European Union

HC Deb 21 June 1995 vol 262 cc355-448

[Relevant documents: The White Paper on Developments in the European Union January-June 1994 (Cm 2675); the White Paper on Developments in the European Union July-December 1994 (Cm 2798); the unnumbered Explanatory Memorandum submitted by HM Treasury on 6th June 1995 on the Commission's recommendation for the broad guidelines of the economic policies of the Member States and the Community; European Community Documents Nos. COM (95) 333, the Commission's Green Paper on the practical arrangements for the introduction of the single currency, EP: A4-0102/95, a European parliament resolution on the functioning of the European Union with a view to the 1996 Intergovernmental Conference-implementation and development of the Union, and SEC (95) 731, the report of the European Commission on the operation of the Treaty of the European Union; the Report of the Council of the 'European Union on the functioning of the Treaty of the European Union (Cm 2866); the Report by the Court of Auditors to the 'Reflection Group' on the operation of the Treaty on European Union; the Report of the Court of Justice on certain aspects of the Treaty on European Union; and European Community Documents Nos. 7221/95, on the White Paper on the preparation of the associated countries of central and eastern Europe for integration into the internal market of the Union, 12269/94, relating to recognition of qualifications for academic and professional purposes, and 5715/95, relating to the implementation of directives in the social field.]

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

Mr. Deputy Speaker (Mr. Michael Morris)

Before I call the Foreign Secretary, I must announce that I have imposed a 10-minute limit on speeches by Back Benchers.

3.45 pm

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

As usual, the debate covers a number of detailed documents, but I shall follow recent custom in looking forward rather than back. I shall try to set out the Government's approach first to the summit at Cannes under the French presidency at the beginning of next week, and secondly to the intergovernmental conference next year. Ideas for that conference are already being exchanged in the reflections group on which my representative is my hon. Friend the Member for Boothferry (Mr. Davis), the Minister of State.

I shall try to set out again the Government's philosophy and policies within the framework already established by my right hon. Friend the Prime Minister's speech at Leiden last year and his speech in the House on 1 March. That philosophy and those policies may not—indeed, do not—suit either extreme of the argument, and they therefore disappoint those who prefer excitement to reason, particularly in some parts of the press; but I strongly believe that they are the right philosophy and the right policies for the national interests of Britain and, indeed, for the success of the European Union. I also believe that, unless the Governments of Europe are remarkably foolish over the years to come, that is the approach that will succeed in the end. I do not believe in either the disintegration of the European Union or its conversion to a centralised state.

Mr. Tony Marlow (Northampton, North)

Will my right hon. Friend give way?

Mr. Hurd

So soon!

Mr. Marlow

My right hon. Friend raised the spectre of a centralised European state. One issue that could be involved in that is obviously the single currency. Let us suppose that the next election took place in April 1997. I understand that, before joining a single currency, a country must have been in the exchange rate mechanism for two years. Given that our right hon. Friend the Prime Minister said that we would not join the ERM during this Parliament, would it be right to assume that the United Kingdom could not, in those circumstances, be a founder member of the single currency?

Mr. Hurd

It might be sensible if I dealt with the single currency at the point where it arises in my speech, but I do not know that I shall add a great deal to what my hon. Friend heard from the Prime Minister on 1 March, when he dealt with the matter at some length.

The line set out by my right hon. Friend the Prime Minister in the speeches that I have mentioned has been consistently advocated and defended by the whole Cabinet, which recently reaffirmed our commitment to it. It is greatly to be preferred to the policies of the Opposition, whose spokesmen hop about from one branch of the European argument to another, uttering first one note and then—a few weeks later—another, and, as far as I can see, being consistent only in their carelessness of the national interest. I believe that our policies are also to be preferred to others based simply on fear and dislike of the European Union to which we belong. If we want a Europe of nations, we need to work positively and persuasively with our partners to achieve it.

At Cannes and in the intergovernmental conference, we will be talking of the Europe of 1995, looking forward to the next century. Ten or 20 years ago, the mindset in Europe was different. Indeed, the general assumptions in Europe have changed since my right hon. and noble Friend Baroness Thatcher was Prime Minister. As she reminds us, she challenged the assumptions of the day with great vigour and she now summarises her stance as no, no, no. My recollection is a little bit different. I tend to remember it as no, maybe, yes. That was her approach.

Mr. Terry Dicks (Hayes and Harlington)

Does my right hon. Friend agree that the truth about Baroness Thatcher was that her approach was yes, yes, yes—yes to the Single European Act, yes to giving money when the Community overspent and yes to the exchange rate mechanism?

Mr. Hurd

I think that my hon. Friend, with the best of motives, is slightly exaggerating. I would prefer to summarise it as no, maybe, yes. That was her approach to the successful negotiation of the British rebate and it was certainly her approach to the decisive extension of majority voting in the Single European Act.

Mr. John Sykes (Scarborough)

Will my right hon. Friend give way?

Mr. Hurd

May I just finish this?

I think myself that it would have been Baroness Thatcher's approach also to the issues of Maastricht and I do not criticise her for that. What the noble Lady did was to argue hard and when she had the best deal available for Britain, she signed. She argued and she signed. That is the record and, in its time, it was a successful one. The style now is different but, actually, the approach of my right hon. Friend the Prime Minister is much closer to that of his predecessor than she now supposes.

Mr. Sykes

I am grateful to my right hon. Friend for giving way. I am not really interested in what my right hon. and noble Friend Baroness Thatcher did in 1986. I am far more interested in, and want to ask about, what will happen in 1997. I want to ask my right hon. Friend whether he remembers 20 years ago, when we had the referendum. I was recently looking in my attic and I found an old leaflet which at the time I busily shoved through people's letter boxes. If I could quote from this document, which I was happy to disseminate in 1975, on the question of sovereignty and ministerial responsibility it says that the real guarantee of Parliamentary control over new EEC legislation is the fact that British Ministers attending the EEC Councils remain responsible to Parliament at Westminster and can, if necessary, veto decisions to introduce new EEC legislation if they believe that it would not be in the national interest. It goes on to say, if my right hon. Friend will listen, that as long as Parliament can control its Ministers, it can control all important new laws that are made in Brussels and Luxembourg. How can I hold my right hon. Friend to account in the House 20 years later when we have sold so many of our interests to qualified majority voting?

Mr. Hurd

That is precisely what my hon. Friend is doing now. He is holding me to account. He can do so frequently. It is perfectly true that in 1985 in the Single European Act, in order to gain the advantages of the single market we—and the Prime Minister of the day—accepted a substantial extension of majority voting. I think that she was entirely right.

I do not think that we could have had a single market and rules and a proper enforcement of those rules if every anti-protectionist measure and every attempt to enforce the single market had had to be done by unanimity. That was the argument that the noble Lady accepted in 1985 and I think that she was entirely right. But we do not believe that that having been accomplished, it is necessary to go further. That is one of the differences, as I shall seek to explain, between our position and that of the Opposition.

Going back to the mindset of 10 or 20 years ago and illustrating the change that is now occurring, it was assumed in those years that community spending was a good thing in itself and that budget discipline was an eccentricity to which only the British were attached. The prospect of enlargement in those days to include the Scandinavians and Austria was viewed with suspicion. Remember the hostile reception given to Lady Thatcher's speech at Bruges in which this was one of her main themes? It was felt that Britain was interested in enlargement only because Britain was opposed to deepening. Deepening good, widening probably wrong was the general view in those days.

It was supposed that the more the Community did, the better. It was an absolute. There was a steady move to enlarge the areas in which the Community was competent, that is, to draw more and more power to the centre. There are still people who hold these ideas and preach them, and when they do so their words are happily pounced on here by those who like to believe simply that Britain stands alone against the unanimous continental ambition for a centralised state. However, these voices, which were once dominant and which we still hear, are now defensive because events and opinion are moving against them, as I shall seek to show.

Mr. Hugh Dykes (Harrow, East)

My right hon. Friend just now, quite rightly, gave the reasons why the Prime Minister is better as a successor to Baroness Thatcher, in respect not only of European matters but of other policies. Does he agree that one of the sad features of Baroness Thatcher is her repeated attacks on friendly member states in the so-called friendly European Union, not least the attack that she made on Germany yesterday? Will my right hon. Friend confirm that the Prime Minister has very good relations with the other member states?

Mr. Hurd

I was not seeking to make the point that my hon. Friend suggests. I was not seeking to make a distinction or difference; I was simply saying that the approach of arguing and then, when one feels that one has the best deal available for Britain, signing, is one shared by the present Prime Minister and his predecessor.

Going back to the difference between the mindset of those days and now, we now have the beginnings of budget discipline, as opposed to the time when it was thought that extra Community spending was essentially a good thing.

Mr. Alex Salmond (Banff and Buchan)

Will the right hon. Gentleman give way?

Mr. Hurd

No, I have to get on.

I say that we have only the beginnings of budget discipline because we are not yet satisfied, but, when my right hon. Friend discusses in Cannes next week how much money the European Union should spend on helping the countries of eastern Europe and the Mediterranean, the whole discussion will be within spending guidelines laid down under his chairmanship in Edinburgh in 1992. There will be plenty of argument—there always is plenty of argument about these matters—but it will be within the financial bounds already set, something that would have been inconceivable in the early years.

The enlargement of the Union, which was regarded as heretical in the old days, has happened and will happen again. The argument set out in Bruges by Lady Thatcher about including the east is now orthodox. It is also now orthodox to say that the European Union should do less and do it better. That is a phrase of the present President of the Commission, Mr. Santer. It is inconceivable that his predecessor, Jacques Delors, in his heyday would have used such a phrase.

No one in a position of authority now talks about the "United States of Europe". Indeed, the federal Chancellor of Germany, who used to use the phrase, has explicitly renounced it, saying that we are not aiming for a United States of Europe. The European Commission and the European Parliament have recently set out their ideas of how the intergovernmental conference should end up, and there are many things in their papers that we would contest.

It is notable that in neither the Commission's paper nor in the Parliament's paper is it suggested that further matters should be transferred from the competence of nations to the competence of the European Union. That, in itself, shows the change of mindset in recent years. As the chairman of the reflections group told me in Madrid this week, the dreaded F-word is nowhere to be seen.

Mr. Peter Shore (Bethnal Green and Stepney)

Will the Secretary of State give way?

Mr. Hurd

I shall give way to the right hon. Gentleman in a minute.

No one is proposing an increase in competences. There is plenty of room for debate about what remains and about how Europe should act in the area already allocated for European action within the existing treaties, but there is no proposal on the table at the moment for an increase in that area. The accent is—

Mr. Shore

rose—

Mr. Hurd

I shall give way in a moment if the right hon. Gentleman will let me finish the point.

The accent is on subsidiarity and deregulation within those spheres where the Union has a role under the existing treaties, and we shall want to find ways to entrench subsidiarity and deregulation during the IGC.

Mr. Shore

Before the Secretary of State escapes entirely into cloud cuckoo land, may I put to him one obvious point? All the European institutions—the Parliament, the Commission and the European Court of Justice—are making proposals, which are now before the reflections group and will be before the IGC, to dismantle the two pillars of foreign and security policy and home affairs and justice, which were the right hon. Gentleman's greatest claim to success in the previous negotiations. Surely he cannot overlook this major assault, which will not be confined to those three institutions but which will be backed by virtually all the Governments of the nation states.

Mr. Hurd

There is certainly a tentative attempt by those institutions to enlarge their scope within the area covered by the treaties. The point that I was making was that, I think for the first time in the history of the European Community, or Union, there is now to be a conference at which no one will seriously suggest that areas now within the competence of the nation state should be put within the competence of the European Union.

Several hon. Members

rose—

Mr. Hurd

I shall give way to my hon. and learned Friend the Member for Burton (Sir I. Lawrence) and then get on.

Sir Ivan Lawrence (Burton)

What does my right hon. Friend say about the current demand that we could only have Europol as an instrument for controlling organised crime and drugs if we were prepared to accept that Europol must be judicable by the European Court of Justice, which is within the competence of the European Union, however strongly we have asserted that justice and home affairs should be the third pillar of Maastricht outside the competence of the European Union?

Mr. Hurd

We shall resist that. Indeed, my right hon. and learned Friend the Home Secretary is resisting it at the moment. I hope that it will be possible to reach agreement on Europol—a very important and valuable proposal—at Cannes, without accepting the jurisdiction of the ECJ in what should be an intergovernmental pillar.

Several hon. Members

rose—

Mr. Hurd

I shall give way once more and then I really must get on.

Mr. Iain Duncan Smith (Chingford)

May I press my right hon. Friend on the point about competence? Surely the real factor is not so much that extra competence is granted under the aegis of the IGC, but that the European Court of Justice, in the way that it is constructed, does not need extra competence to be granted because it will, through teleological interpretation and other devices, grant itself greater scope by reinterpreting the treaties. Is not the reality that federalism may not be spelt out literally, but is in action the whole time through the European Court of Justice?

Mr. Hurd

If my hon. Friend looks at the recent judgments of the court, for example, on competence, and on the question of the World Trade Organisation, where the court found in favour of the member states against the Commission, he will find that the pattern is not as uniform as he and sometimes others seek to lay down. But of course one of the things that we shall need to look at during the IGC is the role of the ECJ and whether it fits our idea of how the institutions of the Community should work.

The Opposition do not seem to have noticed the change in mindset, which I have been—I hope—proving. In the 1980s, the Labour party was wholly opposed to British membership of the European Union. It now embraces the European ideas of the 1980s, just when the debate in Europe is moving away from them, as I hope that I have proved. It seems determined to stay about 10 years behind the gang. For example, it clings obstinately to the social chapter, and it clings obstinately to the national minimum wage—presumably as the price which the unions exacted for their support on clause IV.

The social chapter and the national minimum wage may suit the Leader of the Opposition's internal policies, but we believe that there would be a heavy price for Britain. The accent now in the European debate, which will be sounded quite clearly at Cannes, is on restoring Europe's competitiveness, not on undermining it further. The accent is on creating new jobs, not on destroying those which already exist.

Mr. Mike Gapes (Ilford, South)

rose—

Mr. Robert N. Wareing (Liverpool, West Derby)

rose—

Mr. Hurd

I shall just finish this part of my speech and then give way to the hon. Member for Ilford, South (Mr. Gapes).

President Chirac has rightly put the creation of jobs at the top of the agenda in Cannes next week. Our Prime Minister, representing the country with the fastest falling unemployment in the European Union, is well placed to take the lead.

Mr. Gapes

How many member states of the enlarged European Union are in favour of ditching the social chapter?

Mr. Hurd

With regard to the member states at Maastricht, before this concern with competitiveness really took hold, people signed up to the social chapter who would have been much wiser to follow our example and stay well away from it. They are now repenting that. On that day, I remember very clearly, the European employers were not awake to what was happening. A recent report from the European Employers Federation puts deregulation and subsidiarity at the top of its list and realises that the loss of competitors in Europe is connected with the inflexibility of the labour market. It is now moving away from the ideas which the Labour party would have this country embrace. That is what I mean by saying that the Labour party appears to be, in the most damaging way, about 10 years behind the debate.

Mr. Wareing

Will the right hon. Gentleman give way?

Mr. Hurd

No, I am going to move on.

In his speech in Chatham house and again in Bonn recently, the Leader of the Opposition offered up four whole areas of policy for qualified majority voting: industrial, regional, environmental and social. Last month many of his Members of the European Parliament, presumably taking their cue from him, voted for much wider extension, to collapse the intergovernmental pillars and to move to full co-decision between the European Parliament and the Council of Ministers.

Mr. William Cash (Stafford)

Will my right hon. Friend give way?

Mr. Hurd

May I finish this passage? Then I shall give way to my hon. Friend.

To those of my right hon. and hon. Friends who want to establish clear blue water between the views of the Opposition and those of the Government on Europe I simply say this: "You have it. Read the speeches by the Leader of the Opposition and read the speeches by the Prime Minister, especially the two that I have mentioned." We do not need to retreat into a stream of negatives or a mood of sourness to establish a difference between the parties. The difference exists; it is there in the texts; the Leader of the Opposition created it. He thought that he was being fashionable about Europe, but the fashion has changed. Our policy is based not on fashion but on an analysis of the national interests of Britain. His policy is based on a set of ideas that, in our view and in the view of an increasing number of Europeans, have had their day.

Mr. Cash

Of course Conservative Members acknowledge that the Opposition are absolutely hopeless on majority voting, but will my right hon. Friend comment on the Foreign Ministers' report adopted in April, to which he and the Government subscribed? It is now contained in a Command Paper before the House, and it says clearly: On the question of efficiency the continued extension of qualified majority voting is a positive factor". How does my right hon. Friend square that with what he has just said about majority voting and governmental competence?

Mr. Hurd

As I shall say in a minute, for the single market, to keep the protectionists at bay and for the sake of any future reform of the common agricultural policy, qualified majority voting will be needed. But I do not believe—in fact, I strongly disbelieve, if that is the right word—that qualified majority voting should be extended into the area in which I have most experience, that of foreign policy. I shall say more about that in a minute.

Mr. Wareing

rose—

Mr. Hurd

No, I shall get on.

As regards the summit at Cannes, I have already mentioned the debate on employment. Everybody hopes that it will be possible to reach agreement on setting up Europol, because agreement is needed. My hon. and learned Friend the Member for Burton (Sir I. Lawrence) asked me about that. Europol will not be a Community institution but will be established under the third pillar of intergovernmental co-operation. We hope that on the same intergovernmental basis it will be possible to reach agreement on conventions dealing with fraud and the exchange of information between customs departments.

The summit will be asked to take some financial decisions. For example, it will be asked to settle the size of the European development fund for the countries of Africa, the Caribbean and the Pacific under the Lomé convention. It will also be asked to strike a balance between spending in central and east European countries as they prepare for membership of the Community and spending in the Mediterranean, in whose stability all of us in Europe have a clear interest.

As the House would expect, the Chancellor of the Exchequer has been on the cautious side in those discussions. No one suggests that we should breach the Edinburgh ceiling. We British are keen that there should be a sizeable reserve for external spending on which we may need to call in an emergency, but which may remain happily unspent.

Mr. John Wilkinson (Ruislip-Northwood)

May I ask my right hon. Friend an important and topical question about spending? Why was it necessary for Her Majesty's Government yesterday to approve with the Spanish Government the assignment of £2.8 billion of European taxpayers' money to the countries of the Mediterranean? Was that done to buy off the Spanish over Gibraltar? How will it benefit living standards in this country?

Mr. Hurd

My hon. Friend may be referring to a report in The Times, but there has been no agreement between us and the Spaniards. I have referred to the balance between eastern Europe and the Mediterranean. The Commission put forward proposals for a rapid expansion in expenditure in the Mediterranean which ourselves and others, including the Germans, thought to be excessive. We contested that and we now have a presidency proposal which does not deal with the maximum proposal, but with a baseline minimum proposal which leaves scope for reserves for emergencies which might be happily unspent. We have not yet agreed on the matter, which will have to be agreed just before Cannes. The discussion is moving in a sensible way from our point of view, and the figures lie entirely within the ceilings embodied in the legislation that the House has approved.

There are some discussions taking place about stage III of economic and monetary union and, in particular, a single currency. There is no proposal at Cannes or anywhere else either to change the timetable in the treaty or to relax the criteria which countries must meet before they can join the single currency. To return to the point raised by my hon. Friend the Member for Northampton, North (Mr. Marlow), the Prime Minister set out the Government's attitude on the single currency at some length in his speech on 1 March. There is really nothing that I can add to that today, and it remains the Government's policy. The House will recall that the Prime Minister explained at length and with care the reasons for his own wariness—the word he used—about the proposition so far as Britain was concerned.

My right hon. Friend also explained why he felt it right that we should hold on to the freedom that he obtained for us at Maastricht to take a decision on this matter at the time, if and when a choice comes before us. I note the strong endorsement of his stance in the report issued by the CBI yesterday. The Prime Minister has not excluded the possibility of holding a referendum on the single currency if the Government ever felt that such a test was in the British interest.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Can my right hon. Friend tell the House what the money to be spent in the Mediterranean will be used for? Is there not a slight tendency for some of the Euro-money spent in the Mediterranean to be frittered away by fraud? I am sure that my right hon. Friend would wish to reassure the House on that subject.

Mr. Hurd

We must be able to reassure the House on that matter, and that is why—as I have mentioned—we have been particularly energetic in trying to promote measures against fraud which would give even my hon. Friend reassurance on the matter. I hope that member states will agree at Cannes on new measures against fraud and also regulations which will enable the Commission to be more active and effective against fraud.

One of the ways in which the European Parliament can attract attention and respect is by being more energetic in using the Court of Auditors in this action against fraud. While my hon. Friend the Member for Wolverhampton, South (Mr. Budgen) is right in what he says about fraud, it does not occur only in the Mediterranean. That subject concerns every member state, and it is crucial for confidence in the Union that fraud is stamped out.

Mr. Budgen

What will the money be spent on?

Mr. Hurd

My hon. Friend asked for guarantees against fraud. A slice of the money will be spent on Gibraltar, for example. The stability of the southern and eastern shores of the Mediterranean is a matter of huge importance to this country. I am often questioned by my hon. Friends about the middle east peace process and what help we are giving to the Palestinians in their efforts to maintain the agreement which they have signed with Israel. One answer to my hon. Friend is that part of the money for the Mediterranean will go in that direction.

The European Union is making an entirely justified effort to do its best to create and preserve stability along the eastern and southern shores of the Mediterranean. That is something that we in Britain have always spent a certain amount of money on.

Mr. Salmond

The Foreign Secretary has spoken about a divergence of opinion on Europe, but is not the most obvious divergence of opinion that between the one that he is putting forward at the Dispatch Box and the basic anti-European Union stance which now seems to be predominant among his Back Benchers? Earlier today I inadvertently found some Conservative Members handing out question papers for the next Foreign Office Question Time in a couple of weeks' time, no doubt designed to ambush the Foreign Secretary. Does he not increasingly resemble a waggon train surrounded by indians?

Mr. Hurd

What I am setting out is the policy that has been set out by the Prime Minister in a number of speeches and which was endorsed, unanimously, of course, by the Cabinet about a fortnight ago. It is now being worked up into detailed proposals in Whitehall, the details of which are gradually being made available to the House. That is the Government's policy. We believe that is right, in line with popular feeling in the country and in the interests of the country and of Europe.

Sir Peter Tapsell (East Lindsey)

On the important subject of the single currency, my right hon. Friend said that there were no proposals at Cannes either to ease the economic criteria conditions or to change the timetable laid down for that. Those two statements are incompatible. Everyone now knows—it is universally recognised—that the economic criteria cannot be satisfied by a sufficient number of European Union countries in order to establish a single currency according to the Maastricht timetable. Surely that is a fact.

Mr. Hurd

What is acknowledged and what the Finance Ministers explicitly acknowledged on Monday is that the earlier timetable as envisaged in the Maastricht treaty—1996-97—is unreal. That is something that the Prime Minister and the Chancellor have been saying here for a long time, but there were people on the continent, particularly in the Commission, who clutched at the dream that it might be possible to realise the earlier timetable envisaged in the treaty. My hon. Friend certainly knows that there is also provision in the treaty for a timetable based on 1999. People have not yet come to the conclusion that that is unreal, although they may have to do so eventually. I am not disputing my hon. Friend's basic thesis, but, so far, the earlier timetable has been abandoned as unreal.

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

Will my right hon. Friend give way?

Mr. Hurd

No. I must get on and deal with the issues before the intergovernmental conference.

The House is being kept fully informed of the work of the reflections group, and it will have ample opportunities to cross-examine Ministers about our negotiating stance. For example, I spent two hours with the Select Committee on Foreign Affairs this morning, to a large extent discussing that point.

As the Prime Minister has stressed, and as the House, I think, understands, Ministers cannot be expected to give every detail of a negotiating position in advance, but he and we have already set out the principles on which we will operate. There is no massive idea dominating the discussion in the run-up to the conference in the same way as the single market and majority voting dominated the discussion before the Single European Act and the way in which economic and monetary union dominated the discussion before Maastricht.

There will be discussions, however, of a number of difficult items. Qualified majority voting has already been mentioned. We shall argue, as the House knows, for a fairer system of weighting which gives a greater say to the larger countries. As I have said, QMV is necessary in certain spheres. We must face that. It is needed to keep the protectionists at hay and to prevent them from undermining the single market. It will certainly be essential when the time comes for further reform of the common agricultural policy, but we do not accept the case for its further extension into areas now covered by unanimity.

I feel particularly strongly about the sector which I know best, foreign policy. To spare the House a long explanation, I will put in the Library a copy of an article that I have just written for a German newspaper setting out my reasons. It is right that the countries of Europe should act together when they agree and the common foreign and security policy can be built, and is being built brick by brick in that way. I cannot think of any case, however, during my time as Foreign Secretary when we would have been more effective if it had been possible to override a member state on a foreign policy matter. There is a gap there between theoretical and practical thinking. The notion, for example, that somehow there would be peace in Bosnia, and in Croatia, today if we were able to use qualified majority voting in Brussels appears wholly unreal.

We do want to make foreign policy work better in Europe. Where does the remedy lie? Among other things, we believe in strengthening the presidency, so that when there is action agreed by everyone it can be more visible and effective. We need to consider the idea of shared presidencies so that the assets of the bigger member states in that sphere can be used better. We need better back-up for the Council: proper analysis, planning, and discussion of policy options.

My opinion is that the basic structure of the European Union is now about right, whether it be a Union of 15 or 20 or more members. We are on the right track as regards that. It is right that the single market should have rules and institutions which work out those rules and enforce them evenly.

Mr. Marlow

Will my right hon. Friend give way?

Mr. Hurd

May I finish this bit? Then I will give way to my hon. Friend again.

We need a Commission and a Court to ensure, for example, that British planes are allowed to fly into Orly, as they can today—as they could not a couple of years ago—that the Italians and Spaniards are heavily fined if their milk quota figures are wrong and that the Italians have to repeal a tax on luxury cars. Since that tax was repealed, under pressure from the Commission and the Court, there has been a massive increase in the sales of Jaguar cars in Italy.

Mr. Nigel Spearing (Newham, South)

rose—

Mr. Marlow

rose—

Mr. Hurd

I promised one Opposition Member that I would give way to him, but he is no longer in the Chamber. I give way to my hon. Friend.

Mr. Marlow

I am exceedingly grateful for the generosity of my right hon. Friend. Will he tell the House in what aspects of policy Her Majesty's Government will seek to regain competence to the United Kingdom from European institutions? Is it none?

Mr. Hurd

It is not none. We are still considering whether there are ways in which we could make clearer the definitions of competence. No one suggests, as I have said, an enlargement of competence. There may well he aspects in which it would be right and we could reach agreement. It should remain absolutely clear, where there is doubt at the moment, that matters about which there is doubt remain within national jurisdiction. We have that in the existing treaty as regards school institutions, education policy and as regards harmonisation of health care. Those are excluded. Perhaps that can be carried further in the next treaty. That is the type of detailed sub-policy work that we are still carrying through in Whitehall, and no doubt other countries are doing the same.

Mr. Spearing

rose—

Mr. Hurd

I think I will come to the end.

I am going through some of the specific ideas that we intend to propose. We shall seek changes as regards the Commission—a leaner Commission. As the Union expands, the infinite expansion of the college of Commissioners makes, in our opinion, no sense. We are considering a further control on unnecessary legislation. We believe that it is possible—not certain, but possible—that what is called a sunset clause should be considered. If an idea has got stuck and has not advanced in three years, why not allow it to lapse, to avoid cluttering the negotiating table with unwanted paper?

We need a European Parliament that can monitor the work of the Commission in ways that are beyond the reach of the House or national Parliaments. Fraud has been mentioned; the improvement of financial control is another example. We also seek—I mentioned that in my evidence this morning to the Foreign Affairs Select Committee—stronger ways in which national Parliaments and the European Parliament can work together, although that is something where we need co-operation with the House. It is not something that Governments themselves can decide.

Governments need to work together, outside the institutions of the Community, on an intergovernmental basis, as the treaty provides.

Mr. Bernard Jenkin (Colchester, North)

Will my right hon. Friend give way?

Mr. Hurd

I will give way to my hon. Friend for the last time.

Mr. Jenkin

I am extremely grateful to my right hon. Friend. May I read him a short paragraph?

It would be idle to pretend that the United Kingdom Parliament has any influence over the institutions of the European Community. It is equally unrealistic to believe that it could ever have effective control, or that other national parliaments, singly or acting together, could create an effective control mechanism. Those are the words written by my right hon. Friend the President of the Board of Trade when he was on the Back Benches.

Should not we recognise that the only effective way to strengthen the role of national Parliaments is to repatriate competencies from the European Parliament to the national Parliaments—not, as my right hon. Friend advocates, to strengthen the European Parliament?

Mr. Hurd

I do not agree with that at all. The energy that my hon. Friend and other right hon. and hon. Members spend on European matters in the House refutes my hon. Friend's thesis. The essential decisions—changes in the treaty, anything to do with foreign policy, defence, home and justice matters—are taken by unanimity. My hon. Friend can hold me to ransom; I am responsible to him and my voice, or that of the Prime Minister, is crucial. On other matters, for reasons that I have now explained twice in my speech, there is majority voting. We in Britain agreed that there should be majority voting in order to gain our objective, which is a single market.

Mr. Budgen

Some of us did not.

Mr. Hurd

Some did not, but most did.

That deal was in our interests. I do not accept that national Parliaments do not have a role—they do. Many national Parliaments, including most people in this one, would like it to be a stronger role. It is difficult to work out the practical ways of achieving that, but we have to try to do it. Some of the ideas that I set out to the Select Committee this morning—I hope that my hon. Friend the Member for Colchester, North (Mr. Jenkin) will study the reports—are ideas which I hope that Committees and Members of the House will take up and run with.

Mr. Dykes

Will my right hon. Friend give way?

Mr. Hurd

No, I have given way to my hon. Friend already.

The institutions that I have talked about are better suited to a Europe of nations than a united states of Europe. Yet we must acknowledge that neither in this country nor elsewhere do those institutions have a firm hold on the loyalties or even sometimes the respect of the peoples whom they exist to serve. That is not because people have suddenly developed a dislike of foreigners or suddenly turned against the idea of Europeans working together. On the contrary, market research, certainly in this country and, I think, in all the countries of Europe, shows that people want Europe to succeed. They want the Europeans to work successfully together, but they are ill at ease with the way in which things are done today.

That unease will not be cured by speeches or declarations or tinkering with the treaties. People will have greater confidence in the institutions of Europe when they see them working clearly for the objectives which they themselves—the people—think important: the building of prosperity through the opening of markets, through free trade, through deregulation and through strong action against fraud; the extension eastward of the stability and prosperity which, with all the arguments among ourselves, we take for granted in the west of Europe; and flexibility, so that national differences can be accepted, not regarded as heretical, and national identity is preserved.

As I hope that I have established, the record of the past few years shows much greater progress in those healthy directions than people yet perceive. Britain is well placed—better placed than others—to press for further progress on all those points. The Prime Minister has set our course. It may not be dramatic enough for all tastes—it just happens to be right, and we shall follow it.

Sir Edward Heath (Old Bexley and Sidcup)

In his opening remarks, my right hon. Friend—and former assistant—praised my successor for her repeated technique of saying no, no, no and then saying yes and signing up. My right hon. Friend also emphasised that both he and the present Prime Minister closely follow that technique. That has given me immense reassurance and I now have every confidence in the future of the meeting at Cannes, of the intergovernmental conference, of the Union and of this country because if that excellent example is followed, we shall achieve all the aims that my right hon. Friend has been describing in his speech. Those who have been niggling away on the Benches behind us will be defeated and we shall all benefit. I thank him very much.

Mr. Hurd

That was not quite what I expected from my right hon. Friend. I learnt a great deal from him 20 years ago. I have forgotten some of it—whether to my benefit or not, I am not sure. I am grateful—or I think that I am grateful; it will need a little further study later—for what my right hon. Friend has said.

In conclusion, I believe that the record of the last few years and the change in the mindset that I have tried to document because it is often disputed shows that there has been greater progress in a healthy direction than people yet perceive. I also believe that this country is well placed to press for further progress on those points because, in many cases, we originated the argument which is beginning to prevail. The Prime Minister has set our course in the speeches that I have mentioned. I entirely accept that it may not be dramatic enough for all tastes; it just happens to be right. We shall follow that course steadily, firmly and in the national interest.

4.29 pm

Mr. Robin Cook (Livingston)

For the convenience of the Foreign Secretary, I make it clear at the outset that I do not intend to utter any word of criticism of him in my speech. Having listened to his speech and watched the Back Benchers behind him, I fear that he will receive enough criticism in the course of the debate without any contribution from me.

I found the least convincing passage in the right hon. Gentleman's speech that moment when he attempted to explain that there was clear blue water between his position and that of the Labour Front Bench. I do not suggest that the Foreign Secretary should intervene at this moment, but the reality is that he knows in his heart that, if he had the freedom of speaking from the Back Benches, he would make speeches very similar to those from which he quoted by my right hon. Friend the Leader of the Opposition. [AN HON. MEMBER: "Would you?"] Indeed, I have not the slightest hesitation in answering yes to that question. My right hon. Friend and I share each other's speeches.

If one looks for clear blue water, one will find it within the Conservative party. That has been demonstrated and measured in the past few months by the war of the pamphlets. In February, we received an interesting pamphlet from the hon. Member for Worcestershire, South (Mr. Spicer) arguing the cause of Euro-scepticism.

In March, we received a pamphlet from the hon. Member for Wycombe (Mr. Whitney) arguing the case for a more positive approach to Europe.

It is interesting that both pamphlets contained forewords by the Prime Minister. He welcomed the pamphlet on Euro-scepticism as a "thought-provoking contribution", and a month later he welcomed the pamphlet that was positive to Europe as a "constructive contribution". I advise right hon. and hon. Members opposite to hold on to their Prime Minister. He seems to be the only person in the Conservative party who can possibly span the gulf that is opening up between its members over Europe.

I was sorry to read in the past week that some doubt has been cast on the Prime Minister's continued survival because of a meeting with a number of Conservatives, some of whom I presume are in the Chamber now—although there is no published minute of that meeting. We understand that 60 Conservatives attended a meeting of the Conservative party's Fresh Start group, at which the Prime Minister was strongly urged to be tough on Europe and tough on the causes of Europe.

I tried to warn the Prime Minister about the views of the Fresh Start group. Three weeks ago, I released the agenda of its previous meeting.

Mr. Duncan Smith

You used to be a member.

Mr. Cook

I do not think that I was ever a member of a Tory party group in this place; I must set the hon. Member straight on that point.

The agenda stated: Britain should veto all further discussion at the intergovernmental conference unless the points stated above were agreed, which was unlikely"— having read the above points, I concur with that view. It continued: That overall veto would create a crisis with the other members. I cannot think of any more irresponsible strategy to adopt in relation to our immediate neighbours and the rest of the European Union than one that deliberately sets out to create a crisis by vetoing the proposals of everyone else.

Mr. Cash

Will the hon. Gentleman give way?

Mr. Cook

Of course. I presume that the hon. Member was present at the meeting last week, and perhaps he will tell us some more about it now.

Mr. Cash

Will the hon. Gentleman concede that, although many of us are in favour of the idea of a referendum, when the referendum was proposed in 1975 after we had signed the original treaty, it would obviously have created a crisis if the Labour party's policy with regard to a referendum had been seen in its true light?

Mr. Cook

The Labour party gave the people of Britain the opportunity to make a choice. We understood that they were promised such an opportunity in 1970, when we were told that the country would enter the European Community only with the full-hearted consent of the British people. It was left to a subsequent Labour Government to provide the opportunity for the people to give that full-hearted consent. The hon. Gentleman keeps ignoring the fact that they gave that full-hearted consent in a referendum.

I am disappointed that the Foreign Secretary gave us no insight into how the Prime Minister responded when he was invited to create a crisis with the other members of the European Union. Let me remind the right hon. Gentleman and his colleagues with what organisation they will be seeking to cause that crisis. It is the continent that receives the majority of our visible exports. When I referred to that at Question Time last week, I was howled down by certain Conservative Members, who said, "No!" In case they were correct, and in a spirit of humility, as I might have been wrong, I took the opportunity of checking the figures.

In 1994, 57.1 per cent. of Britain's industrial exports and visible exports went to the other member states of the European Union. It was fractionally more than in 1993. Those are the countries with which Conservative members want to create a crisis. What possible rationale is there in seeking to create a crisis with the people who buy the majority of our exports?

Mr. Duncan Smith

I am sure that the hon. Gentleman would not wish to mislead the House. He will therefore want to correct his statement, as he has been carefully selective. He should be discussing the totality of British exports, including invisibles. He should therefore admit that we do no more than 43.6 per cent. of our total trade with Europe, including invisibles. Will he comment on the fact that he has been selective, and should not invisibles— which are highly profitable and employs many people—also be included?

Mr. Cook

The hon. Gentleman has raised a genuine issue. I would have more respect for what he said had he responded to that problem by saying that we should be seeking to open up the single market in financial services and insurance services to address the under-performance of the invisibles. To return to the hon. Gentleman's point, first, he is wrong. The figures from the Library say that the figure is 48.3 per cent., including invisibles. Secondly, what an extraordinarily cavalier attitude it is to say, "Does it matter, because it is only 48.3 per cent. of total exports?"

There is another reason why Europe is so important to us. Conservative Members are fond of quoting inward investment to Britain as a triumph for the Government. If they really want to take any credit for inward investment in Britain, or any real interest in that investment, it is about time they recognised why it comes to Britain.

I am fortunate in representing a constituency that is still a very large manufacturing area: 40 per cent. of the work force—double the national average—work in manufacturing. My constituency has attracted major investment. Most Japanese electronic firms are represented in my constituency.

Mr. David Martin (Portsmouth, South)

Under which Government?

Mr. Cook

Under both Governments. The hon. Gentleman should think through the logic of his intervention.

Many American companies are also there. Those companies did not come to Scotland for the Scottish or even the British market. They did not come to Livingston because of the intrinsic beauty of new town architecture or the quality of our weather. They came to Livingston and to Britain because they wanted access to the market of Europe, and nothing would put in doubt that investment more than any doubt over our future in Europe.

There was a time when the Conservative party claimed to be the party of industry. The divisions among Conservative Members and the voices being expressed from within their party are causing dismay to industrialists. The Foreign Secretary referred to this week's statement from the CBI, which urges the Government to re-establish their credibility as a negotiating partner in the European Union. This week, the author of that report says: I know, through my dealings with colleagues in other member states, that the UK is losing credibility as a negotiating partner in the European Union. Political divisions over Europe and the hyperbolic statements which result have often been misguided and are deeply damaging. The splits make it harder to do business and harm our economic interests. If Conservative Members take a different view, they should perhaps ask themselves why four other countries have, within the period that we are debating, signed up to the EU. Those four countries understood perfectly well that their market was inside the European Union, and that, if they want to influence the terms under which they trade in the EU, they have to play a full part in it. None of them imagined that they were surrendering sovereignty when they signed up; nor do we.

Mr. Jenkin

Is it not important to keep this in proportion? May I point out that Switzerland has increased its trade with the EU faster than Britain has during its period of membership? Switzerland has also maintained a stable currency. It is an efficient country, and it provides a good standard of living for its people. Life outside the EU need not necessarily mean death. In any case, few Conservative Members are advocating leaving the European Union. We advocate redefining our relationship with it so that it is more in our interests.

Mr. Robin Cook

I understand from press reports that the hon. Gentleman was present at the meeting in question when creating a crisis with other EU members was discussed. Certainly that is one way of redefining a relationship.

Of course, there will always be a place—in Europe and the world—for a small nation with a modest manufacturing base, such as Switzerland, looking for niche markets. Anyone who wants to go out to the public and say that Britain can survive on the basis of Switzerland's economy will get a loud raspberry in return from anybody who understands the facts of industry.

Sir Peter Tapsell

The hon. Gentleman is putting up a number of amusing Aunt Sallies, only to knock them down. Having been present at the meeting, may I tell the hon. Gentleman that no one suggested to the Prime Minister that we should provoke a crisis with Europe; and that no one, to my knowledge, in the Fresh Start group wants to do anything of the kind. What we want to do, as my hon. Friend the Member for Colchester, North (Mr. Jenkin) has just said, is to maintain our access to the single European market without getting mixed up in a lot of socialist bureaucracy of the central European kind.

Mr. Cook

I ought to let more Conservative Members intervene. The hon. Gentleman has clearly demonstrated that what they want, simply and solely, is an agenda for those at the top of business, with no agenda to help the people who work in business. It is hardly surprising, therefore, that the hon. Gentleman's colleagues in the Fresh Start group may not yet have created a crisis in Europe, but they have most certainly created one in the Conservative party.

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)

As one who was not at that meeting, may I tell the hon. Gentleman that it is no good standing at the Dispatch Box smugly pretending that all is sweetness and light in the Labour party? If he thinks it is, he has only to look at some of his right hon. and hon. Friends behind him and ask them what their views on Europe are.

Mr. Cook

rose—

Mr. Denis MacShane (Rotherham)

Speak for England!

Mr. Cook

I should be in deep difficulties with my constituents if I spoke for England. I assure the hon. Gentleman that it would greatly enhance the quality of these debates if we could look at our hon. Friends behind us instead of at Conservative Members opposite us—

Sir Teddy Taylor (Southend, East)

rose—

Mr. Cook

I have not yet answered the previous point.

I speak for Labour party policy—particularly, for the Labour party policy document that went through conference in 1993 without a single nem. con.

Sir Teddy Taylor

In the course of his Library researches, did the hon. Gentleman find out—many of us would like to know—why, before we joined the EU, we had a positive balance of trade, whereas since we joined we have built up a total accumulated deficit of £100,000 million—the equivalent of £2,000 per head of the British population? Moreover, did the hon. Gentleman's researches explain to him what has happened to Sweden and Norway since their respective referendums?

Mr. Cook

The hon. Gentleman really should do more research into the trade figures. If he did, he would discover that, until 1980, we had a surplus in manufacturing exports with the whole of the world, that we did not have a deficit with the rest of the world before then, and that, since 1980, as a result of the collapse of manufacturing industry, and this Government, there was no surplus in any year until 1994. If he would like to go up and down the country and draw that to the attention of the electorate, I would be thoroughly pleased, and so would every Labour candidate in Britain.

I shall now address our real position.

Mr. Duncan Smith

Answer the question.

Mr. Cook

I have answered the hon. Gentleman's question.

Our position is that we do not, as Conservative Members like to fantasise, support a federal Europe or any super-state in Europe. We are not in favour of joining a European Union in which we have to surrender sovereignty. We favour a European Union that is a free association of independent member states, not surrendering sovereignty but sharing our common interests.

I must say to the Foreign Secretary that his idea—that the position that he was outlining is more central to the Europe of the 1990s—is totally at variance with the experience of his own negotiator at the previous meeting, who found that he was outnumbered by 14 to 1. Some of his hon. Friends seem to prefer that isolation. The problem is that isolation is a poor place from which to negotiate the best deal for Britain. Hon. Members would know that if they read the document produced by the Department of Trade and Industry only last year, which spelt out that officials of Britain feel marginalised in negotiations within Brussels, precisely because of the negative attitude taken by Ministers.

There is, of course, a wider issue in this debate—the world is shrinking. Trade is expanding at double the rate of output. Financial flows across the exchange markets every day now clock up 20 times the amount required to finance any one day's trade. What makes that movement irreversible is the change in the telecommunications industry, which has meant that industries around the world are interlocked. It is now possible to transmit the entire "Encyclopedia Britannica" around the world in three seconds—and the Tory manifesto in a nanosecond.

That creates a real challenge for politicians. We have to grapple with two separate realities. On the one hand, there is a powerful, rich sense of identity with the nation of our people. It is a sense of identity that is deeply creative, which Labour Members totally respect, because that sense of national identity is one of the strong bases of the social solidarity that we hold dear. We will take no lectures on the importance of national identity from people who have done more to break up social solidarity in Britain than any previous Government this century.

The challenge for responsible politicians is how one reconciles that powerful sense of national identity with the requirement to create international structures that regulate economic relations and resolve the opportunity for friction between nations. That is the central challenge facing us.

Conservative Members refuse to face that challenge. They are retreating into the rhetoric and mind-set of an 18th-century nation state. I do not say the 19th century, as the 19th century would be too modern. At least in the 19th century Britain understood that it could not be isolated from the world.

Conservative Members are failing to grasp the logic of their own position. As I understand it, Conservative Members on the Front Bench and the Back Benches are united on one item for the intergovernmental conference: enlarge the European Union and bring in other countries of central and eastern Europe. We are entirely at one with them on that. I believe that western Europe at present has a very important mission: to embrace the new democratic countries of Europe and bring them into the family of democratic nations. We would then be able to underwrite those democratic structures and firmly anchor them into a structure of human rights, so that we never again see them slip back into totalitarianism.

If Conservative Members are sincere and genuinely want to see the European Union expanded to bring in all the countries of central and eastern Europe, they cannot continue to say that there must be no change to the EU's institutions. Those institutions were designed when there were six member states. We cannot expect those same institutions to work without change when we have a European Union with over 20 members.

Mr. Dykes

I am grateful to the hon. Gentleman for allowing me to intervene, especially at such an interesting part of his speech.

Does he agree that the Government are definitely sincere about the proposals to which he has referred, given all the evidence, but are facing increasingly dotty xenophobia and a manic dislike of socialism in Christian Democratic Germany, for instance, by some Conservative Back-Bench Members? I fear that that will become worse.

Therefore, rather like other principal countries of the Union where there are no significant differences over European policy between the major parties, why is it not possible for the Opposition to respond more positively to the idea of free votes in future in the House, where there is a large built-in majority for European development? That would, of course, need co-operation from the Opposition. Why cannot they be more constructive in that way, especially if the Government were, interestingly, able in future to offer some abandonment of controversial legislation such as British Rail privatisation?

Mr. Cook

My right hon. Friend the Member for Bishop Auckland (Mr. Foster) might like to retire at this stage with the hon. Gentleman to tie down the deal that he was offering. If the offer were on the table—that we can halt the privatisation of British Rail in exchange for a free vote on Europe—it would be one that we would happily entertain.

A free vote would, of course, have to cut both ways. Conservative Members would have to recognise the importance of such a free vote. If the hon. Gentleman is suggesting that, in certain circumstances, he and his colleagues might be tempted into the Opposition Lobby, we shall happily take away the suggestion and reflect upon it. We could happily do so when I and some of my hon. Friends leave the Chamber to attend a meeting in nine minutes' time.

I shall finish the point that I was making about enlargement. The Foreign Secretary knows the truth of what I have just said. In any event, we can test him on it. The demand from the Government Back Benches, including the Fresh Start group, is that he should veto any extension of qualified majority voting. Would he do that? Would he give us an undertaking that he would veto—

Sir Teddy Taylor

No.

Mr. Robin Cook

I know that the hon. Gentleman aspires to be Foreign Secretary, but it is perhaps unfair for him to answer for the Foreign Secretary. However, he voices the thought that is in all our minds. The answer is no, because the Foreign Secretary is far too sensible to take such a course. He knows that it was the Conservative Government under the previous Prime Minister, who agreed to the last major expansion of QMV when she signed up to the single market.

I watched the former Prime Minister with interest when she was being interviewed about these matters. She appeared to give the impression that she felt that she had been cheated when she signed the agreement. She thought it was an agreement with Singapore. No one had told her that the end user would be the European Commission.

Let us turn to another area where the Foreign Secretary is under pressure. The right hon. Gentleman is being pressed to veto an extension of the European Parliament's role. I can understand why Conservative Members are anxious to avoid any extension of its role. After all, they have great difficulty in getting elected to the European Parliament. I shall not ask the Foreign Secretary if he will veto any extension of that Parliament.

I shall ask the right hon. Gentleman another question. What conceivable British interest would be served by stopping the European Parliament scrutinising the agriculture budget? At present, the European Parliament can have powers of scrutiny only over the non-compulsory section of the budget. That excludes the agriculture budget. What possible purpose is served in Britain's interests by stopping the European Parliament from being able to ask questions and to vote on that budget?

Reference has been made to fraud. Fraud stems from the common agricultural policy. Despite the promises given before Christmas, fraud is increasing. More cases of fraud were recorded in the first nine months of last year than in the whole of 1993. Why not also make that something that is open to scrutiny, vote and judgment in the European Parliament?

May I offer one word of warning to those on both sides of the debate? Looking ahead to the next 12 months, I can see that our debates on Europe will be dominated by the issues before the intergovernmental conference. Those issues are, of course, highly technical. They take us into orbit among remote and lonely planets of the institutions of the European Union. If we, on either side of the debate, really want to connect the debate about Europe with the public, we must debate Europe in terms that relate to the lives of the public.

I would entirely accept the challenge that the Foreign Secretary threw down to us. One of the ways in which Europe can affect the public's lives is the way in which it can provide them with working rights at the place of work—and yes, I confirm entirely, as the Foreign Secretary said, that the Labour party is fully committed to the social chapter, and that one of our first steps will be to sign up to it. To suggest that that position makes Labour isolated in Europe is extraordinary, given that the Government are the only one who have not signed it, and that four new countries have joined it within the past six months.

Mr. John Carlisle (Luton, North)

Will the hon. Gentleman give way?

Mr. Cook

I shall give way for the last time.

Mr. Carlisle

In the earlier part of the hon. Gentleman's speech, he proudly boasted that American companies were coming into his constituency of Livingston because they wanted access to Europe. May I remind him that an American company came into my constituency because it wanted access to Europe, and that it came to Britain rather than to another European country because we had not signed up to the social chapter? Had it gone to another European country, it would have suffered the iniquities that the chapter has brought. It came to Britain for that very reason. Should the hon. Gentleman get into power, that company may desert us, and his American investment would go away from these shores for ever.

Mr. Cook

On that point, I shall be guided by the Labour Member of Parliament who will replace the hon. Gentleman as the representative of his constituency by the time we come to power. I regularly meet American and Japanese companies in my constituency. Not one of them would have the slightest problem with living within any minimum wage that this party may propose; nor do the companies that trade internationally have the same difficulty over the social chapter that Conservative Members appear to have, which is why three companies have signed up to a works council, and all of them, at the same time, withdrew their donations to the Tory party.

Sir Richard Body (Holland with Boston)

Will the hon. Gentleman give way?

Mr. Cook

No. I have given way for the last time. With respect to the hon. Gentleman, I have been generous in giving way, and I said before that that would be the last time that I gave way.

The fundamental difference between the Front-Bench teams of both parties is that we fully reject the idea that one can achieve competitiveness in the new global economy by lowering wages and lowering conditions. People in China will work for 10p an hour. Not even Conservative Members would advocate that we pay 10p an hour in Britain. [HoN. MEMBERS: "They would."] I say to my hon. Friends that Conservative Members would never agree to work for 10p an hour themselves. We will never successfully compete by doing the job cheaper. We will compete only by doing it better, and that means higher skills and higher technology.

The reality is that Conservative Members are limbering up to fight the next election as the nationalist party of Britain. Indeed, some of them see that as the solution to their difficulties. It would be not a solution to their difficulties but the start of their problem, because a nationalist party would have difficulty relating to the new world.

What the electorate out there want is a Government who can relate to the real world, who can build alliances in the real world, who can find common ground with their trading partners, who can give people opportunity in the global economy and the full opportunity to take the benefit of the globalisation of the economy, not a Government who will isolate Britain behind the new great wall of opt-outs and vetoes.

If Conservative Members really want to conspire to offer that choice to the people of Britain at the next election, I warn them that I shall be happy to accept it. We shall offer them a Government prepared to face a new century, because they understand that new century and will work with it; we shall be happy to fight an election against a party that would prefer to retreat into the 18th century. I have no doubt which century the electorate will choose.

Several hon. Members

rose—

Mr. Deputy Speaker (Sir Geoffrey Lofthouse)

Order. I remind hon. Members that Back-Bench speeches are limited to 10 minutes.

4.59 pm

Mr. David Howell (Guildford)

With his usual courage and integrity, my right hon. Friend the Foreign Secretary struggled to draw from the sea of documents listed on the Order Paper—the vast output of bumf that seems to have flowed from every European institution—an awareness of positive developments in the European Union. I agree with him that some of those developments are very positive, and that we are unwise to see everything in black, negative terms: we should not conclude that all that happens in Europe is against our interests.

I shall deal in a moment with the matters that do worry me. First, however, let us consider the European scene today, just before the Cannes summit. The French Government are changing some of their views. Their position is contradictory, of course, in that they remain deeply committed to merging their currency with the deutschmark and regaining control of their monetary destiny—or so they say; I do not think that they will—while also remaining healthily sceptical about the centralising tendency of some Community institutions.

Like us, the French are arguing for positive measures that reassert the strength and power of the Council of Ministers over the Commission—which, notwithstanding denials, seems to be bursting with unseemly ambitions in diverse areas where its competencies do not lie, and moving in directions in which, according to treaty, it should not move. The French want the assertion of national Parliaments over the European Parliament. I assume that every good Member of this Parliament would support their aim to enable national Parliaments to call the European Union to account in regard to decisions taken in our name.

It would be stupid of us to reject those positive developments, and to say that nothing is going our way. Of course France and Germany want to remain close; of course President Chirac went first to Bonn, because the oldest and fiercest memory in the breasts of the French tells them that never again must they be overrun by their colossal neighbour. We understand that; no British man or woman could want France and Germany to be other than friends. The French attitude is changing, however, and I think that it is changing in a healthy way—in line with some of the ideas that my right hon. Friends the Foreign Secretary and the Prime Minister, and others, have struggled to put across in recent years.

I do not know whether it was fair of me to detect in the speech of the hon. Member for Livingston (Mr. Cook) definite signs that the Labour party, too, is moving—although I do not want to raise the hopes of the right hon. Member for Bethnal Green and Stepney (Mr. Shore). I detect a change in certain pronouncements.

It was less noticeable today: although the hon. Member for Livingston always makes an enjoyable speech, his speeches are rather like a Chinese meal in that, when we read them later, nothing much can be extracted from them. The Labour leader, however, seems to be striking a far more cautious note than was struck by the mad centralism of the past, and the dotty commitment to everything coming out of Brussels.

Who knows? It is better that one should be saved. Labour has moved in so many other areas; indeed, listening to Labour leaders describe their policies nowadays is like reading the labels on bottles of homeopathic drugs. We note all the ingredients that the Labour party no longer contains. It is no longer in favour of nationalisation, for instance; it is no longer going to sting the rich.

Perhaps, even, the Labour party is no longer committed to dotty centralisation in social policy, and the vast redistribution of funds proposed, with excessive zeal and enthusiasm, by the Brussels Commission. We live in hope: there have been positive developments which should be built on. My right hon. Friend has done marvels, and will continue to do so; I have complete confidence in him.

Nevertheless, when I look at some of the documents listed on the Order Paper, I feel far less confident. As we have reduced our debates to mere soundbites—I know that that is nothing to do with the Chair, but the ruling has resulted in all the action going upstairs to the Committee Rooms, so that we cannot have a proper debate in the Chamber—I shall concentrate on one issue: the Commission's Green Paper on the practical arrangements for the introduction of a single currency.

I do not know whether hon. Members have had a chance to read that vast, verbose and almost unintelligible document. When it was published, a big press conference was held in Brussels, led by the Commissioner concerned—a Frenchman, Mr. Yves-Thibault de Silguy—and the Belgian Finance Minister, Mr. Maystadt. They had some remarkable things to say, which filled me with apprehension. I speak as much as someone who has worked for European unity as someone who wants this country's interests to be upheld and protected.

The conference was told that a core number of countries would be committed to a single currency, and that some countries outside that number either would not be able to join because their convergence criteria were all over the place—Spain, for instance, and poor old Italy, with its vast debt-to-GNP ratio—or would refuse to join, like the impudent British, who insist on good convergence criteria and a good performing economy. Those countries would have the cheek to have competitive currencies, which would be very challenging to the core countries that had signed up for the single currency—whether they consisted only of Germany, Benelux and Austria, or included France.

Those eminent Commissioners concluded that the answer was to raise tariffs or trade barriers against members of the European Union that were not part of the core currency. I ask my right hon. and hon. Friends to ponder that proposition. It goes like this: "We believe"— I do not believe it myself—"that a single market needs a single currency." I consider that a fallacy in itself. The argument continues: "Therefore, to create a single currency, we will destroy the single market. We will cut it up; we will divide it." That strikes me as not merely a divisive but an anti-European move. It is certainly anti the Europe for which, along with many of my hon. Friends, I have worked for two or three decades.

I know that some Conservative Members think that a single currency must be all right, because Europe is for it and everyone says that it is necessary for a single market; but I beg them to examine the technicalities of proposals that will divide that market, and to consider the advice of skilled people in the currency markets who know that the single currency is a recipe for colossal instability, vast arbitrage and huge volatility. Above all, as learned bankers are now saying every day, it is not even necessary: it is possible to run a very good single market without a single currency.

We are left with a feeling of slight despair. Many people in the country—and, I suspect, many members of my party—are pro-Europe. We have always wanted to part of a good single market. We want it to be enlarged to bring the new democracies—and we note that that is not going too well: a good deal of rhetoric is in favour, but numerous obstacles are being put in the way.

We want a great single market, and to trade in that market. Instead, we see Europe either being dragged in the wrong direction, towards the "great leap forward"—the lunatic ideas of centralisation and uniformity that are technologically and constitutionally out of date—or being told that the alternative is to unravel the whole thing and walk away.

We are presented with a miserable choice. It is time, dare I say, that the—I hope—not too muddled middle had a say. Most people in the country and, I suspect, most hon. Members on both sides of the House want us to be part of a good, strong single market involving some political authority at the centre, carefully delegated and circumscribed, and underpinning a highly effective Europe of nations—or, as President Chirac says, a Europe of united nations.

That is what we want. It is time that that was articulated and that people had the right to get away from the mad extremes with which we are being presented. I know that my right hon. Friend will continue to fight for that aim, because that is the Europe with which Britain not only can live but of which we can be at the heart.

5.10 pm

Mr. Denzil Davies (Llanelli)

Those of us from the Celtic fringes like to choose a text on which to hang our speeches. The trouble with debates on the common market, as it used to be called, is that there are so many documents. There are more texts than in the Old Testament. I have found two texts. I do not know whether 10 minutes is enough for a sermon on two texts, but I shall try.

The first text is in a communication dated 13 March 1995 from the Commission to the Council following the Essen council on employment. It says: Fighting unemployment is a paramount task of the Community. The next text comes from paragraph 6.9 of the development document of July to December 1994, which points out that 10 out of the 12 member states still have excess deficits on their Government budgets.

There could not be a starker contrast—a contradiction of Hegelian proportions. On the one hand, we are told that fighting unemployment is paramount but on the other we are told that all the countries, or 10 at least, are engaged in a massive deflationary exercise to reduce public expenditure and public debt to the 60 per cent. and 3 per cent. targets in the Maastricht treaty because they have to eliminate their excess deficits by 1999.

The drive to meet those criteria is one of the major reasons for the high unemployment in western Europe today and I fear that it is going get worse. Even a committee of the European Parliament—I do not usually use its documents—has apparently concluded that perhaps 11 million jobs will be lost in western Europe as a result of the drive to reduce Government expenditure and debt to meet the Maastricht criteria. That is before member states start to lock their currencies together irrevocably in the run-up to a single currency.

The unemployed, the poor and those on welfare will have to pay the highest price for this mad exercise to get a single currency and a centralised European state. As far as I can see, the political and bureaucratic elite in Europe does not care about that and believes, as Lenin would have said, that the end justifies the means.

The main purpose of a single currency is constitutional; obviously, there have been economic arguments one way or another but the main purpose is constitutional. It is a major plank in the creation of a centralised European state. Joining the single currency, which we have debated before so there is no need go over it again, would be a major constitutional change for Britain. We would hand power over monetary and exchange rate policy and, in effect, over public expenditure and fiscal policy from a democratically elected Government to undemocratic European institutions.

A single currency could involve a major constitutional change within the United Kingdom. The Prime Minister was in Wales a few weeks ago. I am sure that he is very sincere about this but he apparently believes that a rather modest Welsh assembly would, with the Scottish Parliament, lead to the break-up of the United Kingdom.

If we sign up to a single currency, many people in Wales—I can speak only for Wales but it will be even more true in Scotland—will ask why they should belong to the smaller Union when they can belong directly to a larger Union. They look across the sea to Ireland. I read in a development document that the Irish do not have an excess deficit; they have negotiated it away. They do not have to reduce their debt and Government expenditure to the Maastricht criteria, whereas we in Wales, if I can be parochial, will have to strive to cut our welfare benefits and accept higher unemployment to meet the 3 per cent. target. That is not necessary across the Irish sea because Ireland has a direct seat in the Council of Ministers and can get away with it.

I do not share that view, but many people would. If the Prime Minister and the Conservative party are concerned about the United Kingdom, as I am sure they are, they should realise that the issue of a single currency could lead to major constitutional changes within this Union.

My hon. Friend the Member for Livingston (Mr. Cook) did not deal with the economic aspects of a single currency. I do not criticise him for that. Some of my right hon. and hon Friends have said that we are not really going to join. They accept the Maastricht criteria and a European bank but say that we will not join until there is real convergence. When I hear the word "real", I reach for a child's guide to metaphysics because I am never sure what the purpose of the use of that word is. Let us say that it does not mean inflation, unemployment or growth rates but GDP per head.

In parts of the south Wales valleys, GDP per head is about 60 per cent. of the European average. In Wales, it is about 70 per cent; in Northern Ireland, I suspect, about 70 per cent; in Scotland, a little higher. Is the Labour party, when it talks about real economic convergence, saying that we will not sign up to a single currency until the Rhondda and the other valleys have an average GDP per head of 100 per cent. of the European average? If that is what we are saying, fine. Let us put it in the Labour party manifesto so that we know exactly what we mean by real convergence. I suspect that the word "real" is being used in the same sense as the late Lord Joseph used it in talking about real jobs in 1979 and 1980. If we believe in real convergence, let us spell it out.

The final escape is saying that it will not happen anyway. All those countries are striving with might and main and have signed a treaty to reduce deficits and set up an embryo European bank but it will not happen because the Germans do not want it. The German people may not want it, but who cares about them? The business and political leadership in Germany do not care about the German people. The leadership will want it because it will be an opportunity to keep down the value of the mark.

The hidden emphasis of German monetary policy has always been to ensure that the mark, as far as possible, was undervalued. Increasingly, the mark is becoming a sort of reserve currency. It will be in the interest of German business and industry to have a European single currency to ensure that it is undervalued and that their exports do not suffer. They will try to lock in other countries to prevent them from exercising economic sovereignty by devaluing their currencies. A clash will come between the hard core that wants go outside the treaty and impose restrictions and those who do not want to join the currency.

The vogue word in this debate has been mind-set. Frankly, it seems to me that the mind-set of most of the pro-marketeers is still that of the world of Monnet and Schuman. Some go back to the Congress of Vienna. When I read reports of the Council of Ministers, I think that if they had powdered wigs, they would not be very different from Ministers at the Congress of Vienna.

My hon. Friend the Member for Livingston talked of a global economy. Yes, we have a global economy with free trade, although the World Trade Organisation is having some difficulties. GATT has been around a long time. A regional economic pact is not necessary in a world with a global economy. The economic prizes will go not to large economic blocs but to the country that is able to change its economic policies quickly and has the flexibility, democratic credibility and legitimacy to change its policies quickly.

The centralised European state is a dinosaur. The best thing for Britain is not to go down the route of a single currency but to keep well away from it.

5.18 pm

Sir Geoffrey Pattie (Chertsey and Walton)

I should like to offer some thoughts on the current position before the Cannes summit, based on the regular, almost weekly, contacts that I have with other centre-right parties throughout Europe in my capacity as international vice-chairman of the Conservative party.

When the Berlin wall came down in November 1989, few people expected it. Few people anticipated what the wave of challenges to authority in eastern Europe would produce. Equally, very few people realised that it would have a similar effect in western Europe. By the time the Maastricht treaty came to be signed, much of it was, in practical terms, dead in the water. We then witnessed the holding of two Danish referendums and a wafer-thin French majority and, as the right hon. Member for Llanelli (Mr. Davies) pointed out, even the Germans discovered that European monetary union meant the end of the deutschmark, which was a great shock to them. Suddenly, there was a great deal of rethinking to be done. 1 believe that there is much greater uncertainty in the European Union than appears on the surface.

The European Community—to use its previous title—was founded to make war impossible between France and Germany, an excellent aim that has been splendidly achieved. However, we have to ask what does the Community now do for an encore, especially for the younger generation for whom the idea of war between France and Germany is unthinkable? Where is the new philosophy? I do not see it, and that is especially sad when we have the opportunity to create a Union of nation states and can for the first time be genuinely European. We are not just western European but have the possibility to include in the Union countries from central and eastern Europe.

When Lord Tugendhat recently gave his valedictory address from Chatham house, he said: In most countries, however, there has been a minimum of public debate or accountability on the details and implications of what was being constructed and planned. There has been high flown rhetoric in abundance and many grand schemes put forward by politicians anxious to demonstrate statesmanship and far-sightedness. But, for the most part the impact of what these schemes would involve for the ordinary citizen was not spelt out nor subjected to detailed scrutiny. Indeed, President Mitterrand and Chancellor Kohl, in particular, both appeared anxious to avoid in-depth public discussion. It had been widely accepted in Europe that the single market was fundamental—a concept that, incidentally, was very much a British one activated by British Members of the European Parliament and a British commissioner. However, Lord Tugendhat also said: Yet, I believe, a major component of the wide spread disillusion stems from the legislation needed to bring the Single Market into being. That legislation has proved to be unprecedentedly intrusive. Partly, there is the question of sheer scale—282 individual items of European legislation required to bring it into effect. Partly too it is a result of so many existing national rules and regulations on technical standards, health, safety, environment and other matters being so detailed that in order to create a level playing field EU regulations had to follow suit. As a result it has been brought into what my right hon. Friend the Foreign Secretary— has described as 'the nooks and crannies' of national life all over the European Union. There is a genuine debate throughout Europe, not only between Governments but between parties and certainly not only in this country. In my view, which stems from numerous discussions, opinions on the continent are changing and there is, for example, a debate within the Christian Democrat party in Germany. The original paper by Mr. Schauble and Mr. Lammers has been much modified following internal debate in their country. I have not found a German Christian Democrat Member of Parliament who wants a united states of Europe or anything remotely resembling a united states of Europe.

Interestingly, in a meeting that I attended in Vienna three weeks ago, the chairman of the Christian Democrat delegation—when were in the mode to commission new study work—asked for a paper to be written on "The Adverse Impact of the Workings of Brussels Bureaucracy on Germany". That is not the sort of thing that we think about in this country because we tend to identify the Germans as being in favour of everything that comes out of Brussels, but they are not.

In many spheres, it is the British who are setting the agenda. The Conservative party has produced its paper for debate in the European Democrat Union and it has been extremely well received. The paper states: We support the enlargement of the European Union to the East. There are three fundamental reasons why enlargement of the EU is essential for its future development—security, prosperity and shared values The EDU believes that the further enlargement of the European Union also requires a fundamental examination of the EU, its policies and its institutional structures … The framework best suited to meeting the aspirations of EU applicants is a flexible, decentralised one, not a monolithic or centralised one … Our goal should be a Europe of nation states working more effectively with each other in pursuit of shared interests and common solutions to common problems, but not a Europe which attempts to supersede the nation state.

Mr. Dykes

Does my right hon. Friend accept that until now all the eastern European countries without exception have, by way of pronouncements by senior leaders in the Government and in the Opposition, fully accepted the acquis communautaire and, indeed, the move towards a single currency if convergence is achieved?

Sir Geoffrey Pattie

Yes, but they need to consider to what extent they will be able to meet the key criteria. It is one thing to talk about signing up to the generalities but the reality will be harder to achieve.

The document goes on to say that we need a Europe that will push ahead with jobs and deal with various aspects of job creation. There is too much of a tendency in Brussels to come up with programmes and proposals that impede job creation. In my three years on the Council of Ministers, I frequently found that it was our continental friends who came up with the visionary "blue sky" ideas. They were strong on rhetoric or—as we English like to call it—guff, but it was down to the United Kingdom to examine proposals in a cautious and pragmatic but entirely practical way, which was not very popular especially when others had been so enthusiastic. In the process, however, we injected the vital ingredient of practicality into many proposals.

I believe that, by the same token, the Government's approach to the IGC 1996 process is very close to the instincts of the British people in bringing to bear our pragmatism and experience. In this we are very different from the two Opposition parties—from the Liberal Democrats who have been over the hills and far away on this issue for a long time, and from the new Labour party which, of course, is that most dangerous of things, a party of converts on this issue.

I find it hard to understand why some elements in this country—and, I have to say, in my own party—seem to be so lacking in confidence that they are not prepared to accept the power and strength of our arguments or the fact that they are succeeding and setting the agenda. As we embark on the IGC 1996 process, we should be confident that the healthy pragmatism that so characterises the Government's approach is the best way and the best foundation for our proposals.

5.27 pm

Mr. Charles Kennedy (Ross, Cromarty and Skye)

On behalf of those who are over the hills and far away—I suppose that Ross, Cromarty and Skye is over the hills and far away in a geographical sense—I have to say to the right hon. Member for Chertsey and Walton (Sir G. Pattie) that it strikes me that, given the rather febrile state of his party on these matters these days, being the international vice-chairman of the Conservative party is perhaps not too onerous a task. I am not sure how many foreigners would want to talk to him in that capacity, given the propensities of some of his colleagues and what they have said.

The focus of the debate so far, and the matter on which I shall dwell, is the Government's position in the run-up not only to Cannes, but, in the longer term, the intergovernmental conference itself. We heard what the Foreign Secretary had to say this afternoon, but I do not think that we heard what he believes. That is the central difficulty.

This is an Administration caught in the headlights of their own Back Benchers. Whether the Foreign Secretary went emphatically pro-European or Euro-sceptical this afternoon, he was going to distance himself from and cause difficulties within his own party. He is, therefore, left immobilised somewhere in the middle, and it is pathetic to behold. One only needed to look at the faces of his Back Benchers as he proceeded to see that he was satisfying no one. The Conservative Euro-enthusiasts, whom I applaud, did not look entirely pleased with what he was saying, and the Conservative Euro-sceptics did not look at all persuaded by his efforts either. So long as what has become the war of John's ear goes on vis-à-vis the IGC, it will severely damage British national interests.

I speak, after all, as one who has experience of having being a member of a party that split in a rather acrimonious fashion a number of years ago—the then Social Democratic party. Frankly, it would be better to get on and have an honest and open divorce now than to persist with this farce between mainstream continental Christian Democrats and what are essentially nationalistic English Conservatives. Both have perfectly respectable views—I tend to lean more towards one than the other—but they both cannot continue to cohabit in the existing United Kingdom Conservative party. It would be better for them and for the interests of this country if they were to go their separate ways now.

In an earlier intervention, the hon. Member for Harrow, East (Mr. Dykes) made a powerful point—perhaps slightly tongue in cheek, but none the less placing his finger on a very important point—when he referred to proceeding on European matters on the basis of free votes in the House. We would have fun if there were a free vote, for example, on the social chapter, given how many Conservative Members would quite happily go through the Lobby in favour of it because they would recognise it for what it is: much more a set of aspirations than the laying down of a whole set of legal requirements. But leaving aside that fun, the hon. Gentleman made an important point that there is an in-built cross-party majority in this House for sensible European progress and for Britain to be very much a part of it.

There is also a perfectly honourable tradition in the House among hon. Members who do not like the fact that we went into Europe in the first place but who now argue—so they say, although the logic of their position would none the less lead us to exit from Europe—that we could have some kind of competitive single market and economic benefits without the single currency and the social and political dimensions attached to it. That is an honest set of opinions with which I do not agree. Those hon. Members are in a minority in the House. Even if there were a change of Government, which there would be based on the present opinion polls if there were a general election tomorrow, that attitude would still be in the minority in the House. We need to keep that consideration very much to the fore.

We have seen abject political leadership from the Prime Minister on matters European, especially since the last general election. There has also been third-rate party management from his point of view. That has led us to a fantasy world where the likes of Jacques Chirac and Helmut Kohl are being held up as hob-goblin, socialist figures who are seeking to impose all kinds of terms and conditions of employment in this country, which otherwise we would not want.

The former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), intervened during the Foreign Secretary's speech, referring, as it were, to his right hon. Friend as the sorcerer's apprentice. The Father of the House made a telling point the previous time that we visited some of these European issues. He said that the Government had said nothing positive about Europe since 1979. That is entirely true as one can see by looking at all the debates on the Maastricht treaty.

If I wanted to sell any commercial idea to anybody in this House or outside, I would play up the benefits, the positive aspects and why I wanted them to take the idea on board. Maastricht was sold to the Conservative party, to the House and to the country on the basis that we had opted out of the social chapter and that we had a derogation from the next stage. That is a hopelessly negative basis on which to try to provide political leadership on an issue that goes beyond the party and that is as broadly based as Europe itself.

The characteristically penetrating analysis in The Times today by Mr. Peter Riddell says it all. I appeal to the pro-Europeans in the Conservative party. In speaking about them, Mr. Riddell said: They have deployed a strong case, but they are losing the political battle. The main question now is how much ground they will have to surrender, and whether any of their generals will be pushed out in the process. He is correct. He concludes: These questions— the ones that he has discussed— are central to Mr. Major's future. Either way, the sceptics are continuing to gain at the expense of the pro-Europeans. That is a very worrying state of affairs.

Mrs. Edwina Currie (Derbyshire, South)

Watch.

Mr. Kennedy

The hon. Lady says "watch". With her, the hon. Member for Hartlepool (Mr. Mandelson) and others, I am involved in an exercise on behalf of the European Movement. We are approaching all three UK party leaders, with a view to having a discussion and trying to heighten the profile of positive European arguments. The situation in the Conservative party has now got so serious—it would not matter if it were in opposition although the problem for all of us is that it is in government—and the division among their ranks so deep that it is having a positively damaging effect on Britain's capacity to contribute to the European Union and, in the run-up to the next intergovernmental conference, to win the deal for which we should be aiming.

That is why I say that the efforts now being made in the European Movement and elsewhere to try to build an all-party pro-European movement are so important and why it certainly has Liberal Democrat support.

Mr. Dykes

Does the hon. Gentleman further agree that in recent months the negative situation has even had an adverse effect on sterling?

Mr. Kennedy

Yes, the evidence has shown that. There is no doubt that the position of the Chancellor in particular, which has been open to some question given the politics of the Conservative party on the single currency and so forth, has weakened his credibility, which of course has had a knock-on effect in the currency market. That is indisputable.

The hon. Member for Harrow, East and I had lunch with the American ambassador to the European Union only yesterday. The ambassador was pointing out the United States' general sense of agnosticism over a single currency. The most telling point that he made—when he could get a word in edgeways because his colleagues were putting their rather robust construction on things—was that a single currency without sterling is of much less concern to the United States than a single currency with sterling. That was an important signal for us.

There is clearly a need, which goes beyond sectional party interest in this House, to build a broader pro-European movement. I am glad that hon. Members of all parties are involved in that effort. My colleagues and I will certainly be contributing to it. Such an effort is needed because of what we heard in the Foreign Secretary's speech this afternoon. If that was his swansong at the Dispatch Box, it was a very sad one. The man is reduced to the position, because of the state of his own party and the division in his Cabinet, of not being able to say anything. That is a pathetic state of affairs in which the country and the rest of the European Union has no confidence and which gains no respect whatever.

5.36 pm

Mr. Tim Renton (Mid-Sussex)

To say that the speech of my right hon. Friend the Foreign Secretary said nothing, as the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) has done, is very odd indeed. My right hon. Friend's speech clearly said a great deal, and much of it was somewhat unsatisfactory to those on the Conservative Benches who call themselves Euro sceptics. The Foreign Secretary sticks clearly and firmly to his line, just as the Prime Minister rightly sticks clearly and firmly to the line that he enunciated in his speech of 1 March.

I shall, however, take up the encouragement that the hon. Member for Ross, Cromarty and Skye gave to those hon. Members who are pro-European. I include myself in that number, although I always think of myself as a Euro realist rather than a pro-European fanatic. The hon. Gentleman will have read in the Financial Times yesterday the comments of Howard Davies, the Director General of the Confederation of British Industry, on the report that it has just produced, "A Europe that Works". Mr. Davies talked about CBI membership having a bias in favour in the long-term of the United Kingdom joining European economic and monetary union. He said, however, that companies remained cautious about the circumstances and supported, therefore, the "wait and see" position of Her Majesty's Government.

That is not unlike the conclusion in the report from Andersen Consulting, part of the very large Arthur Andersen group, which will have fallen on many of our desks in the past few days. That, too, concludes that in general the contributors to the survey, who were by and large manufacturing companies in this country, felt the advantages of participation outweighed the disadvantages and said that they were concerned about the effect on British industry of the United Kingdom choosing to stay outside an economic and monetary union bloc.

That view happens to be very close to the conclusion of the working group on the implications of monetary union for Britain, which was produced under the title of the Kingsdown inquiry, on which my hon. Friend the Member for Stamford and Spalding (Mr. Davies) and I sat. I was delighted to be asked to join the working group and I came to a personal conclusion after attending most of the detailed sessions. I say this to my right hon. Friend the Member for Guildford (Mr. Howell), although he is no longer present: we were addressed by bankers, economists, those used to dealing in very large quantities of foreign exchange, and representatives of British, German and Japanese industry in this country. I reached the conclusion that if a single currency comes into being, on balance it will be in Britain's interests to join.

I must admit that, pro-European as I am, when I started on the group I had some doubts about that. What finally convinced me was hearing the consistent majority opinion put before us that if there were an economic and monetary union and a successful and viable single currency, we were likely to have lower inflation, lower interest rates and more positive inward investment—a continuing flow, in fact—if we joined it than we would be if we stayed outside.

Mr. Cash

Will my right hon. Friend give way?

Mr. Renton

No, I shall not give way. I have only a few minutes and I am sure that my hon. Friend will make his point when he makes his own speech. I do not expect him to agree with me, but he will have his chance to speak soon. Having listened carefully and reached the opinion that I have described, so I decided that the conclusions of the Kingsdown report and those of the Andersen report, like those of the CBI, pointed in the right direction.

As I said at the beginning, there is obviously a big "if" here. If the single currency comes into being, we would do better to join. My right hon. Friend the Member for Guildford touched on that question, and many of us must wonder whether the single currency will in fact ever happen. That is perfectly fair. The Finance Ministers of the European Union countries now say that the date will certainly be postponed from 1997 to 1999, and clearly substantial difficulties will have to be overcome if a majority are to meet the convergence criteria.

From working on the Kingsdown report I also learnt that the transitional period—the moments between the decision to go into a single currency and the event itself—would be extremely difficult. The technicians have studied the possibilities—in the Maas committee, for example—to discover what the best approach would be. However, I am sure that if the single currency were to happen and if it looked like being successful, we ought to be in it. Indeed, we should get into it quickly rather than being, as we so often have been in other European Community developments, a Johnny-come-lately who plays no part in forming the rules and lives greatly to regret that fact.

Whatever the economists and the bankers say, in the end the decision will be a political one for all of us. Moreover, it will have to have public support; it cannot possibly be a purely automatic decision.

The concern that emerges most clearly from my hon. Friends and from Opposition Members who are worried about such developments is the fear of loss of sovereignty by the House. "Loss of sovereignty" is a difficult phrase to define, and it is easy to say that in many respects we have already lost sovereignty in financial and monetary matters. The decisions taken by qualified majority vote following 1986 further reduced the influence of the House. The European Court of Justice, which was set up in 1972 by the original accession to the treaty, has also removed sovereignty from the House.

Will we lose more sovereignty if we move into an economic and monetary union? Clearly, over monetary control and money supply, we shall. A European central bank would mean that there was only one monetary authority. Against that it must be said that the House already has little real influence and little say in controlling money supply figures. It is told what is happening; it is told the decisions of the Chancellor of the Exchequer. Money supply is not debated and decided in the House. The other day, in his Mansion House speech, my right hon. and learned Friend reaffirmed his inflation targets; subsequently he told Back Benchers about them. Such matters are not regularly decided on the Floor of the Chamber.

To me, the big question is to what degree the authority to tax and to spend—in order words, the fiscal powers—would leave the House if we joined a single currency and an economic and monetary union. That problem is well reflected in the Kingsdown report. The experts are divided, but in the course of the inquiry it was said that monetary union would not remove the fiscal powers of individual national parliaments. For instance, it would still be possible for any national parliament to have either a high-spend, high-tax posture or a low-spend, low-tax posture within the Maastricht restraints. If one had to stay within the convergence criteria, however, it would not be possible to have a high-spend, low-tax posture, but within those restraints Parliament would retain as much fiscal authority as it had before. To me, therefore, the fiscal question is still an open one and I should like it to be further examined in the debate on this key issue in the months and years ahead.

Against that background of general approval, but a great deal of understandable worry about the detail, it seems to me that the Prime Minister is absolutely right to defend the Maastricht option—an option either to go in or to stay out. Equally, there is no need for the Government to make a decision yet. No other European leader is making a decision on the issue at this stage, so why on earth should the British Government do so, however often they are pressed by those who criticise them on European matters? "Wait and see" is not a heroic posture on such a complex issue, but there is no doubt that on this issue it is the right posture.

There is also the difficult question of how many more decisions should he taken by qualified majority voting rather than by unanimity. Clearly, as the number of countries in the Community enlarges—the next countries likely to accede are Malta and Cyprus, whose membership will be considered immediately after the intergovernmental conference, and then the Baltic states—it is difficult to continue to give a right of total veto to each country. A small state such as Malta might, for example, block the accession of Lithuania until it received some particular agricultural concession.

I know that my time is up, Mr. Deputy Speaker, so I say to the House—

Mr. Deputy Speaker

Order.

5.47 pm

Mr. James Molyneaux (Lagan Valley)

In this season of commemoration of the end of the second world war it has been claimed by several people that the achievement of the European Economic Community, as it originally was, has been to keep the peace and to preserve us from a repetition of that war. The right hon. Member for Chertsey and Walton (Sir G. Pattie) said something about that, and in view of his long experience in the Ministry of Defence and the Northern Ireland Office we should pay close attention to his opinions. If time permits I may later be able to quote something for the benefit of the right hon. Member for Mid-Sussex (Mr. Renton).

It is now suggested that the European Union should assume the role of NATO—complete with a European army, if you please. We need say no more than that the European Union's dry run in Yugoslavia has illustrated the folly of any such ideas, including the notion that the EU could ever in any circumstances be an effective peacemaker. Equally flawed is the absurd notion that the European Union could work magic on social issues. I do not have time to quote the leader in today's edition of The Times, but it is well worth reading in that regard.

My party has consistently supported free trade in the widest sense of the term, but we can never understand the logic of those who in 1970 and much earlier advocated membership of a free trading bloc in Europe but then proceeded to erect tariff barriers all round it. We support the concept of GATT and its removal of barriers, but we must ask whether the signatories—particularly in Europe—will honour their obligations to remove all the irksome restrictions on, for example, British companies in the service sector.

As we move into the pre-IGC discussions, we must take account of the enormous shift in global trade in the quarter of a century since we joined the Common Market, which all of us knew very well in 1972 was only the cover name for what is now the European Union. Capital investment is flowing at an ever-increasing rate from high-cost economies in America and Europe to Asia and the Pacific rim, and the coming IGC cannot ignore that global flow. The UK in particular must accept that the assumptions of 25 years ago that British trade would be focused within the European Community are now greatly out of date—so out of date that by the end of the century the related notions of monetary and political union will also be obsolete.

Only last week, we saw how some of the leading advocates of a common currency were lowering their targets and extending their expectations from 1997 to 1999. My party's fixed position on exchange rates has been based on something more solid than arguments about Europe. Since 1974—when we were forced by an authority not now in the House to become a separate parliamentary party—we have counselled against experiments in fixing the rate. That has remained our consistent position.

It strikes us as very odd that every time the Government—of whatever party—get a bloody nose, they eventually come back for more punishment. Plain common sense supported by experience proves that once an exchange rate is fixed, the burden of support falls on the Treasury—the taxpayer's agent.

The younger and enlightened generation of industrialists and business men—I come here to the tradition referred to by the right hon. Member for Mid—Sussex—are now well aware of the fatal consequences of a single currency. Today we have read a contribution from the chairman of the Institute of Directors in Northern Ireland, Mr. Howard Hastings, a young man making his way in the world and particularly in the world of business and industry. He says: The main cost to the UK of a single currency would be relinquishing control over monetary policies…If it is too tight, there are the costs of lost output and employment.too lax, and there would be the costs of inflation…A single currency is forever…We were able to leave the ERM, albeit in a far from dignified fashion, because we had our national currency. Adopt a single currency and that option is removed. Not only is the case for a single currency not proven—it doesn't have a leg to stand on. I need add only a few other considerations. To maintain a single currency, there has to be a single Government. If there is a single Government, it follows that there has to be a single nation. In such a single nation, democracy itself becomes impotent and obsolete. Some forget or ignore that a single currency in Europe would still have to float on the world markets, and I am afraid to leave that out of my calculations.

5.53 pm

Sir Peter Hordern (Horsham)

I wish to say a few words about the single currency. As my right hon. Friend the Member for Mid-Sussex (Mr. Renton) said, it is true that a number of commissions and business leaders such as the CBI have found in favour of closer European co-operation and, on balance—so far as I can tell—of a single currency. But it will be a matter for intense debate within this House, both in the rest of this Parliament and, I am sure, in the next Parliament.

In an excellent speech, the hon. Member for Livingston (Mr. Cook) seemed to suggest that he had the total support of his Labour colleagues, but I believe that the Labour party is far more split on this issue than my party is—difficult though that is to believe.

When we reach 1999, it is certain that those countries within the European Union which meet the economic criteria set out in the Maastricht treaty will join the single currency. I shall leave aside for the moment the transitional arrangements, which will be extremely difficult. The House will agree that there is a real political will in Germany, France and the Benelux countries to form that single currency. The House must also consider where we, and our business and industry, would stand if there were to be a core currency—that is what I think it would be—in 1999 and thereafter. That currency would certainly be widely traded in this country, as we do 40 per cent. of our physical trade with Germany, France and the Netherlands. That being so, it is certain that transactions would be settled in that currency—whatever it was called—and, increasingly, private transactions would also be settled in that currency.

We would have at least a common currency operating within this country, and I do not believe that there is any way in which that could be prevented, even if anyone wanted to do so. A common currency would operate with sterling and because of its considerable strength due to the economic criteria the common currency would be inclined to have somewhat lower interest rates than sterling, and would consequently become over time a rather more attractive currency. One must take into account the pressure on sterling in those circumstances, as it would be in competition with a very powerful common currency in which business would increasingly be transacted.

A future Parliament will have to consider those issues, and the right way to settle the matter is to see how the initial process goes and then decide what the impact on our economy will be as a result. That is why I am so glad that we have the opt-out. The best way to settle the arguments about sovereignty would be by a free vote in this House. I do not think that a common currency operating strongly in this country is a good subject on which to have a referendum and, because of the enormous constitutional implications of a referendum, I do not go along with my right hon. and hon. Friends who believe in a referendum.

I wonder what will happen when the core countries form a single currency. There will be considerable pressure, because of our opt-out, either to conform or to create within the European Union some kind of mechanism which will be adverse to our trading interests. I hope that we shall resist any such suggestions.

I am glad that we have an opt-out from the social charter, as it is bad enough to hear suggestions that we should go along with that. Labour Members today have repeated their adherence to that charter. A report in today's edition of the Financial Times referred to the impact of the OECD report on pensions within the European Union. I believe that it will be profound. One thing that it shows is rather comforting: we are by far the best provided for by pensions of any of the European Union countries. It will unquestioningly be the case—

Mr. Salmond

What?

Sir Peter Hordern

The hon. Gentleman does not seem to understand. I refer him to the OECD report. I am talking about total pensions, which of course include occupational ones.

The idea that we should have to contribute to a shortfall in other countries' pension funds must be anathema to us. I am quite certain that we should remain as we are and maintain an opt-out from the social contract in that respect.

Mrs. Currie

I remind my right hon. Friend that the United Kingdom has the largest proportion of elderly people in Europe, with the exception of Sweden. Would he feel the same way if Sweden were to contribute to our funds?

Sir Peter Hordern

I draw my hon. Friend's attention to the OECD report, which she will find interesting and illuminating. We should not be party to making large extra contributions to countries which have not made proper provision for their elderly people.

I have a clear idea of how we should proceed within the European Union. We are in favour of an ever-widening single market to include the eastern European countries and to provide maximum competition. I am sure that that is the case.

There is a costly downside to maintaining an independent currency. The Government cannot finance themselves through the bond market without having to pay a full 2 per cent. more than the Germans now pay. We even have to pay 1 per cent. more than the Belgians; despite the fact that Belgium has a huge debt compared with its gross domestic product and our own, it is clearly determined to go along with the deutschmark. There is therefore a cost attached to maintaining our currency which must be borne in mind.

I do not think that a single currency necessarily leads to a federal state. There is no question of our losing control of the power to raise income tax. In that respect, it is important that we should always retain that power within the House. We should not yield it to a European Parliament because national parliaments most nearly represent the people—much more so, at any rate so far, than the European Parliament does or is ever likely to do. We should not promote the European institutions too far, but we should promote unity among the European peoples through free trade, competition and the removal of national barriers.

I should like to offer one suggestion to my hon. Friend the Minister. Europe will be a matter of supreme importance in the next Parliament. Although I am not in favour of a referendum, I wonder whether it would be a good idea to appoint a commission to look at every aspect of the matter, both from our monetary and economic point of view and from our constitutional point of view. People should be invited to give evidence so that if there is to be a free vote it can be taken after a proper assessment of all the important matters involved.

6.2 pm

Ms Roseanna Cunningham (Perth and Kinross)

Thank you, Mr. Deputy Speaker, for calling me so early in the debate, especially when I know that a number of other hon. Members are in the queue waiting to speak.

I wanted to speak in this debate because the subject is of enormous importance to the Scottish National party and Scotland. Our party has a policy of independence within Europe, so we are firmly on the side of the pro-Europeans in the Chamber. My predecessor, Sir Nicholas Fairbairn, might also have wished to take part in the debate, but perhaps not for the same side of the argument.

I had occasion, in a number of different capacities, to meet Sir Nicholas, because as well as being involved in politics, I am a member of the Scottish Bar. I recall that he contributed to a book in 1992 in which he described the creation of the city of Edinburgh as being done in a "creative, roistering spirit". I believe that that quotation, rather than describing Edinburgh, is probably a more apt description of Sir Nicholas, because his impact was such that, once one met him, one never forgot him.

Sir Nicholas made an impact not only in politics but through his work at the Bar. As a Member of Parliament, however, he had an enormous impact. In my travels around Perth and Kinross, I have met many people who have a little story to tell about him. They spoke of some cause that he had taken up or some particular intervention that he had made on their behalf, which they remembered clearly, particularly because of the way in which he made his interventions.

Other hon. Members who are also members of the Scottish Bar—not all of them are in the Chamber—would agree that when one first arrives at the Scottish Bar, it is noticeable that one of the people about whom one hears the most stories is Sir Nicholas. I regret to say that those stories are generally not suitable for inclusion in a speech, particularly in a maiden speech. The one thing that characterised every one of them was the enormous affection with which they were told. The political views of the individual did not matter, because the affection in which Sir Nicholas was held at the Bar in Scotland and on both sides of the House came through strongly. That also came through in the constituency, because wherever I went, from Kinross to Comrie, and from Milnathort to Muthill, the affection in which Sir Nicholas was held was evident.

That affection is also tempered with amusement, because after many years of being in total political disagreement with Sir Nicholas, I found myself in total agreement with him at the very end of his life, when he gave his opinion on the likely result of the by-election that he knew was about to be called in Scotland. The result of that subsequent by-election bore out the prophetic abilities of Sir Nicholas. It at least highlighted the fact that, in the people of Perth and Kinross, one has an electorate who prefer a Member of Parliament who is just perhaps a little different from the norm. Although I cannot promise to go on in precisely the same way as Sir Nicholas, I shall provide the people of Perth and Kinross with the same distinctive voice.

That by-election was of enormous importance for Scotland. We in the SNP had the opportunity to put forward our entirely positive vision—an independent Scotland within Europe. I could contrast that with the vision of the Conservative party, if I could ascertain what it is. I am afraid that I cannot. Such is the Tories' disarray, their only response to Europe is to delay. We could characterise their approach as "back to Baldwin" rather than "back to basics". I am afraid that at the moment our Conservative colleagues appear to be both anti-European and anti-Scottish at the same time. I hope that they will not try to save themselves in the coming general election by displaying insularity, xenophobia and parochialism, because that would be a great shame.

An attempt is being made to press emotional buttons harking back to an empire that no longer exists in order to combat Brussels and to deal with the awkward squad on the Celtic fringe. That approach can be contrasted with the openness and inclusive nature of my party, which we demonstrate so vigorously in our campaigns. That contrast is bound to benefit my party, as it will benefit Scotland, because Tory strategy will not work in Scotland. The by-election made that clear.

Our policy also contrasts just a little with that pursued by our colleagues on the Labour Benches. They may not be quite as anti-European or as anti-Scottish as Conservative Members, but their rhetoric is directed to what I would describe as the soggy centre. They still want to whistle "Land of hope and glory", but they want to do it quietly and in the dark. They are equally irrelevant to Scotland's political debate.

Scotland is lucky because it has a real alternative, which we laid out at the by-election. We fought a hard campaign in one of the most beautiful constituencies of Scotland, where, everywhere one walks, history is all around. It is a Scottish history, not a British nor an English history. There is certainly prosperity in my constituency, but there is also poverty, in spite of the way in which it is frequently portrayed.

There is also an enormous thirst for change and a fresh start, which my constituents have discovered that only the Scottish National party can provide. Our by-election campaign laid out detailed policies directed towards economic and social decency. They are the type of policies that ordinary, decent Scots, not only in Perth and Kinross but throughout Scotland, find energising, because Scotland does not regard proper social provision and a culture of care as in any way extreme. The real extremists and the real separatists are those who wish to separate us in Scotland from the rights and benefits that should be part of a normal working life.

In the context of the debate, I am speaking especially about those who wish to separate Scotland from the benefits to be accrued from the social chapter. I believe that it is the Government's intransigence in continually opposing the social chapter that has led or is leading directly to a low-skill, low-wage, low working standard culture.

We are on the verge of becoming a sweatshop in Europe. There are private fortunes for some, but for the majority there is low job security, low commitment to employers and low standards of service and of production.

Scotland does not believe that Government policies are providing a sound future for that country. Security and prosperity can come only from full and willing participation in a Europe-wide social chapter and a commitment to the people.

The most successful European economies are those in which the work force is motivated and supported. It is short-sighted to neglect that work force and to neglect the people. An example of that short-sightedness, if I may digress slightly, is intransigence towards a minimum wage. The Government show total resistance to that, and it was one of the principal arguments in the by-election. I found that strange because the agricultural minimum wage exists, which protects rather than destroys jobs.

That is also the case elsewhere. Study after study has shown that the 60 years of a minimum wage in the United States have not destroyed jobs. I also find it amusing that the right-wing platform of President Chirac included a commitment to increasing the French minimum wage. Indeed, Sir Winston Churchill, I believe in this very Chamber, in 1909 called it "a serious national evil" for anyone to receive less than a living wage.

Those are the benefits that we can accrue from the European Union—tangible benefits. The concept of a people's Europe and the social chapter helps to bring us those benefits, and it can and should be coupled with a minimum wage, set by Government. It can be introduced during a transitional period to help small businesses, and I believe that, in 1995, it should be set at not less than £4 per hour—a pity that my friends on the Labour Benches will not also fix a figure.

An opinion poll early this year showed that Scots were more enthusiastic about Europe than were people in any other part of the United Kingdom. The message of that by-election is that it is time for Britain to pull over, get out of the slow lane and let Scotland past.

6.12 pm

Sir Richard Body (Holland with Boston)

I congratulate the hon. Member for Perth and Kinross (Ms Cunningham) wholeheartedly on a notable speech. I do not know whether Sir Nicholas was up there, but I believe that, if he were, he would have been grinning amiably at those reminiscences. The hon. Lady spoke with great generosity towards him and with wit, both of which the House always much appreciates.

The hon. Lady spoke of her constituency in glowing terms, which was only right, because we all envy her that constituency and she is lucky to be there. I do not know whether her constituents are lucky to have her. So far, no doubt they are, but the hon. Lady will strive hard to hold that seat and, if she continues to make speeches like that, she may he there longer than some of us would wish.

I am tempted to tread on the controversial element of the hon. Lady's speech, but that would be to depart from the traditions of the House. Instead I shall allude, if I may, to one industry in which morale is now very low, an industry that was once the greatest of its kind in the world—our fishing industry.

Our fishing industry is becoming smaller day by day. That is literally so, as fishermen are becoming fewer by the day and as one boat after another is being decommissioned. The industry has two parts—inshore and deep sea.

I shall refer to the inshore sector first. We have a leasehold on what were once our British waters, but that leasehold expires in 2002. That is seven years ahead. It is an eternity away to politicians—all of us—as we never like to think of seven years ahead, but it is tomorrow to the fishermen who are contemplating whether it will be worth their while to renew the boats that they have—and many need to be renewed now—or to advise their sons to join them in an industry that has traditionally gone from generation to generation.

In my constituency, we now have only 40 boats—40 boats, I should say, from Boston. We have none from Fosdyke and Sutton Bridge now. There are only 40 boats left going out from Boston, when not so many years ago we had more than 100. We have only 80 fishermen left, when not so many years ago we had about 500, earning a living out of the fishing industry.

That figure can be repeated all round the coast of the United Kingdom. That is the scale on which the industry is diminishing. We really must decide very soon whether we intend to have a fishing industry. Unless we make that decision soon, morale is so low that we shall not have the investment coming in to enable boats to be rebuilt and to recruit the younger men to come in, to enable the industry to carry on in the next century.

I beg the Government to have regard to that, even at this stage, for the intergovernmental conference. Unless we make a decision soon, we shall simply not have more people willing to enter the fishing industry to replace those who are retiring and the others—and there are quite a number of them—who see little hope for their industry and are leaving.

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

Does the hon. Gentleman agree that a campaign for the reform of the ramshackle common fisheries policy that we have now must call for regional management and regional preferences in terms of the indigenous fishermen and communities?

Sir Richard Body

I would go a little way along that road, but my conclusion would be more radical, as the hon. Gentleman may understand.

May I now refer to the deep sea sector. What has happened in the past 24 hours will not be lost on deep-sea fishermen—that a little militancy on the high seas can bring its reward. Having visited many deep-sea fishermen in the past few months, I must report to the House that there is rising anger, because they feel deeply let down. They feel that their industry is being treated as expendable and that they, and those who depend on them, have little future in an industry that could be great.

It has been calculated that our fishing industry might be worth £6,000 million a year. That could make it a major industry, as indeed it used to be. We must ask ourselves seriously whether we wish to see that go—and go it will, unless the House resolves very soon that it should not go, and that requires the repatriation of fishing policy.

One of the arguments for the common fisheries policy is that it conserves fish. I shall give one statistic that the House will not believe. Fishermen whom I have spoken to in the past few months have calculated how many fish round our shores are tipped back, dead, into the sea once they have been caught. Nobody will believe me when I say that those fishermen tell me—it is not just one view, but the view of many, including marine biologists and others who have kept an eye on what is happening—that about 1,000 million fish are tipped back in the course of a year. I do not know how many fish one could get into the Chamber—perhaps 1 million or 2 million.

When our fishermen go out to fish, they have to keep to a quota. If they exceed it, they know that they will almost certainly be caught and fined up to £50,000. As a result, they dare not take the risk. In my constituency, it is seldom that as many as 16 boats go out in one day, but no fewer than 16 fishery officers police the Wash ports. The chances of exceeding the quota and getting away with it are nil.

If one is fishing in the midst of a shoal of fish such as herring, one can easily, so I am told, bring on board 20 tonnes of herring. One cannot limit the amount as the nets come in; all the fish will come on board, although the quota may perhaps be only 10 tonnes—it may be anything from 8 to 12 tonnes. One will probably have to tip back half the herring. They will be fed to seagulls, but there is no other advantage in tipping them back. That process, which is far from conservation, is happening with one species after another.

The common fisheries policy has failed to meet its objective. It is a disgraceful and wicked waste that so many millions of tonnes of food are being thrown back into the sea. The amount of waste is far worse than anything that has so far been recorded due to the common agricultural policy—and enough food has certainly been wasted as a result of that policy.

I hope that the House—particularly my hon. Friend the Minister, who I know is sympathetic to, and understands, the problem—will urgently consider the issue. We need some resolve to ensure that the industry does not perish. It is slowly dying and it will die unless the House has the resolve to ensure that we have effective control over our waters. That will not be achieved by reform—reform is Euro-speak for more bureaucracy.

6.22 pm

Mr. Ken Livingstone (Brent, East)

I should certainly like to echo the kind words of the hon. Member for Holland with Boston (Sir R. Body) on the maiden speech that we have just heard from the hon. Member for Perth and Kinross (Ms Cunningham). I particularly welcomed her speech as I thought that it had a decidedly socialist tinge to it and I suspect that we are not getting as many socialists in the House as we did in the past. I hope that being generous to the hon. Lady in that way will do her no more damage in her party than it is likely to do me in mine.

I was struck in the debate on two or three occasions by Tory Members grasping at straws and expressing the hope that the Labour party is as deeply split on Europe as the Government. They were misguided because there has been a tendency not to examine the detail of the speeches that were made by many of us in the Maastricht debate. I consistently voted against the Maastricht treaty, largely because the Government were stupid enough to make it an issue of confidence. Therefore, irrespective of what was in it, I would have voted against it.

I also voted against the Maastricht treaty largely because I am opposed to an independent central bank—a strong motivating force for many Labour Members who opposed it. I have not the slightest doubt that, whether we are in or out of Europe, that issue will return in the next Parliament and will have to be fought over. I did not spend so much of my life trying to get elected to this place, then to conspire to give bankers vast powers over the British people.

The recent conflict between Eddie George and the Chancellor shows that, ultimately, one person has to be responsible to the House for interest rates. It is nonsense to have dual responsibility carried between an unelected official and an elected official. Interest rates are central to the lives of British people and accountability for those interest rates should lie in the Chamber, not with an unelected official or an independent central bank. I have no problem in voting against it.

Mr. MacShane

I shall ask a quick question as we are limited to 10-minute speeches. Who is more powerful in determining our interest rates—Eddie George, the Chancellor of the Exchequer or Mr. George Soros?

Mr. Livingstone

George Soros and his like around the world, who, with their ability to manipulate currency flows, largely determine such issues when one is dealing with a currency that is not as large or important as it used to be.

I want to deal with the subject of the splits in the Labour party. Shortly before the election in 1991, my right hon. Friend the Member for Chesterfield (Mr. Benn) came to the Campaign group as the Maastricht debate was building up and presented a paper of total opposition to the European project. He was surprised to discover that two thirds of the members of the Campaign group were in favour of the federal project. It should not be a surprise to the Tory party to discover that those of us with roots in internationalism, Marxism or even Methodism are open to the idea of supranational, international and global methods of organisation and government. In a world that is becoming more and more crowded with people and in which there is more competition for resources, international organisations will become more important.

When I was on the national executive committee of the Labour party, I attended a party conference in, I think, 1988, at which there was a vote on whether to withdraw from Europe. I noticed that the constituency Labour party delegates voted overwhelmingly against it. I do not think that Conservative Members should think that the Labour party's change of attitude on Europe is a manoeuvre or a device. That change of approach has come up through the party from the grass roots, so it is irreversible.

The Labour party contains people, on both the left and right wings, who are genuinely opposed to the European project, but they form a small minority. I do not think that we shall face the same problems in government as the Prime Minister is having with the Conservative party. We must find a way of getting Europe right, not whinge about whether to stay in it.

One has only to examine the aspects that the intergovernmental conference will be discussing over the next couple of years as we move towards the next stage of the European project to see that there is no role for a major nation outside Europe. We know full well that Britain has a major impact on foreign affairs only when it agrees with another major power or bloc of powers. We learnt in Suez that we can no longer strut the stage. Instead, we must co-operate with our European neighbours so that there is a European dimension to global affairs, which we can pose against the policies that often emerge from the White House or the far east. We must ensure that we have that interest. It is nonsense that we are still armed to the teeth in western Europe, as if we might one day fight a war. There are major savings to be made for European peoples if we co-ordinate and co-operate on defence issues.

Clearly, the most important question for most hon. Members is that of a currency. I was struck by the Bruges group's 19th occasional paper, which I was kindly sent by Bill Jamieson of The Daily Telegraph. It made the case that we should not be constrained by Europe but, with our vast capital holdings around the world, we should be genuinely international. I read through the paper and it decided me in favour of the European project. The Bruges document is a restatement of Britain's traditional financial perspective: to invest abroad and to neglect home investment. It convinced me more than ever to favour a single currency. We should concentrate on investing in Britain and in our European neighbours in order to build a strong industrial base, which has been neglected so badly and to which the hon. Member for Southend, East (Sir T. Taylor) drew attention with regard to the collapse in our exporting ability.

I have no doubt that there will be a European currency. The European project has been clear: since Messina 40 years ago the Europeans have not had the slightest doubt that they were talking about a united states of Europe. The British people have been ill served by politicians constantly trying to emphasise the economic issues. It was a much wider project. It is absolute nonsense for anyone to say that a single European currency can be created without recognising that that is another step towards creating a wider European union, and eventually a united states of Europe.

I welcome that. I remember when Harold Macmillan first applied to take Britain into Europe in 1961. I was about 17 at the time and I was excited by the project. The debate then was that, although we would not necessarily enjoy tremendous economic benefits, there were wider political and military issues to consider. We wanted to create a genuine European dimension. When Kennedy in the White House gave the Union his support, it was seen as creating twin pillars either side of the Atlantic. It was viewed not simply in economic terms, but in political and military terms.

We should now be honest to the British people. I do not believe that we were honest in the referendum, which purported to be only about the economy and so on. There is a political dimension, and we are deceiving the British people if we try to deny that. I am proud of it and I am happy to tell the British people that Europe is moving gradually—it may take a generation—towards the creation of a federal structure. Our role, as socialists, is to ensure that it is the correct structure and that Europe is devolved, decentralised, open and democratic. It must not be centralised and undemocratic and it must not turn its back on the rest of the world. That will be the subject of future debates.

There is no way that Britain can stand apart because the rest of Europe will go with that project. The issue is whether it will be a small core based around Germany, or whether the whole of Europe will be brought together. I do not want to see a small German core with the rest of us stuck on the periphery where we have little influence; I want to see the wider European project open out as rapidly as possible, to draw in the nations of eastern Europe.

If the rest of Europe creates a single currency and Britain opts out of it, every minute of every day the George Soros's and the international markets will test the strength of the pound against the next European currency. Every minute of every day, British citizens will have to pay more in terms of interest rates in order to fend off those attacks. The exchange rate mechanism failed because we were stupid enough to go in at an unsustainable rate. [Interruption.] I remind those hon. Members who are dissenting that I said that in the speech that I made when they voted to go in at an unsustainable rate. I said at the time that if we entered at that rate, another million people would be thrown on to the dole. I was right. The fact that the ERM failed us is irrelevant because the Government were stupid about the rate at which they entered.

Mr. Deputy Speaker

Order. The hon. Gentleman's time has expired.

6.32 pm

Mrs. Edwina Currie (Derbyshire, South)

I add my words of congratulation to the hon. Member for Perth and Kinross (Ms Cunningham). It is particularly nice to hear that sort of speech from a new woman Member. She may know that her predecessor, Sir Nicholas Fairbairn, very kindly described some women Members in the House as "old slags". I am sure that he would be amused by the irony of his being replaced by one who is not only so capable but also so attractive—and I am allowed to say that.

On Monday I had the honour to be elected as the new chairman of the Conservative Group for Europe. The group came into existence 20 years ago to fight for the yes side in the referendum. It has supporters all over the country, including in both Houses of Parliament.

For those of us who are pro-European, it has always been a great reassurance to be members of the Conservative party. The original idea for modern Europe came from Churchill in Zurich in September 1946, when he spoke of creating a structure under which the European family can dwell in peace, in safety and in freedom". He talked about giving a sense of enlarged patriotism and common citizenship to the distracted peoples of this mighty and turbulent continent". It was the efforts more than 30 years ago of the then Tory Prime Minister, Harold MacMillan, to take us into Europe that inspired me and many like me to join the Conservative party. Since then, Tory Prime Ministers have brought about our entry into Europe; pushed through the single market; developed the notion of subsidiarity, which is now widely accepted; and pressed for the accession of other countries, especially those which once suffered under communism. I think that Tories can be very proud of those achievements.

Most of that was done in the teeth of bitter hostility from Labour. From Attlee onwards, through the leadership of Michael Foot and Neil Kinnock, Labour's natural tendency to trudge backwards with its head down has led the party in the wrong direction. The new Labour leader, the right hon. Member for Sedgefield (Mr. Blair), says that he is pro-European now. In 1983—the year that we were both elected to this place—he wanted to pull out and leave the European Community entirely. In his 1983 election address he said: We'll negotiate a withdrawal from the EEC which has drained our natural resources and destroyed jobs". He now says in radio interviews that, privately, he was all in favour of Europe. That is very strange. In public he is now in favour of Europe, but perhaps he is against it in private. One wonders at a commitment that is so superficial. I will take some convincing before I believe that the modern Labour party is in favour of the European Union.

The Opposition's current conversion to the cause is very welcome, but what does it signify? It signifies only their realisation that an anti-European stance, along with their other batty policies, has made them repeatedly unelectable. There's the rub and there is the lesson for Conservatives as well. No anti-European party has ever been elected to office in this country. The voters, for all their grumbles, know on which side their bread is buttered.

The European Union is a living creature; it is like a teenager. We can no more tell it to stop and say that we shall go no further with it than we can tell a teenager to stop growing. The tight little knot of six countries 40 years ago has grown until the Union's population is now as big as that of the United States of America and Japan put together. Our combined gross domestic product is 20 per cent. larger than that of the United States. The European Union is a world player and we should be thrilled to play our part.

Sir Teddy Taylor

What is their unemployment?

Mr. Deputy Speaker (Mr. Michael Morris)

Order. Injury time will be given. That sort of barracking from the Back Benches is not acceptable.

Mrs. Currie

In trading terms, we should make no mistake: Europe's strength is vital to us as a trading nation. We account for a quarter of total European Union trade. When there is a recession on the continent, we suffer; when continental economies grow, we benefit. Last year's figures show that we exported more to Germany than to the USA, more to Italy than to the whole of the middle east, and more to the small Dutch economy than to all the tiger economies of Asia put together. As far as our exports are concerned, the Australian market is roughly the same size as that of Denmark.

Of course, we should not ignore the rest of the world, but why go halfway around the world when the richest and most discerning buyers are on our doorstep and we are triumphant in their markets? That is now our home market. The belief that we would find life easier somewhere outside the European Union is simply crazy and it does not accord with the facts.

Churchill spoke of an "enlarged patriotism". Edith Cavell told us that "patriotism is not enough". I think that that is correct. I do not believe that we can improve our nation's position by taking a narrow view. Nor is it patriots who do so: it is those unpatriotic weak willies who are terrified of the challenge of other nations and who believe that we cannot meet that challenge.

As to the single currency, I must tell my right hon and hon Friends on the Front Bench that if patriotism is not enough, nor is pragmatism. It is always necessary to ask the shrewd question: will it work? It is unwise to wait until others have designed the whole caboodle before putting the question. To insist upon "wait and see" is not a policy; it is a postponement of a policy. Worse still, it carries with it the serious danger that we will not like what we see eventually simply because we lacked the nerve or the taste to get involved at the start.

My right hon. Friend the Member for Horsham (Sir P. Hordern) Horsham called for free votes on the issue and he was right. My right hon. Friend the Prime Minister is correct to say that we cannot take a decision on a single currency until we see what is on offer, and to insist that it must be workable before we consider joining. However, true patriotism would assume that of course we will be capable of joining when the time comes and that we are capable now of active engagement in the massive amount of detailed planning that is required. That is the view of the CBI in its paper, "A Europe that works", which was launched yesterday.

If we stand back and let other countries take the initiative, the result will be a creation from which our experience and knowledge will be excluded. It will be worse without us. We must be involved and engaged.

I have one or two old-fashioned views. I believe that it is the job of Government not only to govern as widely as possible, but to inspire. I should like to see the Conservative Government expound the principles on which modern Europe is founded, as Churchill and Macmillan did. I should like them vigorously to promote radical change and growth in Europe, including a flexible labour market, instead of appearing to oppose it at every step.

The Government have an obligation to inform the public of how we benefit from our membership of the European Union. The ignorance of ordinary voters is a major stumbling block to our playing a full role. It is up to the Government to tackle it and not leave it to others.

I should like to hear words of hope and enthusiasm from the Government about Europe, not the nit-picking and criticisms which have become so many Ministers' stock in trade. Otherwise, we may find that the voters in some future referendum have absorbed the lukewarm attitudes of some of our leaders and Back Benchers and will vote no, whatever the question is. That would be a disaster for Britain, for our partners and, in my judgment, for the free world.

I pray that a principled, long-sighted and positive view will prevail over policy in Europe as it has in the Conservative party up to now. We must at all times seek what is good for the nation and for our constituents. Only in that direction lie the targets we desire: the wealth and security of our country and success in the next election.

6.41 pm

Mr. Mike Gapes (Ilford, South)

This morning, the Foreign Secretary made it clear to the Foreign Affairs Select Committee that the Government have made no formal submission of their position to the inter-governmental conference and study group. So far, they published a paper on defence policy in March and a document on the common foreign and security policy. Both those documents would be broadly welcomed in the House as they contain what most people in Britain would consider eminently sensible proposals that take us towards greater European co-operation. However, some of us wish that the Government had provided a more explicit, clearer statement of the need for a common European approach to stand up to the stupidities from the other side of the Atlantic.

It is significant that this morning the Foreign Secretary was not prepared to promise a White Paper before the IGC. The reason is clearly demonstrated on the Conservative Benches. The Foreign Secretary is unable to produce such a White Paper because of the divisions within the Cabinet and the Conservative party. It is clear that the Government are suffering from immobility.

Mr. Duncan-Smith

Not Mobil, what about Shell?

Mr. Gapes

I shall come to Shell in a moment.

The sceptics are on the rampage and the lunatics are taking over the asylum. The Inter-Governmental Conference Study Group will be an important test of whether the Government can survive into 1997, but the outcome in 1997 will not necessarily be what is envisaged at the moment.

The German representative on the reflections group, Werner Hoyer, said a few weeks ago that from the German viewpoint it would be preferable for discussions to continue into 1997 because of the political uncertainties in Britain. He went on: but the schedule could be kept only if elections in Britain have by then strengthened the decisiveness of London. That can be read in two ways, but I suspect that what he had in mind was his hope that there will be a Government with a clear majority led by my right hon. Friend the Leader of the Opposition before the conclusion of the negotiations. That has consequences not just for Britain and the other members of the European Union but for other potential members with the enlargement to the Visegrad countries and other central and eastern European states as well as Malta and Cyprus.

The Select Committee recently visited Finland and Poland as part of our work in reporting to the House on the issue. We had detailed discussions with representatives of the Polish Government. There are concerns in Poland that the process of enlargement will drag on and be delayed because of the ratification process after the IGC.

I therefore welcome what the Foreign Secretary told us this morning. His view was that within six months of the IGC, discussions with potential new members should then start and that we should not have to wait for the ratification of the new treaty, which could delay matters perhaps a year or more and make it more difficult for that enlargement to take place before the end of the century, causing growing uncertainty in Poland, Hungary and elsewhere for several years.

It is also clear that applicant countries will join the European Union when the debate on the single currency is becoming central. If the discussions of the last few days lead to the single currency being introduced in 1999, and if the Commission's proposal for a four-year, three-phase process to bring it in is met, by about 2003 there will be a fully fledged single European currency. That will have big ramifications even for countries which have decided to opt out.

The Commission's document envisages the single currency operating throughout the single market. That has serious implications. Hon. Members have already referred to the potential costs of staying out of such a single currency, if it were introduced.

My constituents who travel to work in the financial institutions in central London—in banking, insurance and associated industries. The single currency will have significant consequences for a part of the country with higher than average unemployment and massive job losses in those sectors in recent years. It will be worrying if we stay out of the process and the focus of European banking, finance, insurance and information technology shifts away from London towards other European cities. It would be appear to me that, in the German sense, the matter is being driven by politics. That is clear from what Chancellor Kohl has said and from what everyone else in the Social Democratic party is saying. Indeed, I met a member of the SDP this week, and he confirmed the fact that a majority in the German Parliament is committed to establishing a single currency. German public opinion may he registering some suspicion and hostility, as expressed in the polls; but I agreed—if only on this—with my right hon. Friend the Member for Llanelli (Mr. Davies) that there will be a single currency, and the Germans will be at the core of it.

The choice that we in this country face is: should we sit on the sidelines, believing that we can operate from outside, with all the attendant risks of speculation to which my hon. Friend the Member for Brent, East (Mr. Livingstone) referred earlier? That would pose great dangers to our economy, our interest rates and our stability. We have been here before, in the 1960s and at other times. We must not repeat the mistakes of the past.

I believe that the Labour Government who will be in power between 1999 and 2003— and beyond— will have to confront these issues positively. I am confident that they will do so, in the interests of the long-term future of employment, stability and living standards in this country.

6.50 pm

Sir Teddy Taylor (Southend, East)

These debates are usually dull and boring; it must be even more boring for the Speaker to have to sit and listen to the same old people hurling abuse at each other and at each other's opinions.

Today we heard a considerable speech by the hon. Member for Brent, East (Mr. Livingstone), who rightly pointed out why the Labour party has changed from the grass roots up. It was not a case of some clever leader deciding to stand on his head. What has happened—it should have happened years ago—is that the average socialist has realised that the EC is about things he cares about—subsidy, intervention, social conscience, market management, protectionism, artificial prices, and boards, councils and commissions running everything. Certainly, if I were a socialist that is the kind of society that I would support. If an industry was collapsing, we would not let it go down. We would call someone to come in, sort it out and keep it going. And there would be calls for subsidies here, there, and everywhere.

It would seem that, for perfectly good reasons—certainly not out of nastiness—people do crazy things which always end up in mass unemployment and bankruptcy. But the Labour party has certainly changed. As for the Conservative party, we have heard today how it and the rest of society have changed dramatically. When I was coming in here this afternoon I met an hon. Member who abused me when I voted against the Maastricht Bill. He called me stupid and mad. Now he tells me that he has written an article for a newspaper called The Sun, Saturday's edition, in which he intends to argue for total withdrawal from the European Union. That is quite a big change.

Some of my colleagues have referred to that ridiculous, highly subsidised body known as the CBI. I realised when I read the CBI report that I had never seen anything like it in my life. I do wish that the CBI would state at the front of its documents how much cash it gets from the EU. Many organisations basically do no more than a PR job for the EU—but they should say how much they get in return.

Anyway, the CBI document is quite astonishing. It says that the CBI is very concerned about the distorted competition in the EU. It goes on to say that the European agricultural policy needs to be replaced with a completely new one. Further, it says that business shares the general concern about the huge sums being spent on fraud and financial irregularity. All this represents a dramatic change from the usual rubbish which amounts to no more than PR for the European Union.

The European Parliament is also changing. I hope that the small minority of Euro-fanatics that we still have in the Conservative party will read the massive report due to be published by the European Parliament's employment committee next week. Based on costly and detailed advice, the committee states that convergence—the first of the three stages—will cost another 10 million unemployed people. The committee is right. Forcing all the currencies together will create unemployment, just as another 500,000 people were made unemployed while we were in the ERM. This view represents a massive change too.

People's attitudes to legislation from Europe are also changing. My colleagues and I get cascades of letters from industry and commerce saying that they are fed up to the teeth with the costly and nonsensical legislation from Europe. Some of it is truly unbelievable. In the past few days, we have had the infant formula regulations, bringing in for the first time official censorship, with fines to be imposed on anyone who argues that a product that does not involve breast feeding can be good—crazy but true.

Next comes the new chocolate directive; it has almost gone through even though the Government oppose it. It will go through on majority voting, and it will change our chocolate. On 1 October the crazy regulations governing the use of the metric system will come into play. People selling products in British shops without metric labelling will be subject to fines of up to £5,000. This proposal went through a Committee of this House in 21 minutes, because there was nothing that anyone could do about it.

Of course, a tiny minority in our party still shout about the EU. Earlier, we heard the hon. Member for Derby, South delightfully saying that we should be telling the people of Britain what the EU is doing to them. I wish to goodness that she would do that—

Mrs. Currie

rose—

Sir Teddy Taylor

I shall certainly not give way. She should tell the people of Britain the truth instead of talking all the rubbish that we heard from her today. She should tell them the cost of VAT to poor families. VAT is a filthy tax on the poor, and there is nothing that she nor 1 can do about it. Will she tell her constituents, many of whom are poor, that we spend £1 billion on growing high tar tobacco and dumping it on the third world? There is nothing that we can do about that scandal. What about telling families about the £28 extra a week that they are paying in higher food prices and taxation because of the absurd common agricultural policy? There is nothing that she or I can do about that either.

Mrs. Currie

On a point of order, Mr. Deputy Speaker. I rise merely to point out that the hon. Member for Derby, South (Mrs. Beckett) sits on the other side of the House. I am the hon. Member for Derbyshire, South—and I continue to be proud of my membership of the pro-European faction.

Sir Teddy Taylor

Ridiculous. Everyone knew who I was talking about. What about the £5 a week that families in Derbyshire have to pay as their net contribution to the EU? What good is coming from money going to waste and fraud?

Conservatives are beginning to wake up, and the Government must take that into account. But what the blazes are we to do? First, I ask the Government not to try to resolve the matter with silly reassurances—all that stuff about moving away from federalism and about things going our way—"No one is talking about a United States of Europe", and so on. It is all nonsense and the Government know it. We are slipping ever further into Europe and, because of the courts, we cannot stop it—unless something new happens.

Secondly, I must ask the Government to abandon their pretences over issues such as border controls. The Government say that they will go to the brink over them, but those of us who live near the sea and the ports of entry know that we have already agreed to uniform visas, to the principle of mutual recognition and so on. More than half our illegal immigration now comes from Europe. I could give more details from the unions about this—the hon. Member for Thurrock (Mr. Mackinlay) knows exactly what is happening.

We cannot hold back this advance so, if we are to achieve change, we must give authority to the Prime Minister, be he Conservative or Labour. We must not try to change the leadership; we must face up to the issue. The only way in which the Prime Minister can get the necessary authority is by sorting out that small band of dissidents who are trying to pull us away from our new Conservative policy of giving the people their say. But the idea of a referendum on a single currency is the biggest joke ever. By the time we come to that, everything will have gone except the Scottish pound note. If we are to ask for people's views, it must be done before we get involved in the two years of fixed exchange rates—anything else would be a fraud. If I were to try to talk to people in a referendum about whether they are for or against keeping the Euro equivalent of a Scottish pound note they would think it an absolute irrelevance. What should we look to for the future? Europe, we should appreciate, is going down the plug hole economically and politically.

Mrs. Currie

Rubbish.

Sir Teddy Taylor

There is mass unemployment, as my hon. Friend the Member for Derbyshire, South should know—20 million unemployed, and more to come. It is a disastrous situation. The economic situation of European countries is appalling. As we see in France at the present time, extra seats are being provided for the fascist parties. That is worrying and appalling. We should be avoiding Euro-xenophobia. We should be looking out to the world, for relations with countries like those in the North American Free Trade Agreement, which believe in free trade and nothing else.

I would appeal to my colleagues to appreciate that we are in danger of going down the plug hole. Britain should be seeking to disengage so that we can pursue Conservative policies once again. While a small minority of my colleagues are still here laughing and chortling at what we say, they should realise that, unless something happens soon, Britain is destined, unfortunately, to the miseries of the European Union, to the disappearance of democracy and to a future that will deprive the House of bringing in Conservatism—

Mr. Deputy Speaker

Order. Time is up.

7 pm

Mr. Roy Hughes (Newport, East)

It is rather interesting to follow the hon. Member for Southend, East (Sir T. Taylor), because I have always admired the principled stand that he has taken on this issue over many years.

I welcome the debate on the European Union. It is accompanied by the usual shoal of documents, which I have tried to browse through. I confess that I have not participated much in European debates in recent years, although I did play a fair part in the 1960s, when all the agonising took place about joining, and in the 1970s, including the referendum campaign, when, with Neil Kinnock, who is now the Transport Commissioner for the European Union, I campaigned for a "no" vote. After that, I rather felt that I was knocking my head against the wall a bit. That view was reinforced for me at the time by Viscount Tonypandy, or George Thomas as he was then. He said to me, "Drop it, Roy. There are other issues."

For me, today is something of a look back. The first thing to note are the name changes over the years. It started off as the Coal and Steel Community, the amalgamation between Germany and France, the traditional enemies. Then Britain joined what was known as the Common Market, without, incidentally, the full-hearted consent of the people of Britain, which was promised us by the right hon. Member for Old Bexley and Sidcup (Sir E. Heath). Then there was the European Economic Community, the EEC. Now, of course, we have the European Union. I may have missed one or two changes in the meantime.

There are, of course, those to whom I shall refer as the Euro-fanatics, for want of a better term, and they, it seems, will not be satisfied until it becomes federal Europe. I was therefore glad to be reassured by my hon. Friend the Member for Livingston (Mr. Cook)—who, incidentally, I hold in the highest possible regard. He indicated today and on 30 January that Europe must be a community of free member states. Labour, he said, rejects the concept of a European super-state. I hope that I am not misquoting my hon. Friend in any way.

Mr. Robin Cook

indicated dissent.

Mr. Hughes

I recall that our delegation to Europe was once nominated. Now it is elected. I note, too, that the name has changed from a European Assembly to a European Parliament. There is, I suppose, nothing constant but change.

In the 1960s and 1970s, when arguments were raging about membership, one of the main bones of contention was undoubtedly the common agricultural policy, so I was rather interested to receive a few days ago, from my hon. Friend the Member for Edinburgh, East (Dr. Strang), the shadow Minister of Agriculture, a communication that pointed out: The recently released CAP fraud statistics show how badly we are being ripped off by CAP fraudsters". The figures, he said, are a scandal, and no fair-minded person could disagree, for the figures, far from getting better, are actually getting worse.

In 1993, 1,284 cases were recorded, amounting to £235 million. Yet for the first nine months of 1994, the number of recorded cases had risen to 1,597, amounting to £340 million. Those figures are from official European Union sources. As my hon. Friend points out, they are merely the tip of the iceberg.

I shall quote some of the cases involved in 1994. Italian companies claiming to be exporting tobacco were in fact shipping containers full of waste paper, plastic and mouldy tobacco waste. They received £2 million in subsidies. Criminal organisations were collecting butter export subsidies—and not exporting butter. Subsidies were paid out to export beef to Egypt, even though the beef had such high levels of bacteria that it was rejected by Egypt. Fourteen million pounds was spent in subsidies for grape must because it was going to Sweden. It was in fact going to the USA and Canada, where these subsidies do not apply. Those are examples of fraud in the European Union.

My hon. Friend said that only radical CAP reform can stop the scandal of CAP fraud. The Minister of Agriculture, Fisheries and Food should be saying that to President Chirac and Chancellor Kohl, but perhaps he is too busy defending himself over the Scott allegations.

The fact is that the CAP swallows half the European budget. It pushes up food prices in this country for every family. The cost for the average family in Britain is currently close to £20 per week.

Sir Teddy Taylor

Twenty-eight pounds.

Mr. Hughes

I stand corrected.

In addition, it is doing endless damage to the British countryside. We need to switch spending to support farmers' incomes, and stop subsidising endless production.

The Government have been in office for 16 years. They have certainly had little success in reforming the CAP. In fact, they seem to have given up the fight, and claiming it as their own policy. The Library has provided me with figures that show that the average number of unemployed in the European Union in 1995 is some 18.5 million—11.3 per cent. of the total labour force. What figures these are. They are for ever rising.

Twelve months ago, Sir Michael Perry, the chairman of Unilever UK, pointed out that Europe, judged by its ability to provide jobs for its people, was a palpable failure. In the 1960s, only 2.5 per cent. of Europe's work force was unemployed. Unemployment increased to 4 per cent. in the 1970s. It was nearly 10 per cent. in the 1980s. It is likely to be 11.3 per cent. in 1995. Is it any wonder that the Trades Union Congress has put unemployment back at the top of the agenda, and rightly so? We need a Britain at work, not one on benefits.

The issue of a common currency looms on the horizon. Such a currency could turn out to be a huge disaster. Within the European Union, there are large differences in prosperity and levels of employment. Some areas have high unemployment, while others fare much better. A degree of flexibility in wages and social costs obtains. A single currency could close off the avenues of regional devaluation and run the risk of locking in—

Mr. Deputy Speaker (Mr. Michael Morris)

Order.

7.10 pm

Mr. Peter Temple-Morris (Leominster)

I cannot agree with what the hon. Member for Newport, East (Mr. Hughes) said and was saying, but it is a pleasure to be able to take up his remarks. I say that sincerely, as the Conservative candidate who opposed him before he first became a Member of this place. As it was Newport on the one hand and the 1966 general election on the other, he will not be surprised, as the House will be, that I firmly lost.

I come to the debate as a vigorous European. I think that my views are pretty well known. They have been expressed in the House from time to time. I have clashed, I hope honourably and never personally, with my hon. Friends of the more sceptical element. We have always respected one another's views.

I have been a pro-European all my political life. I see the Union now, as I always have, as both political and economic. I put those words in that order deliberately. I accept the notion of shared—I am tempted to use the word of the hon. Member for Livingston (Mr. Cook)—interest, but I prefer to take terminology by the scruff of the neck and declare that I support the notion of shared sovereignty within the institutions of Europe. I take that view because that is exactly what we are sharing now. The debate will focus increasingly on the amount of that sharing and the areas in which it takes place.

I want Britain to play a world role. We have much to contribute. The only way in which we can make our contribution now is within Europe. We waste far too much time clashing with one another about whether we shall be actively within Europe when we should actively be leading Europe. The tragedy of the entire debate, which transcends the adversarial nature of the Chamber, is that we are losing the opportunity to lead. Our position within Europe with our potential allies is diminishing almost as I speak.

I want a single currency. Some of my hon. Friends have already said that that is what they want. They think, with various degrees of balance, that we should get into it. In a difficult world and a difficult Europe, it would mean increasing security for our country. It would mean also security for individuals, in everything from their private finance to mortgages and everything else. A feature of a strong currency is not having to worry about every international breeze, let alone wind, that might cause the pound to rock. That is something that has been going on for most of my adult life.

I very much agree with what my right hon. Friend the Member for Horsham (Sir P. Hordern) said about the development of a core currency. I think that it is coming, as surely as night follows day. If we are not part of it, we shall have to conform with it. Increasingly, our trade will be done within it in any event. If the pound is away from it, it will most certainly have to follow it.

When we argue about a single currency and everything else, Europe tends to go into cores, tiers or concentric circles. There are so many buzz words. I want Britain in the top tier. We do not belong lower down. I was amazed when my hon. Friend the Member for Colchester, North (Mr. Jenkin) mentioned Switzerland. I like to think that I am in a country that likes Switzerland. Indeed, I enjoy Switzerland. The hon. Member for Livingston (Mr. Cook) talked about niche markets. I do not think that we are a nation of chocolate or watch makers, and we are certainly not neutral. We like to be in there, as it were, pursuing our policy and influencing others.

That leads me to investment and the City. It is my firm belief—I know that there are disagreements about this—that in the longer term the future of the City will increasingly come under challenge if we are not actively part of a financial and economic Europe, and that means most certainly a single currency. At present, the City is pre-eminent. It is one of the finest things that we have to contribute to the rest of Europe and the wider world.

It is all very well for many in the City to say, "If we are outside developments, it will not make any difference. We are just like Hong Kong or Switzerland, for example. We shall manage." With that attitude, I believe that City business will move away from us. 'That will happen in the medium to longer term, unless, as I have said, we are in there.

I move on to foreign and defence policies, and, I hope, the increasingly common nature of them. I welcome co-operation in procurement—for example, the closer relationship that the Government are seeking and securing with France. We need, however, to develop efficient decision making. I do not mind how we proceed in that direction, whether it is nation to nation, intergovernmental or within the EU. There must, however, be increasingly an efficient decision-making process. That brings me to the United States.

There has been only one reference to the United States before mine thus far in the debate. We cannot rely indefinitely on Uncle Sam to dig us out of trouble and to pay the bill. He is becoming increasingly unpredictable. The imbalance of power between the United States and the other elements of the world is becoming positively frightening, given the burdens on the US. It is the only nation that is executing foreign policy by means of measures that require a strong defence policy—in other words, military capability. It is the only nation that can act as a world power. Europe must rapidly provide some balance, for the sake of a strong twin pillar and a more equal alliance with the US.

We are in an international world. It stares us in the face that the powers of the nation state are increasingly being challenged. Indeed, it is becoming increasingly a dated concept. We must co-operate, whether we are in or out, financially, commercially, militarily and environmentally. The European Union is a reality. The Franco-German axis will remain. There is no point in conning and kidding ourselves that, because of a change here or there, the fundamental nature of that axis will change meaningfully for us.

A single currency will become a reality, as will enlargement. Enlargement equals institutional reform. That must be faced. We are inextricably tied by geographical and trading interests. If we are not part of the rest of Europe, we shall have to follow it.

I regret the internal disputes that we insist on having. They are damaging, and confusing to the British people. Our people are receiving inadequate leadership and guidance. They have been in that position for many years, under, dare I say it, successive Governments. If it ever comes to it, I shall welcome a referendum. I would accept it and fight it, on the basis of a single currency or anything else.

I believe that the pro-Europeans would win the debate and the referendum. It is all very well talking about there being only a few pro-Europeans left. There are many of them outside the House. The concept of a free vote, which has been raised by my hon. Friend the Member for Harrow, East (Mr. Dykes), my right hon. Friend the Member for Horsham and my hon. Friend the Member for Derbyshire, South (Mrs. Currie), proves that. It is almost embarrassing that I have been able to agree with some Opposition Members' speeches. Equally embarrassing is the fact that I have disagreed with some of my hon. Friends' speeches.

I support Government policy wholeheartedly. I recognise reality, however, and when it is a matter of wait and see, we encourage a continuing argument and debate about what we are waiting to see and the course that should be taken at the end of the day. I think that my Euro-sceptical hon. Friends would agree with that. It is vital that there is no further slippage. It is vital that the United Kingdom preserves, protects and furthers its options within Europe. There must be no slippage, only preservation of options.

7.20 pm

Dr. Tony Wright (Cannock and Burntwood)

It would be easy for us Labour Members simply to sit back and take pleasure in watching the antics of Conservative Members. Watching the visceral hatreds that have appeared even in the debate today could simply cause us pleasure, but we would be most misguided if we were to settle for that. The tragedy is that the debate on Europe that takes place here on occasions such as this bears ever less resemblance to the feelings about Europe outside.

We may like to pretend that it is simply a Conservative problem, that the issue about Europe interests us only because it divides the Conservative party, and therefore makes it easier for us to get elected, but that is not so. It is a Conservative problem, but it is wider than that.

The way in which the issue is discussed and reported suggests always that there are simply two sides. That has been replayed in the arguments today: there are pros and antis, there are Euro-fans and Europhobes, and there shall be nothing in between. The reality is that most British people and most of the House are precisely in between. The tragedy of the way in which the argument is conducted is that the majority position—the critical, friendly European position, if I may put it like that—is never heard.

We are approaching a moment of truth, not only for Europe, but absolutely for this country in its relationship with Europe. This is the moment that will test us. It will decide what sort of society we will be, certainly what sort of England we will be.

It is interesting that Europe comes as a solution to all sorts of other people's problems. As we have heard, it comes as a solution to the Scottish problem. In a way, it comes as a solution to the French problem, the Belgium problem and the German problem, but it does not come as a solution to our problem. It compounds our problem, or so we believe. Unless we can resolve that, we shall make no progress.

Mr. Wilkinson

What did the hon. Gentleman mean by the German problem? Germany's problems were essentially solved with reunification. I recognise that the reconstruction of the east's economy has proved difficult, but what is the German problem? To what is he alluding?

Dr. Wright

Would that I had more than 10 minutes. That is a most extraordinarily interesting intervention. Here we are at the end of the 20th century, and a Europhobe says, "By the way, what is the German problem?" The German problem is the history of Europe in the 20th century; it is the foundation of the European Union; and it is at the heart of every discussion that we should be having about the European Union. Any hon. Member who suggests, knowing all that, that we can detach ourselves from the European project and leave a unified Germany at the heart of that project simply has not understood the history of this century.

Options are opening up. One option, which the hon. Gentleman's intervention reminds me of, is the "out" option—the disengagement option. Let us hear it clearly. We are beginning to do so, but people must accept the answer that I have tried to give to the question. That option means accepting the Europe that I have described, of which we shall not be part. That disengagement carries with it the most momentous and dangerous implications for us, but let us at least be clear and honest about it.

A second option would be the "old European project, business as usual" option. One might even call it the pure integrationist model. Problems are also associated with it. Given everything that has happened, including enlargement and the end of the cold war, to think that that project is on course in the old way is profoundly misguided.

The "out" model and the old, pure integrationist model do not work. What else are we being offered? The Government offer the "let's muddle through as best we can" model, whereby we try to avoid taking any strategic view on these matters and live day to day, week to week. Labour Members watch the agonies of that policy. It is not a pleasant sight. We may take some perverse pleasure in it, but it does not help this country or the cause of Europe. None of those positions is adequate.

We are at a moment when Europe needs a new foundation that takes on board the environment in which we live. Real issues exist in relation to the balance between regulation and deregulation, social costs and social solidarity, and the virtues and the stability that a single currency would give and the worries about its deflationary consequences.

There are big questions, which have surfaced once or twice in the debate, about whether the old route, and political integration proceeding by means of economic integration, were right. The time may be coming when we must return finally to the original project—the political one, involving the German and European problems—and go for it directly, but we should not do so in ever more circuitous and different ways.

In that process, we may finish up with a project that is more confederal than federal, or certainly with a softer rather than harder federalism. All manner of questions are being discussed about the shape of a possible European constitution: is it possible to define competences in a new way, to involve the judges of national states in defining competences in a new way—which we can do—and to involve national Parliaments in European institutions in a new way? Again, around Europe interesting ideas are emerging on those questions. We shall divorce ourselves from the argument if we simply go for disengagement or make it up as we go along.

A Europe is opening up that enables us to do things at a European level that we cannot do at a national level. To achieve a Europe of many tiers, we want more power to go not only upwards, but downwards. I say to people who are most ferocious in their defence of national sovereignty that they were not ferocious in defending the rights of the House and of Parliament against an overweening Executive; nor have they been alert and attentive as power has departed from the House to all manner of unelected bodies.

If we accept that the world is not divided between those who are for and those who are against, but that people are somewhere in between, we need a new vision for Europe. Those arguments are being heard throughout Europe, not just here. The question is: will we be part of those arguments? We need a new sort of politics to enable us to contribute to the shaping of that new vision.

In Denmark, where many of the arguments in which we are currently engaging also feature, the parties—in preparation for the IGC—are preparing what they call a consensus position to articulate and defend Danish national interests in the context of Europe. That approach to the IGC is a million miles away from its antithesis—the unreasoning and unsensible approach adopted here.

We must conclude by asking what Europe is for, and providing an intelligent answer. The Government seem to think that dressing up in union jack boxer shorts will somehow get them through the next general election; but I am afraid that it will fall to new Labour to provide a new vision for a new Europe.

7.30 pm

Mr. William Cash (Stafford)

We have heard the articulated claptrap of Labour at its best: a new Labour, and a new vision for a new Europe. What the hon. Member for Cannock and Burntwood (Dr. Wright) does not understand, and what the Labour party—including its leader—does not understand, is that the prescription at which the party has connived will produce massive unemployment among the very people whom it purports to represent. Worse, if a single currency were ever introduced it would be just as vulnerable to one simple solution as the dollar or the yen.

Labour wants the borders removed. It wants a single currency and—like Germany—it wants a single state. We can tell that from the enthusiasm of the hon. Member for Cannock and Burntwood for the German position; I shall return to that shortly. The combination of those factors, and the movement of other currencies against a single currency, with the highest unemployment that we have seen for 30 years, would inevitably produce bad results. As my hon. Friend the Member for Southend, East (Sir T. Taylor) pointed out, the European Parliament has just considered unemployment. It will know that further movement towards currency links will lead to a further increase in unemployment—an increase of as much as 10 million.

That is Labour's prescription. It is about time that Labour voters knew that it is Labour Members who will create havoc followed by disorder. In the welter of chaos that will accompany the absence of national Parliaments that is advocated by Labour, we may well face a new form of incipient fascism owing to the removal of the safety valves provided by such Parliaments. [Interruption.]

Madam Deputy Speaker (Dame Janet Fookes)

Order. I do not expect to hear seated conversations between members of different parties, or even between members of the same party.

Mr. Cash

I am grateful for your ruling, Madam Deputy Speaker, but when Opposition Members try to interfere by chuntering among themselves I always know that it is because they do not want to hear what is being said. They are guilty men: they have connived in this project. The evidence is there for all to see. We need only look back to the exchange rate mechanism. We know perfectly well that that caused a massive loss of businesses, produced a public sector borrowing requirement of £50 billion and, regrettably, led to an increase in social security and other domestic costs that then had to be repaid by the breaking of our own tax promises. That is why we are electorally unpopular. Not for one minute can Opposition Members be seen as other than guilty of having agreed to the arrangement—and. furthermore, of not having repudiated that agreement subsequently.

Mr. MacShane

Does the hon. Gentleman recall that the biggest surge in unemployment over the past 16 years occurred early in the 1980s, when we were not in the exchange rate mechanism, thanks to this national Government's policies?

Mr. Cash

The hon. Gentleman is not really considering what is actually happening under the current European project. He is trying to look into the distant past without focusing on the high interest rates incurred by the ERM.

Only today, Mr. Theo Waigel made it clear that the Germans are fed up with paying money into the cohesion and structural funds. Indeed, a leaked internal paper from the Dutch Finance Ministry that came into my hands the other day suggested the same. The net contributors are fed up with making the payments, and all the promises made to countries in the south Mediterranean and elsewhere will come home to roost. People will discover that all the promises that they were given will disintegrate; a web of deceit and dishonesty is being woven on a scale that has not been seen for generations.

The plain fact is that, if I know that such things are going on, other hon. Members must as well. None of us has that amount of knowledge; we all have access to the same information. Why are we not told openly what is really happening, and what the consequences of monetary union would actually be?

Furthermore, under article 10 of the own resources decision, the Fontainebleau rebate, to which my right hon. Friend the Foreign Secretary referred, is on the table for consideration, having being put there by our Government. It is intended that the Fontainebleau question, as well as proposals for a fixed uniform rate of VAT and for a new own resources decision, should be discussed and decided by 1999.

Some of my hon. Friends are looking at me with a certain amount of interest, because they know that what I am saying is true. I beg them to take account of this: I am not trying to be difficult, but merely trying to bring some of the information into the public arena. Why should the people of this country not be told the truth about what is happening? We sold the pass at Maastricht, and Labour and the Liberal Democrats were party to that.

During the debate on the Maastricht confidence motion, I told the Prime Minister, "You have presented the British people with the unnecessary question of whether, in 1996 and 1999, we may have to leave the European Community." That has not been said only in the past week or so; I said it to the Prime Minister when he entered the Chamber during my speech on that motion. The analysis leads us inexorably in that direction. As one who voted yes in 1975 and—with some criticism—voted in favour of the Single European Act in 1986, and would do so again, I think it deplorable that we should be put in this position.

Time after time, we are presented with the covert passing of more and more powers to the European Union. A German paper published only a few days ago specifically states that, over the next decade, the development of integration in "constitutional" matters must progress, within the Union, "step by step" from the state of community of law to that of what is described as "constitutional community". What the Germans are actually saying is that they want a written constitution for Europe. We are up against it. With the tremendous power that Germany is acquiring as a result of the economic dependency of other member states upon her, the majority voting that goes with it is going get worse and worse.

I challenged my right hon. Friend the Foreign Secretary on majority voting this afternoon. I did so not only with good reason but accurately because I quoted from a paper to which he is a signatory on behalf of the British Government. The paper was adopted by Foreign Ministers and by the British Government. It includes a proposal that increased majority voting is to be regarded as a positive factor in terms of efficiency.

We are not talking about efficiency; we are talking about democracy. That is the point. We are selling out. We are not being told enough and only as a result of the tremendous efforts of a number of Conservative Members do we manage to discover things from time to time. We are not being given the full picture—

Madam Deputy Speaker

Order.

7.41 pm

Mr. Nigel Spearing (Newham, South)

The hon. Member for Stafford (Mr. Cash) has certainly discovered things. I pay tribute to him for having made it clear that he voted for the Single European Act treaty, because a treaty is what it was. It further intensified and expanded the treaties that are, in fact, already a written constitution of the European Union. He has been humble and frank enough to make that absolutely clear.

The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) said that he would negotiate, no more and no less. He did not; he went the whole way. He talked of the wholehearted consent of Parliament and people, which he did not get. It is clear that from that time as we have gone down that road, more and more people have begun to understand the fundamental nature of the original common market, the European Community and the European Union. The public are uneasy.

One of the interesting features of the debate has been the use of the word "Europe". Europe is a geographical continent. If hon. Members meant the European Union, that is another matter but they have not been saying "European Union". If someone asked me, "Nigel, what is the European Union?", I would have to say that it is the treaties.

The European Union was sold, especially to younger people—my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) has gone—as having being formed to create prosperity and peace for Europe after the war. Let people read the treaty that was made at the start and they will see that it was nothing of the sort. It was first an attempt at a rapprochement on iron and steel between Germany and France and then an economic union. I will return to the constitution that was adopted because it was that of the European Coal and Steel Community, which had the high authority and decision-making powers necessary to run such an organisation.

As one who went through the war as a boy and pupil, I give three cheers for the rapprochement and three cheers for a European view. I am very pro-European but very strongly anti-treaty. Extension and intensification of its authoritarian structure will further disintegrate not only Parliament but societies and the Union that has so far been established.

It has been a failure of hon. Members on both Front Benches that they try to pretend that that is not so. Perhaps they do not read the treaties. They should come and listen to the Select Committee on European Legislation and try to understand the stuff that is thrown at us and the powers that already exist.

The Foreign Secretary said that it was a good thing when we can all agree—we will do things better if we can. However article J.I of the treaty states: The Union…shall define and implement a common foreign and security policy". It does not say that we should agree where we can and act together where possible. No, there must be an authority. It may be done in future, some say, by qualified majority voting.

My hon. Friend the Member for Livingston (Mr. Cook) tried to take it as logical that because there is enlargement, there must be a change in the institutions. I do not follow that logic at all, if the European Union is that free association of free member states in an international sphere to which we all looked.

Many hon. Members, including the hon. Member for Leominster (Mr. Temple-Morris), talked about internationalism. It is because there should be internationalism that the treaties are no good. Why change the institutions just because of enlargement? There is no logic in that principle.

People have often said that it is a bankers' Europe and it is. For those who regard a single currency as the culmination of European Union, it must be. Some people do not appear to be concerned about keeping the bankers' criteria under public control. What is good for bankers is not necessarily good for us or for industry and the leaders of industry. It is not necessarily good for people at all and nor is competition good for people all the time. Economically, competition is imprinted into that treaty.

I shall close quickly with two points. The first concerns federalism. There is no separation of powers in this Union and talk about subsidiarity is a mirage. It operates in the treaty only where the exclusive powers of the Union do not run and those powers run pretty well everywhere. Where it does operate, I would claim that, as article 3(b) of the treaty says, we should judge subsidiarity on the basis of a complex of multiple balances, probabilities, predictions, hypotheses and value judgments incapable of resolution by judicial procedure. I think therefore that we misunderstand the nature of the EC.

I close on this point. I mentioned iron and steel earlier. If we consider the history of the Community, we see that at the meeting after Messina, a group in Rome was asked to produce a constitution. That group adopted almost without question the constitutional structures of the European Coal and Steel Community for the coming common market. That has been expanded treaty by treaty.

It may have been good—and I would have probably agreed, as I said at the start of the my speech—to create a common market for iron and steel. The treaty is not for the people and, in the end, the treaty will break itself if it is enlarged. Even if it stays as it is, it is unworkable.

7.47 pm

Mr. Ray Whitney (Wycombe)

Those of us who participate regularly in these Euro-debates seem to have adopted set-piece roles for ourselves. Certainly, the hon. Member for Newham, South (Mr. Spearing) adopted the role of the voice of old Labour and he reminded us that the differences on the vital issue of Europe go across the party Benches. By doing that, if in no other matter, he does the House a service.

We in Britain take a pride in a propensity to ask questions and challenge everything. We think it right and honourable to adopt an attitude of healthy scepticism. However, there are occasions when scepticism can be carried too far and is no longer healthy, but negative, destructive and corrosive. I believe that, sadly, those who adopt what they choose to call a Euro-sceptic attitude—many of my hon. Friends and, as I have observed, many Labour Members and all too many in the media—have got to the point where their scepticism, far from being healthy, is destructive and damaging to Britain's national interest. It is useful to analyse the divisions within their ranks, such as they are. They are greatly exaggerated by my hon. Friend the Member for Southend, East (Sir T. Taylor).

The thinned ranks of Euro-sceptics contain several categories of animal, if I may use that word. First, many are not sceptical at all. Their mind is completely made up. They have decided that Britain's future is not in Europe and that they cannot find a modus vivendi with the 14 other nations and the 10, 11 or 12 others that may join later. They want us out. Most of them do not have the courage to say so, although one or two are approaching it.

Secondly, those who lack the courage to say what they think tend to set out a number of conditions which, they are quite aware, are completely outdated, unacceptable not only to our European partners but to most people in this country, and incompatible with any policy pursued by the Conservative party for a generation.

The third category claim that they thought that the Community was a free trade area and that, when we voted in 1975 or whenever it was, we thought that that was what we were entering. That is clearly an untenable position. My hon. Friend the Member for Scarborough (Mr. Sykes) referred to the leaflets that he was distributing at the time of the 1975 referendum. They made it clear that it was not a free trade area but something with a political dimension.

Indeed, this country tried a free trade area, discovered that it did not suit our national interests and applied to join the Common Market. That discovery has subsequently been made by the other European Free Trade Association countries—our erstwhile partners—and they, too, concluded that membership of the European Union served their interests.

Lest there should be any doubt about whether the Common Market was simply a free trade area or whether anyone could sensibly have had any illusions, I refer the House to a memorandum that Baroness Thatcher, as Prime Minister, addressed to her fellow Heads of Government in August 1984. She called on them for a series of new policies to promote the economic, social and political growth of the then European Community. She went on to say that it must be our objective to aim beyond the Common Commercial Policy through Political Co-operation towards common approaches to external affairs. We seem to have forgotten what she said. She also said that the Commission was central to the functioning of the Community and Europe needed to advance its internal development. One of the objectives that she enunciated was to heighten the consciousness among our citizens of what unites us. I wish that people would remind themselves that that is crucial in our attitude to Europe.

The Euro-sceptics genuinely believe that it is they who stand up for Britain and that they are the true patriots but, in reality, it is they who are selling Britain short. They lack confidence in Britain being able to carve out for itself in the European Union a role that is and will continue to be of huge advantage to the people of this country. Underlying that attitude is a complete lack of national self-confidence.

The Euro-sceptics believe that the British economy can never stand up to or live with the German economy and that the pound can never look the deutschmark in the face. That is why they run away from the idea that they should give up the right to devalue or increase interest rates. Fundamentally and instinctively, they seem to believe that we cannot live with the German economy. I reject that notion.

Some also seem to believe that the wily continentals will always run rings round British politicians and bureaucrats negotiating at Brussels. The reality is otherwise. For example, the Maastricht negotiations were a triumph for the Prime Minister and recognised as such by all our European partners. However, they were certainly not recognised as such in this country or by the Euro-sceptics.

The Euro-sceptics should have much more confidence, the sort of confidence that the French have. I do not know any Frenchman who believes that an active and positive membership of the European Union will somehow rob him of his national identity. I am enough of a patriot to believe that the British national identity does not need to be and will not be jeopardised or threatened by a sensible relationship with our European partners.

At the 1GC and afterwards, we must continue to develop that positive relationship, and we have many allies. As was proved recently, we need the self-confidence to go into the negotiations with the fundamental belief that, as the Prime Minister said, Britain should be at the heart of Europe. It is not fair to expect him, my right hon. Friend the Foreign Secretary or any other Minister to go in to bat in what are inevitably very difficult negotiations when, behind their backs, doubt is constantly being expressed about whether we shall be in Europe the next day or the next month.

The difficulty was highlighted in yesterday's report by the Confederation of British Industry, which said that the United Kingdom is committed to Europe, but that to be fully effective it needs to work from within and participate in full in the EU's political and economic decision-making, creating a positive agenda and support for it amongst all member states. This will be possible only if the UK re-establishes its credibility as a constructive force committed to the European Union. We can do that.

A good example of the possibilities open to us was provided when my right hon. Friend the Prime Minister met President Chirac the other day. President Chirac said: Europe being what it is, the quality of the Franco-German relationship is essential … We shall not build Europe without England. It is therefore essential to understand England's specific problems and France may play a role in finding the synergy indispensable for European construction between the countries of Europe, and notably between Germany, England and France". With the new France and the new entrants from Scandinavia, Britain has a great opportunity to play a constructive role. We must not allow that opportunity to be missed because of negativism or the destructive attitudes of Euro-scepticism.

7.57 pm

Mr. Harry Barnes (Derbyshire, North-East)

In debates on the European Union, two positions are inevitably adopted, which never engage with one another: the position of the Euro-sceptics and that of the Euro-fanatics. They were to some extent reflected in the clash between the hon. Members for Southend, East (Sir T. Taylor) and for Derbyshire, South (Mrs. Currie). I think that we should seek a new and superior position.

The Euro-sceptics' position has weaknesses and strengths. It clearly depends on who is putting the case and from what point of view they are arguing, hut, if it is insular, based on chauvinism and causes us not to mix but to worry excessively about, for example, immigration, it is a cause for concern, as are the values that flow from it. However, when the Euro-sceptics point out the massive shortcomings in the European Union, they do us a great service, for example, when they highlight its economic shortcomings and its inability to tackle unemployment or to develop policies for economic regeneration. When they point to the anti-social nature of the operation of the common agricultural policy and when they point out, as has been said in the debate, that VAT is a regressive form of taxation, which is foisted on us by being a member state, it is of value.

Fraud in the European Union has been stressed considerably. The work of the Court of Auditors, in illustrating the nature of that fraud, is very important. The Court of Auditors is one of the underfunded institutions in the European Union. It should be doing a fuller job and we should be basing many activities on the work that it produces.

It is important when the shortcomings of this country in failing to engage in social provisions and our opt-out are pointed out, although the importance of social chapters is sometimes exaggerated. Social chapters provide channels through which we can later introduce regulations and directives. They do not produce an alternative social agenda that comes to the fore automatically. Much work needs to be done to produce that.

Above all, these debates are valuable when democratic shortcomings are highlighted. It has been pointed out that the Commission is a bureaucratic organisation and that the Council of Ministers is a secretive body, even though it is really the parliament of the European Union, making decisions on directives, regulations and legislation, which impact all across Europe.

The Council of Ministers does not operate according to the norms and values of an official decision-making body such as a parliament, with the openness that goes with it. The final vote taken at meetings of the Council of Ministers and the position of our country have begun to be reported only recently. But there was a very long battle before that minor advance was achieved. We are still not given details on amendments and how debates in the Council of Ministers are developed.

The Euro-sceptic view is strong when it points out those many shortcomings: the great lack of openness, the problem—often expressed—over qualified majority voting and doubt over who has the say in decisions. We have a weak Parliament, and some have tried to turn the nonsense of a notion of subsidiarity—a philosophical and social doctrine—into a constitutional and legal provision, yet there are no grounds for doing so.

The question, therefore, that the Euro-sceptics ask us is, with all those weaknesses, what should we do? Should we, as some Euro-sceptics have said, come out in such circumstances if that is necessary just to stop further development, or should we go in to seek democratic change, to overcome those great difficulties?

The position of the Euro-fanatics has its weaknesses and strengths as well. When they encourage us down a bureaucratic, centralised road, with creeping competences that cannot be clawed back because power is passed to the Commission and to the Council of Ministers, they are seriously wrong. They look for central banks that will not be democratically controlled and they stress subsidiarity as some way of clawing back authority when, as has been suggested, subsidiarity is meaningless. If subsidiarity was to be given meaning at future intergovernmental conferences and if it enabled distinctions to be drawn between European Union and national matters, it would become a form of federalism. Subsidiarity is a type of federalism that is frightened to speak its name. We should be prepared to speak in the name of federalism on occasion.

The strength of the Euro-fanatic lies in talk about integration, mutual self-dependence and a political framework in which peoples can be drawn together to make decisions and be allowed to extend and mix. In such divided circumstances, we should look for the best in the Euro-sceptic argument and the best in the Euro-fanatic argument and build a different position—not a compromise. I am frightened that my party is assuming some sort of compromise between the two views.

What would the synthesis be? The strength of the Euro-sceptic argument would overcome the economic, social and democratic shortcomings, but from a Euro-fanatic viewpoint, it could be done in the framework of an economic European Union. I grant that, in doing that, the points that have been made about the treaty—read what is in the treaty—add to the Euro-sceptic argument and must be taken on board. If we talk in that way, we are talking about a new treaty and a new constitution for the European Union. People should be prepared to grasp the high ground and argue for it.

I am reminded of Britain in the 19th century, when it lacked many democratic controls. Chartism argued for extension of the franchise for social and economic reasons, so that betterment would come for working people. In the late 20th century, the argument for developing Europe should be based on arguing for democratic extensions—not by requiring the vote, because it is usually available, but so that the vote does something and it elects parliaments with power in different areas. Parliaments should have all the power in formal decision making. Matters for the European Union should be decided by the European Parliament. National matters—many more matters could be determined nationally—should be decided by national parliaments.

We could be establishing democratic principles as part of a programme towards full social democratic federalism in the House in the meantime. For instance, the Select Committee on European Legislation, of which I am a member, is attempting to scrutinise what takes place in Europe, but there are problems about the avenues of authority that it has. In deciding and debating European matters, nobody is able to concentrate on Europe and conduct investigations such as those carried out by other Select Committees, because the responsibility is spread between agriculture, transport, foreign affairs and so on. The House should give the European Legislation Select Committee authority to carry out such functions.

European Standing Committees A and B check material out. The House should learn some of the lessons of those Committees and take some of their work on board, and enable the questioning sessions in those Committee sittings to take place on the Floor of the House before debates such as this.

8.7 pm

Mr. John Wilkinson (Ruislip-Northwood)

I hope that the House will forgive me and will understand if I do not follow the remarks of the hon. Member for Derbyshire, North-East (Mr. Barnes). I turn my attention to the hon. Member for Perth and Kinross (Ms Cunningham), who is now absent, whose speech added distinction to the debate. The hon. Lady made a maiden speech of rare quality. In particular, I admired her generosity of spirit in paying tribute to the late Sir Nicky Fairbairn. How much we have missed one of his interventions on this occasion in the bland remarks of my right hon. Friend the Foreign Secretary.

There were moments of real insight in the comments of the hon. Member for Perth and Kinross. She accused the Conservative party of harking back. In matters of European affairs, I fear that may be true of the mainstream of the Conservative party and of our Government. It was well exemplified in the extraordinary speech of my hon. Friend the Member for Derbyshire, South (Mrs. Currie), whose mind-set—the term repeatedly used by my right hon. Friend the Secretary of State—was fixed in the era of Churchill, Schuman, Monnet, de Gasperi and Adenauer—the founding fathers of what is now the European Union. The world has moved on since then, and when my hon. Friend went on to criticise patriotism I could only imagine that she must he very remote from the electorate, who are bemused and wonder how a party, our own party, can seem to care more about European matters than about the everyday preoccupations of earning a living, securing and keeping a job, maintaining a house, making mortgage payments and sending a child to school—activities totally remote from the abstract themes of high European policy to which we devote so much attention.

There was another moment of insight in the speech of the hon. Member for Perth and Kinross when she emphasised the paradox of a Conservative party whose rhetoric professes unionist credentials but the effect of whose policies in favour of closer European integration inexorably militates against the unity of our own kingdom.

I was somewhat amused to see the large number of official papers held to be relevant to the debate. Such a plethora of paper is a feature of all matters relating to the European Union. I feel that our people are being bored into submission. There is a feeling that they are powerless against the process of ever closer European union. The sense of powerlessness and frustration is building up and will eventually become a dangerous feature of our democratic politics unless we adapt our policies to accommodate our people's apprehensions.

It is not as though the issues were complicated; they are perfectly plain. One does not need to be an economic wizard, or even to have the intellectual gifts of the right hon. Member for Llanelli (Mr. Davies), who spoke so well on the subject, to realise that if we were to give up our own pound sterling and through membership of an economic and monetary union participate in a single currency, our country would no longer be an independent sovereign state. We would not set our own interest rates. We would not have our own reserves. Inevitably, we would be forced into much closer integration of indirect taxation, and we would have lost the features that make us a nation and make us distinctive.

If that is what people wish, if that is the majority will, I will go along with it, but until that will is democratically expressed I shall fight the prospect with all the strength of my being. I do not believe that we have the right to take away our people's birthright: it is for them to decide—that is why my hon. Friends and I have campaigned so vigorously for a referendum. My hon. Friend the Member for Derbyshire, South was rather scathing about the electorate and their opinions, but our duty is to serve the electorate. It is as simple as that. It is because we appear not to serve them well that we lose by-elections and are so poorly placed in the polls.

If there were a fundamental choice between liberty and the hypothetical greater prosperity that it is claimed that membership of EMU and participation in a single currency would bring, the risk to our democratic liberties would be such that, even if that prosperity were certain, it would not necessarily be worth gaining. If there were a choice between liberty and prosperity I would always choose freedom—every time—and so would our people, as they have done ever since the Norman conquest.

There probably will be an inner core of countries which will create a single currency around the deutschmark. They could call it a shilling or whatever they liked, but to me it would be all the more reason for our country to stand aside. Whenever there has been a predominant power on the continent we have sought to create a balance. We have looked to the wider world and tried to create coalitions of power and influence to offset that dominant power. There have been times when it must have been tempting to join the predominant power, and when we could have done so—1940 might have been one of those times—but at great cost we have always thought that our liberty was more important.

I do not think that the issues are complicated—far from it. Our Government should declare now where they stand in principle on the question of a single currency. In my judgment this is not an issue on which there can be equivocation: it is a matter of principle. Our people long for our party to display principle, to demonstrate decision and not to imply that procrastination is a political virtue. I do not believe that by putting off awkward decisions our party will gain electoral credibility and be better placed to win a general election. But if our party said that we would always put Britain first, that we would seek to regain powers and competencies that we ought never to have lost, that we would make British law supreme again rather than being inferior to European law, and that we would regain control over fishing and agriculture, we should again become a party that was authentically Conservative and, I believe, worthy of re-election. Above all, it would become worthy of the aspirations and traditional aims and objectives of the British people.

8.16 pm

Mr. Denis MacShane (Rotherham)

It is a pleasure to follow the hon. Member for Ruislip-Northwood (Mr. Wilkinson), and I join in his praise for the maiden speech of the hon. Member for Perth and Kinross (Ms Cunningham). In a calm, rational and courteous way, the hon. Gentleman put the Europhobe position without the ranting that we heard earlier. None the less, his argument is pernicious and dangerous and it would be a disaster if this country were to follow him.

I am pro-European because I want to reclaim sovereignty for our people. In political philosophy, it is the people who are sovereign—not the House of Commons. We have heard much today about the importance of the House of Commons, about the centrality of its representative nature and about its debates. Yet look at us: out of 650 Members of Parliament, fewer than 20 are here to debate the issue. I want to see sovereignty reclaimed for the British people, and I believe that that is best done by working in co-operation with our partners both in Europe and in a wider world.

I strongly oppose the new and rising tide of isolationism which the Europhobes so perfectly represent. I was horrified at the humiliation suffered by the Prime Minister yesterday. I suppose that I might have taken some political pleasure in that humiliation, but never in the 20th century has a multinational company shown such contempt and disregard for a British Prime Minister. I support the idea of dismantling the Brent Spar on land rather than sinking it, but it is a strange state of affairs when a handful of Trotskyist ecologists in Germany can so frighten Shell that it dictates a change to what a British Prime Minister has decided to do. The Prime Minister defended Shell's original decision here on Monday, and defended it even more strongly at 3.15 yesterday afternoon; yet by 4.30 he was the most humiliated Prime Minister this country has had this century. As a British citizen, I find that deplorable.

Mr. Austin Mitchell (Great Grimsby)

The Prime Minister was wrong.

Mr. MacShane

It is not a question of the Prime Minister being wrong, although his decision was wrong. The plain fact is that our Government are so isolated and so wrong in much of their approach to Europe that they have no understanding of the new forces and powers that are sweeping Europe.

We must look, for example, at France where 20 per cent. of the vote in the recent presidential elections went to the extreme right led by Jean-Marie Le Pen's National Front, and to Philippe de Villiers' party. What unites the extreme right is an absolute hatred of and hostility to Europe. And whom do we see as Philippe de Villiers' companion in the recent European parliamentary elections but Sir James Goldsmith, who is bankrolling the Europhobe isolationist right in our country?

A rising tide of anti-European isolationist filth is poisoning European politics and someone must provide the leadership to lift the debate out of the swamp into which it has sunk. The hon. Member for Harlow (Mr. Hayes) talked yesterday about the dogs barking while the caravan moves on; I only wish that it was indeed moving on, but it is stuck still in the sand. To paraphrase Chesterton, the European ideal has not been tried and found wanting—it has been found difficult and left untried.

In Conservative Members' comments about Switzerland I detected an invitation to make a little specialist contribution, but I resisted it. I have to say that I have no sense at all of Germany, France, Italy or Sweden becoming any less German, French, Italian or Swedish as a result of their membership and active participation in the European Union.

I would like the debate to be widened and taken into the country. I have said in this House that I am not opposed to a referendum on the basic question of our membership of the European Union. I draw hon. Members' attention to the very interesting survey contained in a report in the Sunday Times last Sunday which showed that if we give people the chance to discuss the issues free from the poisonous filth that we see now in the Murdoch press and in the Daily Mail, for example, they will take a rational—not united, but rational—decision in favour of Europe.

To the pro-Europeans on the Conservative Benches, I would say that the Government—through the opt-outs obtained at Maastricht—have excluded the working people of this country from any sense of a stake in Europe. The Prime Minister took a fateful turn when he put the interests of his party before the interests of the nation. And not much good it did him, as we have seen from speeches from Conservative Members this evening.

If we do not put economic and social issues at the forefront of the debate and policy of Europe, we may well be lost, and we shall not claim any more sovereignty back for this country. I am glad to see that business in the shape of the recent CBI report at least is taking the lead. The Prime Minister believes that he obtained an opt-out from the social charter, but every day the Financial Times reports that more British companies are agreeing to European works councils.

My hon. Friend the Member for Livingston (Mr. Cook) made it clear in his speech that the Labour party's position on European monetary union is that it must be based on the economic convergence criteria. The failure of the Kingsdown report and other important contributions to the debate is that they do not mention the central problem of unemployment. The hon. Member for Stafford (Mr. Cash) thought that I was alluding to past history in my earlier remarks on this subject, but it is in the history of the Conservative Government since 1979 that our unemployment shot way above European averages before we joined the ERM, and certainly before there was any question of the single European currency.

The question of the single European currency has now been put back to 1999, and I fear that it may be soon entering the Greek calends because the massive social ill of unemployment is now dominating all policy-making minds in France, Germany and other countries—except, alas, in this country. I was attracted by those who talked about the possibility of free voting on this issue. I put it to my right hon. and hon. Friends on the Opposition Front Bench that when we take power we should look at how we consult Members of Parliament and also the country at large on Europe.

If we wish to reclaim our sovereignty, we must share power. If we want to be effective again and to rise up in the ranks of world powers instead of declining on every available index, we must do so in partnership and co-operation and through shared sovereignty with our friends and democratic allies in the rest of Europe.

8.26 pm

Mr. David Lidington (Aylesbury)

I share the views of the hon. Member for Rotherham (Mr. Macshane) in one respect only—the priority he rightly attached to the importance throughout western Europe of tackling the stubbornly high levels of unemployment. For that reason, I rather regret the fact that so much ministerial and official time and energy is having to be spent in preparing for the IGC in 1996—which I believe is premature—rather than in concentrating on the priorities of tackling unemployment on the one hand and dealing with the urgent necessity of enlarging the European Union into eastern and central Europe in a way that accommodates greater diversity on the other.

When we look at the patterns of employment in western Europe, we see more than the straightforward results of an economic cycle and a deep world recession. We are seeing much more fundamental shifts in the global economy. I believe that there is a risk that western Europe today is behaving like 18th century Venice—still trading, but trading off a reputation and wealth built up by former generations while ignoring at our own peril developments in economic organisations in other parts of the world. In the case of the serene city, those developments quickly overwhelmed both its wealth and reputation.

Listening to Opposition Members, I find myself not surprised, but startled by their insistence on the importance of the issue of unemployment in Europe which is contrasted with their stubborn advocacy of measures which seem purpose-built to add to, rather than reduce, those levels of unemployment. Labour spokesmen advocate the sort of labour market regulations through the European social chapter which damaged the British economy in the 1960s and 1970s. Those regulations are damaging western European economies today. I sometimes wish that the Opposition Members who rightly remind us of the misery and degradation that unemployment causes the men and women who experience it would also look at the experience of countries such as France and Germany. Their Governments not only advocated but implemented enthusiastically the social and economic policies that Opposition Members now wish to see imposed upon the British people, whether at a national or European level.

Mr. MacShane

Will the hon. Member give way on that point?

Mr. Lidington

I will not give way, because time is short and other colleagues wish to speak.

Opposition Members say that they want the unemployment rate to be reduced, but that is belied by their uncritical acceptance of a European single currency. Whatever the advantages that may be argued by the most ardent advocates of a single currency, it is surely inevitable that acceding to membership of a European currency system would involve giving up national control of both fiscal and monetary policies. That would make it virtually impossible for a British or other national Government in that system to balance economic policy at a time when national economic circumstances diverged from those of other European national economies.

I would like to see the Governments of the member states, the European Commission and the European Parliament devote the energies that are being expended on the IGC towards the completion of the single market. It is clear from the steel and aviation industries that there are still many gaps in that market. I should like to see them devote time and energy to continuing to resist the dangerous trend towards global protectionism, because in that way Governments and the Commission would offer the best possible service to the peoples whom they exist to represent.

I have already argued that the second priority for the European Union is to provide for enlargement to the east in such a way as to accommodate the greater diversity which such enlargement would bring. I listened carefully to the attack of the hon. Member for Rotherham (Mr. MacShane) on examples of isolationist political trends in various western European countries. I certainly agreed with some of his analysis and criticisms of those trends, but I fear that the great federal leap forward which he and some of his colleagues have advocated would almost certainly have the reverse effect from that intended. It would tend to heighten the trend towards isolation and extreme nationalism. If Europe is to develop further, it must do so in a way that goes with the grain of national loyalty and national affection. It should not try to pretend that those loyalties and feelings are no longer of any account.

The hon. Member for Livingston (Mr. Cook) offered a false antithesis when he implied that the choice for the United Kingdom was either to roll over in the face of whatever was argued by our partners, or else to get out. The purpose of British membership of the European Union is to sustain and advance the national interests of the United Kingdom. That is what our Government have done at meetings of the Council and what they are trying to do in the reflections group, and at the forthcoming IGC.

We need enlargement to the east. It is vital to strengthen the free markets and democratic institutions of those east European countries in order to ease local political and economic strains, which, otherwise, would have a serious impact on us in western Europe. That enlargement will work only if it is accompanied by a reform of the common agricultural policy, the European Community budget and the decision-taking structure of the community.

Although there is some coherence and logic in the arguments of those who say that the decision-taking arrangements should be set in a more federal direction, that would definitely be harmful. The French and Danish referendum results and German concerns over the deutschmark reveal a widening gap between the vision of the self-styled political elite of the Community and the wishes of the peoples they represent. If we want greater understanding and co-operation, Europe must evolve in a way that respects national political realities.

My hon. Friend, and neighbour, the Member for Wycombe (Mr. Whitney) talked about the political dimension of the European Union. I agree with him about that dimension, but it should be primarily intergovernmental and not supranational in character. It would lose none of its worth if it developed along those lines.

When we consider the gap between the so-called political elite and European public opinion, we find that Labour Members of the European Parliament, without exception, are voting at Strasbourg to abolish the intergovernmental arrangements governing home affairs and foreign policy. They have instead placed those areas of policy within a supranational legal and institutional framework. I can think of no better recipe for future tension and division.

Whether we call the Europe that we want a Europe of variable geometry, a Europe á la carte, or a multi-speed Europe, the term is less relevant than the reality of a Europe that develops in line with the diverse wishes of the diverse nations that make it up. I believe that my hon. Friend the Minister, through the reflections group, is seeking to shift the European Union towards that end, and in doing so, he will have my support.

8.35 pm

Mr. Austin Mitchell (Great Grimsby)

I join those other hon. Members who have complimented the hon. Member for Perth and Kinross (Ms Cunningham) on the quality of her maiden speech, which was outstanding.

I should now like to turn my attention immediately to the issue of the single currency, because so much of the rest of the argument about Europe invokes history, theology, high idealism or total nonsense—all evident in the debate. We have gone over all those other arguments many times, but the single currency is now the single dominant central issue. It has been the central subject of most of the documents that have been published in the past year, as Europe has been squeezed to meet convergence criteria, which have prolonged deflation in most of the European economies. It is the central issue in all those documents that have flooded in, containing recommendations for the IGC next year. I thought that the IGC would be a kind of 3,000 mile service, but it has turned out to be a total reconstruction of the car. People are sending in huge manuals on how to do just that. The single currency is central to that.

The single currency is also central to the Maastricht treaty, because it attempts to use the exchange rate—the single currency—as a means of political union. That is the other way round from the way in which everyone else has developed; people have achieved political union first and a single currency has followed. In Europe, we propose to build unity through a single currency. The idea is to establish that single currency, then the institutions. That is supposed to build unity, but it will be a disastrous way of doing so.

The single currency is also the central issue in the outpouring of documents on monetary union. In the past few weeks, we have had the Commission's report and the Kingsdown report on that subject. I am frankly horrified that someone who was Governor of the Bank of England could write a report that reveals so little knowledge of the role of the exchange rate. What do they know of economics who only banking know? People who come to review that report in the future will say that Lord Kingsdown's contribution to monetary union is much the same as his former deputy, Mr. Pennant-Rea's, to banking. Such is the quality of his report. The CBI has also published a report on monetary union.

The common thread throughout all those reports is the argument that the wonderful people who gave us the ERM and recommended it to us, are now recommending monetary union. The authors of those reports seem to have forgotten the disastrous consequences of the ERM. They seem to believe that if a proposal comes from Europe it must automatically be a good thing. All those reports are characterised by a well-developed lemming mentality—if everyone else rushes over the cliff, we must join them. It is essential that we all go over that cliff together. That is the economics and politics of lemmings.

There has been no consideration. No one has done any research on, or developed any economic analysis of the effects of a single currency. That is a huge gap in our knowledge because, as far as I can see, the economic consequences will be disastrous.

First, one obviously cannot put two economies at different levels of productivity, investment, economic growth, training, skills and strength, together in a single currency without ripping the weaker economy apart. That is the inevitable consequence. The introduction of a single currency, in a Europe as diverse as this, will produce disaster for the weaker economies, one of which is ours.

Secondly, one cannot have monetary union without a massive machinery of redistribution because, if a country cannot take changes on the exchange rate, it must have direct subsidy to condition the consequences in unemployment and industrial distress. No one is proposing a machinery for redistribution to cushion those consequences.

The McDougall report, in the 1970s, recommended that between 7.5 per cent. and 10 per cent. of Europe's gross national product would have to be used in redistribution if we were going to have a single currency. That was before Spain, Portugal and Greece joined the European Union. It would now have to be much bigger. There would have to be redistribution of a proportion similar to the amount that West Germany redistributed to East Germany to cushion the consequences of their monetary union. One can do that within a nation state, as they did in Germany. In Europe, who will pay for it? The Germans certainly will not. Where will the money come from? So what redistribution is there?

Thirdly, obviously we must reconstruct the exchange rate mechanism bridge—put our head back into the furnace—to get to monetary union in the first place. There is no other way there. The Commission's document speaks of an approach known as "the immediate big bang". Well, merger of currencies immediately would certainly be a big bang, and a horrible, crashing, grinding of gears.

The only way to do it is to reconstitute the ERM. That means that every country, especially us—it is more crucial for us because we do more trade outside Europe—would have to have its economic policy dominated by the need to keep the exchange rate at an externally determined level. In other words, interest rates and everything else would have to be sacrificed to that, whatever the damage to the economy.

These are the arguments against a single currency. A single market does not need it—it is not necessary in the North American Free Trade Area, for instance—but, if there is a single currency unit, it follows automatically that those who are outside it would have to be forced into some type of ERM straitjacket to prevent what the others will then call "competitive devaluations". So it will apply to everyone, in or out, and one cannot devise a structure as powerful as that.

All that springs from the folly of trying to use the exchange rate for political purposes. It cannot be said often enough that the exchange rate is simply a market-clearing mechanism. In an ever-changing world, the exchange rate needs to change too. One cannot fix it in that fashion without damage to the economy.

It is nonsense to say, as the Commission does, that we cannot control our own destinies. Of course we can. We can control our own destinies by managing the exchange rate through interest rates, by taking shocks on the exchange rate rather than in terms of unemployment and industrial closure.

The exchange rate is what connects us to the rate of inflation or deflation of other economies. It is therefore a crucial instrument of management. We cannot give it up, and especially the Labour party cannot give it up, if we are going to reduce the level of unemployment and regenerate the economy.

The exchange rate sets the terms of our competitiveness with other countries. British industry needs a sustained competitive exchange rate, so demand can be channelled to production in this country instead of to exports. It gives industry the prospect of long-term growth in which it will invest, to grow. British industry needs to be profitable. For that, it needs a competitive exchange rate. We shall not achieve expansion without that. We cannot rebuild the British economy without that.

In conclusion, it is obvious that monetary union "ain't gonna happen"—certainly not Europe-wide. If a single currency does happen, it can only happen in Germany plus a few acolytes such as Austria, and perhaps the Netherlands; a small group of currencies.

The question is, will France go in? Obviously, President Chirac cannot have it both ways; he cannot have the franc fort and reduce unemployment. The question that the French must confront is, can Chirac continue to maintain the crucifying effect on the economy of the franc fort or will the French electorate rebel, turn to the right and produce the growth of fascism that we have witnessed in the past few years?

I doubt that France can make it. If France does not make it, the adventure never gets off the ground. If it does get off the ground, our position is obviously to stay outside and profit from their disadvantage. We shall benefit from the self-produced, do-it-yourself disaster that those countries will inflict on themselves if the single currency does go ahead, because the consequences will he disastrous. That is the sensible strategy for this country to maintain.

8.44 pm

Mr. Nigel Forman (Carshalton and Wallington)

I am glad to have the opportunity to take part in an interesting debate, which has demonstrated, among other things, the way in which both main political parties are now acting on the European issue as though it were more of a straitjacket than a creator of opportunities. That merely emphasises something that I have known for a long time, as someone who has been involved in the European issue at least since the late 1960s—that the two main political parties no longer adequately mobilise or reflect the main currents of argument on these issues, and in the later 1990s that may well have its effect on the cleavages in British politics.

The main argument that I wish to make tonight, which is more short-term, is to emphasise the growing extent of common ground between this country and our key partners in the European Union. To give a few examples, we agree with the French about the need for an effective common defence and security policy, which is based on an international, not a supranational, method of operation.

We also join the French in emphasising the paramount importance of the Council of Ministers and a relatively restricted role for the European Parliament, so there is a good deal of common ground with the French in those facts alone.

We agree with the Germans about the importance of the subsidiarity principle and between us and them we were largely responsible for getting article 3(b) into the Maastricht treaty. One has only to read annex II of the report of the Council of Ministers on the functioning of the treaty on European Union, Cm. 2866, which was mentioned earlier, to be aware of the way in which competences are already rightly being repatriated to the national authorities and away from the supranational level where it is not appropriate, according to the subsidiarity principle that they should he exercised.

Equally, we agree with the Germans about the importance of observing all the convergence criteria attached to progress towards economic and monetary union, and about the attractions of enlarging the European Union to include the new democracies of central and eastern Europe, whose cultural and historical antecedents qualify them every bit as much as London, Paris or Berlin to belong firmly in the European family.

Indeed, we have a common interest, with all the other large member states of the European Union, in ensuring that the process of institutional reform, which is hound to accompany the forthcoming intergovernmental conference, gives relatively greater weight to the wishes of the larger member states, with the larger economies and the larger populations, compared with the smaller member states, which have so often formed effective, and to some extent unrepresentative, alliances with the Commission and the European Parliament against the interests of countries such as Britain, France and Germany.

The same principle applies with regard to the European Court of Justice, which I happen to believe, as a firm European, has got slightly out of hand and now finds itself in a position in which, relatively speaking, it is unchecked, whether by political or popular factors. Unless this issue is tackled as well, we shall find ourselves being taken towards further and deeper integration of a type that our peoples perhaps would not support and without the political consent that is a necessary prerequisite for all these developments.

I believe that the intergovernmental conference, due to start in spring 1996, should be an occasion for consolidation in the European Union—something closer to the 3,000 mile service than the general overhaul to which the hon. Member for Great Grimsby (Mr. Mitchell) referred.

I believe that, in the run-up to that conference, all the member states should concentrate on how best to implement the new hybrid institutional structure, which is what the European Union now is, and what has emerged from the Maastricht treaty. This means that we should urge our partners to redouble their efforts to reform the common agricultural policy so that it can be afforded within an enlarged European Union. We must make no mistake about it: it could not be afforded on the present basis were the European Union to be enlarged to 18 or 20 members.

It is also important to tackle the issues of Euro-fraud and non-compliance with European legislation because they undermine consent and trust in the arrangements, and, if allowed to continue, breed cynicism. We must also take forward the intergovernmental policies, which form the new pillars of common security policy and common approaches to law and order, migration and terrorism. On those points I agree with my hon. Friend the Member for Aylesbury (Mr. Lidington).

Above all, we should try to improve our own performance and the policy outcomes in the European Union decision-making process. We must defend the use of the national veto when vital national interests are involved in those areas of European Union policy not covered by qualified majority voting. At the same time, we must learn how to achieve more European solutions in the areas which are covered by qualified majority voting and which also coincide with our own national interests.

One of the Library research papers, which is relevant background to the debate, shows that over the brief period covered in the paper—October 1993 to March 1994—Britain and Germany were each outvoted on eight occasions on issues of qualified majority voting, whereas France was outvoted on only three occasions and Italy on only two. There is a moral in that tale: we need to work even harder and more effectively to ensure that the European Union interests and outcomes coincide with our national interests and objectives. To do that, we must practise a deliberate policy of placing our best people in European institutions—a point that has not been made this evening. We must also try to have a disproportionate influence on the first draft of vital documents. This is exactly the lesson that the Italians and French—involved in the two examples that I have given—have learnt very effectively.

When we approach such matters, we must understand the Community method. As my hon. Friend the Minister will know, that method involves essentially saying, "Yes, but" rather than "No, unless". We would not have to adopt the latter approach—the "No, unless" approach—so often were we more successful in practising the former approach, which is the essence of the Community method.

The two propositions are linked. We must understand that the successful operators within the Community—I speak with some experience as I went to the College of Europe years ago and have lived with Europe ever since—are those who know almost instinctively how to operate the politics of coalition-building case by case and issue by issue. That is painstaking and necessary, and it is the best way forward.

One sphere in which the pay-off for greater success in the Community method would soon become apparent would be that of the preparations for European monetary union, which have been at the heart of much of our debate today. Our sensible influence has been diminished by our image in the eyes of our partners as a potential free rider or a semi-detached participant. As a result, our sound reservations and policy principles are too easily dismissed or ignored by our partners. Examples of that attitude include the wisdom of a lengthy stage 3(a)—irrevocably locked exchange rates. Such a policy is completely daft—anyone who has studied it knows that it would be a recipe for disaster. Another such example is the credibility of the no-bail-out rule in article 104(b), which is critical to the success of the venture.

Another example involves the supervisory implications of monetary union for the financial services sector across Europe—the extent to which we can leave the central bank in charge of supervision as well as the control of inflation. Another such example is the practical improbability of any European central bank being able simultaneously to achieve lower inflation for the European Union as a whole, external stability for the European currency vis-a-vis the dollar and the yen, and monetary conditions appropriate for the whole of the single monetary area.

All those points are too easily dismissed or ignored by our partners. They are more likely to be dismissed or ignored if we do not build our European credentials in the way that I have suggested.

Her Majesty's Government's policy in the run-up to the next intergovernmental conference is broadly on the right lines. We want to sustain our pressure for a more globally competitive European economy. We must continue to strive for sensible institutional reform. We must ensure that we understand the value and effectiveness of following a genuine Community method.

8.55 pm

Mr. Andrew Mackinlay (Thurrock)

I am pleased to follow the hon. Member for Carshalton and Wallington (Mr. Forman), and I was interested to hear what he said in his thoughtful contribution. Before the hon. Member for Wycombe Wanderers leaves the Chamber, I want to refer to something that he said earlier—I shall come to that in a moment.

An awful lot of claptrap is talked about the European Union in this place. The suggestion that Labour's policy is for federalism is tommy-rot. Nobody in the mainstream of our political parties would suggest that we could move to a federal state of Europe. That needs to be stated, despite what people might say for electioneering purposes.

The importance of the social chapter is also exaggerated on both sides of the argument. Some of my colleagues in the Labour party, in this place and outside, think that it is the greatest thing since sliced bread and will be a wonderful breakthrough for working people. I think that it is important, but its importance can be exaggerated.

Some people, including the present Prime Minister, say that we shall not sign up to the social chapter, and that he has secured a cast-iron guarantee that we shall never do so. That is rubbish—as we know, such matters are being pursued through the courts and the European courts and, gradually, much of the social chapter is entering our statute book by stealth. In the long term, the so-called opt-out is not worth the paper it is written on. With these two examples, I wanted to show that things are sometimes grossly exaggerated in this place, and must be put into perspective.

I hinted that the hon. Member for Wycombe (Mr. Whitney) should return. I was interested to hear what he had to say about Lady Thatcher—it is amazing how people rewrite history. Madam Thatcher signed the Single European Act, which, in my reckoning, was an important benchmark—a threshold. Once it was signed, much was surrendered.

I am not too uncomfortable about the Single European Act, but to suggest that it was anything other than a major move in terms of European integration is to deny history. For Lady Thatcher to try to pretend otherwise is disappointing from somebody who held high office. Those who complain about European integration must tell Lady Thatcher that she is to blame. Margaret Thatcher has played a part in European integration.

I notice that the hon. Member for Wycombe used to be a Minister at the Foreign Office. The problem is that Foreign Office Ministers do not properly acquaint this place or the British people with the ramifications of what is happening. I have recently come to learn that the endemic problem within the Foreign Office is one of appeasement towards British interests. The Foreign Office does not dish out the cards from the top of the pack. That has happened over Europe and over many other policies.

That is happening now in relation to one part of the European Community that is under the stewardship of the Minister of State, the hon. Member for Boothferry (Mr. Davis). I refer to Gibraltar. It is claptrap to suggest that there is total free mobility within the European Union. Freedom of movement does not exist with regard to Gibraltar, and the Minister is not doing anything about that.

People from Wycombe, Thurrock, Huntingdon, Livingston and elsewhere are being frustrated from travelling through Spain to Gibraltar, and I want to know what is happening about that situation. Those difficulties are symbolic of the nonsense that is put about regarding free movement within the European Union and the suggestion that somehow we have a robust Foreign Minister. We do not. The Government are not protecting and promoting British interests.

I turn now to our current position within the European Union, and look ahead to 1996 and the intergovernmental conference. I think that the British people are broadly content with where we are in terms of European integration. They do not share the nightmare view that somehow we are about to lose our 1,000 years of sovereignty, but they do want to see some consolidation.

I think that the electorates of western Europe also want to see that consolidation. They have had about as much integration as they can digest: to that extent, I agree with the thrust of the speech by the hon. Member for Aylesbury (Mr. Lidington).

The IGC must reassure British and other electorates—many of which agreed, in referendums, to sign the Maastricht treaty only by some very narrow majorities—that there will be a bedding down and a period of consolidation for a decade or 20 years. I agree with the hon. Member for Aylesbury that the IGC should also allow the states of central Europe—particularly the Visegrad countries—the opportunity of early admission into the European Union.

I had the privilege of visiting Poland recently, and I was profoundly moved by the importance that the Polish people attach to joining the European Union. As an aside, I think it is wicked that, for nearly half a century, the west told the countries of eastern Europe, "Look over the wall and see how wonderful capitalism and democracy is." If one had believed the propaganda, one would have thought that in the west the sun always shone and the rain never fell. What happened? Communism collapsed, the wall came down, and when the central and eastern European countries asked to join the clubs, we said no.

The other club to which I shall refer quickly is the North Atlantic Treaty Organisation—although it is not the subject of this debate. Membership of NATO is vital for Poland and the other Visegrad countries. It is an important symbol, along with EU membership, of their emerging and developing democracies, of which they are justifiably very proud. The IGC must find a way of granting political membership of the European Union to the Visegrad countries as soon as possible. If the price we pay for that is that issues such as monetary union will be kicked into touch, then so be it—in fact, that might be a helpful spin-off; although I do not suggest that that should be the primary intention.

It is vital that those countries are given the opportunity of political membership of the European Union, even if there is a long transitional period. After all, the United Kingdom and Spain had transitional periods. Given the circumstances of the countries of central Europe, I do not see why they cannot be given a transitional period, albeit of some length—perhaps a decade or more—with built-in stages. When each of those stages was achieved, they could then participate in certain defined areas of decision-making. The shibboleth of membership of the European Union is very important to those countries.

It is also a moral issue. In this place some 54 years ago, Winston Churchill said: The gratitude of every home in our island, in the empire and indeed throughout the world—except in the abodes of the guilty—goes out to the Airmen who, undaunted by the odds, unwearied in their constant challenge of mortal danger, are changing the tide of the war by their prowess and devotion. Never before in the field of human conflict was so much owed by so many to so few". Some 17 per cent. of the "few" were Polish pilots and many others were Czechs. It may sound old-fashioned, but I think that is rather important. They fought for their freedom, their democracy and their membership of western Europe, and that is yet to be realised.

The aggressor state—I mean no disrespect to Germany—is a member of the European Union. The then German Democratic Republic was allowed to enter the European Union because it joined the then Federal Republic of Germany. The fact is that the GDR was allowed to join the Union in special circumstances. Surely the Polish state has at least an equal right to be allowed early admission, as well as some buttressing and funding to assist its integration with western Europe. I think that that is extremely important.

I make no apologies for appealing to those fairly basic, but I think important, instincts of fairness. I ask the Government to be much more robust in protecting and promoting our interests—particularly in respect of Gibraltar and access to that country, which is being treated abysmally.

In a few weeks' time, the Island games will be held. It is an international athletic competition that is very important to places such as the Scilly Isles, the Western Isles, the Isle of Man and so on. The Princess Royal is the patron of those games, but it might surprise you, Madam Deputy Speaker, to learn that she will not be attending this year, although she was invited to attend two years ago. That is the fault not of the Princess Royal, but of the craven Foreign Office, which is frightened of causing any consternation in our relations with Spain, and of any knock-on effects in the European Union.

How pathetic that is. What a weak, shambolic Foreign Ministry we have. It is time we had a change. My hon. Friend the Member for Livingston (Mr. Cook) will be much more robust in protecting and promoting British interests.

9.4 pm

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

We have had an interesting debate and as the evening progressed, the speeches became more interesting. My hon. Friend the Member for Aylesbury (Mr. Lidington) made a valuable contribution to the debate, and his comments about the national interest have been well made. My hon. Friend the Member for Carshalton and Wallington (Mr. Forman) also made an interesting speech.

The debate started rather curiously with speeches from two highly intelligent men—one trying to avoid the obvious and the other trying to bury his head in the sand. In respect of the highly intelligent man trying to avoid the obvious, it is unlikely that we can make progress with our European partners unless we accept the European Union and its institutions for what they are. Unless we do that, phrases such as "net retrieval" will mean nothing. First, we have to recognise that currently the institutions have a momentum which is driving the European Union towards further integration.

We also have to accept that we are not pooling sovereignty through the Council of Ministers, since the ultimate political authority in the European Union is the European Court. We know from previous debates that the European Court is a highly political body with a vested interest in extending its authority.

Once we accept those basic propositions about the nature of the Community and its institutions, the British Government can put forward an agenda that is credible and advances British interests.

Some of my hon. Friends want to drive ahead with economic and monetary union regardless. I found the speech of my hon. Friend the Member for Derbyshire, South (Mrs. Currie) quite breathtaking for a Tory. She was totally committed to the concept of the single currency, come what may. She wanted politicians to fix exchange rates irrevocably. That would be a tremendous gamble and I would not expect such reasoning from a Tory, since Tory attitudes are pragmatic and Tories do not believe that politicians have a monopoly on wisdom.

Many hon. Members do not go as far as the hon. Lady in supporting a single currency come what may. They tend to say, "I like currency stability. I think that it is a good thing.". It is a good thing; it is rather like motherhood and apple pie, but if we make currency stability the focus of our economic policy, if we peg our currency or fix it, that has to be the number one economic priority and all the other economic variables have to adjust around it. Interest rates, unemployment and the level of nominal wages have to adjust around it. Although it is a worthy objective, currency stability cannot be the priority.

Although currency instability can cause problems for businesses, at least businesses can insure against currency instability. Products are available to provide security. I would be interested if any hon. Member could tell me of one other variable in the real economy for which business men can get a form of insurance. I do not believe that there is one.

Pursuing currency stability for its own sake is a great mistake: as we learned from our membership of the exchange rate mechanism, it can damage an economy. Neither politicians nor central bankers can guess the right exchange rate for a currency.

We are also missing a point by failing to realise how diverse the British economy now is. Many medium-sized businesses in my constituency trade with 30 or 40 countries across the world: they are global players. That is what is so good about the British economy; we have businesses going out and selling throughout the world. If we tell these businesses that we want a fixed exchange rate with Germany, or that we want to abolish sterling in favour of a single currency with Germany, trading relationships with Germany may or may not be made easier, but the businesses will have been put at risk vis-à-vis the rest of the world's markets.

There is no clearer example of this than the dollar-sterling rate. If we could have stayed in the ERM at DM2.95, the sterling-dollar rate would now be $2.12, and the competitiveness of British businesses operating around the world would be badly disadvantaged. That is my message to hon. Members who seek to put currency stability at the forefront of our economic policies.

My right hon. Friend the Member for Mid-Sussex (Mr. Renton) referred to his membership of the Kingsdown committee which drafted the report of the same name. I suggest that every hon. Member read it, because it offers an interesting insight into economic and monetary union. The most interesting phrase in the whole report comes on page 30: To start with, very few monetary unions have ever been formed anywhere and there is probably no precedent for a monetary union with a single currency being formed by sovereign states which nevertheless retain independent political, economic and fiscal systems. Thus the Kingsdown report spells it out: there are no examples of independent sovereign states joining currency unions and irrevocably fixing their exchange rates. Taking such an action would mean that a state was no longer independent or self-governing. That goes to the heart of the contradictions in the Tory—

Mr. Whitney

Will my hon. Friend give way?

Mr. Legg

I cannot; time is short. My hon. Friend has had ample opportunity to make his points.

I come next to the core of one of the contradictions in the Government's policy on Europe. The Government tell us that they want a Europe of nation states but that they want to keep open the option of entering into a single currency and abolishing the pound sterling. Those two propositions are contradictory. If we give up our national currency and other states give up theirs, they will no longer be sovereign states. Until the Government wrestle with that contradiction, recognise that it is one and come up with a clear policy on monetary union, they will have difficulty presenting a coherent European policy to the British people.

The time cannot be far off when we must make a clear statement on monetary union and the British attitude to it. I do not believe that the Tory party can become the advocate of a policy that would abolish the pound sterling and would enter into a single European currency.

9.14 pm

Mr. Iain Duncan Smith (Chingford)

I am fully aware that we have limited time, so I shall keep my comments short.

I am intrigued because, as ever in these European debates, we seem to spend one half of the time abusing each other with a certain amount of name calling, which always strikes me as not getting to the heart of anything, and the other half claiming territory that we think will persuade others that we are somehow better than we are. I am also intrigued by my hon. Friend the Member for Wycombe (Mr. Whitney), who used his speech to claim massive patriotism, as though that was territory that nobody else could claim.

I say to the House generally that I wish that we would get past all this nonsense about patriotism or massive self-interest, and try to deal with the honest problems that exist, and understand the argument. I feel that, if we dealt with the subject honestly, with a desire to get to the truth of the problems—for example, of the single currency and what exactly the corpus of law that exists in Europe is all about—we would begin to understand it far better.

I am aware that we have recently been discussing the economics of the single currency. It seems to me that those who are desperate to go to the single currency have now accepted, not only through the Kingsdown report, but through a number of other reports, that the best that can be said for it is that it "might" be okay.

On the basis of an economic "might be", we are now expected to launch into the great experiment as though we could gamble away all our constituents' livelihoods on the basis that, economically, it might be all right. That really gets to the heart of the problem, because the truth is that it is not really about economics. It is a political matter. It is a political decision. Even the Kingsdown report said that. So let us stop the nonsense that, somehow, big business says that it is okay, because the IOD says that it is not. We should accept that the jury is out.

We must understand the nature of the beast with which we are engaged. Europe. European Union. What is it about? The most important feature of that, surely, is European federal law. I use the word "federal" most definitely, as that is precisely what European law is. Let us not play around and pretend that it is not. It is about a federal concept of law. European federal law, as it currently exists, is precisely that. It is structured in such a way that it will develop of its own will, guided by the European Court of Justice and the other institutions, so that Europe attains an identity that is wholly federal.

If we can accept that process, at least we know either that we are in favour of it, and the eventual destiny that that takes us to, or that we are not. If we are not, it is no good pretending that things are not changing. If the body of European law has a clear focus and direction, mere words and the odd change in policy here and there will not stop the essential ratchet from moving in that direction, because the nature of the European Court of Justice is always to interpret in that direction. Therefore, the only way in which one should deal with it, if one does not believe that we should eventually have a federal destiny, is to define what it is we want.

If we want a Europe of nation states, in which I firmly believe—I am very positive and pro-Europe, and that is not something that others can claim for themselves—I say, let us now engage in the argument about what makes a Europe of nation states. We must define what it is about European law that moves against the concept of a nation state; the powers that a nation state should have unto itself; and powers that should be ceded for, perhaps, in this case, the working of a marketplace.

We must discuss that and arrive at a conclusion. It is important, before we go to the IGC, that we work out a template for the nation state. We then talk to our colleagues in other countries, at the discussions, in the reflections group, and say to them, "There are whole areas here which, frankly, run counter to the concept."

Let us take the concept briefly, before I conclude, on social policy. The whole principle of the social chapter is, to some degree, nonsense, because the real body of social policy comes through what we already have in the treaty of Rome. It is all there. All the articles will do it for us.

Therefore, I say to my colleagues and to my hon. Friends on the Front Bench, we should not accept that social policy is a general across-the-board policy for all of Europe. Individual states, depending on what their electorates want—if they choose, for example, the Labour party, it is presented to them in the manifesto—must decide whether that is the policy they want. Whether it increases or decreases the productivity of companies is in the balance.

The marketplace must be about the competitiveness of goods and services. We cannot add to it the concept that everyone must take away one of the areas of competition—social policy—because of the costs it adds. In other words, that is a power and an area that the nation state must hold to itself.

We must engage in the debate properly. We must say to the other states in Europe that we cannot continue endlessly pretending one thing or another. Acceptance of the present, an ever-present ratchet under European federal law, would be to say, "Yes, that is the destiny we want." If we were to say no, we would have to ensure that we had an alternative policy. What we have at present is not, I believe, such a policy.

9.20 pm

Ms Joyce Quin (Gateshead, East)

This has been a lively debate and many hon. Members have contributed to it. Despite the varied comments and contributions that have been made, I am sure that we can all agree that the European Union affects many aspects of our lives. The breadth of the issues that so affect us has been raised during the debate and illustrates my point. Such issues include the effects of the EU on our economy, on social matters, on agriculture and on fishing. Other issues concern us for the future of our continent, such as enlargement of the EU. All these matters have been mentioned many times during the debate.

We were pleased to hear the maiden speech of the hon. Member for Perth and Kinross (Ms Cunningham). She entertained us with references to her predecessor and spoke about her political convictions. I shared her feeling of confusion when she tried to analyse the Government's European policies. I shared her views on the social chapter. Many of us in England agree with her comments, which were much in line with official Labour party policy.

A variety of views have been expressed about and towards the European Union on both sides of the House. We have seen on the Government Benches especially how much internal damage the issue of Europe is doing. It has been described as the San Andreas fault of the Conservative party, and it seemed much that way today. The Foreign Secretary seemed beleaguered during the competition to make hostile interventions on him that was raging on the Government Back Benches. It was made clear during those interventions that both he and the Minister of State will have a bumpy ride in seeking to put the Government's views in the run-up to the intergovernmental conference.

I had sympathy with the Foreign Secretary during some parts of his speech. He referred to the recent interview of Baroness Thatcher and her description of her Government's policy on Europe as being, "No, no, no", and that of the present Government as being, "Yes, yes". As the right hon. Gentleman said, it was the then Mrs. Thatcher and her Government who were responsible for the large increase in qualified majority voting that took place under the Single European Act. I remember, shortly after becoming a Member, that she was saying, "No, no, no" to the proposition that the European structural funds should be doubled. In the end, the funds were increased by over 90 per cent. The "No, no, no" did not seem to be very effective in practice.

Conservative divisions have been reinforced by events in recent days and weeks. It seemed sad that, after he returned from Halifax, the Prime Minister had to appeal once again for unity in his own party. Once again, however, he sounded very much like the boy who cried wolf. We have heard it all before and it does not seem to have any effect. Whatever tactic is used—begging, cajoling, threatening—it is ineffective. I know nothing about rugby, but trying to stop Euro-rifts and divisions in the Tory party is like trying to stop the All Black, Jonah Lomu, in a match.

There has been a balance in Conservative Members' speeches. Those of the hon. Members for Stafford (Mr. Cash), for Southend, East (Sir T. Taylor) and for Ruislip-Northwood (Mr. Wilkinson) have been balanced by those of the hon. Members for Leominster (Mr. Temple-Morris), for Derbyshire, South (Mrs. Currie) and for Wycombe (Mr. Whitney), among others.

We have had some analysis of the rifts. The hon. Member for Wycombe spoke of the nature of Euro-scepticism in his party and highlighted its divisions. Among some Conservative Members, there was a hidden agenda, perhaps not so hidden on occasions, of withdrawal from the European Union; among others, that was not on the agenda. Obviously, that is yet a further factor for division in Conservative ranks.

Understandably, the intergovernmental conference dominated many speeches. Many Conservative Members sought to tie the Government's hands in advance of the negotiations, which will not help British interests. I note that the chairman of the Tory Members of the European Parliament said a couple of days ago that To get a successful negotiation"— in the IGC— the government should not be ruling out too many options under pressure from Bill Cash. The difficulty for the Government, however, is that it is not that simple. They have to worry not only about the hon. Member for Stafford, but about several members of the Cabinet, who have also sought to tie the Government's hands in advance of the negotiations. Last year, the Secretary of State for Employment stated that he did not want any changes in the veto and in the weighting of qualified majority voting and no new powers to the European Parliament—comments that have not been reinforced by the Foreign Secretary or by the Minister.

My hon. Friend the Member for Livingston (Mr. Cook) rightly talked about the danger of Britain's isolation because of the Government's attitude. It is hard to see who the Government's allies will be for their views on the intergovernmental conference process. The Minister has already begun to represent Britain in the IGC reflections group, but we heard from my hon. Friend the Member for Livingston about the Minister's isolation there and the fact that his proposal, whereby he was hoping to scrap a body of European legislation, had a reaction which was said to be lukewarm amid suspicions that the UK is seeking to roll back Brussels in favour of a looser, more flexible European Union. That is not a very convincing start if the Government are really serious about building up allies.

It does not seem likely that the Government will receive much support from the European Commission—they will certainly not receive it from the head of the Commission, Jacques Santer, whose appointment was a particularly spectacular pyrrhic victory by the Government.

As for France, although it is true that President Chirac instinctively shares some Conservative ideas on Europe, the reality is that, within 48 hours of taking office, he was taking part in a Franco-German summit. It seems that the logic of the position in France is to reinforce the Franco-German alliance.

On social issues, which one or two of my hon. Friends have mentioned, it is true that, during the election campaign and after, President Chirac talked in terms a strong social policy, a high minimum wage and issues that do not seem to have much in common with Tory views on the social chapter.

Other important themes have surfaced in the debate. Transparency and democracy, for instance, give rise to a concern that straddles both sides of the House. My hon. Friend the Member for Derbyshire, North-East (Mr. Barnes), in particular, has campaigned vigorously for a more open European Union, and has frequently drawn attention to the secretive way in which the Council of Ministers operates.

I urge the Government to do much more than they have so far to encourage debate and give information to hon. Members on both sides of the House. I note that the European scrutiny Committee, for example, has asked many times over the past year for debates on European affairs to be taken on the Floor of the House; certain wide-ranging matters are beyond the remit of either of the European Standing Committees. On most occasions, however, the Government have rejected those representations—presumably because they want to minimise the number of embarrassing European debates on the Floor of the House. Opposition Members are concerned about that.

I understand that the Minister for the Environment and Countryside had difficulties today with the scrutiny Committee, which feels that it was not adequately consulted in advance about important matters that will be considered by the Environment Council this week. The Government must ensure that we see the proposals in good time, and can scrutinise them effectively.

In what ways will the Minister promote greater openness in the Council of Ministers? We should like the Government to support the Dutch, Danish and Swedish Governments' efforts to open up proceedings in the Council. Although we want the pillar structure to continue under the Maastricht treaty and want it to apply to the justice and home affairs section, we are concerned about the secrecy and lack of openness in that sector. The Government should give urgent consideration to ways of ensuring that we are involved and informed.

Not surprisingly, the principle of subsidiarity featured in the debate. There remains a clear distinction between Government and Opposition views. Opposition Members believe that subsidiarity must mean making decisions at the lowest appropriate level, which will have consequences for decision-making within the United Kingdom as well as at European level. It was heartening to learn that, in another place, Lord Cockfield had the courage to criticise the Government's policy on subsidiarity, saying that they ignored decentralisation and subsidiarity within Britain at their peril.

We want the Government to give much more recognition to the work of the Committee of the Regions. During the Maastricht debates in the House, the Government made it clear that they wanted to nominate members to the committee rather than having any local authority or direct representation from the regions. We still consider that an important issue: we want the committee to play a useful and representational role in the workings of the European Union.

Many hon. Members mentioned the single currency and general economic issues. I was glad that my hon. Friend the Member for Livingston stressed the importance of trade and the future of inward investment, and I echo all that he said about the motives of inward investors in the United Kingdom. What he said has been very much reflected in my part of the country, the north-east. We have seen inward investment, but as far as I am aware—I have had contact with the firms in question—none of it has involved any concern about the social chapter. Certainly, firms have not come to our part of the country because Britain did not subscribe to the social chapter; they have come for all kinds of other reasons. The English language is one obvious factor in American and Japanese investment; the Japanese are used to working in English.

One matter that perhaps was not mentioned as much as I would have liked was environmental co-operation in Europe. We feel strongly about such co-operation. We think that Europe can be an environmental trendsetter and we deplore the Government's efforts to try to get out of various environmental commitments that they have made at European level. The environment is a European and international issue and certain decisions about it need to be taken at those levels.

Mr. Spearing

I endorse entirely the importance of the environment, but can my hon. Friend confirm my impression that most of the articles that relate to the environment are already subject to qualified majority voting and therefore subject to an international dimension?

Ms Quin

My hon. Friend is right that most of the articles are subject to qualified majority voting, but we are concerned about the fact that, simply to avoid meeting European standards, the Government have been, in their words, trying to repatriate some of the legislation. Many of the directives were agreed a number of years ago. It is important that if we make such commitments we are prepared to fulfil them. Many people in my part of the world and elsewhere are concerned that our environmental standards will drop behind some other European countries. In some cases, they already have.

Agriculture was mentioned by many hon. Members, including my hon. Friend the Member for Newport, East (Mr. Hughes) and the hon. Member for Holland with Boston (Sir R. Body). I agreed very much with their criticisms. Agricultural reform needs to be a good deal higher up the agenda. As the hon. Member for Carshalton and Wallington (Mr. Forman) said, that is imperative if we are serious, as I hope we are, about enlarging to the countries of central and eastern Europe.

I endorse some of the comments on enlargement made by my hon. Friend the Member for Thurrock (Mr. Mackinlay), who spoke very much from the heart, especially about the situation in Poland. Of course he is right. It would be quite tragic if, having encouraged changes in such countries, we seemed to turn our backs on them economically, politically or in any other way. That is a very important aspect that we must all understand and on which there is fairly wide agreement across the House.

I make no apology for saying to the Minister, as he has heard me say in Committee, that it is terribly important for the United Kingdom to get involved economically with the countries of central and eastern Europe. I feel that we are lagging way behind Germany, Italy, France and even the Netherlands in the volume of our trade with those countries.

I was extremely disappointed, having tabled a question about direct investment by Britain and certain other European Union countries into central and eastern Europe, to receive the tired old answer that the information was not available and could be obtained only at disproportionate cost. Surely it is extremely important for us to know how much direct investment other countries are making in the countries of central and eastern Europe.

In a very short space of time, by ringing up the Library, I obtained the information that in the past two years investment by Germany into the countries that I was asking about has been 10 times higher than British direct investment. I urge the Government very strongly to examine the pattern of trade between us and the countries of central and eastern Europe and to direct investment because it is terribly important if we are to make our relationship with those countries a success.

Various comments were made about Labour policies: most were the usual misrepresentation of them. The comments about the social chapter were certainly wholly unjustified. I was at a meeting the other day that was also attended by a Conservative Member. I was listening to the Prime Minister of Malta, whom the Conservative Member asked about the social chapter—would not it cause Malta all kinds of difficulties if Malta joined the European Union? The answer was that it would not and, in any case, Malta had a good minimum wage system, although almost everyone in Malta earns at least twice as much.

Mrs. Currie

Will the hon. Lady give way?

Ms Quin

I apologise to the hon. Lady for not giving way but I have only one minute left; I should have been happy to give way otherwise.

As I said, there were misrepresentations of the Opposition's policy, especially by the hon. Member for Aylesbury (Mr. Lidington) about our position on the veto. He described our policy as a choice between rolling over and agreeing to everything that Europe said or coming out of Europe. That is an absurd distortion, and I hope that it will carry no weight as it is a complete misrepresentation of our position.

We contend that Government policies have weakened Britain in Europe. They have marginalised and isolated us, which has been bad for the country. It is no wonder that the hon. Member for Derbyshire, South accused some of her colleagues of not being patriotic. The British people as individuals have lost out, too, because of the Government's attitude to European social and environmental policies and to economic and employment initiatives in Europe.

Labour wants to give the British people a good deal from their membership of the European Union by adopting a different approach, with different ideas and policies for co-operation and reform. It is clear that the British people have not won that good deal under the Conservatives; they will do so under Labour.

9.41 pm

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

Before I deal with the substantive debate, I must congratulate the hon. Member for Perth and Kinross (Ms Cunningham) on an impressively confident maiden speech. She was extremely generous about Sir Nicholas Fairbairn, for which his many friends will be grateful. I hope that she will take it in the spirit in which it is intended if I say that, were he here today, he would, with his usual pungent wit, have quoted Winston Churchill and said, "Maiden speech? That was no maiden speech; that was a brazen hussy of a speech." It was exceptional. If she continues to make such speeches, I suggest that the hon. Member for Banff and Buchan (Mr. Salmond) should look to his position—and we shall support her.

The preparations and negotiations for the 1996 intergovernmental conference are a major challenge for this country, and the Conservatives had a vigourous debate about them. A number of my right hon. and hon. Friends made powerful and insightful speeches. The shopping list is so long that I am almost bound to miss out someone, but it includes my right hon. Friend the Member for Guildford (Mr. Howell), my hon. Friend the Member for Wycombe (Mr. Whitney), my right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie), and my hon. Friends the Members for Chingford (Mr. Duncan Smith), for Carshalton and Wallington (Mr. Forman), for Holland with Boston (Sir R. Body) and for Milton Keynes, South-West (Mr. Legg), who all made excellent speeches. In their very different ways, my hon. Friends the Members for Derbyshire, South (Mrs. Currie) and for Southend, East (Sir T. Taylor) gave different perspectives on the outcome. Of course, I must also mention my hon. Friends the Members for Stafford (Mr. Cash) and for Ruislip-Northwood (Mr. Wilkinson).

The Government's goal is simply stated: to move the European Union in the direction that serves British interests. Some have argued today that we have no choice but to concede the further integration that some of our partners desire. Others have argued, today and previously, that we cannot achieve our goals and should instead prepare to leave the Union altogether. I believe that both groups are profoundly wrong.

One of the lessons of our involvement with the European Community is that, if we fight hard enough for what we want, we can achieve success. We have done so with the British rebate, enlargement, the single market and many other matters. I understand some of the doubts expressed about the European Union today, but I do not believe that we should throw in the towel.

We want a Europe that is committed to free trade, a Europe that seeks to bring the countries of eastern and central Europe within its boundaries and a Europe that respects nation states and does not attempt to supersede them. Some have suggested that it is time to leave the European Union and that membership is no longer compatible with our national interests. That approach is a counsel of despair.

We have never been starry-eyed about the Community. There are costs associated with membership: the waste of the common agricultural policy, as my hon. Friend the Member for Southend, East commented, frustration at the continued protectionism of some member states and the tendency of the Commission to expand its reach far beyond its grasp. But the balance of interests weighs heavily in favour of our membership: the peace, prosperity and democracy that the Community has helped so to foster, the progress towards free trade and a single market, with the massive boost that inward investment has brought this country.

In recent weeks, some have suggested that we could leave the Community and join the European Economic Area instead. I do not believe that that would be in the interests of this country. Members of the EEA are subject to all the rules of the single market, but have no say in their development. What would they say to the aerospace or engineering companies desperate to liberalise public purchasing in the Community? What about the commercial television companies worried that restrictions on advertising will take away their revenues? What about the next time that we have to face down a works council directive, a parental leave directive, or a part-time workers directive that will burden business and cripple companies?

Those companies want a British Minister at the table fighting for Britain. I and my right hon. and hon. Friends intend to fight that fight and to continue fighting it until we get the Europe that we want, that the British people want and that the peoples of all Europe want.

The challenges facing Europe do not require a rush to further political union. That is what we should be saying at the IGC over and over and over again. As the Prime Minister has explained many times, it is time for Europe's leaders to put away the utopian dreams about a united states of Europe and to concentrate on Europe that works. We should look at the countries of Europe today. There is sluggish growth, high unemployment and instability in the east following the break-up of the Soviet Union and the Warsaw pact.

Those are the principal problems facing Europe. They will not be solved by blueprints for a federal Europe. Indeed, nothing can be more damaging to the peace and security of Europe or more harmful to the health and welfare of its citizens than an ill-judged and unpopular lurch towards a federal Europe. It would fly in the face of what the people in this and other countries want. It would lead to bitterness and resentment. It would end in collapse and failure. That is why this Government will never support it.

As some of my hon. Friends have pointed out, some Governments in other member states do not share that analysis. There is no point whatever in trying to brush away that fact and pretending that differences do not exist—they do. That makes the task of the Government in negotiating on Britain's behalf all the more important. It means that we must be prepared to stand up and say no to centralising proposals put forward in the negotiations and it means that, even if we find that few around the table agree with us, we must go on saying no.

The task for the next IGC should be to make the Union work better. It should not be a great leap forward. Those who think that it should be have learned little from the Maastricht process. They seem to think that if Europe does not head somewhere, it will go nowhere; if it does not integrate, it will disintegrate. That is why we hear endlessly about catching buses, riding trains and missing boats. Unless we like the destination, we shall not buy the ticket.

A senior business man participating in the BBC's recent debate about the future of Europe said that the Union was like a business: unless it was heading rapidly in a particular direction, it would falter and fail. I could not agree less. Many of the most successful businesses flourish because they stick to their core activities and avoid launching into the unknown. The European Union should do the same.

Mr. Mackinlay

Hands up everyone who agrees with him.

Mr. Davis

We would not notice the hon. Gentleman, that is for sure. It means that we should reinforce subsidiarity and make sure that Brussels does not attempt to do what should properly be done by the nation state.

The democratic legitimacy of the European Union rests first and foremost on the national Parliaments and national Governments of member states. Those who talk about the democratic deficit have got it wrong. They assume that the Commission should be the executive and the European Parliament the legislature, but they are wrong on both counts. It is the Council of Ministers that should take the lead in Europe, and national Parliaments that should call it to account. That is why we have reinforced the authority of the Council of Ministers over that of the Commission, and why we shall oppose attempts to give the European Parliament massive new powers.

A Community operating along those lines is not a negative vision but a practical one—tackling crime and drug trafficking on an intergovernmental basis, co-operating over foreign policy on the basis not of majority voting but of unanimity, and co-operating on defence in a way that reinforces rather than undermines the transatlantic links embodied in NATO.

As my hon. Friend the Member for Carshalton and Wallington pointed out in an especially cogent speech, there is much that we can achieve by working together. But we shall achieve nothing by forcing countries to act against their will. More centralisation is not inevitable, it is not acceptable and it is not in the interests of the British people.

The idea of European monetary union and a single currency has dominated much of the debate. We heard wise and thoughtful speeches by my right hon. Friends the Members for Guildford, for Mid-Sussex (Mr. Renton) and for Horsham (Sir P. Hordern), by my hon. Friends the Members for Leominster (Mr. Temple-Morris), for Derbyshire, South and for Milton Keynes, South-West and even—I shall exercise my characteristic charity here—by my right hon. namesake the Member for Llanelli (Mr. Davies) —[HON. MEMBERS: "Hear, hear."] It got through.

Our position remains clear—no decisions now or in the lifetime of this Parliament. Our protocol negotiated at Maastricht by the Prime Minister ensures that we shall never be forced to join a single currency. I must tell my hon. Friends that that would not be the case had Labour negotiated the Maastricht treaty.

My right hon. Friend the Member for Guildford, with his usual perspicacity, identified the key problems that would arise if a small group went ahead with a single currency in the wrong circumstances. I reject the implication in the Commission's recent Green Paper that countries outside such a small group would have to tie their national currencies to the single currency so that, in the Commission's definition, the single market could continue to work properly. I reject that idea because it would mean bucking the markets, and because it would be artificial and ineffective. Our warnings about the divisiveness of a single currency introduced in the wrong circumstances are beginning to hit home.

The Labour party's approach to all that is markedly different.

Mr. Duncan Smith

Stop there.

Mr. Davis

Yes, I could stop there.

The Labour leader said recently that he would never allow this country to be isolated in Europe. What a good time he would have had at Messina. Give up the veto in important areas of national interest? Fine. Give away our rights to make our own decisions on joining a single currency? Certainly. Collapse the pillars of the Maastricht treaty and the treaty of Rome? Absolutely. The meeting would have been a short one. He could have sold the country down the river in the morning and sat on the beach in the afternoon.

I must tell the right hon. Gentleman that being willing to stand alone is often necessary to defend Britain's interests. This is not the first time that Britain has stood alone. In the past decade and a half, every negotiating success has been marked in the early stages by Britain's standing alone, or in a small minority, for its principles. It was Britain that fought for the single market; it was Britain that fought for enlargement and for subsidiarity. We stood alone, we fought our corner and we won our argument.

Mr. Charles Kennedy

And then we ditched our leader.

Mr. Davis

It is interesting to hear from the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy). I was touched by his earlier concern for our party, since he is now a member of the wholly owned subsidiary of the Labour party.

Jacques Santer said a few weeks ago: It is British initiatives that end up being mainstream Community policy". We are still at least seven months away from the beginning of the 1GC, and negotiations have not even begun. Yet what has the leader of the Labour party done? For no conceivable reason, other than to conform with his Euro-socialist friends, he has said that he is willing to give up the veto in four areas: social policy, environmental policy, industrial policy and regional policy. There is no trade-off and no negotiation—just capitulation. So much for the man who would be Prime Minister. Charting the right course for the European Union, and our relationship with it, is one of the great questions.

Mr. David Harris (St. Ives)

I hope that my hon. Friend will go on to tell the House about the declared position of the leader of the Liberal Democrats, who would give up the veto in all areas.

Mr. Davis

My hon. Friend is right. It is not clear whether subsidiarity applies between the Labour party and the Liberal Democrat party, and we may not know what the right hon. Gentleman's policy will be in the future. At the moment, however, it is to give up everything.

We have heard a lot from Opposition Front-Bench Members about the splits and debates that take place on Conservative Benches. Yet they know full well that the same divisions exist among Opposition Members. There was a brave attempt by the hon. Member for Brent, East (Mr. Livingstone) to explain away the 59 votes against the Labour Whip on Maastricht. He might have been more persuasive if we could not have seen the faces of his hon. Friends during his subsequent federalist rant. The right hon. Member for Llanelli and the hon. Member for Newham, South (Mr. Spearing) made a pretty picture during that speech.

Those hon. Members have at least been consistent in their views. That is more than anyone can say about the leader of the Labour party. If his policy, as clearly stated in his 1983 election address, had been carried out and Britain had left the Community, we would have been having a very different debate today. In the future, the right hon. Gentleman should start every speech in Europe with an apology.

The Labour leadership has been wrong about Europe at every turn. When it was in Britain's interests to join, it voted to stay out. When tough negotiations to fight for reform were needed, it wanted to pull out. Now, when the people of Europe are saying no to a European super-state, Labour's policy would bring one closer. It has swapped outright hostility to the Community for blind acceptance of whatever comes out of Brussels. Companies across Europe are groaning under the weight of regulation, bureaucracy and social costs, yet Labour wants the United Kingdom to sign the social chapter and to give up our veto rights. The party that wanted out now cannot wait to sign up to any piece of Euro-nonsense on offer.

Why does the Labour party do it? Because, after four defeats, it has nothing left to believe in. All that brought Labour Members into politics has been ditched, shelved and thrown overboard. The message about the Labour party that the British people should take away from this debate is that those who stand for nothing will fall for anything.

When the historians look back in 30, 40 or 50 years' time at what we are doing today, I am sure that they will see this time as a critical juncture in the history of Europe. Their judgement will be driven by whether what we do in the next few years creates a Europe that achieves a number of things. First, we must succeed in bringing to the Community of western, liberal and capitalist democracies the massive free states of central and eastern Europe and in doing so, create a stable and peaceful community in the centre of Europe. That, above all, will be the key defining issue of the decade. What we do in dealing with the common agricultural policy, structural funds and the other key institutional issues in the next few years will be crucial to that.

Secondly, that judgment will be based on whether the European structure that we have created delivers prosperity, security and freedom to the people of Europe. That, of course, will depend on whether we are cemented together by the shackles of a federalist logic or held together by the joint belief of the peoples of Europe that it is in their mutual interest to remain in a co-operative and coherent Community. That will be achieved only if the European Union works with the grain of the nation state and not against it.

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