takes on board the issue that I believe that the British people would be willing and able to tackle if they were given the chance to do so, and were treated in the responsible manner in which they are entitled to be treated.

People sometimes speak about sovereignty as though it were an absolute quality, a bit like virginity, which you can give once and never have again. It is nothing of the kind. It is something that every one of us, as individuals, in personal terms, compromises every day, because that is what life is about. It is about how one subordinates one's individuality. Even to have a conversation with someone, by definition, is a compromise: if one does not stop talking, one will never hear the reply, so there is no conversation.

Mr. Menzies Campbell

That happens in the House, too.

Mr. Bruce

My hon. Friend is perfectly right. One does not have to be a Member of the House for long to know that that is one of its major weaknesses.

Mr. Spearing

The hon. Gentleman is repeating an old saw, because obviously, in common life, one has to maintain a compromise, but we are discussing legislation. Does he agree that it would be illegal, and out of kilter with the treaties, for the House, or anyone, to propose any law that was contrary to the legislation and the requirements of the treaties, as they now are, and as they will be in future? Is not that a loss of sovereignty?

Mr. Bruce

Of course it is a loss of sovereignty, and we have already had an example of it in the House with the Merchant Shipping Act 1988, which is the first British Act of Parliament that was declared illegal because it contravened our treaty obligations under the treaties of Rome and Paris. However, it is a question of what one receives in return for that loss of sovereignty. It is not a matter of—[Interruption.] The heckling from behind me completely misses the point that there is obviously no point in diluting one's sovereignty for no purpose, but where there is a purpose, where there is a benefit, where it enlarges and enriches in every sense—

Mr. Spearing

It is only speculation.

Mr. Bruce

We have been in the Common Market and in the Union for more than 20 years, and it is not speculation to say that we have achieved benefits. It may be a matter of opinion; one can quote some objective facts as well, and I did, but the hon. Gentleman did not choose to take account of them.

The reality, nevertheless, is that it is not an absolute matter; it is a matter of the balance and the judgment of the benefit that one obtains from sharing one's sovereignty with people with whom one has twice been to war in living memory. It is not unimportant to keep sight of that fact.

I often say to people who express a xenophobia, sometimes in disturbingly racist terms, saying that they do not wish to be kicked around by the Germans or the French and so on, that the Germans, the French and all the other member states of Europe will be there whatever we do. They will not go away. They have been there longer than we have. Most of us came from there, originally, or via that route—there was no other way to get to this country.

Given that that is the case, we need to appreciate that we have the opportunity to participate in institutions whereby we can influence what they do and ensure that they take some account of our interests. When we did not have those institutions, we finished up fighting one another into the ground on the bloodstained battlefields of Europe. Many of us regard that as well worth avoiding, and we should therefore aspire to play a much more positive role in those institutions.

The Prime Minister has got himself into a complete bind. I find it interesting that the obvious line from Conservative central office is that, if one is unfortunate enough to speak for the Government in some capacity on the issue, and one finds a microphone before one's nose or a camera in front of one's face, one should say, "I am totally in support of the Prime Minister's speech." There is no comprehensive coherence in the speech, and indeed the Minister who replied to the debate had some considerable difficulty proving otherwise.

Let us take the simplest argument. The Prime Minister said that Britain's position should be at the heart of Europe. That was his starting point, but he has now said that there is, in the context of the intergovernmental conference, no need to be concerned about any implications of constitutional change, and therefore no need for a referendum, because there will be no constitutional change as a result of the IGC. He will not accept it. No one believes a word of that, not least the Prime Minister.

We know one of two things. The Prime Minister will either capitulate on things such as the single currency, which he has opted out of helping to shape, which Britain should be at the centre of shaping, or he will try to use a veto, which will result in other member states saying, "We will not allow one member who has not taken part in the process to hold us back", and we shall simply be pushed to the sidelines. We shall suffer either from the consequences of a single currency from which we are excluded, the consequences of which will nevertheless affect us, or from having to sign up for it, having opted out of shaping it.

It is a matter of concern, not just to the United Kingdom, but to the whole of Europe, that the country that has the major financial centre in Europe, and which has a great deal to contribute to the operation of a single currency, including legitimate reservations about timing and adjustments that need to be taken into account, should be marginalised. It is not in our interest or Europe's interest.

It is high time that the Government recognised that it is our duty, never mind in our national interest, to be in there, trying to ensure that the shape of a single currency is one that takes clear understanding of Britain's knowledge, expertise and, yes, national interests. All those things are relevant to the other member states.

If, some time in the near future, there is agreement among the French, the Germans, the Benelux countries, possibly Sweden and perhaps one or two other countries, that they will have a single currency, whether that agreement occurs in 1997—which I think is unrealistic, and I am not sure that anyone seriously accepts that we shall be in that position then—or 1999 or 2001, the question then arises: will Britain opt in or opt out?

Those people who say that we need not sign up to a decision now have an obligation to tell us what options they envisage. If they believe that there is a realistic possibility of our saying that Britain will not be part of that European monetary union—because we want to take the decision to be outside it—we need an explanation of the way in which the City of London will develop, the way in which Britain's trade will develop, the way in which investment will develop, the way in which it will positively benefit the British economy and the alternative arrangements that we can or will make.

Those people also need to explain how we shall benefit from losing out on the advantages that a single currency is designed to bring. Several assertions have been made—for example, that it should help to benefit us in the cause of keeping inflation and interest rates down. I noticed some scepticism among the sceptics about the relevance of that.

Let us first note that although inflation in Britain may be relatively low at the moment, hardly anyone believes that it is under control. The figures that were issued today demonstrate that the upward pressure on inflation is becoming not insignificant. Three and a half per cent. is the underlying rate of inflation, which we expect to come through with substantial additional upward pressure in the system. In those circumstances, Ministers who give the impression that a miracle has happened and inflation is under control because we have managed to keep it low for a couple of years, should read the speeches of previous Conservative Chancellors of the Exchequer who have claimed economic miracles that did not last even until the following election.

We can all benefit from a single currency. Interest rates in this country have been historically, on average, 1.5 per cent. greater than those in Germany. If there is a single currency, there is a fair chance that interest rates will be lower in Germany and lower still, relatively speaking, here.

That is one of the advantages of a single currency. One reduces the pressure for speculation and consequently one does not need to have such high interest rates to maintain currency stability. The once-proud claim that Britain never devalued under a Conservative Government is no longer sustainable. Britain has secured the current recovery entirely on the back of a 15 per cent. devaluation of our currency. As a result of that devaluation, and the fact that we have no membership of any external arrangement at the moment, many people realise that the pressure on our currency is such that we are forced to maintain higher interest rates than would otherwise be the case. There are therefore real benefits of being part of a single currency.

I wish to comment on the economic implications of the comments of the hon. Member for Bexhill and Battle (Mr. Wardle), who, according to what I saw on the media at the weekend, implied that immigration policy was such that 15 million people were waiting to come into this country because we had ineffective immigration controls.

There is no question of the European Union's external immigration controls being lifted, but there is a desire to ensure genuine mobility of people and capital to effect the proper working of the single market. The hon. Member for Bexhill and Battle is deluded if he thinks that free movement in Europe will see people queueing to enter a Britain which has opted out of the single currency and the social chapter. I think it is much more likely that, if they can speak French or German, they will queue in Dover to cross the channel to reap the benefits of opting in. It is a preposterous argument.

Mr. Spearing

What about a referendum?

Mr. Bruce

I am confident that the British people will respond to the arguments in favour of a positive vision of Britain in Europe if they are presented in a grown-up and intelligent manner. At the moment, those arguments are not being presented with any leadership or vision. Our fundamental national interests are being sold down the river by a Government who are led by a Prime Minister with no vision—he is interested only in whether he will make it through the week. He is not willing to risk anything within his party—even if it means putting the nation's interests in second place. That disappoints and depresses me and the Liberal Democrats.

I have taken part in a great many debates in the House and it is not often that I see so much real debate about an issue which people clearly feel strongly about. Hon. Members have had the opportunity to express their views honestly with the gloves off. We should take the issue to the people, rather than conduct a rarefied debate which offers them a confused diet of misinformation, half-truths and misrepresentation.

A simple majority in the House can be achieved by winning a minority of the popular vote in circumstances where there has been no adequate consultation following a general election that has been fought on the basis of dozens of issues. The Liberal Democrats believe that a referendum is the only way to ensure that the issue is addressed in an adult fashion which gives everyone an opportunity to have their say.

After proper debate, the British people will recognise that they are in Europe, that they want to be in Europe and that they would like their Government to play a much more positive role. Of course, we must fight to defend our interests in the same way as other countries do. But we will not do that by opting out, by letting others make the rules and then signing up afterwards to what they have shaped. That is not sensible democracy, diplomacy or politics, and it is a disaster for Britain's economic policy. That is why I commend the motion to the House.

7.52 pm

Sir Teddy Taylor (Southend, East)

Although the hon. Member for Gordon (Mr. Bruce) is obviously living in daydream land, I will not reply to all the issues that he raised. Hon. Members' speeches tonight have been far too long and I will try to speak for only a few minutes.

If the hon. Gentleman sincerely believes that inflation and interest rates will suddenly decrease if we adopt a single currency, I ask him to read the speech by the Governor of the Bank of England. If we agree to convergence, there will be a flow of capital and it will cost a great deal of money. Once we have secured that magical convergence by dropping pound notes all over the place, how on earth will we maintain convergence? That will be very difficult.

On immigration, I hope that the hon. Gentleman will wake up to reality; he must know the facts about the events in Brussels this afternoon. It is not simply a question of whether the residents of Germany and France will come to Britain; the problem is that, under Brussels's plans, if people gain access to Europe they will gain access to Britain also. People who wish to maintain good relations within the Union are concerned about that fact. I will not take up the time of the House debating it now, but I hope that the hon. Gentleman will wake up and read the speech by the Governor of the Bank of England, who knows something about the matter.

The Liberal Democrats have done us a service in enabling us to debate the referendum issue tonight. Although the motion is not terribly significant because it obviously does not cover the issue of a single currency, which was in the Maastricht treaty, and although it is unlikely that any progress will be made at the next conference, we are talking about a significant issue of principle.

It is a sad day for democracy when both the major parties issue a one-line Whip. Those conscientious Members of Parliament who are present know that a one-line Whip does not constitute a free vote; basically, it means a day off. Hon. Members are told, "Please don't come and talk about the issue, just go away." It is sickening that both the major parties have decided to apply a one-line Whip to an issue of this magnitude and significance.

I do not wish to politicise the issue, but it is scandalous that the Labour party decided, before the motion was even published, that its members did not need to attend for the debate. I do not wish to single out Labour Members. It is shocking and disgraceful that hon. Members are dragged here on three-line Whips to debate matters which are of no great significance, yet there is a desire that they should not debate a referendum over Europe.

I was pleased to have a cup of coffee with three Conservative Members of Parliament this morning. I asked what we should do about the Euro-issue and they answered, "Please stop talking." That is a dangerous attitude. Unless we think about the problem, talk about it and seek some solutions, we will not make any progress. Ministers are not dishonest, but both Labour and Conservative Front-Bench spokespeople become trapped and the public are deliberately misled. They become very angry when they discover that has occurred.

During the debate on the Single European Act, Ministers assured me time and again—I am sure in all sincerity—that everything would be all right. The news from Brussels this afternoon is that plans to ban all passport controls in European Union countries, including Britain, will be tabled by the Brussels Commission later this year. If we object to those plans, we will go to court and Ministers know that our chances of winning are very slim.

This is not an issue of little significance. We are talking about the removal of border controls which will apply not only to all residents of the EC, but to all people who visit the EC and to all of those who enter the EC at some time. I believe that, through no fault of their own, people have been misled about that issue.

They have also been misled over a single currency. There is great debate in the Conservative party which I am sure will result in a referendum on a single currency. A decision about a single currency will have the same significance as deciding whether to keep a Scottish £1 note. By that time, convergence will have taken place and we will be linked to the European currency. We will have to decide whether to have a coin bearing the Queen's head, or an ecu.

The people have been misled time and again over agricultural policy. The Euro-enthusiasts—there are even one or two in the Labour party—have told us that the policy will be reformed. However, it gets worse all the time. Hon. Members will be aware that the budget this year will exceed the legal expenditure limits. People have been misled and they are very angry. We should all be concerned about certain tension points in society. People are concerned about corruption. The structure in Europe is riddled with corruption, waste and mismanagement. However, all we do is set up new Departments, organisations and consultancies. The people are helpless to do anything about that situation and that makes them very angry.

The structure of the European institutions and policies invites fraud and corruption. We should be concerned about what is happening to Britain's poor. We often argue about who is to blame for poor people getting poorer. EC policies have a devastating effect on the poor. Hon. Members must recognise that value added tax is a tax on the poor.

Mr. Malcolm Bruce

The hon. Gentleman should not blame me.

Sir Teddy Taylor

I do blame him. I blame all hon. Members who voted for a system that does not allow VAT to be reduced. The hon. Gentleman is an expert on Europe and must know what is meant by the amended 6th directive and what we shall be obliged to do.

We should worry also about young people. Hon. Members should go around the country and hear what they are saying. The people who are agitated about the EU are not the elderly but the young. The effect on our democracy should also cause concern. The public are growing terribly angry because there is nothing that they can do. This appalling paper, the Evening Standard, published an article today headed The law, not the mob, must prevail". In it, the Home Secretary says that people should protest properly and legally, not break any laws, because that is our long-standing tradition. It was a long-standing tradition for people to protest and for something to be done.

Recently in Coventry, the funeral was held of the young lady crushed to death by a lorry because she wanted to protest against the export of live animals. Some people think that such protesters are silly, but they are not. They feel passionately, but there is nothing that they can achieve through the democratic system. They can write to their Members of Parliament—whether or not they are Liberal Democrats—about something that they think is important, but nothing can be done. Wait until 1 January 1996, when there will be terrible problems in the fishing industry. British fishermen are desperately angry, because everyone else seems to be breaking the law.

There is also the issue of the different European courts—not just the Common Market court but the human rights court. The House should appreciate that the public are made angry that poll tax protesters who were sent to prison are to receive massive compensation. What are the thoughts of people who struggled to pay their tax? What about the drug dealers who are using technical points of law to argue retrospective action and then receive compensation?

Mr. Quentin Davies (Stamford and Spalding)

Does my hon. Friend concede that the European Court of Human Rights has nothing to do with the European Union, which is the subject of this debate? We acceded to it in 1950, long before the European Community was ever thought of, and presumably we could resile from it now if we wished, without compromising our membership of the European Union. It is a complete red herring to introduce the European Court of Human Rights in a debate on the EU.

Sir Teddy Taylor

If my hon. Friend reads Hansard, he will find that I mentioned the Common Market court—the European Court of Justice—and the European Court of Human Rights. My hon. Friend's remark does not help. If he walks through the streets of his constituency and talks to people, he will find that they are angry at the decisions of the European Court of Justice and of the European Court of Human Rights.

Let us take the other court. How do my hon. Friend's constituents feel when they discover that female Army officers who became pregnant are to receive substantial compensation, while female officers who decided against having children and suffered consequential distress—or who even had abortions and suffered psychological damage—are to receive nothing? My hon. Friend tends to make flippant remarks. He should wake up to the fact that the public are annoyed. When democracy is abolished, the same always happens—things happen in a rush, and that makes people angry.

The answer is a referendum. It is desperately important to give the public the chance to express their views on how to proceed. The tragedy is that almost everything has gone. Present policies are creating misery and substantial unemployment. Seeking public opinion is also important for the Conservative party, with which I used to be associated, which now forms the Government.

The Prime Minister is a decent. respectable and honourable person, but he has been placed in an impossible position. He has people banging and screaming at him from both sides. It is difficult to move without upsetting someone, making them angry cm being asked silly questions. What can the Prime Minister do? If the public expressed their clear and concise view in a referendum, that would give the Prime Minister the authority to sort out the rebels on either side, and that would be the end of the internal debate.

The House should not think that that problem is only for the Conservative party. If Labour came to power, they would have exactly the same problems—perhaps more. Although Conservative Members are able and colourful, Labour Members probably have more beliefs and are more passionate because of the way that they grew up. Therefore, a Labour Government would face greater problems. The divides are the same, but they care about people.

Today's debate is desperately important. We must wake up to the fact that there is a serious problem. The only way out is to give the people the chance to express their opinion on the question, "Do you want to carry on this way, or do you want to get out of it? Do you want a separate relationship, or do you want the EU developed as the Liberal Democrats would like?" Once that is done, the present debate will be over and the country can get on in a sensible and united way. The present division is damaging the Government and country, and greatly damaging our democracy.

8.5 pm

Mr. Austin Mitchell (Great Grimsby)

It is a reflection of the state of public opinion that in today's debate, the Euro-enthusiasts are, broadly speaking, against a referendum, whereas the Euro-sceptics have argued passionately and strongly for one. The view advanced by the Euro-enthusiasts is that people are not worthy to make the fine, exalted judgments that those committed to Europe are qualified to make.

Mr. Malcolm Bruce

I did not suggest that.

Mr. Mitchell

The hon. Gentleman should not jeer yet because I wish to pay him a compliment.

The only consistency is to be found in the speech of the right hon. Member for Worthing (Sir T. Higgins), who opposes monetary union and a referendum—which would be a means of blocking monetary union—and in the Liberal Democrat position. No party can be more enthusiastically, naively and foolishly pro-European. The Liberal Democrats are prepared to prostrate themselves before Europe as though it were a branch of the international Scout movement, yet they support a referendum. It does them credit, to say that the people must be consulted. Criticisms of the Liberal Democrat position are unfair, and I commend that party for tabling its motion and giving the House the opportunity to debate it.

I am in favour of a referendum, as the motion says. As honesty is the name of the game, I admit to taking that position partly because I believe that a referendum would defeat those aspects of progress towards European union to which I object. That apart, I still strongly support a referendum, not on every policy issue—which has been held out—but on basic constitutional issues, such as whether we should change to proportional representation, regional government, or Scottish and Welsh devolution. People have a right to a say on such issues, particularly on whether sovereignty—which sounds a technical word but means the people's ability to control the Government and make them accountable—should be dismantled, shipped to Europe and abandoned. The people must be consulted on such a basic issue. We cannot give sovereignty away on their behalf.

All parties—even the Liberals—are split on Europe. It is childish and silly to pretend that we are united, and on that basis to push European matters through the House on the back of a three-line Whip. When the parties are disunited, a referendum is the only way of deciding. It is illegitimate to push through such proposals on a three-line Whip—using the discipline of the Whips, the lure of career, the quiet word that it will not enhance an hon. Members parliamentary career prospects to vote against the party line, and other covert means to secure a majority for Europe. We all know that such tactics are deployed, and we know they are wrong. It is imperative to allow people to speak because the only way to clarify the issue is through them. It is not the power of Parliament versus the power of the people. The power of the party is being used in a three-line Whip and that is illegitimate.

The sovereignty which we are being asked to give away is not ours to give; it belongs to the people not to us. Indeed, had the people been consulted right at the start of the whole venture on entry into Europe, when the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) promised the whole-hearted consent of the British people, and had they been consulted over Maastricht, we would not have faced such difficulties, which have undermined our relationship with Europe from the beginning. Decisions have been imposed on the people without them being consulted, which has been corrupting. The people have been dragged along grumbling, reluctantly and unenthusiastically behind the elite—the elite have constantly said that Europe was good for them—without getting their consent.

Mr. Spearing

Does my hon. Friend agree that that relationship is also not good for those who advocate a partnership—as they call it—in the Union, because the people of Britain have not been given the chance to say yes? Does he recall that the former Prime Minister, the right hon. Member for Old Bexley and Sidcup, to whom my hon. Friend referred, said that we would negotiate—no more and no less? He went into negotiations and none of the three treaties involved has received a mandate from the Government who put them through.

Mr. Mitchell

I agree with my hon. Friend. It has been corrupting. It has been destructive of democracy, and destructive of commitment to the institutions of this country to misuse them in such a fashion. Membership has been defended and advocated on what amounts to a litany of lies, half-truths and distortions.

The problem is that Euro-enthusiasm—commitment to Europe—is an elite preoccupation, an elite disease in this country. The elite middle class—[Laughter.] My hon. Friend the Member for Durham, North (Mr. Radice) may laugh, but he is one of the proponents of that point of view. The middle-class, cosmopolitan elite, which feels itself to be European and international, has a vague contempt for the institutions and the people of the country, especially British industry and its workers who have never been quite good enough. The elite are well-off and in cushioned, insulated jobs so that they do not feel the same threats to jobs or food prices as do the people.

Mr. Radice

Will my hon. Friend give way?

Mr. Mitchell

I welcome an elite point of view.

Mr. Radice

How does my hon. Friend square his view with the fact that the British trade union movement is in favour of being in the European Union and, indeed, in favour of Maastricht?

Mr. Mitchell

I said that it was an elite preoccupation. The leadership has been persuaded that doors will be open to them in Brussels which are closed in Downing street, and they have been persuaded, especially by the visit of Jacques Delors to their conference, that they may advance their cause through Europe. However, that enthusiasm is not felt by the mass of trade union members, which bears out my point.

This elite disease is highly infectious. It has infected large sections of the media. Europe is the lingua franca, one might say, of the media, especially among the pundits. They like a nice, distant position—say, Brussels—from which they can be contemptuous because it gives them a degree of distance from Britain.

Such an elite is characteristic, too, of political parties. The higher one goes up to the leadership of both main parties, the greater the degree of Euro-enthusiasm. It is stronger in the Cabinet than it is in the 1922 Committee. It is stronger in the 1922 Committee than it is in the rank and file Tory associations. However, the same is true of the Labour party. The further one goes down the pyramid, the lower the flame of the Euro-enthusiast candle burns and the more people know the consequences and the damage that is being done by the European institution and the more they feel resentful about not having been consulted about it.

That is why there is a constant need to deceive and trick people with a litany of lies into believing that damage is success; that failure is triumph; that we are getting our way in Europe; that the institution, which is so good for the elite, is also good for the people. We are told that we must be in there to shape the institution. We have been trying to reshape the common agricultural policy for 20 or 30 years, and what shape is it in now? We spend more money on it now than ever before. We are told that we cannot be left behind in Europe—the argument of the educationally subnormal lemming. We are told that we must be there in the rush over the cliff of monetary union.

We are told through an argument of fear and manipulation that if we do not go along, we shall be on our own and left out. What a terrifying vision of having to decide things for ourselves and not being able to run with the mob. We are told that we shall lose out—after all the damage that this institution has done so far.

Given such arguments and the litany of lies and deceit, it is sad, indeed, barmy that the Labour party has not supported the Liberal Democrat motion on a three-line Whip because we could have defeated the Government and we could have supported the people. The argument is right in principle. We should not now appear cool on a referendum. My hon. Friend the Member for Gateshead, East (Ms Quin) mentioned a referendum or an election. An election is no substitute for a referendum on such an issue. In an election, a hundred issues or more are considered and it could never be focused on a single issue such as monetary union.

Since the instruments to improve the economy will be taken away from us, the Labour party especially should ask the people's opinion on monetary union before we agree to it in principle. I am happy that the Labour party is moving crabwise towards a referendum. It is right that we should do so. We will get there, but we could have got there a lot quicker if we had supported the motion.

A referendum on monetary union, is especially important because the monetary union argument is being urged forward as a way in which to build European unity without the consent of the people. This drive in Europe to build a stronger, central set of institutions is not legitimate, but inevitably comes from the bureaucracy and the people in power at the centre. They want to see the centre strengthened. However, most of the paths towards that unity are blocked.

They cannot go down the path of getting the consent of the people, because in a referendum or in any other means of attaining consent, the people would refuse to give it. Indeed, the people came very close to refusing it in Denmark and France, where the yes and no votes were within two percentage points of each other. If the question did not receive the whole-hearted consent of the people, it could not therefore be put to them. Unity cannot be achieved by agreements among Governments because that builds a camel, rather like the European Union we have under Maastricht. We shall never achieve agreement among Governments on some effective democratic federal institution with a powerful centre.

Therefore, the democratic roads to union are closed to those aspiring to union. The only path left open is to try to build union through monetary union, which builds union from the top down; through economic forces without the consent of the people. It builds union in a way that no other set of nations have ever done before. Normally, nations achieve political union before monetary union. Monetary union is impossible—effectively—without political union.

If we go down the path that Europe wants, we shall be imposing on the back of monetary union a central bank to operate the finances, a Committee of Ministers at the centre to manage the economic policies and there will have to be one economic policy and one interest rate. What is more, monetary union breaks the mainspring of a national economy on which the nation rests. It builds union covertly—secretly—without the consent of the people. That is the agenda which is now at issue.

In this situation it is essential that people be consulted, because although the elite may find the damaging economic consequences tolerable—because they are testimony to our enthusiasm for Europe: a step towards unity—and they are prepared to put up with them, the people, on whom the sacrifices and the economic dislocation will fall, must be allowed to give their consent first.

There is no way of building monetary union which is not damaging to the mass of the people, especially in this country. It is rather like the state of perfect virtue—we are all in favour of it, it sounds very nice, especially with regular brushing of teeth, motherhood and apple pie. But how do we get to the reign of perfect virtue? The same applies to monetary union: the process of getting there is so damaging that it rules out any benefits to be had from it.

The only way to achieve monetary union is to cross the exchange rate mechanism bridge, which means putting the nation's head back into the furnace which lost us 1.2 million jobs, most of them in manufacturing. That took place in the period after that tough, dynamic, abrasive Prime Minister of ours forced that poor, weak, wilting woman, his predecessor, into the ERM, consequently inflicting so much damage on the people of Britain.

Either we return to the ERM, which involves a gradual and irrevocable linking of currencies; or we attempt to go to monetary union overnight. If we do the latter, the stronger economies will inevitably rip apart the weaker ones. That was what happened in east Germany—although, heaven knows, it had the benefit of enormous aid from the west. Germany wanted to destroy east Germany's economic system the better to absorb it into that of dominant west Germany.

These, then, are the choices: long-term ERM anorexia or instant east Germany. They are the only two ways of reaching monetary union.

May we impose either alternative on the British people? Do we not have an obligation to tell them what is likely to happen—in my view, what is certain to eventuate—and to ask them whether they want it? The British people already have experience of the ERM. The elite Euro-enthusiasts remained enthusiastic about the exchange rate mechanism right to the bitter end—right to the day when George Soros, who has done more good for the people of this country and for its economy than the past three Chancellors combined, forced us out of the ERM in such humiliating circumstances.

People have also seen the benefits that have attended our being forced out. If they looked at Italy, they could see even more such benefits. The Italian economy has done much better than ours. Not only was its devaluation greater, but the Italians had the astute idea of destroying confidence and devaluing the lire still further by sending so many of their politicians to gaol. I commend that idea to the Prime Minister; his party looks as though it needs the same treatment in some respects.

In any case, the consequences for Italy of leaving the exchange rate mechanism and devaluing were that it has been able to turn a hefty balance of payments deficit into a massive balance of payments surplus in just over two years. Fiat is now in profit, and Italian manufacturing and exports are doing well.

Mr. Fabricant

I have some sympathy with the hon. Gentleman's argument, but surely he is not suggesting that devaluation is the panacea—or is Labour party policy still the same as it was in the 1970s?

Mr. Mitchell

I am saying that one cannot make the maintenance of an externally determined exchange rate the be-all and end-all of economic policy in a democracy. To do so, one must sacrifice every other instrument of management to maintain the exchange rate at a particular level. That applies whether a country enters with its currency overvalued or at a competitive rate, because circumstances change and exchange rates have to change with them; if they do not, they strangle the economy.

The fact that our exchange rate was so overvalued and maintained by high interest rates for so long crucified British manufacturing industry, which recovered only when the process was stopped. The Euro-enthusiasts did not tell us that that would happen. They complained when it did, but until it did, they—particularly the Liberals—urged us to move to the narrower bands. I remember the right hon. Member for Berwick-upon-Tweed (Mr. Beith) leading huge mobs up and down Whitehall shouting, "Narrower bands now." The popular response was immense.

I shall conclude soon, Mr. Deputy Speaker, as I can tell from the way that you are leaning forward how passionately interested you are in what I am saying.

Monetary union may never happen. The European Union may have enough sense to avoid it, but if it does happen we shall hear the usual bleat from our Euro-enthusiasts, "We can't be left behind; we must be in there to shape this monstrosity."

That is the prospectus of what we might give away, which is why the people must be consulted. In monetary union, we would give away our ability to run our economy in our own way for the purposes of our people—not for the purposes of the wealthy or of the central bankers with their mystique of stable prices, which exist only in graveyards. It is for our people that we have to retain the ability to control our interest rates, exchange rates, money supply, borrowing and public sector deficit or surplus. The only way we can manage the economy for our people is by having a Government who are accountable to them and whom they feel they can throw out.

The ultimate argument for this motion tonight is that the House must consider what the people want. The people are fed up with being deceived and bamboozled and with not being consulted. They are fed up with having Europe imposed on them willy-nilly. They have shown at the polls that they want to vote on and be consulted about this issue. I ask the House to think of the alienation that will result if, once again, we impose on them the panacea of Euro-medicine—higher unemployment, more massive deflation and so on. The people tell the pollsters repeatedly that they want to be consulted. We in this House cannot take a decision, split and divided over Europe as the parties are. Let the people speak.

8.27 pm

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

This evening's debate has moved without hindrance to the issue of a single currency and a European central bank. The last few speakers have all focused on those issues; the House is right to focus on them. The establishment of a single currency, a single interest rate and a European central bank is an issue that goes to the heart of democracy in this country, and to the heart of our constitution.

Time is running short for Her Majesty's Government to say clearly where they stand on this issue. Hitherto, the policy has been to wait and see, but that cannot go on for ever. There will be a single currency—of that I have no doubt. The Maastricht treaty provides for it to be established on 1 January 1999. It will go ahead, with a certain number of states participating. If a country wants to join the single currency, it will have to make the decision no later than 1 July 1998.

At the start of the year, my right hon. Friend the Prime Minister made some helpful statements. I think particularly of his interview on 8 January with David Frost. As I said earlier when I intervened in the speech of my hon. Friend the Minister of State, Foreign and Commonwealth Office, my right hon. Friend made it clear that he was keeping open the option of a referendum. He said also that he considered that a firm commitment to a single currency was a major constitutional change.

When my hon. Friend the Minister of State responded to my intervention, things were slightly less clear cut. He said, "I think that is the case still." Some ambiguity seems to have crept in. I hope that it will be made clear later this evening that the Government still believe that the single currency is a major constitutional issue, and that they are keeping open the option of having a referendum on the issue.

Why should doubts have crept in? Were the comments made last week by my right hon. and learned Friend the Chancellor of the Exchequer, when he sought to play down the political aspects of monetary union, something to do with the hesitancy that we saw on the Government Front Bench earlier today?

When my right hon. and learned Friend the Chancellor recently gave evidence to the Select Committee on the Treasury and Civil Service, he seemed to get to the heart of the matters that we are discussing. When he was asked whether there had been a movement in the balance of power between himself and the Governor of the Bank of England in setting domestic interest rates, he did not agree. He said: the power"— that is, the power to set interest rates— lies with the Chancellor because the Chancellor is accountable to Parliament and I do not think Parliament would allow the Chancellor to surrender that power. There we have it. The position is set out clearly by the Chancellor. My right hon. and learned Friend dealt with the importance of a British Chancellor being able to set interest rates and being accountable at the Dispatch Box to the British Parliament. He went on to press the point even harder. He said: I think actually one thing which we have retained which, I do not want to get flippant about, is that nobody is arguing that we have thrown parliamentary accountability because I come here and I answer for the decision. That is what most of us on the Government Benches want to see continuing. We want a Chancellor setting interest rates with the Governor of the Bank of England and being accountable to the House for his decisions.

The provisions set out in the Maastricht treaty would not allow that process of accountability to continue. The establishment of a European central bank clearly takes the relevant powers away from the Chancellor. The European constitution could not be clearer.

It could not be clearer also from reading that constitution that monetary union is not a purely technical and economic matter. Instead, it is of fundamental constitutional importance. It creates a central bank that is unaccountable. The constitution of the central bank has been described as being even harder than the Bundesbank, and we know that the Bundesbank constitution contains provision for the bank to take into account German economic policy—the policy of the German Government—when setting interest rates.

In the constitution for the European central bank, which we passed some 18 months ago, the only criterion is price stability. The running of the bank is placed in the hands of unaccountable officials. Six officials are elected to the executive body of the bank. They are chosen by the Governments that decide to go ahead with monetary union. Once the six officials have been elected, they are no longer accountable. They have an unrenewable term of eight years.

The governors of the domestic central banks join the six officials to set interest rates. However, the governors of the domestic banks, as I think Lord Kingsdown remarked, are really no more than members of a country branch of the European central bank. Power will lie with the six elected officials.

Article 3 of the Maastricht treaty sets out clearly the responsibilities of the six men. They will have responsibility for monetary policy, which means setting interest rates. How will those rates be decided? That will be left to a simple majority of the members of the governing council. The six will have the power to conduct foreign exchange operations. They will also have the power to hold and manage the official reserves of the member states and to promote the "smooth operation" of the payment system. Power will be put into their hands. They will be able to call upon minimum reserves from the credit institutions across the member states of the monetary union.

The six men will be responsible for setting interest rates and monetary policy as a whole. Anyone who considers the constitution behind the European central bank in a pragmatic and sensible way will say that it is not a feasible way in which to run European economic policy. Our lessons from the exchange rate mechanism, to which the hon. Member for Great Grimsby (Mr. Mitchell) referred, should still be clear in everyone's minds.

Politicians deciding upon arbitrary exchange rates and expecting their domestic economies to fit in with the rates they have fixed will damage their economies. We need freely floating exchange rates throughout the European Community if we are to get the best that we can from the prosperity of the Community.

The hon. Member for Gordon (Mr. Bruce) talked of small businesses gaining from a single currency. I think that he is out of touch with what businesses are like these days. I visited a medium-sized business in my constituency which has a turnover of £10 million a year. The company trades throughout the world, with customers in 34 countries. It is a global business.

If the British exchange rate is artificially linked to the deutschmark and irrevocably fixed, the business is at risk. That is what the managing director told me. He said that, if the United Kingdom had not left the exchange rate mechanism in September 1992, he faced ruin in his business. British businesses are global, and they need flexibility. They cannot afford to have the British exchange rate locked irrevocably to the deutschmark.

Currencies are important as shock absorbers to allow countries to adjust to continually changing economic circumstances. In his speech on Thursday night, my right hon. and learned Friend the Chancellor of the Exchequer sought to play down the political and constitutional implications of a single currency. I think that he did a disservice in doing that. He gave two examples of countries that he believed had retained their sovereignty but had linked their currency to another state.

What were the two countries that he selected? The first was Austria, which had linked its currency to the deutschmark. I must tell my right hon. and learned Friend that the size of Austria in economic terms—its gross domestic product—is just under a tenth of the German economy. My right hon. and learned Friend's second example was the Republic of Ireland, which has linked its currency to the pound sterling. Again, I must tell my right hon. and learned Friend that the economy of Ireland is less than 5 per cent. of the UK economy.

It is possible for very small economies that are dependent on other economies to link their exchange rates to those larger economies.

Mr. Sweeney

As an Irishman, I am well aware that, for many years, the Irish pound and the British pound were worth exactly the same. Is it not significant that, despite being a small economy, Ireland chose to separate its pound from the British pound, thereby demonstrating the desire of a particular nation for the symbol of nationhood which its own currency represents?

Mr. Legg

I was just coming to that point. Eventually, Ireland detached its currency from sterling. It can be argued that Ireland's best economic interests were not served by tying itself to sterling, as the nature of the Irish economy, which was largely agriculturally based, did not equate to the nature of the United Kingdom economy.

It is possible from time to time for smaller economies to link their currencies to much larger economies. Hong Kong does it with the United States. We did it during the Bretton Woods period. It is possible to do it with very large economies for a certain time, but it is not viable to link economies of medium-sized states, because they will experience quite different shocks to their economy. We cannot make the decision to lock our currency to another medium-sized economic power, and—what is more—make a decision that is irrevocable. If we accept monetary union, we are making an irrevocable decision.

Mr. Bernard Jenkin (Colchester, North)

Is not the crucial difference between the so-called monetary union between Austria and Germany, or between the Republic of Ireland and the United Kingdom, not only that they were revocable but that they retained separate central banks, separate foreign currency reserves, separate gold reserves and total independence? The choice to link their currency was a decision for each of those sovereign stales, whereas that arrangement bears no relation to what is set out in the Maastricht treaty, which is a legally binding irrevocable monetary union?

Mr. Legg

My hon. Friend has hit the nail on the head. Those countries had the flexibility to change their currency if they so wished. They retained their own central banks, and the democracy and economic opportunity that went with that. Ireland, as my hon. Friend the Member for the Vale of Glamorgan said, made that change, but we are being called on to make an irrevocable decision on which we cannot go back.

One can think of more and more factors that one might take into account in judging whether convergence is taken into account. For example, one might look at the tax burden of each state, its overall balance of trade, the percentage of trade that it conducts across the world, its investment percentages across the world. It might just be conceivable that, at some point, convergence might take place, but politicians are notoriously lacking in the ability to pick that moment, as we have seen from our own recent economic history.

But even if we did pick the right moment, that convergence could not continue for ever and a day. That is the point. We would have given up our currency and our economic flexibility, with the objective of achieving something that I believe would be deeply damaging to the British people and our economy.

Mrs. Teresa Gorman (Billericay)

Is it not true that, in a way, we already have a common currency with the dollar? More people use it voluntarily than probably any other currency. More people use the pound sterling as a type of common currency than the deutschmark, so to link ourselves to the deutschmark, which is foreign in its nature to most people, is quite ridiculous.

Mr. Legg

I agree with my hon. Friend. One of the great problems we had when we were in the exchange rate mechanism was that our link with the deutschmark took us to $2 to the pound. For anybody in Britain trying to do business with the United States—many of our companies do—at such an exchange rate, that just was not on. The hon. Lady is right to say that the dollar is a very important currency. However many conditions we come up with for monetary union, at the end of the day we must accept that, under the Maastricht treaty, a political decision will be made on whether there is a single currency. It will not be done just on economic factors.

Many hon. Members may remember the Madrid conditions, which Professor Alan Walters came up with to please the Prime Minister of the day. He believed that they were impossible to achieve, so tough were the conditions. What happened? The Madrid conditions were never fulfilled, but we entered the ERM, with the problems that ensued.

I ask hon. Members not to put all their faith in economic conditions and convergence criteria, because at the end of the day they can go by the board.

Mr. Nick Harvey (North Devon)

Is the hon. Gentleman aware that politicians all over Europe who are committed to the idea of a single currency are artificially manipulating economic indicators to ensure that the convergence criteria are met? Is it any satisfactory indication of anything?

Would it not be better for us to see whether convergence criteria that have been met could be sustained through a complete economic cycle, because those who build their house of straw will rapidly see it come unstuck when their economies at home hit a downturn? The fact that they can achieve that happy convergence at one point is no indication of anything that could be a foundation for a future currency.

Mr. Legg

The hon. Gentleman makes a valuable point. Some 12 months ago, I visited Germany. Having had discussions there about the convergence criteria and the level of debt, I learned that the level of debt that the German Government disclose to meet the 60 per cent. debt criteria does not include the East German debt that they inherited.

The hon. Gentleman is entirely right: politicians who have the political objective of achieving monetary union will dilute and tamper with the conditions to achieve their political objectives. We should not be surprised about that, because they have been very open with us.

Chancellor Kohl has been very open. He said that of course one gets political union with monetary union; it cannot operate in any other way. He must be right. If one thinks about what it means to have one interest rate and one currency, one sees that one must have fiscal transfer values to try to make the system work. The safety valve has been taken away, so one needs to transfer tax revenues to the regions that are not doing very well.

As hon. Members on both sides of the House have said tonight, that is precisely what happens in the United Kingdom with the single currency that we have here. That is precisely what would happen with a European single currency. Taxes would have to be raised and transferred to the regions that were doing badly because they had lost flexibility.

Mr. Marlow

Is not my hon. Friend setting out a rather exciting prospect: a bunch of countries in the European Union will fudge the convergence criteria and will join some single European currency? They will have got it wrong. There will be massive transfer payments and massive social payments, so that part of Europe will become increasingly uncompetitive, with increasingly higher interest rates and inflation, and we in the United Kingdom, with Thatcherite economic policies, driven by our desire to make our industry and trade prosper, will be the rich men of Europe.

Mr. Legg

My hon. Friend has outlined what some might consider a golden scenario. It is certainly a prospect to warm many of our hearts. It is so reminiscent of what we were told when we were in the exchange rate mechanism. We were told then that, if we left the ERM, interest rates would have to rise; tonight we have been told that, if we had a single currency, interest rates would be lower.

When we came out of the ERM, despite what we had been told by the Chancellor of the Exchequer, we suddenly found that we could cut interest rates to the level that was required domestically. There is no guarantee that a single currency would produce lower interest rates or lower inflation. As politicians, we shoulder a grave responsibility in making the decisions that we are making now.

Mr. Whitney

My hon. Friend seems to see no difference between the single currency and stage 2 of the exchange rate mechanism.

Mr. Legg

I do see a difference: the single currency would be much worse. At least we could come out of the ERM. As the hon. Member for Great Grimsby pointed out, George Soros could come and rescue us, and with one bound we were free. We can never come out of the single currency. The position will be irrevocable. Having given up our currency and transferred our reserves to the European central bank, we shall have banished the option of having a currency of our own and setting interest rates in accordance with domestic monetary conditions.

I think that most hon. Members understand the magnitude of the issues and policies that we are discussing. Surely it is time for the British Government to make their position clear. The decisions governing whether we enter a single European currency will have to be made—

Mr. Peter Mandelson (Hartlepool)

In 1998.

Mr. Legg

The hon. Gentleman is right. The Prime Minister has already ruled it out for 1996 and 1997, however, and I believe that ruling it out for 1998 will be just one more small step.

The Government cannot put off this decision. They will have to explain whatever they decide to the British people in the next general election campaign; they cannot hope to fight an election in 1997 saying, "We do not know whether we shall go for a single currency in 1998." They must either rule it out or promise a referendum. I hope that, when he winds up, the Minister will begin to clarify the Government's position on a vital issue that is crucial to the British economy and the British people.

8.52 pm

Mr. Giles Radice (Durham, North)

I wish to return to the subject of the motion. I share many of the views of the right hon. Member for Yeovil (Mr. Ashdown) on the European Union. For many years, I believed that it was in the national interest to co-operate and, if necessary, integrate with our European partners—

Mr. Austin Mitchell

At any cost.

Mr. Radice

My hon. Friend has had his say, at considerable length. Perhaps he will allow me to make a three-minute speech.

The European Community has achieved a great deal for this continent. It has helped to keep peace in Europe, and it has helped to create unparalleled prosperity. [Interruption.] It certainly has, as anyone who had studied a little history and viewed the past from a slightly wider perspective than the past three or four years would know. It is essential to the future of the continent, which is why so many countries want to join the European Union: three of the four EFTA countries that held referendums voted to join. I agree with the Prime Minister that Britain ought to be at the heart of Europe.

That is not what we are discussing, however. We are discussing whether there should be a referendum. I strongly support the idea of involving the people more in major European decisions, because we are a Europe of the peoples rather than a Europe of the elite. I agree with my hon. Friend the Member for Great Grimsby (Mr. Mitchell) that that means that the people should be consulted on such decisions; the question is how they should be consulted.

That consultation need not necessarily take place by means of a referendum. It could take place in a general election, if there were a major difference between the views of the two parties. The Conservative party is changing so rapidly that it is not beyond the bounds of possibility that it will fight the next election on an anti-European ticket, although I hope very much that it will not. Those in the Conservative party who speak for the European cause have a responsibility in that regard, and I am glad to say that they are just beginning to wake up to it.

Mr. Marlow

There are not many of them.

Mr. Radice

There are indeed. Perhaps they should speak a little louder; then we would not hear quite so much from the hon. Member for Northampton, North (Mr. Marlow).

If there are no strong differences between the parties, however, there will be a case for a referendum. I do not agree with the right hon. Member for Worthing (Sir T. Higgins) that a principled objection can be advanced: it is possible to believe in parliamentary democracy while supporting the idea of a referendum on constitutional issues. In 1975, we had a referendum on whether we should leave the common market. We did not hear much about that from my hon. Friend the Member for Great Grimsby, but that is probably because he did not like the decision; certainly he never accepted it.

I voted yes in that referendum, as did the majority of British people. Other countries have had more frequent referendums on European issues—especially France, Spain and Denmark—to decide not just questions of accession, but other questions. There is, however, a problem with ad hoc national referendums, which are often decided on national issues. As my hon. Friend the Member for Swansea, East (Mr. Anderson) pointed out, the French referendum was decided partly on the basis of whether people were for or against President Mitterrand. I know, because I was involved in that referendum—on the yes side, unlike others who have spoken.

The first Danish referendum was decided partly as a result of the unpopularity of the Conservative Government of the time. The second was won partly because there was a new Social Democrat Government who were able to present a new broom. The Swedish referendum could not have been carried by the Conservative Government, who were very unpopular at the time. That Government had the good sense to wait until they had been defeated at the polls, and it was a new Social Democrat Government—who were quite popular at that stage—who were able to carry the referendum.

I believe that we should hold European-wide referendums on major issues, and that they should take place on the same day. They would be decided on a national basis, but at least such a process would iron out some of the purely national issues and focus people on the European issues. I hope that the European nations will consider that at the 1996 intergovernmental conference.

I do not share the view of some of my hon. Friends that somehow we would lose in a referendum. Some of my hon. Friends gave away the fact that their support is cynical. They think that they can win it and that that is the only way in which they can stop Europe going forward. I do not believe that. The British people are sometime reluctant Europeans but they do not want to be left out of what is happening. My hon. Friend the Member for Great Grimsby may want to be left out but the British people do not. They showed that in 1975 and if there is a referendum they will show it again. I am certainly not against the principle of a referendum, but it would be a question of what would have to be decided at the time.

I am aware of Liberal Democrat policy and I do not blame the party for putting down the motion. It was perfectly fair for it to do so and we have had a good debate on the issue. However, it cannot be said that it is a serious attempt to defeat the Government because if it were there would have been wide consultation with the Labour party. The Liberals would have asked Labour to write the terms of a resolution. If they had really wanted to defeat the Government with the support of the Labour party, that is the way they should have gone about it.

They did not consult the other minority parties, either. I do not criticise them for that, but they should not pretend that the motion is a serious attempt to defeat the Government. It is a legitimate exposition of Liberal Democrat policy which contains some sense, and it has provided us with a good debate. I congratulate the Liberal party on that. If there is to be a coalition of ideas there will have to be give and take and there has not been quite enough of that in the debate.

Mr. Charles Kennedy

Given the hon. Gentleman's forthcoming role in the European movement, on which I congratulate him, he will have some influence in that give and take. May I correct the hon. Gentleman as I did earlier? His account is factually incorrect, I am sure not wilfully, but he is wrong.

Mr. Radice

I think that there are different versions, of what happened.

Mr. Spearing

Or what did not happen.

Mr. Radice

Yes, but there was no attempt to say to the Labour party, "You write the thing and support—"

Mr. Ashdown

That is give and take!

Mr. Radice

If the Liberal Democrats were interested in defeating the Government, that is what they would have done. The Liberals were interested in having a good debate and perhaps hoped to raise their profile, with which they have had some difficulty in recent months. That is perfectly legitimate and I do not complain about it, but let us not pretend that the motion is a serious attempt to defeat the Government.

Mr. Ashdown

My hon. Friend the Member for Ross, Cromarty and Skye (Mr. Kennedy) told the hon. Gentleman that he was factually wrong. Clearly, he was not prepared to take that, so perhaps he will accept some of the details. He rightly said that this requires give and take. But his definition of that is that we give and they take.

I shall tell him exactly what happened. The words were drawn up and there was widespread consultation with other Opposition parties, including the Labour party. Labour Members were shown the words and offered the opportunity to change them or at least suggest how they might be changed. The offer was not taken up; there was no response from Labour. Far from the situation being as the hon. Gentleman describes, the truth is that all this is a charade and a farrago, because right from the start there was no intention of voting in favour of the motion.

Mr. Radice

It would be a pity if the debate were just a squabble between the Labour party and the Liberal Democrats. The Conservative party would like that very much. I shall not quote the Evening Standard or the memorandum by the hon. and learned Member for Fife, North-East (Mr. Campbell) because that would not be sensible. The leader of the Liberal Democrats may have read it and may know what is in the Evening Standard, but let us not have that kind of detailed claim and counter claim.

Mr. Bernard Jenkin (Colchester, North)

Will the hon. Gentleman give way?

Mr. Radice

No. I said that my speech would be short and I am coming to the end of it.

I am in favour of a referendum, if necessary, on major European issues. I should prefer to have it on a European basis because that is a much more sensible way to go.

9.3 pm

Mr. Michael Fabricant (Mid-Staffordshire)

This has been an interesting, thought-provoking and revealing debate, because it has demonstrated that the undoubted divisions are not just in one party. When Hansard is analysed tomorrow it will become clear to everyone that the Labour party is divided, as are the Liberal Democrats, as we heard earlier.

The whole thrust of the debate is to discuss a future referendum. I want to examine the possibilities for that and to make some predictions—not just for two or three years hence, as many hon. Members have done, but for a little further into the nation's possible future.

Some hon. Members have already said that a referendum should be called on greater integration, but that begs the question of degree. Every statutory instrument, every Act whose genesis was in Brussels, is yet another step on the road to greater European integration. Since our earliest treaty with another power, such as that with Portugal in the 16th century, there have always been times when there has been a loss of some sovereignty, but that has been outweighed by the greater benefit. Therefore, a surrender of sovereignty is not always against the interests of the state. The advantages must always be weighed against the disadvantages; it must always be a question of degree.

Bilateral treaties can be initiated only by the British Executive, with the approval of Parliament, under the Ponsonby rule. That is not the case with legislation emanating from Brussels, especially that which is subject to a majority vote in the Council of Ministers—that is, not subject to unanimity. Nevertheless, I welcome some European legislation set out in the Maastricht treaty, especially that which gives power to the courts to ensure that rules rigorously applied in Britain are also applied in other European countries that have—how shall we put it?—a more flexible approach to the enforcement of national legislation.

However, let us be clear—not all integration is in this nation's interest. I shall expand on that later. First, I shall return to the subject of our debate, which is whether or not to hold a referendum. It was in 1890 that the Liberal Unionist constitutional lawyer Dicey wrote a pamphlet called "Ought the Referendum to be introduced into England?" At the time, he was concerned with home rule for Ireland. Some 105 years later, it is again the Liberal Democrats, and, it must be said, others, who pose the question whether we should use a referendum to solve a problem that divides Parliament, and not across party lines. Let us make no mistake, views on Europe are as diverse on the Opposition Benches, as we have heard this evening, as they are on the Government Benches.

I believe that referenda—I say "referenda" and not "referendums"—are a surrender of the responsibilities that we, as parliamentarians, have fought for over the years. To those who might say that a referendum is a useful tool as a means to an end, I would say that the outcome of referenda are not always predictable. For while it might be assumed that a referendum on Europe would reject greater integration, I believe that if, during a referendum campaign, enough industrialists and others were to predict mass unemployment—wrongly in my opinion—as a consequence of no greater integration, for fear of jobs and general well-being, a referendum might well come out in favour of greater European integration—hardly the result desired by many who are arguing today for a referendum.

The current vexed question is whether a single European currency or fixed exchange rate, for they are the same thing, is an integration too far and a surrender of our constitutional right to government. Is that, too, a question of degree? I think not. I believe that this is one of those rare occasions when there is a clear line to be drawn; when reality is not a shade of grey and it is only the politician who sees it simplistically in black or white.

Although my right hon. and learned Friend the Chancellor was right to say that a single currency is not explicitly a surrender of sovereignty, any economic or historical model would say that implicitly it must be so. When Germany formed its customs union in the 19th century, it led to economic and political union. That worked for Germany in economic terms, although historians might argue that over 70 years it also led to three European wars—but that is not the point.

Political union worked in Germany because the Lander were culturally similar, sharing a common language system, a similar legal system and, on the whole, populations whose lifestyles and personal goals were similar. Garibaldi's unification of Italy's city states, however, has not been so successful. Although the language and legal systems are similar, Italy's population varies greatly between the north and south and that is not simply a function of economic activity. Italy's instability lies with its huge cultural differences.

If there were a referendum on a single currency, would we be voting for a European political union? The answer would definitely be yes. That is not demonstrated only by historical models, for without control of interest rates and other mechanisms, the state would have to surrender its sovereignty on all economic policy, if it were not to be subject to social instability arising from resultant unemployment and falls in living standards.

Mrs. Gorman

I notice that my hon. Friend has tipped a lot of pound coins on to the Bench. Of course, once upon a time, we used to have coins that were more valuable. What will happen to the pound in our pockets if we go into a single currency? Will it be anything like decimalisation, where the value of money halved and the price of everything doubled?

Mr. Fabricant

Many of the pounds in my pocket, or, in this instance, on the Bench, would be diverted to the "Club-Med" countries, especially countries such as Greece and Portugal, which would need sustaining if we were to have economic union.

Who can doubt that if sovereignty were not surrendered in favour of a single political entity, the most powerful economy in any monetary union would be the dog that wags the tail—the tail in this case being all the other member states. To take that metaphor further, the dog wags the tail in the interests of the dog and not of the tail. The only possible course of action for the other member states would be to join a single political state with its dominant former partner to mitigate the effects of monetary union.

If a future referendum were to decide on monetary union, even assuming that the convergence criteria were met by all 15 member states, political stability would be short-lived without political union. Full economic union across states and across peoples as varied as the Greek hill farmer and the German factory worker would lead to huge divergent stresses and strains which would pull the union apart again. If that is the case now, how much more unstable would be a union of states including those from eastern Europe, whose economies are even more diverse? Are they to be excluded with other states from an inner-European hegemony? Believe me, it will not only be the common agricultural policy that would be unfundable and unworkable.

As we have heard, Eddie George, the Governor of the Bank of England, has graphically pointed out some of the uncontrollable strains and movements of peoples which would be a natural consequence of monetary union. Only a super-state could have any hope of controlling those. There could be no turning back. No sophisticated economy could recreate its own currency once it has been absorbed into a greater whole. Thus, if we were to have a referendum on the question of monetary union, it would be a logical consequence that we would also be voting on an inevitable political union and virtual super-state.

That raises a further question. If, in a world, perhaps in the near future, of huge trading blocs, it were deemed necessary for Britain to enter into a monetary union, I personally would rather Britain's union were with states with whom a commonality of cultural and political interest existed, for only then could such a union be stable and enduring. I do not see it as a prospect within the next 20, 40 or 60 years, if ever, but I speculate as to whether Australia's dissatisfaction with her Pacific rim neighbours, and the United States of America's discomfort with her neighbours to the south, might lead to the conclusion that, as the USA and the old Commonwealth share a common language, culture and legal system, mutual integration might be a logical progression.

This might be the only union as enduring as the 288-year-old Union of Great Britain, despite the fact that the Labour party seems determined to break that Union. What of the distances between these countries with mutual self-interest? Do they create impenetrable barriers? I think not. Modern technology and the nature and content of international trade make distance far less relevant, and this will be even more so in the future.

In summary, I am not enthusiastic about referenda per se. They are unpredictable and are a rejection of the powers of Parliament but, if we were to have a referendum on Europe, the questions must be clear. Do we want greater integration? Do we want monetary union, which will inevitably lead to political union and absolute loss of sovereignty? Do we want union which would be intrinsically unstable, with a mixture of peoples with different goals and different dreams?

When I was in business, immersed in international trade—much of it in Europe—I would have welcomed a fixed exchange rate, a single currency, but I would not have done so at the expense of higher taxation and potential political union introducing socio-business legislation through a socialist back door. By maintaining our opt-outs won for us at Maastricht, we would still, without monetary union, have access to the European markets so needed by our business men as well as those investing in Britain from outside Europe. Does the spectre of the future lighten a different vision?

I am not a Euro-sceptic but a Euro-pragmatist. Unlike some hon. Members, I have lived and worked in many countries in Europe and speak three European languages other than English. I welcome a free trade area in Europe among nation states and the power to enforce it through the courts. However, should we ever need to seek monetary union—I hope that we do not—should we not do so with different partners, partners who are from far beyond our European borders but who share the same dreams and aspirations and who could, in a democratic confederation—should this be necessary—realise the spirit of a new English-speaking nation whose limitless potential could finally be snatched from what is, in effect, a loveless and barren European marriage of convenience?

9.16 pm

Mr. Andrew Mackinlay (Thurrock)

I rise to speak primarily because I am enthusiastic about referendums as a device for securing a legitimate mandate from the electorate and because, more generally, as a candidate in five parliamentary elections I campaigned for parliamentary and constitutional reform. I am therefore pleased to have this opportunity to speak for the greater use of referendums in the United Kingdom, and not only for the narrow question of further integration in the European Union.

One issue that has not been raised in the debate is the undemocratic way in which we ratify treaties. It is time that we followed the example of other democracies where, when the Government sign treaties, those treaties are confirmed by an Act of Parliament at the very least. In this country, the royal prerogative is used, which is profoundly wrong.

The Maastricht legislation, which has preoccupied many of us since the general election, was not to ratify a treaty but to deal with the consequential legislative arrangements that flowed from our having signed the treaty. I want Parliament to confirm treaties by Acts. If major constitutional implications follow thereafter, they should be put to the people in referendums.

I speak as someone who has been described as a Euro-supporter. That is a crude and rather stupid term, like left wing and right wing. I have been a member of the Labour party for 29 years. For 28 years of those years, I have been described as a right winger. This year, I have noticed that I am described as a left winger. I have not shifted an inch—other people have passed me by. The terms left wing, right wing, Euro-sceptic or Euro-supporter are meaningless.

I do not believe that it would be feasible, practical or in the best interests of the United Kingdom to contemplate withdrawing from the EU, but it is probably time that Parliament checked public opinion. It certainly should do so after the IGC conference because, whether or not some of us are comfortable in the EU, there is clearly a need to reaffirm policy with the electorate. That can only be done by a referendum for the reasons that have been canvassed this afternoon: that there are differences across the parties and that one must deal with so many other issues at general elections.

A referendum would be democratic and appropriate, and it would also mean that the ambivalence and hostility to the EU would have to be combated by the people who wish to promote Europe. There is no real debate about Europe, and a referendum would allow both sides to focus on the issues. That is not happening at present, and therefore I would welcome a referendum.

Speaking as a voter, I am uncertain about how I would vote in 1997 or 1998, but we should have the opportunity to vote. The issues should be thoroughly explored.

Mr. Fabricant

Will the hon. Gentleman give way?

Mr. Mackinlay

No. I have listened to a lot of claptrap today, and I want to have my say. It is an important issue to me for the reasons I explained a few moments ago. I have fought five general elections—more than a lot of Members—and this is one of the things on which I campaigned on each occasion.

The right hon. Member for Worthing (Sir T. Higgins) reiterated an argument made by other hon. Members: that these are complex issues, the implication being that the ordinary elector could not understand or comprehend them. That is a deeply insulting argument, and it is also baseless. That argument was advanced by people who resisted the Reform Act 1832, because they believed that the middle classes could not possibly understand the complex issues involved in running the UK.

The same argument was advanced by those who resisted the franchise for those who were no doubt deemed "the great unwashed", or working-class people. It was thought that they could not possibly understand the complex issues. The argument was also used by those wishing to prevent women from having the right to vote. It is nonsense, and deeply insulting to the electorate, to suggest that they cannot comprehend such matters.

Members of the House voted for a referendum in the 1970s because it suited politicians on both sides, and primarily the Labour Government. I am opposed to having referendums a la carte to get over political differences, and that is why there should be a constitutional referendum Act which provides how and when major constitutional issues should be put to the people. Those include an elected second Chamber—which I support and which I hope my right hon. and hon. Friends will be able to introduce when they form the next Government—electoral reform and fixed-term Parliaments. Those issues need to be put to the electorate after the principal Act has been passed.

We are misreading the views of the electorate. A great deal of harm may result if, when we accede to treaties or accept constitutional changes, we dragoon people without the full-hearted consent of Parliament and of the people. It is undemocratic and foolhardy in the extreme, because the dam eventually breaks. I speak as somebody who can be probably described as more of a Euro-supporter than Euro-sceptic. It seems profoundly foolish to dragoon the British people into change when there is no mandate to do so. If there was a proper debate, the matter could be settled.

The argument has been advanced that people such as my hon. Friends the Members for Newham, South (Mr. Spearing) and for Bow and Poplar (Ms Gordon) never accepted the last referendum. That is not fair—subsequent treaties were acceded to, so the debate was, legitimately in their view, reopened. If there was a referendum and it was decided to accept constitutional change or a surrender of sovereignty, I suspect that the hon. Members for Milton Keynes, South-West (Mr. Legg) and for Southend, East (Sir T. Taylor) and others would accept the voice of the people. Those hon. Members have said that they would do so. I too understand that spirit and accept it.

It is time that we in the House started to think of a referendum as being a virtue and being highly desirable in our developing democracy. I look to my hon. Friends who will form the next Government to be bold and to start saying that we will have constitutional innovations—not to get us out of political difficulties, but because it is right. If there is a Division, I shall be obliged, and will wish, to support the motion.

9.25 pm

Mr. Walter Sweeney (Vale of Glamorgan)

As so often, the Liberal Democrats' motion, on which we may vote this evening, looks both ways. Most, if not all, of the Liberals seem to believe in a united Europe, but most Liberals have enough nous to realise that they are out of step with the views of the British public who, while in favour of membership of the European Union, were against the surrender of sovereignty that resulted from the Maastricht treaty and are against any further surrender of sovereignty.

The Liberals are trying to have it both ways. They are being pro-European—indeed, ardent federalists—but are saying to the great British public that, if things go wrong a few years down the road, do not blame us as we were the party that called for a debate in Parliament advocating a referendum.

The motion looks as though it has been cobbled together. The debate has shown the variety of opinions across the House in all three major parties. The hon. Member for Swansea, East (Mr. Anderson) referred to the inadvisability of holding a referendum because it would establish a precedent and would encourage referendums on other topics, such as the death penalty or devolution in Scotland or Wales.

The fundamental distinction between a vote on the death penalty and a vote on an issue of constitutional importance is clear. Once we had acceded to the treaty of Rome or the Maastricht treaty, we had taken an irrevocable step, limiting Parliament's sovereignty and placing ourselves in a position from which we could not turn back. If Parliament were to reintroduce the death penalty for murder—it could, because the death penalty still exists in law for treason and, I believe, for arson in the Queen's dockyards—and a future Parliament disapproved, there would be nothing to stop that later Parliament repealing or amending the legislation. However, the issue that we are discussing today is quite different.

A referendum should not be used as a cop-out to salve Liberal Democrats' consciences on the destruction of the United Kingdom or as a means of making a spurious appeal for people to vote for them. A referendum should not be used simply to stitch together, artificially, differences in the Government as occurred in 1975. A referendum should not be used as a device to exempt the present Parliament from the responsibility of having a debate on fundamental constitutional issues, with a free vote at the end. Parliament and the Conservative Government erred in not having a referendum before implementing the Maastricht treaty. Where there is a fundamental and irrevocable change to the constitution, the Government are not only justified in presenting the issue to the public but have a duty to do so.

That duty is even more strongly held if no clear choice is offered at a general election. When the Conservatives took Britain into the European Economic Community in 1973, they did so following a general election at which the Conservatives supported entry and the Labour party opposed it. The public had a choice, as Enoch Powell so graphically illustrated when he, as a staunch Conservative, suggested that people should vote Labour to prevent Britain's entry into the EEC.

At the most recent general election, the public had no such choice. The public knew that if they were Euro-sceptically minded they had to vote Conservative, because at least the Prime Minister had attempted to negotiate certain opt-outs at Maastricht and they preferred the thought of that to the thought of Maastricht with bells on, which we would undoubtedly have received if the Labour party had won that general election.

In short, it is vital that we should recognise that a referendum may be appropriate, indeed necessary, under certain circumstances, but not under the circumstances envisaged by the Liberal Democrats—[interruption.]—as they say that we should have a referendum before any substantial alteration of the present constitutional settlement between the European Union and its member states. That means that if, by some miracle, the Government were able to negotiate some reversal of the ratchet effect of Maastricht, we would need a referendum to return us to the status quo prior to Maastricht. That would be ridiculous, because we were not given a referendum on ratifying the Maastricht treaty. Why should we need a referendum to throw it out of the window?

9.31 pm

Mr. Charles Kennedy (Ross, Cromarty and Skye)

As they say, "follow that!" An extremely interesting debate took on slightly different proportions with the final two speeches from the Conservative Benches, which I will not attempt to follow. The hon. Member for the Vale of Glamorgan (Mr. Sweeney) was perhaps slightly too Machiavellian in the motives that he ascribed to us for initiating the debate, and the hon. Member for Mid-Staffordshire (Mr. Fabricant) perhaps came out with the quote of the day, saying that what he disliked about referendums was the fact that they tended to be unpredictable.

Mr. Fabricant

I did not say that.

Mr. Kennedy

I shall have a look at the Official Report, but I am sure that the hon. Gentleman used words very much to that effect.

I congratulate the hon. Member for Thurrock (Mr. Mackinlay) on his excellent and lucid exposition of the crux of the case in favour of extending the referendum principle generally to constitutional issues. That was our main motivation in tabling the motion.

I shall not revisit any of the parliamentary or party political controversy—especially across the Opposition side of the House—that has helped frame the context of today's debate. Throughout the debate, the eagerness to engage both sides of the argument from the Back Benches has not exactly been matched by either of the two Front Benches. Indeed, I was left with the strong impression that the Minister and the Labour shadow spokesperson, the hon. Member for Gateshead, East (Ms Quin), would far rather have been anywhere than in the Chamber, having to discuss the European dilemmas and issues that they endeavoured to explore this afternoon.

It is extraordinary, in an Opposition day debate, to find the Government of the day unable or unwilling—or both—to table an amendment of their own, and to give any sign of their position in the Division Lobby. I wonder why that might be. It is equally extraordinary that there is no formal Labour amendment to the motion. It appears that, in a different sense, we have two opt-out parties in terms of the respective leaderships of the Conservative and Labour parties towards the debate and what has been suggested.

Leaving aside the principle of consulting people about constitutional matters, which goes beyond the issue of party politics and the lifetime of any Parliament, the reason for moving towards a referendum must be the rather depressing reality of British politics, certainly since the last general election and perhaps since the Maastricht negotiations which preceded that election. The Government have failed to provide leadership on the European issue because of internal divisions and a lack of purpose in confronting those divisions effectively and coherently. I shall return to that point in a moment.

As one Conservative Member said, on the European question—not least the matter of a single currency—it seems that Labour and the Conservatives essentially occupy much the same ground. They do not appear to rule out entirely the case for a referendum, but at the same time they are being delphic about the desirability of a single currency.

It is fair to let the Leader of the Opposition use his own words to characterise Labour's position on the issue. In The Times on Saturday he wrote: But I am clear about the direction in which I wish to lead the Labour Party. If convergence can be achieved, and if other countries go ahead with a single currency, it would be folly not to recognise the dangers of exclusion. In principle, if there is such real convergence, then clearly there could be benefits to our participation given the increasingly global nature of the economy in which we live. My guess—and it is only that—is that a single currency among any European countries is unlikely by 1997, possible by the end of the century and probable at some point in the not-too-distant future after that". I hope that, in the not-too-distant future between now and the next election, we will have a crystal clear idea of exactly what the Labour party proposes. We will obviously have to look at the conditions and the convergence criteria; that is the sensible thing to do. If it comes to a referendum, it behoves all political parties to give a clear idea to the public about exactly which direction the debate will move in.

Mr. Alex Salmond (Banff and Buchan)

I am enjoying the hon. Gentleman's speech and I agree with him about the Labour party's abdication of responsibility in not either sponsoring an amendment or joining the Opposition parties in the Lobby this evening. Is it not true that, when we last discussed the Maastricht referendum issue in April 1993, which could have seen the Government defeated, the Labour Front-Bench spokesmen voted with the Government and half the Liberal party voted with the Government and half voted against the Government?

Mr. Kennedy

I appreciate that the hon. Gentleman may have had to attend other engagements in Scotland earlier today and he missed the discussion of that point at the outset of the debate. My right hon. Friend the Member for Yeovil (Mr. Ashdown) placed on record—as I did when I spoke during that debate when I voted for a referendum on Maastricht—the fact that we treated that issue as a free vote. I am sure that my right hon. Friend will agree that, if there had been a free vote on some of the issues affecting the progress of the Maastricht treaty and the referendum, we would have achieved Maastricht via a referendum.

The debate on the referendum issue has drawn some very revealing comments from senior Conservative Back Benchers. Time does not permit me to refer to them all. However, I pick up the remarks of the right hon. Member for Mid-Sussex (Mr. Renton), who has apologised to the House for having to leave the debate early. He spoke of contributing to the debate in order to demonstrate his loyalty to the Government. I could not help but reflect that, in his final incarnation in government, he was Chief Whip to the previous leader of the Conservative party, and his loyalty on that occasion did not exactly guarantee her long-term success in that position. Perhaps the Government should not feel too sanguine about his expression of support this afternoon.

The right hon. Gentleman drew several different distinctions. There is a significant difference between a vote on capital punishment, euthanasia or abortion—which are conscience issues, where we must exercise individual conscience and discretion—and a constitutional issue. Even if a constitutional change cannot bind or entrench all future Parliaments, it clearly goes beyond party and influences future Parliaments in a way that decisions that can be revised do not.

The right hon. Member for Worthing (Sir T. Higgins) made the standard argument that a referendum is an alien concept, which it is not. There have been referendums on different issues in Scotland, Wales and Northern Ireland—and there may be another in Northern Ireland before long.

The right hon. Gentleman spoke of the importance of Members of Parliament exercising personal judgments rather than being beholden to a decision of the electorate. That would carry more force if we did not have the brutalised three-line Whip in the Government and official Opposition. When the right hon. Gentleman was pressed to say whether he would vote against a three-line Whip on the introduction of a single currency involving sterling, he did not answer. We were not to know his personal judgment, faced with that dilemma.

The most unacceptable and ludicrous criticism of a referendum was, "What would you people do if you lost—if you didn't get your way?" It was suggested that would make a mockery of Members of Parliament and of politics. Norway has not come to a standstill because the people of that country reached a decision not in keeping with a large section of the political establishment. One must accept the outcome. One must do as hon. Members on both sides of the House did in the 1970s—campaign gamely against Britain reconfirming her membership of Europe, and campaign year in, year out thereafter to change public opinion. That cannot be a serious criticism of the electoral and democratic process.

The Government are on a hook, but if there was a change of Government now, the new Administration would be impaled on exactly the same problems from its own Back Benches—as we heard and was confirmed this afternoon. The big issue is that the business of politics and the Westminster establishment is becoming more disconnected on this and too many issues from the people. On Europe, not least on Maastricht, we saw that difficulty reflected in other countries.

The political elites and chattering classes have moved too quickly ahead of their respective electorates and have forgotten the basic lesson for us all—we must carry people with us in sufficient numbers if we are to progress in a particular political direction. In a nutshell, that is the case for a referendum.

Mr. MacShane

Will the hon. Gentleman give way?

Mr. Kennedy

No, I must conclude.

The problem is that we do not know the Government's direction. The Prime Minister said that the Maastricht criteria are a necessary but not a sufficient condition to justify a single currency"— and that when those were met, we shall then consider whether it would be appropriate … to proceed". The Chief Secretary to the Treasury said: I don't want to see a single currency, period, for as far as I can possible foresee. I would hesitate for an eternity before I came out and said I would vote for a single currency. The Foreign Secretary said: To say either yes or no now to the option which might occur in, say, 1999, would be quixotic and unnecessary. 'Never' is as foolish a word as 'now' in this context. The Secretary of State for Employment, when Chief Secretary to the Treasury, said: A single currency would mean giving up the government of the UK. No British Government can give up the government of the UK. That's impossible. The President of the Board of Trade said that, if Britain did not take part in work on a single currency, the French and Germans will design arrangements in their interests and not ours". The Chancellor of the Exchequer said: It is quite possible to have monetary union without political union. It is a mistake to believe that monetary union need be a huge step on a path to a Federal Europe. The Chancellor of the Duchy of Lancaster provides the greatest quote of all: Our position on Europe is absolutely clear". We must accept that, with the Conservatives, we are offered variety in the marketplace. There is no doubt about that. The bad news for the Minister of State, Foreign and Commonwealth Office, who opened the debate—he may not have had the chance to see the 6 o'clock news—is that the clip that the BBC extracted from his speech showed perhaps the most revealing exchange of all. In a devastating intervention, the hon. Member for Milton Keynes, South-West (Mr. Legg) simply asked the Minister if he agreed with the Prime Minister's statement during the Frost interview, which has become a constitutional event all on its own. The Minister was quoted as saying: I think that that is the case still". A week is a long time in politics and it may not be too long before the Minister's position is being described as unassailable by the Euro-sceptics.

T. S. Eliot wrote: In a minute there is time for decisions and revisions which a minute can reverse. The problem with this Administration is that there are too many minutes, too many decisions and too many reversions and revisions and we do not where the Government stand. I am afraid that Labour has been pretty delphic as well.

The quicker that we get this debate away from this place, where it is harnessed and shackled by divisions and internal politics across and within the parties, and get it outside to let the people decide on any constitutional changes, the better. All the pro-Europeans, as Conservative Members have rightly identified, who make up the majority in this House, would be free from the constraints of parliamentary nonsense and party Whips.

If we argued the case outside this Chamber, we would receive a positive response. It would be good for politics in this country and a lot better for Britain's future in Europe. I commend the motion to the House.

9.47 pm

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tony Baldry)

We have had an interesting debate in which no fewer than eight of my right hon. and hon. Friends have made informed, robust and principled speeches. Although the Liberal Democrats have seemingly paraded and dressed up their principles, it has not been a principled debate. It has been a tawdry and ham-fisted attempt to score short-term party-political advantage. [Laughter.] Hon. Members may guffaw but the truth of that was. given by the leader of the Liberal Democrats yesterday in The Observer. His article was not headlined in any way to suggest that we should have a principled debate about giving people power—not at all.

The headline in yesterday's edition of The Observer, under the name of the right hon. Member for Yeovil (Mr. Ashdown), was Bring down the Tories tomorrow". It said nothing about the principle of giving power to the people through a referendum. The right hon. Member said about the Government: Tomorrow, the opposition parties could join forces to defeat them, widen their splits over Europe, and hasten their demise. Are the empty Opposition Benches a sign of what the Liberal Democrats think that they can do?

As the day unwound, we discovered more of the unprincipled nature of what all the ham-fisted charade was about. A vicious row has broken out within the Liberal Democrat leadership over a failed attempt to team up with Labour and defeat the Government tonight. The party's bid to deliver a body-blow to John Major in a Commons vote on a referendum collapsed after Labour said it would not back the move. We heard of some of the discussions which did not take place, or were alleged to have taken place, between the Liberal Democrats and the Labour party. How the attempt to set up a Lib-Lab alliance fell through is unveiled in an extraordinary memo of complaint to the leader of the Liberal Democrats—

Mr. Mackinlay

What about the referendum?

Mr. Baldry

I shall come on to the referendum, but it is important for the hon. Gentleman to realise that Liberal Democrats, who seem to treat the matter as one of considerable amusement for the House, have used one of their supply days to propose a debate on a referendum. The House is entitled to consider their motivation for that.

Their motivation has absolutely nothing to do with referendums. Their motivation was simply short-term political advantage. They thought that they could cobble together a deal with the Labour party. It is a measure of the incompetence of both parties that they are totally incapable of cobbling together any deal whatever. The House and the country are entitled to know that the Liberal Democrats' debate has nothing to do with principles and that it is all about short-term, party-political gain.

Mr. Mackinlay

Can we talk about the referendum now?

Mr. Baldry

I promise that I will talk about the referendum when the hon. Gentleman lets me make progress on this point. It is clear that a memo was sent by the Liberal Democrat foreign affairs spokesman—[HON. MEMBERS: "Oh!"] It is interesting that Liberal Members do not deny that such a memo exists. In it, the hon. and learned Member for Fife, North-East (Mr. Campbell) claimed that he had been made the scapegoat for this evening's fiasco.

Mr. Menzies Campbell

rose—

Mr. Baldry

I shall give way in a moment. It will be interesting to see whether even the Liberal Democrats can get all their Members into the Lobby this evening.

Mr. Campbell

Can the Minister tell me whether in that memo, a copy of which appears to have been stolen from the desk of my assistant, the word "scapegoat" appears anywhere?

Mr. Baldry

I am glad that the hon. and learned Gentleman does not dispute that the memo exists. It says: I am a little concerned that in the analysis of the events surrounding our Supply Day on Monday 13 February it seems to be accepted that I misunderstood my `instructions' in relation to what I was to advise Robin Cook. Let us therefore have none of this charade about today's debate being a discussion of a political matter of principle. It was about the Liberal Democrats thinking that they could embarrass the Government by cobbling together a deal with the Labour party. That they have lamentably failed to do.

Coming now to my promise to the hon. Member for Thurrock (Mr. Mackinlay) to deal with the referendum, that point turns on a very narrow compass. From our point of view it is quite straightforward; the Prime Minister put it in a straightforward way: I do not believe anything is going to happen in that conference that would remotely justify a referendum, I do not think it is going to deal with constitutional matters … if anything that involved significant constitutional change were raised in the 1996 Intergovernmental Conference we, the British, would not accept it, so the question of a referendum would not arise. As we all know, the only possible reason for anyone offering a referendum on the 1996 IGC would be if the party in question were prepared to accept constitutional change in those negotiations. Such constitutional change might include ending the veto, extending qualified majority voting, giving massive new powers to the European Parliament or providing a firm commitment to a single currency. The Government's position could not be clearer. We do not think that significant constitutional matters will be discussed at the 1996 IGC. If they were discussed, we would not accept them, so the question of a referendum would not arise.

Today's debate, however, was never intended to be about a referendum. The Liberal Democrats simply thought that they might find something with which to entice the Labour party into the Lobby with them. In that, they lamentably failed.

Mr. Marlow

The IGC and the single currency have both been mentioned a great deal. The Minister who opened the debate said that the Prime Minister wanted a flexible Europe. Can my hon. Friend tell the House whether a flexible Europe is consistent with a single currency?

Mr. Baldry

My hon. Friend put that question earlier in the debate. We have made our position on a single currency very clear. It is unlikely that anyone would want to go ahead with a single currency in 1996 or 1997. If anyone did so, the United Kingdom would not be with them.

In the longer term we have been concerned to point out that a single currency, launched in the wrong conditions, could tear the European Union apart—

Madam Speaker

Order. I should like to see the Minister's face rather more often.

Mr. Baldry

Sorry, Madam Speaker, I was trying to answer my hon. Friend's point.

Madam Speaker

Through the Chair, please.

Mr. Baldry

There has been a danger throughout the debate of trying to deal with hypotheses. Perhaps I may make it clear beyond peradventure to you, Madam Speaker, that, for the Government, this evening's motion turns on an extremely narrow compass. It is about a referendum. We do not see that circumstances are ever going to arise in which a referendum will be needed for the 1996 IGC because, as we have made clear, no substantial constitutional issues will arise. If they do, we shall vote against them.

For the reasons I have set out, we do not consider that it is worth voting on the motion. It has been brought forward for short-term, party political gain, and I advise my right hon. and hon. Friends to abstain.

9.55 pm

Mr. Nigel Spearing (Newham, South)

It is unusual to have the opportunity to speak at this time when the House is debating a motion. I think that the opportunity should be taken for a number of brief reasons.

First, the emphasis tonight has been placed on people. That is absolutely right because Parliament—all of us—refer to the people for power, and that power is a trust. Tonight, in Dresden, they are talking about what happened in Coventry. Many people, both inside and outside the House, look to the treaties that we have been discussing—[Interruption.] Perhaps those sitting in front of me will listen to my remarks, because I am addressing them especially.

There are many who look to the treaties as a means of ensuring that Dresden and Coventry do not ever happen again, and that people in all the nations of Europe and all parts of Europe live together in a degree of harmony. That is what all of us and all our constituents want.

The problem is that many think that the treaties that are before us, and on which there could be a referendum, are not the way forward. The treaties confine us in our choices. The choice of the people in future will be denied when it comes to a balance of private and public enterprise, the borrowing requirement or what Chancellors of the Exchequer can do. Narrow, nasty nationalism, both here and in other parts of the European continent, is likely to be fanned and inflamed rather than prevented. I believe that profoundly because of the constitutional analysis of the treaties.

It is unfortunate that there has not been sufficient information about any of the treaties which Conservative Members and their friends have passed without reference to the people. The treaties are with us because of an election during which the issues were not put to the people. The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) and his successors had no general election mandate for the treaties. Any matters of this sort that we are called upon to deal with in future must be accompanied by absolutely full information.

The Government have not even rewritten and republished the treaties that we are talking about. The so-called Maastricht treaty was a treaty on union. The treaty that preceded it, the Single European Act, and the original treaty of Rome form a uniform and entire volume. The Government have not printed it. They are suppressing information at almost every stage. Everyone who is in favour of the treaties wants them not to be understood.

Once they are understood, the chances of a peaceful and prosperous Europe that we all want to see—I helped to rebuild Hamburg after the war and the terrible fires there—will be much less good. There must be co-operation and no coercion. There must be consent, not coercion by political and economic forces, which is implicit in the treaties. The treaties must be examined in far greater detail than we have been able to do this evening or on previous occasions when they have been debated.

Question put:

The House divided: Ayes 47, Noes 3.

Division No. 71]	[10.00 pm
AYES
Alton, David	Bruce, Malcolm (Gordon)
Ashdown, Rt Hon Paddy	Campbell, Menzies (Fife NE)
Barnes, Harry	Cash, William
Beith, Rt Hon A J	Chidgey, David
Bendall, Vivian	Corbyn, Jeremy
Benn, Rt Hon Tony	Davies, Rt Hon Denzil (Llanelli)
Bennett, Andrew F	Davis, Terry (B'ham, H'dge H'I)

Ewing, Mrs Margaret	Michie, Mrs Ray (Argyll & Bute)
Field, Frank (Birkenhead)	Mitchell, Austin (Gt Grimsby)
Foster, Don (Bath)	Rendel, David
Gill, Christopher	Salmond, Alex
Gorman, Mrs Teresa	Shore, Rt Hon Peter
Grant, Bernie (Tottenham)	Simpson, Alan
Harvey, Nick	Skinner, Dennis
Johnston, Sir Russell	Spearing, Nigel
Jones, Lynne (B'ham S O)	Taylor, Matthew (Truro)
Jones, Nigel (Cheltenham)	Taylor, Sir Teddy (Southend, E)
Kennedy, Charles (Ross,C&S)	Tyler, Paul
Livingstone, Ken	Walker, Bill (N Tayside)
Lynne, Ms Liz	Wallace, James
Mackinlay, Andrew	Wilkinson, John
Maclennan, Robert	Williams, Rt Hon Alan (Sw'n W)
Madden, Max	Tellers for the Ayes:
Maddock, Diana	Mr. Archy Kirkwood and
Mahon, Alice	Mr. Simon Hughes

NOES
Hicks, Robert
Higgins, Rt Hon Sir Terence	Tellers for the Noes:
Rathbone, Tim	Mr. Tony Marlow and
	Mr. Andrew Welsh

Question accordingly agreed to.

Resolved, That this House believes that the popular assent of the people of the United Kingdom should be sought through a referendum before any substantial alteration of the present constitutional settlement between the European Union and its member states.

Mr. Charles Kennedy

On a point of order, Madam Speaker. Despite the abstention of Labour and Conservative Front-Bench speakers, which one assumes was based on collusion for their own purposes, the House has unambiguously voted by a clear majority in favour of the motion moved by my right hon. Friend the Member for Yeovil (Mr. Ashdown). Would it be in order during tomorrow's business to have a statement from a Minister telling us how the Government intend to give effect to the recorded wishes of the House?

Madam Speaker

If a Minister wishes to make a statement tomorrow, I shall, of course, permit such a statement.

Mr. Streeter

Further to that point of order, Madam Speaker. As the Division was unwhipped, can we be sure that everyone has left the Aye Lobby? I am particularly concerned that the hon. and learned Member for Montgomery (Mr. Carlile) and the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) might still be there, because they have not voted for their own motion. Could you look into that, Madam Speaker?

Madam Speaker

I do not look into the way in which hon. Members vote, but when I was a Whip I was what was called a sweeper and I ensured that everybody was swept out of the Lobby before the Doors were closed.

Mr. Skinner

On a point of order, Madam Speaker. Before this shambles is over, we should have it recorded that the person who moved the motion for the referendum, for which I voted, was not in the Lobby. When I went in I could not find the leader of the Liberal Democrat party at all.

Madam Speaker

That is not a point of order. The way in which hon. Members vote is not a matter for me.

Mr. David Harris (St. Ives)

Further to that point of order, Madam Speaker. Surely it is contempt of the House for the leader of the Liberal Democrats not to be here for the declaration of the outcome of the Division. I do not know whether he was in the Aye Lobby because I was not in that one. The right hon. Gentleman was not here when we had an important vote on the future of the common fisheries policy. He certainly did not vote on that occasion.

Madam Speaker

No point of order arises. The whereabouts of hon. Members is not a matter for me.

Mr. Salmond

Further to that point of order, Madam Speaker. There was a serious point of order containing an allegation of collusion between the Labour and Tory parties. Seemingly it falls short of collusion to deny the House the right to vote on a motion. Is that the sort of matter on which you have powers to investigate—deliberate collusion between Labour and Tory Front-Bench spokesmen to deny the House a vote on this matter?

Madam Speaker

Internal politics or politics between one party and another is not a matter for me. When a Division is called, Members should be here to vote as they wish. I am not interested at all in inter-party warfare, inter-party rivalry or inter-party loving because we are now close to St. Valentine's day.

Mr. Marlow

Further to that point of order, Madam Speaker. We have just had a vote on a referendum and the House has voted by a far larger majority for that referendum than it did for the Maastricht treaty. Would it be in order to have a referendum on the Maastricht treaty?

Madam Speaker

I do not deal with matters in retrospect.

Mr. Bill Walker (Tayside, North)

Further to that point of order, Madam Speaker. I seek your guidance. I am desperately concerned about Scottish affairs. The Scottish National party appears to be voting in two ways—its leader votes one way and its Whip another. That gives me cause for concern about the future of Scotland and the possibility of referendums on Scottish matters.

Madam Speaker

Order. The hon. Gentleman has been here long enough to know that that is not a point of order, but a point of view. It should be expressed on another occasion, not through an abuse of the House on a point of order.

Mr. MacShane

On a point of order, Madam Speaker—the first point of order that I have raised since I have been a Member of the House. I am very much wearing my L' plates.

Madam Speaker

That is why I called the hon. Gentleman. I knew that it was his first point of order.

Mr. MacShane

Can you, Madam Speaker, give me some guidance on whether a vote that commands only 6 per cent. of the Members of the House has any validity and whether if, as I hope, one day there may have to be a referendum on Europe, you will encourage more than 6 per cent. of the population of this country to take part?

Madam Speaker

Referendums in this country have absolutely nothing to do with me. I am concerned only with ensuring that Divisions in this House are carried out properly and correctly, and this one was.

Mr. Andrew Welsh (Angus, East)

Further to that point of order, Madam Speaker. Would it be in order to have a teach-in so that the hon. Member for Tayside, North (Mr. Walker) can understand the difference between being a teller and actually voting and, further, understand how being a teller can show the collusion between the Labour and Tory Front Benches, acting together to prevent a fair vote in the House?

Madam Speaker

I thought that I had dealt with that point, but if I did not do so adequately the hon. Gentleman has just done so.

Several hon. Members

rose—

Madam Speaker

Order. How many more points of order are we to have?

Mr. Harry Barnes (Derbyshire, North-East)

Further to that point of order, Madam Speaker. As some hon. Members believe that it is highly significant that the House has just carried a vote by a majority of 44, which may require a statement from the Leader of the House, was not Friday's business also very significant in that the majority was four times larger for the Civil Rights (Disabled Persons) Bill. Should not that also require a statement to the House?

Madam Speaker

I do not think that that is a point of order for me. The House makes its own decisions on these matters.

Mr. Peter Bottomley (Eltham)

Further to that point of order, Madam Speaker. The hon. Member for Angus, East (Mr. Welsh) questioned whether tellers counted in the vote. Can you confirm that the requirement to have 40 hon. Members present and voting means 36 hon. Members plus the tellers and that, in fact, those who are tellers count as having voted?

Madam Speaker

The hon. Gentleman is absolutely correct.

Mr. Don Foster (Bath)

Further to that point of order, Madam Speaker. As you raised the point about sweeping, may I point out that I was sweeping in the Aye Lobby and I can assure you that no one was left in the Lobby? Those of my right hon. and hon. Friends who were referred to earlier were, in fact, absent with the permission of our Chief Whip—but, as was quite clear, their presence was not necessary as we had a very large majority without them.

Madam Speaker

I am delighted to hear that the hon. Gentleman follows my example of being a very good sweeper.