HC Deb 27 February 1995 vol 255 cc791-816 10.14 pm
The Paymaster General (Mr. David Heathcoat-Amory)

I beg to move, That this House takes note with approval of the Government's assessment as set out in chapters 4, 5 and 6 of the Financial Statement and Budget Report 1995–96, as updated, for the purposes of section 5 of the European Communities (Amendment) Act 1993. This is the second section 5 debate that has been held. As last year, the House is invited to approve the economic and budgetary information to be sent to the European Commission in accordance with the provisions of the treaty. That information is contained in chapters 4, 5 and 6 of the "Financial Statement and Budget Report", which is usually called the Red Book. At the end of chapter 1 of the Red Book, it is mentioned that those chapters will be used for this purpose and will form the basis of the appropriate submissions.

The House will also know that, following the decision to leave the rate of VAT on domestic fuel and power at 8 per cent., my right hon. and learned Friend the Chancellor of the Exchequer announced further measures on 8 December 1994 to keep public borrowing on a downward path. The increased rates of duty on alcohol, tobacco and road fuels, together with some reductions in public expenditure, were approved by the House and were incorporated in revised tables. A set of revised Red Book tables was published in due course.

The Red Book, therefore, in its original form and with the revised tables, provides the report to Parliament for section 5 purposes. This evening the House is being asked to approve that that report and those tables be sent to the Commission to discharge our obligations under articles 103 and 104c of the Maastricht treaty. The House is not being asked to approve November's Budget. That has already been done. That was and remains a matter of legitimate controversy, which was and still is being debated as part of other business.

Nevertheless, reading last year's debates, I notice that the Labour party contrived a vote against the motion, although it was never really made clear on that occasion on what grounds it objected to the required information being sent. The hon. Member for Oxford, East (Mr. Smith) is—I think—opening the debate for the Labour party—

Mr. Andrew Smith (Oxford, East)

indicated dissent.

Mr. Heathcoat-Amory

The hon. Gentleman is indicating that he will not open the debate this year, but he certainly did so last year. Indeed, I cannot resist drawing the House's attention to one of the hon. Gentleman's predictions last year, when he said that the balance of payments deficit was set to get worse. That was corrected immediately by my right hon. Friend the Member for Loughborough (Mr. Dorrell), the then Financial Secretary, who pointed out that it was getting better. The hon. Member for Oxford, East nevertheless persisted and said that the balance of payments was set to get worse. He added: Time will be the test of who is right on that."—[Official Report, 9 February 1994; Vol. 237, c. 400–2.] Time has been the test. Exports are up by 15 per cent. on a year ago and the current account was in surplus for the last recorded quarter. I hope that whoever opens the debate for the Opposition will show a little more modesty in his or her predictions and also, this year at least, vote to allow the Government's information to be transmitted to the Commission, regardless of whether the Opposition agree with the underlying policy.

In summary, therefore, I invite the House to approve the medium-term economic and budgetary position set out in the Red Book being sent to the European Commission as required under the treaty.

Mr. David Shaw (Dover)

Have my hon. Friend and others in the Treasury been able to consider the fact that the Red Book is produced to the very highest standards of accounting policies and principles in Government accounting, that other countries throughout Europe do not produce their accounts on a similar basis and that many other countries have unfunded pension liabilities of an extraordinarily large nature? Is the Commission able to take our Red Book and use those accounts meaningfully in Europe or, in fact, will it not know what to do with our Red Book in relation to the accounts of other countries?

Mr. Heathcoat-Amory

My hon. Friend is right to say that the way in which we present our accounts and Budget projections is a model that we could well commend to other member states. It reflects credit on us that the projections provide an easily understood and comprehensive guide to our tax and spending priorities. I do not know whether the Commission receives similar information of such a high standard from other member states. However, all other member states are required to send similar information to the Commission and, on the basis of that information, the Commission produces a report and draws up an assessment of how the economies of Europe are converging or diverging.

I commend the motion to the House.

10.19 pm
Ms Hilary Armstrong (Durham, North-West)

I apologise to the House as I am losing my voice. I am sure that hon. Members will be pleased about that because it means inevitably that I shall have to make a shorter speech than I would otherwise have made.

It was interesting that the Minister was prepared to make such a short speech in which he did not say very much. He has moved a motion that is before the House simply because of the magnificent way in which my hon. Friend the Member for Oxford, East (Mr. Smith) and his colleagues managed, in the debates on the approval of the Maastricht treaty, to put down what was referred to at the time as a ticking time-bomb. As a result of that, the Government were forced to concede a section of the Maastricht Bill, along with others, in respect of which the House has an opportunity to debate information that we subsequently forward to the European Community.

Mr. Tim Smith (Beaconsfield)

Will the hon. Lady give way?

Ms Armstrong

I have hardly started. I do not know what on earth the hon. Gentleman can query at this stage, but I shall certainly give way to him.

Mr. Smith

I am grateful to the hon. Lady for giving way. Can she explain why we are having this debate? Why was the hon. Member for Oxford, East (Mr. Smith) so keen for us to have this debate when all the information is set out in the Red Book and it is sent off to the Commission? What is the point of having this debate?

Ms Armstrong

The hon. Gentleman obviously trusts the Government, and exactly what they say, absolutely. As the evening passes, perhaps I can persuade him that that is not the view of the British people. Very few of us, and even the hon. Member for Beaconsfield (Mr. Smith) who, at one stage, was vice-chairman of the Tory party, know precisely what Government policy is in respect of this and other areas. We do not know the Government's views on convergence. We have to wait until Wednesday to see whether the Prime Minister has any new information for us.

The Prime Minister told us on Friday that he was going to give us the definitive position at long last. Some of us wonder how long that position will last, because we have been told that on numerous occasions before. I wonder whether the position will last until the end of the debate. I wonder even more whether it will last until the end of the Government and whether the Government will last much longer than the debate.

According to the motion, the House will commend the Government's assessment to the Commission "with approval". I have very little sense of approving the Government's policy set out in the Red Book. It is our duty and responsibility as an Opposition to ensure that, on every occasion, the House has an opportunity to examine these issues with much more care than the Minister was minded to show this evening.

These questions are pertinent to our debate tonight, even though we cannot be fully assured of the Government's positions because they change so frequently. Indeed, they change not just because of debates in this House, but because of what is said by Conservative Members here, there and everywhere—wherever they may be.

Mr. John Butterfill (Bournemouth, West)

Will the hon. Lady give way?

Ms Armstrong

We heard from the Chief Secretary on one occasion—I think that it was on television one morning—that he would proceed with monetary union virtually over his dead body. One very live body who has been concerned by such debates is trying to intervene.

Mr. Butterfill

Which of the convergence criteria is not satisfied by the information that is set out in the Red Book?

Ms Armstrong

We do not yet know what convergence criteria the Government seek to satisfy and to have laid down. The Prime Minister suggested that he will seek to renegotiate some convergence criteria. It is appropriate to look at not only the convergence criteria that the Prime Minister originally negotiated but precisely the convergence criteria that the Opposition have been urging on the Government for some time, particularly those concerning the nature of the real economy. Nobody else wants me to give way.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

Will my hon. Friend give way? [Interruption.] Does she not find it very revealing that, when there is enormous sensitivity in the country about convergence criteria, there should be a feeling in the Government that the House of Commons does not need to debate the detail and the implications of this highly sensitive and important subject?

Ms Armstrong

I thank my hon. Friend. As usual, she is right and also very supportive in the way that I have come to expect from her over the years.

Here we are, 18 or so months since the passage of the Bill that introduced the Maastricht treaty, yet we are still in the dark about the Government's policy with regard to their future role in Europe. Having upset one group of supporters, will the Prime Minister now side with those whom, just a short time ago, he kicked out of the parliamentary party?

We know that, come what may, we shall not have a serious debate on how we should address the real problems in the economy of Britain, to enable people who have suffered most from the Government's economic policies to prosper. We shall debate the issue in order to ensure that the Government can again secure a majority, having lost the backing of other supporters in the House. The Prime Minister's motives, as ever, are about how he can stitch something together for the benefit of his own party, rather than about how he can tackle the real problems in the economy.

On Wednesday, will the Government support some developments in the real economy for which the Labour party has been arguing, including working towards full employment? Unfortunately, this debate is taking place without our knowing the answer. We are debating Government policy as reflected in the Red Book. From it, we know that there are serious problems in the real economy.

The Budget that we are asked to approve and to send to Europe confirms the Government's determination to press forward with tax increases, which will mean that a typical family will pay £800 a year more in taxes since the Government were elected in 1992. I seem to remember more than one clear statement from the Prime Minister, promising that there would be no tax increases after the election. The British people have learnt just how little they can trust the Prime Minister's word on taxes. Their pressure led to the Government being defeated on the most unfair of their tax increases, the increase in VAT on fuel.

It is interesting to note that the goals in article 2 of the Maastricht treaty include sustainable and non-inflationary growth respecting the environment. The Government had to throw out what they claimed was their "green tax"—not that any of us ever agreed that that was what it was. They had to throw out the measure to impose VAT on fuel, and the Minister has not said tonight how he will satisfy the need to respect the environment.

Mr. Butterfill

The hon. Lady has been most generous in giving way.

What does the hon. Lady think is the purpose of the proposed landfill tax, if it is not to respect the environment? The same applies to the increase in duties on fuel. Surely those are important environmental measures.

Ms Armstrong

We still have a long way to go before we find out precisely what the Government's intentions are in regard to the landfill tax, and when it will be introduced. As for the fuel tax, I believe that it will partly deter people from using their cars, but it does not begin to deal with the need to control emissions from cars and the use of fuel.

I admit that I am making a rather snide point, in that the Government were defeated on the fuel tax issue; but we must deal with realities, and the reality is that the Government were defeated. It was they who claimed that the imposition of VAT on domestic fuel was a great move towards meeting their commitments. I always doubted that, and the Government's failure to address the issue after their defeat confirms that it was never anything of the sort.

Mr. Bruce Grocott (The Wrekin)

A noteworthy feature of the interventions so far is that Conservative Members are apparently still very enthusiastic about imposing a 17.5 per cent. VAT rate on fuel. Presumably that tax promise will figure prominently in the Conservative manifesto preceding the next general election.

Ms Armstrong

My hon. Friend is right, but he applies logic to the way in which the Government will proceed; I am not sure that they ever proceed in an honest and logical way when it comes to admitting their taxation intentions to the electorate.

The Budget failed to include measures that would lead to medium and long-term growth. What is trumpeted as success by Conservative Members is soon shown to be extremely fragile. Total investment is still below its level in 1990, before the recession.

Mr. Bernard Jenkin (Colchester, North)

Will the hon. Lady give way?

Ms Armstrong

Will the hon. Gentleman hold on for a bit? My voice is all right for the moment.

Manufacturing investment in plant and machinery is nearly 30 per cent. below its quarterly level at the start of 1990. British firms must now seek to compete with 30 per cent. less investment per worker than in Germany or France, and 65 per cent. less than in Japan. The Chancellor could and should have done more in his Budget to stimulate investment in industry, and that is the message that we should have given to the European Community.

The Bank of England pointed out in its February report that capacity constraints are becoming more widespread in industry …This will increase inflationary risks unless productive capacity increases. Some people may be wondering why we quote the Bank of England today, but its predictions are normally very reliable.

The Treasury and Civil Service Select Committee has also raised the problem.

Mr. Jenkin

I am grateful to the hon. Lady for giving way and giving me the opportunity to give her another little rest. I am a little confused about the position that she is expanding. First, she voted for the Maastricht treaty Bill. That suggested that she approved of the convergence criteria. Now the hon. Lady says that she wants full employment to be an economic policy, although that is not one of the convergence criteria. Then she criticises the Government's tax-raising policies even though they are necessary to meet the convergence criteria. If we did not raise taxes in the way that the Red Book sets out, we would fail in our obligations to meet the convergence criteria. Is the hon. Lady in favour of the convergence criteria or does she think that they are too deflationary?

Ms Armstrong

The hon. Gentleman has always shown confusion. He abstained in the votes on the Maastricht treaty. I did not. He continues to claim to support the Government while opposing them on their central policies. The Labour party has always said that it wants much of the real economy to be tackled in a way that the Government are not doing and that unless that happens, the convergence criteria will not be sustainable. We have made that argument consistently and we shall continue to make it.

The Government simply fail to tackle the real problems in our economy. Those problems will increase precisely because of what the Bank of England talked about—lack of capacity. It is true that in Britain there is a lack of capacity in industry after the recession. Investment is below even what it was before the recession. It is lower now than in 1979.

Mr. Andrew Britton, one of the specialist advisers to the Chancellor, told the Treasury and Civil Service Select Committee: a lot of the capacity which one might imagine would be there because of the recession has actually been lost". That was in the Committee's report on the 1994 Budget. In other words, too many firms closed and the capacity for growth is not there. Consequently, Mr. Britton thought that the economy could only grow above trend for a couple of years. Lack of capacity for growth is also reflected in the rising problem of skill shortages. One would have thought that, having initially negotiated the terms of the Maastricht treaty, the Government would at least tackle skill shortages during the recession. But no. The figures on training are frightening. The Red Book reflects real cuts in the training budget. The training statistics bulletin demonstrates graphically that neglect. The numbers of people involved in training in and out of work declined. Most worryingly, the worst figures were among those without any qualifications and among 16 to 24-year-olds. Out of 23 countries in the Organisation for Economic Co-operation and Development, the United Kingdom has the second lowest proportion of 18-year-olds in full-time education. The country with the lowest proportion is Turkey.

In its November inflation report, the Bank of England said: At present, skill shortages are not so acute as to pose a major threat of wage inflation …there is some evidence of skill shortages and settlements may be edging upwards. Again, the Bank of England recognises that there are real problems in our economy, which will affect the Government's projections for growth and which already cause real problems in parts of the country. That is another reason why the feelgood factor that people talk about simply is not happening. Living standards are simply not improving to match people's expectations. Having weathered the recession, people believed that they would begin to experience the benefits of having paid so dearly for Government economic policies in the past few years. Far from it: if we include housing costs in the projections for this year, the average family will lose about £10 per week, so the Budget will cause real problems for real people.

Public sector investment has been cut, as well as private sector investment. The Red Book tells us that it will be cut by 9 per cent., but that will be compensated for—so we are told—by a promise of a £5 billion investment in the private finance initiative. In the past two years, only £0.5 billion has been invested in that initiative and only 12 of the 96 projects announced have got started.

Out of all the Group of Seven countries, only the United States had a lower level of Government investment as a proportion of gross domestic product between 1980 and 1990 than the United Kingdom. The fact that the Government are spending not on investment, but on paying for the costs of unemployment, is what makes the Labour party so angry. When we realise that the percentage of public spending spent on benefit has risen from 22 per cent. to 31 per cent. and many more people are dependent on benefit now than in 1979, we know just how far Government policies have failed.

This debate gives us another opportunity to make the Government face their responsibility for the economy. They have failed the country on the economy and they have failed to ensure that people are able to get off benefit and into work—the Budget gave so little opportunity to push that aspect and to make it work. The jobs that the Government estimate will be created by their return-to-work measures will be more than compensated for by the number lost because of the changes and cuts in public expenditure that they announced.

When the Government get round to investing and using investment as a tool to encourage real growth, we shall be able to have much more confidence in the future of the economy. We do not have that confidence. We do not believe that we can take note with approval of the Government's assessment as set out in … the Financial Statement and Budget Report and we will, therefore, divide the House at the end of the debate.

10.42 pm
Mr. John Wilkinson (Ruislip-Northwood)

I thought that my hon. Friend the Paymaster General was unnecessarily laconic in his opening remarks. He was, of course, following the precedent of his predecessor, my right hon. Friend the Secretary of State for National Heritage, who spoke for only four minutes in the debate last year. I think that my hon. Friend spoke for about the same time, which was an unusually modest contribution, as we are asked to approve a motion that suggests That this House takes note with approval of the Government's assessment as set out in chapters 4, 5 and 6 of the Red Book.

Normally, when the Government are pleased with their achievements they do not demonstrate such false modesty. If they are being modest tonight, it is perhaps because they have something to hide. If they have something to hide, it is not the technicalities of the motion, which are clear, as much as the inference in them, which is plain because it is set out in statute form in the European Communities (Amendment) Act 1993.

It is not Labour Members who should take pride in the fact that we are having this debate tonight but the minority on the Conservative Benches, who turned the arithmetic round to ensure that, at least for one and a half hours every year, we debate the progress of Her Majesty's Government in meeting the convergence criteria set out in the Maastricht treaty.

As my hon. Friend the Minister alluded to those criteria, it is worth reminding ourselves what they are. He referred to article 103, the first paragraph of which says: Member States shall regard their economic policies as a matter of common concern and shall co-ordinate them within the Council". This is yet further proof of something which we knew all too well—that there has been a steady erosion of sovereignty and a transfer of authority over our economic management, not least in budget deficits and the ratio of Government debt to gross domestic product.

Mr. Andrew Rowe (Mid-Kent)

On this day of all days, when the failure of a relatively small British bank has sent ripples through the entire global economy, is my hon. Friend suggesting that it is easy to isolate our economy from all the other economies?

Mr. Wilkinson

My hon. Friend makes a jump in rationality that defies belief. I was sticking to the motion on the Order Paper and the exact reference criteria set down in the treaty: the 3 per cent. PSBR to GDP ratio and the 60 per cent. Government debt to GDP ratio, which are clearly established in the relevant protocol. I did not refer to the global economy or discuss the inter-relationship between one financial centre and another but was dealing with the motion on the Order Paper. You, Mr. Deputy Speaker, will agree that, in this short debate, that is quite enough.

Mr. Butterfill

Will my hon. Friend give way?

Mr. Wilkinson

No I will not give way. The debate is short and other hon. Members want to contribute.

Mr. Butterfill


Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. That is not necessary. The other day I deliberately pointed out that good manners seem to be leaving the House. There is no need whatever for insults in these debates. On reflection, perhaps the hon. Gentleman will withdraw that remark.

Mr. Butterfill

I accept that I may have been a little unkind to my hon. Friend, but I had hoped that he would allow an intervention on that specific point.

Mr. Deputy Speaker

Does the hon. Gentleman withdraw the remark?

Mr. Butterfill

Indeed, Mr. Deputy Speaker.

Mr. Wilkinson

Thank you, Mr. Deputy Speaker.

Paragraph 3 says: In order to ensure closer co-ordination of the economic performances of the Member States, the Council shall on the basis of reports submitted by the Commission monitor economic developments in each of the Member States". This bears out exactly what I was saying. Inasmuch as the Commission has powers, if those relevant criteria are not met, to impose sanctions on countries that do not fulfil those obligations, I should have thought that it was, at the very least, a democratic requirement that this House should have an opportunity to debate the Government's performance in fulfilling those criteria.

The Red Book makes it perfectly plain that, in the coming financial year, the United Kingdom will meet exactly the criteria of PSBR to Government debt and, compared with Italy, Spain, Greece and even Belgium, has a far tougher fiscal stance and maintains a far lower ratio of Government borrowing to GDP. The fact that we do so much better, as the Red Book makes clear, shows the difficulty of achieving convergence and the quantity of funds that will have to be disbursed from well-performing economies, such as our own and those of France and Germany, to redress these imbalances of economic performance. Those transfers of resources will he a cost to our people, as we saw during the passage of the European Communities (Finance) Bill in November.

The Government should come clean about the objectives behind the convergence process. They can rightly take pride in reasserting fiscal and budgetary discipline and I share with them wholehearted approval for what they have achieved in that regard to date. The qualities of fiscal and budgetary discipline are meritorious in their own right but not in relation to a process of supervision and, potentially, ultimate control to be exercised by the Commission and then the Council of the European Union. I do not think it appropriate either that the European Parliament should be a reference body to whom the defaulting nation's performance will be reported, as is provided for under the terms of the Maastricht treaty.

That said, I will not disapprove or vote against the motion. The Government, by passing those parts of the treaty, have accepted the objectives of convergence as they relate to economic and monetary union. Although we have a technical derogation by virtue of our opt-out, nevertheless we have accepted the disciplines that are germane to economic and monetary union, regardless of whether they fulfil the circumstances of our economy at any one time. At the moment, they do and I am delighted that we have made such progress. I hope that my hon. Friend the Minister will answer those points when he replies and that his right hon. Friend the Prime Minister will do so at greater length on Wednesday afternoon.

10.51 pm
Mr. Malcolm Bruce (Gordon)

In a sense, that was an extraordinary speech. The hon. Member for Ruislip-Northwood (Mr. Wilkinson) aspires to some form of splendid isolation, but he concluded his speech by congratulating the Government on being on course for convergence and said, "Please God, let it never happen." That reflects some inconsistency in his argument.

The debate is likely to be an annual event, which probably should be a little depressing to the House. The wording of the motion could have been a little more felicitous, because all that is required is that the Government seek the House's approval to submit progress reports on our economic convergence criteria. Section 5 of the European Communities (Amendment) Act 1993, however, also asks for a report on the social and environmental goals set. Although I appreciate that it is not the Treasury's job to set those goals, the motion contains no reference to the Government having any intention to do so.

I remind the House that section 5 stemmed from an amendment tabled by the Labour party, of which the Liberal Democrats did not approve, but which the Government, rather astonishingly, accepted. Having done so, the Government should fulfil the section's terms. They have done two things to make that somewhat difficult. They have shown no regard for the full text of the Act. I am not sure what the implications of their defiance of an Act, which they accepted, amounts to. I suppose it requires someone to take them to court for a judicial review. Where is the social and environmental report, which was required by the Act? Will the Government provide it? Secondly, why are we being asked to note the Government's assessment "with approval", which requires everyone to endorse the Government's economic policy?

Many of us wish the Government to strive to fulfil the spirit of the Maastricht treaty, unlike the hon. Member for Ruislip-Northwood, but that does not necessarily mean that the Government's policies by definition will eventually lead in that direction. Tearing a few pages out of the Red Book, throwing them down on the Floor of the House and in effect saying, "This is our economic strategy; please support it," does not show willingness to accept the letter or the spirit of the Act.

Interestingly, the Government talk about the opt-out that they have secured and the current success of their convergence criteria but do not appear to come to grips with the fact that our ability to opt in may be seriously questioned, not merely whether we can meet the convergence criteria, which we have not done yet and may still have difficulty in doing. If we met those criteria, the capability of the British economy to cope with the strains that a single currency would provide may bring our ability to opt in into question.

I say that personally and as a representative of a party that wants monetary union but believes that the Government have not really set their mind to the implications with anything like the rigour that is necessary. In those circumstances, we would have welcomed a fuller explanation, not simply of where we were, but of where we were going and the way in which we were going to get there.

Mr. Austin Mitchell (Great Grimsby)

If the hon. Gentleman has those doubts about the economy's capability to fit into monetary union, why, two or three years ago, was the Liberal party chanting, "Move to the narrower bands of the exchange rate mechanism now"?

Mr. Bruce

Had the Government moved to the position that we took at the time that we said, they would not have finished up in a mess. [Interruption.] What happened—which also reinforces the case for a politically independent central bank—was that Lord Lawson did the most damaging thing that any Government could do: he joined the exchange rate mechanism at the worst possible moment, at the worst possible exchange rate and for the worst possible reason, which was to obtain a standing ovation at the Conservative party conference the next day. That is no way to run the economy and, sadly, the Government have failed to recognise that a commitment to a single currency—even in principle, never mind with or without an opt-out—requires an extremely rigorous economic policy, which the Government have shown no real application to deliver.

To finish that specific argument, which is only parenthetical but which I wish to make absolutely clear, I should say that it remains the opinion of the Liberal Democrats, and my personal opinion, that Britain should be taking a positive role in the development of closer political and economic union in the European Union and the development of a single currency. There is no doubt that the expertise that we have in the country should be used, but before we have even begun to opt in we have weakened our bargaining position and undermined our ability to shape the rules and regulations under which a single currency will be developed.

As a consequence, there is a real danger that the Government, having left the position open, may find that the British economy is not strong enough to sustain membership of monetary union because they have not applied themselves now. I earnestly hoped that the Minister would explain in much more rigorous terms how we shall ensure that the British economy invests strongly enough, organises strongly enough and accepts the cultural changes necessary to ensure that the choice of opting in and opting out was a real choice, based on a real understanding of the needs of the British economy.

Mr. Butterfill

The hon. Gentleman complains that the Government are not pursuing policies that create strong growth in the economy and are not ensuring rigorous application of fiscal standards. Will he explain why the Liberal party consistently votes for increased public expenditure in almost every Division, yet failed to vote for, and indeed voted against, increases in taxation?

Mr. Bruce

That simply is not true. I remind the hon. Gentleman that it was the Liberal Democrats, and myself in person, who voted against the cost of electricity privatisation and the £7 billion of debt write-off that would have passed through the House on the nod until I spoke against the money resolution. I am not prepared to take lectures from Conservative Members who are selective about when they oppose public expenditure. If the Barings rescue had required public money, Conservative Members might have agreed to it because of their need to support their friends in the City. Their opposition of public expenditure is selective, and I do not accept the justification behind the hon. Gentleman's intervention.

Mr. Jenkin

Will the hon. Gentleman give way?

Mr. Bruce

No, I will not. I have given way enough—this is a short debate and I intend to bring my remarks to a close.

The Government, having accepted the amendment to the European Communities (Amendment) Act—an amendment that my party and I did not support, but which the Government accepted from the Opposition—should have recognised that it required more than just a few pages from the Red Book and a vote of confidence in their economic policy. The terms of the Act require a social and environmental report, about which we have heard nothing. We have had no clear sign of whether the Government intend to introduce it.

I want to make it clear to the Minister so that there is no doubt that we do not wish the Government to be placed in a situation where they cannot fulfil their obligations under the Maastricht treaty, which we support. There is a duty on them to make a report to meet their treaty obligations, not simply to invite a motion of confidence in terms that do not address the whole issue.

On a constructive note, if this is be an annual event, it would be extremely helpful if the motion were in terms that required endorsement not of Government policy but of their submission of a report on the progress achieved by the British economy. Had that been so tonight, my party and I would have had no hesitation in supporting the Minister. If the Government take that view in future, the Minister will have my support and that of the Liberal Democrats. It is unfortunate that the motion was tabled with a lack of thought. I hope the Minister will understand that the Act contains terms that have not been addressed but which the Government should take seriously.

11.1 pm

Mr. Tim Smith (Beaconsfield)

At the start of her speech I asked the hon. Member for Durham, North-West (Ms Armstrong) why we were having this debate and she failed to provide an adequate explanation. My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) has explained that the object of the exercise is to see to what extent we are complying with the convergence conditions of the Maastricht treaty. I could not understand the motion when I looked at it because it seemed that we were being asked to approve three chapters in the Red Book, which is effectively part of the Budget—the House debated the Budget for four or five days and approved it some months ago. We are now being asked to approve the very same information that is contained in chapters 4, 5 and 6 of the Red Book.

As my hon. Friend said, and as I now understand, the real object of the exercise is to see to what extent we are complying with the convergence criteria, only two of which are relevant. The first is the level of public sector borrowing and the second is total Government debt as a proportion of gross domestic product. I agree with my hon. Friend that the targets of reducing those two levels were justified on their merits. He was not so happy about the idea that we should try to bring about convergence in the European Union.

Quite apart from the debate about a single currency, the very concept of trying to achieve convergence is justified on its merits. If we manage to get Government borrowing below 3 per cent. in all member states, we will have a considerably greater degree of exchange rate, inflation and interest rates stability than at present. Those things are all worth while per se; they would be guaranteed if we had a single currency, but the very fact that we are moving towards one will bring about much more stable trading conditions in the EU.

I support the concept of convergence criteria. I am not quite as sanguine as my hon. Friend the Member for Ruislip-Northwood is about the progress that we are making. The news release which was published by the Central Statistical Office on 21 February sets out the figures that are to be sent to the Commission; they are not the figures in the Red Book because they have to be adjusted to comply with the European system of integrated accounts. That results in a considerable addition to Government borrowing in terms of the public sector borrowing requirement and shows the following figures, admittedly now historical. The figure for 1992, as. a percentage of GDP, is 6.1 per cent. and for the calendar year 1993, it is 7.9 per cent. I think that when we get the figures for 1994 we shall see some reduction, but those figures are hardly cause for complacency.

There is not much cause for complacency in the figures for total Government debt as a proportion of GDP. In 1992 Government debt as a proportion of GDP was 41.9 per cent., and it rose to 48.5 per cent. in 1993. That is not far short of a 60 per cent. ceiling. I fully support the Government's determination to reduce the high level of public sector borrowing and to reduce total Government debt as a proportion of GDP over a period of time. The figures in the Red Book show that those objectives will be achieved in four or five years.

I am glad that this information will be sent to the European Commission because there is a very interesting table at the back of the Red Book which shows the history of public spending over the past 30 years. It gives the lie to most people's perceptions of public spending. According to the table, in the past 30 years Governments have reduced the level of public spending in real terms in only four years. In three of those years—1968–69,1976–77 and 1977–78—a Labour Government were in power.

The last Labour Government were responsible for the largest cumulative reduction in public spending. In 1974–75—their first year in office—they cut public spending from £220 billion, in current values, to £205 billion three years later. This Government have increased public spending in every year except 1988–89. We should ensure not only that we cut public spending as a proportion of gross domestic product—

Mr. Austin Mitchell

And lose the next general election too.

Mr. Smith

The hon. Gentleman is wrong if he thinks that elections are won by increasing the level of public spending; I do not believe that they are. I believe that a healthy economy is one which spends well below 40 per cent. as a proportion of GDP in the public sector so that more wealth is retained in the private sector to enable the real economy—about which the hon. Member for Durham, North-West claims to be concerned—to grow and to provide real jobs.

The Government aim to reduce public spending to 40 per cent. and below. In the mid-1960s public spending as a percentage of GDP was 36 and 37 per cent. That is the kind of target that we should aim at now.

Mr. Butterfill

When my hon. Friend refers to the cuts in public spending perpetrated by the Labour party, is he thinking particularly of the cuts which the International Monetary Fund ordered it to make to spending on hospitals and the health service generally?

Mr. Smith

Mr. Deputy Speaker, you probably remember when the last Labour Government achieved huge cuts in public spending through massive reductions in capital expenditure. My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) is right: the funding programme for hospitals was cut by 20 per cent. in one year as a result of the intervention of the International Monetary Fund and Mr. Johannes Witteveen, who took over the running of the British economy at that time.

Today we are back on track to reduce public spending and public borrowing, which is the key point as far as the Maastricht criteria are concerned. I believe that that reduction is justified on its merits, but I am also glad that we are making progress in complying with our treaty obligations.

11.8 pm

Mr. Austin Mitchell (Great Grimsby)

The hon. Member for Beaconsfield (Mr. Smith) does not realise that an economy's ability to bear any level of public spending depends on the health and vigour of that economy. A fast-growing, vigorous economy can bear a much higher proportion of public spending—and would be advised to do so in order to improve the quality of life of most people. It is not the level of public spending as a proportion of GDP—40 per cent., 60 per cent. or whatever it may be—but the underlying strength of the economy that is crucial.

The problem with the convergence criteria that we are discussing tonight is that they are, in effect, deflationary criteria—they are daft and damaging criteria. The nearer the Government come to achieving those criteria, the more they will damage the underlying economic recovery in which the Government take so much pride. The Government were not responsible for that recovery; Mr. George Soros was. Having achieved that, it seems disastrous to clobber the recovery in the way that the Government are, by imposing high interest at double historic rates to fulfil damaging convergence criteria. I am sorry that that was not explained by the Minister, who took pride in the recovery. If he takes pride also in moving nearer to or achieving the convergence criteria, the recovery will be destroyed.

All the criteria are deflationary. It is interesting to hear the Chancellor and members of my Front Bench wishing that there were other convergence criteria, such as real growth, productivity and the underlying strength of the economy. That is fantasy. The convergence criteria in the treaty that must be fulfilled are all deflationary. They all amount to achieving price stability. The more we co-ordinate those criteria in Europe, the more we will co-ordinate deflationary measures that damage our economy.

In the long term, the only way to reduce the public sector deficit is to achieve a rate of growth that generates jobs and brings a return to full employment. That way, more people will be in work to pay more taxes, so more revenue will be generated while less is paid in unemployment and social security benefits. That is the only way to reduce borrowing.

We need this first real burst of sustained growth in the life of this Government. They did not want it but it was forced on them. We need that growth to be boosted. Industry will not invest or expand in the way that the Chancellor and the Governor of the Bank of England are always lecturing about unless industry has a prospect of growth. That means the prospect of sustained competitiveness and lower interest rates.

Every time that the Governor increases interest rates, he damages the economy's prospects and makes investment less likely. He also guarantees that the opportunity for growth that has been thrust on the Government will not be seized.

I am sorry that the Governor's weekend was spoiled by matters that have no bearing on the debate. I wish that he had spoiled more weekends deliberating on the fate of manufacturing companies that have been shedding jobs and closing. When the Governor is in a working weekend mode, he should contemplate the effect that he has on the recovery by increasing interest rates to today's high level.

Why is the Chancellor increasing taxes and the Governor increasing interest rates and clobbering demand? Perhaps they want to keep the pound at a higher level than it should be for the purposes of competitiveness, to regain some of the ground that the Chancellor and the Governor thought Britain lost by leaving the exchange rate mechanism. Shadowing the deutschmark is to revert to Lawson policies. That is one explanation for the folly. The other is that the only way to attain the convergence criteria is to deflate demand.

Both processes are damaging, and the Government owe the House an explanation for their actions. Why are they strangling their own recovery? Is it to shadow the deutschmark and to show ourselves to be communautaire, or is to attain the insane convergence criteria

11.13 pm
Mr. Bernard Jenkin (Colchester, North)

To answer the hon. Member for Great Grimsby (Mr. Mitchell), I do not think it possible to make a judgment about the effect of interest rate movements until one or two years later. Only then will we know whether the correct interpretation of the economic data available at the time was made. Perhaps the hon. Gentleman takes the view that there is less risk in an increase in inflation than the Governor of the Bank of England and the Chancellor believe there to be. But only history will show whether we have made the right judgments.

I believe that the Government are right to err on the side of caution. All the evidence suggests that economies that perform the best are those whose authorities take the most rigorous line against inflation. To risk overheating the economy so soon after coming out of a recession would be a sad failure indeed.

The Paymaster General rather disappointed the House this evening. We expect more of him in these debates. It was evident that he did not submit this convergence plan, which is to he sent off to the European Commission, with a great deal of relish. He did not say, "Hurrah! We're on track to get into the single currency." I detected a note of discomfort in his presentation.

The purpose of these debates on the Government's convergence plan is to highlight the fact that we are locked into a progressional timetable. We are fixed into a machine that makes us submit plans towards an objective over which we have little control. I have heard that this timetable is regarded by the Government as artificial. The more we hear of the development of the Government view of the prospect of a single currency, the more distance we detect between that end and the Government's embrace of it.

Whatever the Government's attitude may be, and however determined, towards the end of the convergence period, the Government may be not to participate in a single currency, the fact is that they are stuck on the tracks. They are being driven down the track towards meeting certain objectives—

Mr. Iain Duncan Smith (Chingford)

Does this not have a great feeling of déjà vu about it? The timetable is certainly one of the key problems. It may force countries to attempt to converge when their natural instincts, based on the performance of their economies, dictate otherwise. I am reminded of the Schlieffen plan—the great first world war German plan to knock out France. It was based wholly on railway timetables. Many historians now believe that that became the cause of the first world war, because, once started, there was no way to stop the plan being put into effect—and it ended in disaster.

Mr. Jenkin

I have great sympathy with that analogy. To a certain extent, it was the intention of the Maastricht treaty. It was not designed to create an opportunity for economic and monetary union across Europe. That opportunity existed anyway, whatever the treaty arrangements. Businesses can opt to use a single currency. Member states can opt to fix their exchange rates with each other. They can even share a currency—and all without this timetable.

The timetable is, of course, political. It is not an economic weapon; it is a political weapon. The whole of Europe has been put in the straitjacket of an artificial timetable because France and Germany are determined to achieve political union. It is a tool to achieve a political end. We are playing a highly dangerous game if we put the European economies into a straitjacket for political purposes, regardless of the political consequences.

Another benefit has emerged from this debate: I detect a mood of consensus across the Chamber. Not only has the Prime Minister, speaking to the Conservative Way Forward, introduced the possibility of new criteria to qualify Britain's possible participation in a single currency; we have also heard the same idea from the hon. Member for Durham, North-West (Ms Armstrong). The hon. Lady thinks that levels of employment are important. She shares that opinion with the Governor of the Bank of England.

The hon. Member for Gordon (Mr. Bruce) told us that he wanted to introduce some extra criteria. He described the economy in Britain as possibly not strong enough to sustain monetary union. Those criteria are not in the Maastricht treaty. The hon. Gentleman is introducing new criteria for monetary union. I detect in the Chamber a consensus that the timetable for economic and monetary union is unrealistic and unreasonable. Perhaps the House should point that out to our European partners, who are more politically obsessed by the objective, and perhaps unreasonably so. They may be in danger of damaging their economies. We see France holding on manically to the franc fort policy, to the detriment of the stability of property and asset prices in France, of employment rates and of growth. We were discussing banking at length, and I am reminded of the nickname of one of France's largest institutions, "Debit" Lyonnais.

What were the risks to which the Governor referred? He was referring to the danger of seeking to impose a uniform monetary policy on several countries in the European Community. We had experience of the risk quite recently. When we were in the exchange rate mechanism we sought to impose the same monetary discipline on several countries in the European Community. What was the result? What might have been an appropriate monetary policy for Germany post-reunification, with all the inflationary effects of funding development in eastern Germany, became a completely inappropriate monetary discipline for the United Kingdom, France and Italy. That demonstrates more graphically than anything else can the risks of applying a single monetary policy before absolute, complete and permanent convergence has been achieved.

Mr. Tim Devlin (Stockton, South)

My hon. Friend has alluded to a great consensus across the Chamber. Perhaps he will briefly think about monetary union within the United Kingdom. As he knows, since 1707 there has been a monetary union of Scotland, Wales, Northern Ireland and England. Yet the financial and economic conditions in Scotland and the north of England now are different from those in the south of England. The policy that is followed in London may not be appropriate to all parts of the UK. Why is the position not the same on a greater scale throughout Europe?

Mr. Jenkin

I am extremely grateful to my hon. Friend for asking me that question. We have had a single currency in the UK for a long time. It followed political union. The two things go very much hand in hand. There are points at which the monetary policy that is pursued throughout the UK for the benefit of the entire UK is more appropriate for some parts of the country than for others.

During the 1980s, for example, we had strong asset growth in the south and strong development of services, whereas in the north and in Scotland we saw the decline of old-fashioned manufacturing industries, the decline of property prices and wide differentials forming. We coped with economic disparities across the single currency area of the United Kingdom because we have huge fiscal transfers. The Government control about 45 per cent. of the national wealth. Public expenditure in Scotland, for example, is about 18 per cent. higher in the current year than it is in England. In Northern Ireland it is about 40 per cent. higher. At the moment, we are planning a European Community, and a single currency across the European Community, in which the European Union will control resources amounting only to 2.26 per cent. of the Europe-wide gross domestic product. Even in the single currency area of the United States, the Federal Government control some 17 per cent. of American GDP. The only way in which a single currency can be sustained across an area of wide disparities is to have huge, compensating fiscal measures.

Several hon. Members


Mr. Jenkin

If I may continue, the Treasury did some work on the subject for the European Community during the 1970s. A Mr. MacDougall prepared a report and he reckoned that the very minimum that the European Community would have to levy in taxation to sustain a single currency across Europe would be 7 per cent. of Community GDP. That would increase the European Community budget to some £333 billion at today's prices, which is considerably larger than it is today and would increase our contribution to some £70 billion.

Mr. Devlin


Mr. Jenkin

If my hon. Friend is prepared to explain that to his constituents, I wish him good luck. Nevertheless, benefits in the current arrangements are considerably cheaper and easier to finance and do not carry the same risks, as demonstrated by the Governor of the Bank of England.

The last question that I want to ask is: who wants this single currency? We are told that business men want it, but I do not think that that is the case. Following a survey, the CBI claimed that a large majority favoured a single currency, yet it remarked in its own survey that only 12 per cent. were enthusiastic about a more federal approach. That would seem to rule out a single currency for a start. More interestingly, only 28 per cent. of the sample said that a single currency was a necessary condition for a single market. Why does the CBI go round telling everybody that business wants a single currency?

Even more interestingly, the authors of an excellent letter in The Times on 9 February said: even if the natural core of European federalist countries were tied into ecu, by far the larger part of Britain's trade and investment would continue to be conducted outside those countries in a wide variety of national currencies. Plainly, a single currency is not indispensable to expanding exports". That letter was signed by luminaries such as Michael Edwardes, Owen Green, Lord Hanson, Stanley Kalms, Christopher Wates, Garry Weston and many, many more.

The fact is that British business is not enthusiastic about a single currency and that only a tiny proportion of our trade relates to the possible hard-core area of a single currency—less than 30 per cent. of our external trade or 8.7 per cent. of our gross domestic product. Why inflict an absurd, foreign-controlled monetary policy on the British economy for the sake of 8.7 per cent. of our gross domestic product.

11.27 pm
Mr. John Butterfill (Bournemouth, West)

I have to agree, on one point at least, with my hon. Friend the Member for Colchester, North (Mr. Jenkin): I do not think that there is the remotest chance of anything but a handful of nations meeting the convergence criteria in the Community by 1999, let alone by 1997.

Having said that, Mr. Deputy Speaker, I would like to explain why, from a sedentary position, I used the word frit during the speech of my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson), for which you admonished me. I did not know that it was an unparliamentary expression; it has been used fairly frequently by hon. Members of all parties. I used the word because my hon. Friend was suggesting that under article 103 we were compelled to go down the convergence criteria. That of course is not so. Compulsion would take place only if we were to move to stage 3 of monetary union, which could not take place until after 1997, and probably not until 1999, which would be under article 104 of the treaty. We would have had to have agreed to proceed for there to be any compulsion.

Guidelines have now come from the Council of Ministers and it is informative to consider those guidelines to discover whether hon. Members on both sides of the House can agree that they are entirely desirable. According to the guidelines, the economic objective is sustainable, non-inflationary and employment-creating growth. No one would disagree with that. The guidelines include reduction in unemployment. Does anyone suggest that that is undesirable?

According to the guidelines, there should be a strengthening of economic convergence. If we are in a trading area, it must be desirable to bring some of our partners up to the level of the more prosperous nations. It is also appropriate to consider the extent to which what is in the Red Book, which we are presenting to the Community, achieves some of those objectives.

With regard to sustainable, non-inflationary and employment-creating growth, we are now seeing non-inflationary growth. We have not had such a long period of low inflation for 25 years. Growth has been continuing for some time now. Indeed, we have a little problem in that growth is perhaps running too far ahead and we have had to correct it to ensure that it is sustainable.

As for reductions in unemployment, if we look at the rest of the Community, unemployment is increasing. Almost uniquely in the United Kingdom, unemployment is decreasing. The only area in which we are perhaps not succeeding is that of the strengthening of economic convergence. As convergence in other states is unlikely to take place, I believe that the timetable for monetary union, as envisaged by the treaty, is way out and extremely unlikely to be achieved.

Mr. Wilkinson

Will my hon. Friend give way?

Mr. Butterfill

No, I will not give way to my hon. Friend because he refused to give way to me. Despite being asked several times, my hon. Friend refused to give way to me.

To meet those objectives, the guidelines advocate price and exchange rate stability. Price stability has certainly been achieved. Apart from unfortunate recent events, exchange rates have been unusually stable for some considerable time. With regard to sound public finances, we need only read the Red Book to discover what has happened with regard to reduction of the public sector borrowing requirement. The Labour party said that that was completely unattainable. Labour Members said that the PSBR was likely to continue to grow. They did not believe that we could meet the objectives set out in the Budget two years ago or in last year's Budget. However, not only have those objectives been met, but they have been exceeded.

The guidelines suggest measures such as reducing the indirect costs of labour. Conservative Members would certainly agree with that objective. The guidelines include the completion of the internal market. The internal market was proposed by the Government and a single market is now one of the Government's proud achievements which have benefited our industry. Conservative Members would also agree with more flexible labour markets, although I am not sure whether the Labour party would agree to that. The Commission guidelines also refer to pay moderation. I have not seen much sign of encouragement of pay moderation from the Opposition Benches.

11.33 pm
Mr. Heathcoat-Amory

I listened very carefully to the hon. Member for Durham, North-West (Ms Armstrong), but I was no clearer at the end of her remarks as to why she was inviting Labour Members to vote against the motion. Of course, she and her party have differences with the Government over economic policy. She gave some rather disjointed examples of what they were, but they were not the subject of today's debate. What we are deciding this evening is not whether we approve the Government's Budget policies; that was settled in last year's Budget. Rather, we are discussing whether we approve the sending of appropriate information in the Red Book to the European Commission, as required by treaty. The hon. Lady did not even touch on whether the Labour party thought that we should do that.

In the few remaining minutes, I shall try to pick up some of the other points that have been raised, in particular the status of the convergence criteria. My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) set out the four main headings of low inflation, low long-term interest rates, no excessive deficits and a degree of exchange rate stability. The point has been made several times, most notably by my hon. Friend the Member for Beaconsfield (Mr. Smith), that those are good and valid policy aims, regardless of whether they may one day pave the way for monetary union.

It is true also that the United Kingdom is doing particularly well as regards the criteria. Our Budget deficit is coming down fast, and it is expected to be below 3 per cent. of gross domestic product by 1996. Our inflation rate, our interest rates and our general Government debt are also all comfortably within the reference limits set out in the treaty and the associated protocols.

Of course those are tough criteria. In answer to the hon. Member for Great Grimsby (Mr. Mitchell), may I say that low inflation and sustainable growth are not easily achieved. The growth rate of 4 per cent., which we achieved last year, combined with low inflation, is something that very few Governments since the second world war have ever glimpsed.

Mr. Austin Mitchell

Will the Minister give way?

Mr. Heathcoat-Amory

If the hon. Gentleman will forgive me, I shall not give way; I am answering some points that he raised, and I have only a few more minutes.

Of course such matters require difficult decisions on taxation. From time to time, it may be necessary to raise interest rates to keep inflation down, but the prize is worth it. I emphasise that those are good policy aims, regardless of whether they are required or recommended as part of the treaty of Rome.

The other point which I wish to emphasise is that the debate is taking place under stage 2 of monetary union, which began more than a year ago. Economic policy and monetary policy throughout that time have remained firmly in national hands. Indeed, that is why it is the Red Book, flowing from our own national Budget, which forms the basis of the information that we are supplying to the Commission.

I tell my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson), who talked about sanctions and suggested penalties, that they have no part to play in stage 2 of EMU. The only sanction, if one may call it that, that is open to the Commission or to the Council of Ministers is to make recommendations. Indeed, it has been recommended that we should continue to bring down our Budget deficit, which we have every intention of doing.

Another point of which I must remind the House is the copper-bottomed nature of the United Kingdom's protocol to the treaty, which states that the UK is not obliged or committed to move to the third stage of Economic and Monetary Union without a separate decision to do so by its government and Parliament". In addition to that, under the European Communities (Amendment) Act 1993—the so-called Maastricht Act—notification to the Council of a United Kingdom intention to join stage 3 also requires a prior Act of Parliament.

We have had some railway metaphors. My hon. Friend the Member for Chingford (Mr. Duncan Smith) introduced into the debate the Schlieffen plan. At the risk of correcting him, may I say that it was the mobilisation of the Russian army at the start of the first world war which required railways and which was so complicated that it could not be stopped. It was A. J. P. Taylor—I know that I am right on this point—who said that the first world war was the culmination of the railway age. Whether in this or in previous debates, we have always been regaled with colourful motoring or railway metaphors about whether we are in danger of missing the train leaving the station or whether we are on the wrong branch line. The truth is, however, that in terms of EMU we can watch the train assembling on the continent and decide at the right moment whether it is in the national interest for us to join it. We are in no sense committed to joining the third stage of monetary union. Doubtless my right hon. Friend the Prime Minister will say more about that on Wednesday.

The convergence criteria, on which we touched earlier, do not simply stop at the four headings already described. My right hon. and learned Friend the Chancellor of the Exchequer has also raised the need to address the deep-seated structural differences in the European economies, and the Governor of the Bank of England has drawn attention to the implications of differences in productivity growth and the need for flexible labour markets. The question whether we can safely relinquish the mechanism of adjustment of nominal exchange rates or whether we should continue to insist on that possibility remains open. I ask my hon. Friend the Member for Colchester, North (Mr. Jenkin) not to assume that the entire argument is over, bar the shouting.

The hon. Member for Gordon (Mr. Bruce) asked about the social and economic goals in article 2 of the treaty. The Red Book sets out the tax and expenditure policies across the board, including a large sum to be spent on social security and the environment. The Budget included not just a new landfill tax but fuel taxes designed in part for us to meet our carbon dioxide reduction commitment. The social and environmental goals are in the Red Book, and will form part of the report that we shall make to the Commission in due course.

The motion is to approve the sending of information to the European Commission, as required by articles 103 and 104c of the treaty. In 1993 the Government gave an assurance that the terms of section 5 of the Maastricht Act would be strictly observed, and that the House's approval was therefore necessary before the sending of the required information; yet this year the Labour party has again contrived a case for voting against the motion, which would entail a breach of the treaty obligations.

We are used to the Labour party's turning somersaults on Europe, but this must constitute a new low. Labour Members show craven subservience to the European Community in regard to big issues when British interests are at stake, but invite the House to break a treaty obligation: they would block the sending of a report that is required. I invite the House to show a good deal more sense than that, and to approve the motion.

Question put:—

The House divided: Ayes 279, Noes 183.

Division No. 87] [11.43 pm
Ainsworth, Peter (East Surrey) Dunn, Bob
Aitken, Rt Hon Jonathan Durant, Sir Anthony
Alexander, Richard Eggar, Rt Hon Tim
Alison, Rt Hon Michael (Selby) Elletson, Harold
Amess, David Emery, Rt Hon Sir Peter
Arbuthnot, James Evans, Jonathan (Brecon)
Arnold, Jacques (Gravesham) Evans, Nigel (Ribble Valley)
Ashby, David Evans, Roger (Monmouth)
Atkins, Robert Evennett, David
Atkinson, David Faber, David
Atkinson, Peter (Hexham) Fabricant, Michael
Baker, Rt Hon Kenneth (Mole V) Fenner, Dame Peggy
Baker, Nicholas (North Dorset) Field, Barry (Isle of Wight)
Baldly, Tony Fishburn, Dudley
Banks, Matthew (Southport) Forman, Nigel
Banks, Robert (Harrogate) Forsyth, Rt Hon Michael (Stirling)
Bates, Michael Forth, Eric
Batiste, Spencer Fowler, Rt Hon Sir Norman
Bellingham, Henry Fox, Dr Liam (Woodspring)
Bendall, Vivian Fox, Sir Marcus (Shipley)
Beresford, Sir Paul Freeman, Rt Hon Roger
Biffen, Rt Hon John French, Douglas
Bonsor, Sir Nicholas Fry, Sir Peter
Booth, Hartley Gale, Roger
Boswell, Tim Gallie, Phil
Bottomley, Peter (Eltham) Gardiner, Sir George
Bottomley, Rt Hon Virginia Garel-Jones, Rt Hon Tristan
Bowden, Sir Andrew Garnier, Edward
Bowis, John Gillan, Cheryl
Boyson, Rt Hon Sir Rhodes Goodlad, Rt Hon Alastair
Brandreth, Gyles Goodson-Wickes, Dr Charles
Brazier, Julian Gorman, Mrs Teresa
Bright, Sir Graham Gorst, Sir John
Brooke, Rt Hon Peter Grant, Sir A (SW Cambs)
Brown, M (Brigg & Cl'thorpes) Greenway, Harry (Ealing N)
Browning, Mrs Angela Greenway, John (Ryedale)
Burns, Simon Griffiths, Peter (Portsmouth, N)
Burt, Alistair Grylls, Sir Michael
Butcher, John Gummer, Rt Hon John Selwyn
Butler, Peter Hamilton, Rt Hon Sir Archibald
Butterfill, John Hamilton, Neil (Tatton)
Carlisle, Sir Kenneth (Lincoln) Hampson, Dr Keith
Carrington, Matthew Hanley, Rt Hon Jeremy
Chapman, Sydney Hargreaves, Andrew
Clappison, James Harris, David
Clarke, Rt Hon Kenneth (Ru'clif) Haselhurst, Alan
Clifton-Brown, Geoffrey Hawkins, Nick
Coe, Sebastian Hayes, Jerry
Colvin, Michael Heald, Oliver
Congdon, David Heathcoat-Amory, David
Coombs, Anthony (Wyre For'st) Hendry, Charles
Coombs, Simon (Swindon) Heseltine, Rt Hon Michael
Cope, Rt Hon Sir John Higgins, Rt Hon Sir Terence
Cormack, Sir Patrick Hill, James (Southampton Test)
Couchman, James Hogg, Rt Hon Douglas (G'tham)
Cran, James Horam, John
Currie, Mrs Edwina (S D'by'ire) Hordem, Rt Hon Sir Peter
Curry, David (Skipton & Ripon) Howard, Rt Hon Michael
Davis, David (Boothferry) Howarth, Alan (Strat'rd-on-A)
Day, Stephen Howell, Rt Hon David (G'dford)
Deva, Nirj Joseph Hughes, Robert G (Harrow W)
Devlin, Tim Hunt, Sir John (Ravensbourne)
Douglas-Hamilton, Lord James Hunter, Andrew
Dover, Den Jack, Michael
Duncan, Alan Jackson, Robert (Wantage)
Duncan-Smith, Iain Jenkin, Bernard
Jessel, Toby Roe, Mrs Marion (Broxbourne)
Johnson Smith, Sir Geoffrey Rowe, Andrew (Mid Kent)
Jones, Gwilym (Cardiff N) Rumbold, Rt Hon Dame Angela
Jones, Robert B (W Hertfdshr) Ryder, Rt Hon Richard
Kellett-Bowman, Dame Elaine Sackville, Tom
Key, Robert Sainsbury, Rt Hon Sir Timothy
King, Rt Hon Tom Scott, Rt Hon Sir Nicholas
Knight, Mrs Angela (Erewash) Shaw, David (Dover)
Knight, Greg (Derby N) Shaw, Sir Giles (Pudsey)
Knight, Dame Jill (Bir'm E'st'n) Shephard, Rt Hon Gillian
Knox, Sir David Shepherd, Colin (Hereford)
Kynoch, George (Kincardine) Shersby, Michael
Lait, Mrs Jacqui Sims, Roger
Lang, Rt Hon Ian Skeet, Sir Trevor
Lawrence, Sir Ivan Smith, Sir Dudley (Warwick)
Leigh, Edward Smith, Tim (Beaconsfield)
Lester, Jim (Broxtowe) Soames, Nicholas
Lidington, David Speed, Sir Keith
Lightbown, David Spencer, Sir Derek
Lilley, Rt Hon Peter Spicer, Sir James (W Dorset)
Lloyd, Rt Hon Sir Peter (Fareham) Spicer, Michael (S Worcs)
Lord, Michael Spink, Dr Robert
Luff, Peter Spring, Richard
Lyell, Rt Hon Sir Nicholas Sproat, Iain
MacGregor, Rt Hon John Squire, Robin (Hornchurch)
MacKay, Andrew Stanley, Rt Hon Sir John
Maclean, David Steen, Anthony
McNair-Wilson, Sir Patrick Stephen, Michael
Madel, Sir David Stem, Michael
Maitland, Lady Olga Stewart, Allan
Major, Rt Hon John Streeter, Gary
Malone, Gerald Sumberg, David
Mans, Keith Sweeney, Walter
Marland, Paul Sykes, John
Marshall, John (Hendon S) Tapsell, Sir Peter
Marshall, Sir Michael (Arundel) Taylor, Ian (Esher)
Martin, David (Portsmouth S) Taylor, John M (Solihull)
Mates, Michael Temple-Morris, Peter
Mawhinney, Rt Hon Dr Brian Thomason, Roy
Merchant, Piers Thompson, Sir Donald (C'er V)
Mitchell, Andrew (Gedling) Thompson, Patrick (Norwich N)
Mitchell, Sir David (NW Hants) Thornton, Sir Malcolm
Moate, Sir Roger Thurnham, Peter
Monro, Sir Hector Townend, John (Bridlington)
Montgomery, Sir Fergus Townsend, Cyril D (Bexl'yh'th)
Needham, Rt Hon Richard Tracey, Richard
Nelson, Anthony Trend, Michael
Neubert, Sir Michael Twinn, Dr Ian
Newton, Rt Hon Tony Vaughan, Sir Gerard
Nicholls, Patrick Viggers, Peter
Nicholson, David (Taunton) Waldegrave, Rt Hon William
Nicholson, Emma (Devon West) Walden, George
Norris, Steve Walker, Bill (N Tayside)
Onslow, Rt Hon Sir Cranley Waller, Gary
Oppenheim, Phillip Ward, John
Ottaway, Richard Wardle, Charles (Bexhill)
Page, Richard Waterson, Nigel
Paice, James Watts, John
Patrick, Sir Irvine Wells, Bowen
Patten, Rt Hon John Wheeler, Rt Hon Sir John
Pawsey, James Whitney, Ray
Peacock, Mrs Elizabeth Widdecombe, Ann
Pickles, Eric Wiggin, Sir Jerry
Porter, Barry (Wirral S) Wilkinson, John
Portillo, Rt Hon Michael Willetts, David
Powell, William (Corby) Wilshire, David
Rathbone, Tim Winterton, Mrs Ann (Congleton)
Redwood, Rt Hon John Winterton, Nicholas (Macc'f'ld)
Renton, Rt Hon Tim Wolfson, Mark
Richards, Rod Wood, Timothy
Riddick, Graham Yeo, Tim
Robathan, Andrew
Roberts, Rt Hon Sir Wyn Tellers for the Ayes:
Robertson, Raymond (Ab'd'n S) Mr. Timothy Kirkhope and Mr. Derek Conway.
Robinson, Mark (Somerton)
Adams, Mrs Irene Gordon, Mildred
Ainger, Nick Graham, Thomas
Ainsworth, Robert (Cov'try NE) Grant, Bernie (Tottenham)
Allen, Graham Griffiths, Win (Bridgend)
Anderson, Donald (Swansea E) Grocott, Bruce
Anderson, Ms Janet (Ros'dale) Hain, Peter
Armstrong, Hilary Hall, Mike
Ashton, Joe Hanson, David
Austin-Walker, John Hardy, Peter
Barron, Kevin Harvey, Nick
Battle, John Hattersley, Rt Hon Roy
Beckett, Rt Hon Margaret Heppell, John
Beggs, Roy Hill, Keith (Streatham)
Beith, Rt Hon A J Hodge, Margaret
Benton, Joe Hoey, Kate
Bermingham, Gerald Hogg, Norman (Cumbernauld)
Betts, Clive Home Robertson, John
Blunkett, David Hoon, Geoffrey
Boateng, Paul Howells, Dr. Kim (Pontypridd)
Boyes, Roland Hughes, Kevin (Doncaster N)
Bradley, Keith Hughes, Robert (Aberdeen N)
Brown, Gordon (Dunfermline E) Hughes, Roy (Newport E)
Brown, N (N'c'tle upon Tyne E) Hutton, John
Bruce, Malcolm (Gordon) Illsley, Eric
Burden, Richard Ingram, Adam
Byers, Stephen Jackson, Glenda (H'stead)
Callaghan, Jim Jackson, Helen (Shef'ld, H)
Campbell, Mrs Anne (C'bridge) Jamieson, David
Campbell, Ronnie (Blyth V) Jones, Barry (Alyn and D'side)
Campbell-Savours, D N Jones, Lynne (B'ham S O)
Cam, Jamie Jones, Martyn (Clwyd, SW)
Carlile, Alexander (Montgomery) Jones, Nigel (Cheltenham)
Chisholm, Malcolm Jowell, Tessa
Church, Judith Keen, Alan
Clapham, Michael Kennedy, Jane (Lpool Brdgn)
Clark, Dr David (South Shields) Khabra, Piara S
Clarke, Eric (Midlothian) Kilfoyle, Peter
Clarke, Tom (Monklands W) Liddell, Mrs Helen
Clelland, David Livingstone, Ken
Clwyd, Mrs Ann McAllion, John
Cohen, Harry McFall, John
Cook, Frank (Stockton N) McKelvey, William
Corbyn, Jeremy Mackinlay, Andrew
Corston, Jean McMaster, Gordon
Cousins, Jim McWilliam, John
Cox, Tom Mahon, Alice
Cummings, John Marek, Dr. John
Cunningham, Jim (Covy SE) Marshall, David (Shettleston)
Dalyell, Tam Marshall, Jim (Leicester, S)
Davidson, Ian Martin, Michael J (Springburn)
Davies, Bryan (Oldham C'tral) Martlew, Eric
Davis, Terry (B'ham, H'dge H'I) Maxton, John
Dixon, Don Meale, Alan
Dobson, Frank Michael, Alun
Donohoe, Brian H Michie, Bill (Sheffield Heeley)
Dowd, Jim Milburn, Alan
Dunnachie, Jimmy Miller, Andrew
Dunwoody, Mrs Gwyneth Mitchell, Austin (Gt Grimsby)
Eagle, Ms Angela Moonie, Dr Lewis
Eastham, Ken Morgan, Rhodri
Enright, Derek Morley, Elliot
Etherington, Bill Morris, Estelle (B'ham Yardley)
Fisher, Mark Mullin, Chris
Flynn, Paul Murphy, Paul
Foster, Rt Hon Derek O'Brien, William (Normanton)
Foulkes, George O'Hara, Edward
Fyfe, Maria Olner, Bill
Galloway, George Pearson, Ian
George, Bruce Pickthall, Colin
Gerrard, Neil Pike, Peter L
Gilbert, Rt Hon Dr John Pope, Greg
Godman, Dr Norman A Powell, Ray (Ogmore)
Godsiff, Roger Prentice, Bridget (Lew'm E)
Golding, Mrs Llin Prentice, Gordon (Pendle)
Primarolo, Dawn Strang, Dr. Gavin
Purchase, Ken Sutcliffe, Gerry
Raynsford, Nick Taylor, Matthew (Truro)
Rendel, David Thompson, Jack (Wansbeck)
Robertson, George (Hamilton) Timms, Stephen
Rooney, Terry Touhig, Don
Ross, Ernie (Dundee W) Turner, Dennis
Rowlands, Ted Wardell, Gareth (Gower)
Ruddock, Joan Wareing, Robert N
Watson, Mike
Shore, Rt Hon Peter Wicks, Malcolm
Skinner, Dennis Williams, Alan W (Carmarthen)
Smith, Andrew (Oxford E) Wilson, Brian
Smith, Chris (Isl'ton S & F'sbury) Wise, Audrey
Smith, Llew (Blaenau Gwent) Worthington, Tony
Soley, Clive Wray, Jimmy
Spearing, Nigel
Spellar, John Tellers for the Noes:
Squire, Rachel (Dunfermline W) Mrs. Babara Roche and Mr. Peter Mandleson.
Stevenson, George

Question accordingly agreed to.

Resolved, That this House takes note with approval of the Government's assessment as set out in chapters 4, 5 and 6 of the Financial Statement and Budget Report 1995–96, as updated, for the purposes of section 5 of the European Communities (Amendment) Act 1993.