MEANING OF "THE TREATIES" AND "THE COMMUNITY TREATIES"

HC Deb 02 December 1997 vol 302 cc191-256

Amendment proposed [27 November]: No. 65, in page 1, line 12, at the end to insert the words 'but (for the avoidance of doubt) not Article 1 of the said Treaty.'—[Mr. Howard.]

5.29 pm

Question again proposed, That the amendment be made.

The Chairman of Ways and Means (Sir Alan Haselhurst)

I remind the Committee that with this we are taking the following amendments: No. 13, in page 1, line 13, after '(i)', insert 'Article 1 (other than paragraph 1)'. No. 14, in page 1, line 13, after '(i)', insert 'Article 1 (other than paragraph 3)'. No. 15, in page 1, line 13, after `(i)', insert 'Article 1 (other than paragraph 5)'. No. 17, in page 1, line 13, after '(i)', insert 'Article 1 (other than paragraph 10)'. No. 18, in page 1, line 13, after '(i)', insert 'Article 1 (other than paragraph 11)'. No. 19, in page 1, line 13, after '(i)', insert 'Article 1 (other than paragraph 12)'. No. 20, in page 1, line 13, after '(i)', insert 'Article 1 (other than paragraph 13)'. No. 21, in page 1, line 13, after '(i)', insert 'Article 1 (other than paragraph 14)'. No. 1, in page 1, line 13, after 'Articles', insert '1, other than the words in paragraph 5, (Cm. 3780, page 9) "and through the establishment of economic and monetary union, ultimately including a single currency in accordance with the provisions of this Treaty".'.

New clause 30—Extension of jurisdiction of European Court of Justice: legal advice— '.—This Act shall not come into force until Her Majesty's Government has obtained specific legal advice from the Attorney General setting out the extent to which the provisions on police and judicial co-operation in criminal matters in Article 1 para 11 of the Treaty of Amsterdam extend the jurisdiction of the European Court of Justice in the United Kingdom, such advice to form the basis of a report to each House of Parliament and to be subject to an affirmative resolution.'.

New clause 37—Relations between European Union and WEU— '—The Government will not take any steps to foster relations between the European Union and the WEU with the view to the possibility of the integration of the WEU into the Union, as contemplated by Article 1, paragraph 10 [Article J.7] of the Treaty of Amsterdam, without first tabling a motion in each House of Parliament which shall be subject to affirmative resolution.'.

New clause 38—Common foreign and security policy— '—The Government shall not take any steps to participate in the decision making arrangements as set out in Article 1 paragraph 10 [Article J.13 1 and 2] of the Treaty of Amsterdam, without first tabling a motion in each House of Parliament which shall be subject to affirmative resolution.'.

Mr. John Bercow (Buckingham)

There is a real concern among Conservative Members that article F.1 of the treaty of Amsterdam is a device conjured up by supporters of European federalism to end the use of the national veto. To date, that real concern has been met by Ministers with a mixture of faint puzzlement and lofty disdain. Clearly, they do not comprehend our concern.

The Minister will, I hope, recall that I promised him last week three examples which illustrate the basis of our concern. I had time to offer him two; I would like simply to conclude by providing the third. The two with which I dealt last week related to the minimum wage and to the possibility of a conflict between the attitude of other member states to the age of consent with that of the United Kingdom.

The third example which I offer for the Minister's consideration is that of strikes in essential services. Let us suppose, for example, that a future Government were to decide to outlaw strikes in essential services. My concern—shared by a number of my right hon. and hon. Friends—is that under article F.1 of the treaty of Amsterdam, there is a danger that we could be had up by the institutions of the Community on the ground that we had breached a fundamental right or freedom. That concern is exacerbated or reinforced by the reference in article 1 to the Fundamental Social Rights of Workers. Is there not a danger that that wording and that article could be used as an excuse to take action against this country and to strip it of its voting rights if its Government were to opt to ban strikes in essential services? Has the Minister considered the point? Has he obtained a guarantee from other member states that the article will not be invoked in that way? Can he say? Does he know? Will he share his view with us?

Silence is no longer an option. We must have answers. I respect the fact that the Minister genuinely does not believe that this problem will arise—my anxiety is that it might. A prudent Government must guard against the possibility of that problem arising. The problem will not go away. It cannot be wished away. It cannot be pretended out of existence. I respectfully ask the Minister to take account of our concern and to seek to respond to it. I have no doubt that other right hon. and hon. Members will reiterate the concern during the debate. I ask him to respond to them and, in the first instance, to me.

Mr. Kenneth Clarke (Rushcliffe)

This debate has run on for some time, and I have sat through quite a lot of it. I read the remainder of the debate—which, unfortunately, I had to miss—before this debate restarted. I propose to make a short speech, as we have gone on for some hours.

I note that I was quoted earlier—I think with approval—as having said that I did not think there was any great reason to get very excited about the treaty of Amsterdam, which did not seem to me to have made any fundamental changes. Indeed, I was rather disappointed by the treaty of Amsterdam. Certainly, there are people on the continent of Europe—who, no doubt, are more pro-European than me—who think that the outcome of the proceedings at Amsterdam was a triumph for British caution at the expense of those who wish to go for European integration at a faster rate.

I have always thought that it was a mistake to insert in the treaty of Maastricht a binding commitment to hold an intergovernmental conference at a set time. The aftermath of Maastricht showed the great dangers that Governments in Europe faced in trying to go for great institutional reform ahead of public opinion. A certain flexibility in the timing of the inevitably necessary intergovernmental conferences might have been of value.

I voted against the Second Reading of this Bill because I have two great objections to the treaty of Amsterdam. First, it contains references to the agreement at Amsterdam that we would accept the social chapter and waive the opt-out negotiated so carefully by the previous Government. Secondly, I do not believe that Amsterdam remotely faced up to the problems of enlargement. It was so unsatisfactory for those of us who attach great importance to the enlargement of the Union to include more and more countries from central Europe. The result is that a great deal of business is left undone.

I would like to make a full speech about the social chapter, but I have made my views clear on many occasions. I simply wish to record that I think that subsequent generations will bitterly regret that we exposed ourselves to the risk of introducing into the British economy provisions on labour market regulation which might increase the cost of employment in this country. We derive considerable advantage from the opt-out negotiated by my right hon. Friend the Member for Huntingdon (Mr. Major) at Maastricht. It has been one of the marked differences between the British and the European economies in recent years.

We have been able to combine strong economic growth with the creation of new employment. The principal reasons for the tragically high levels of unemployment across the remainder of the continent, in my opinion, remain the inflexibility of labour markets there and the inheritance of social legislation which causes great difficulties when the prospect of new jobs arises.

By waiving the British opt-out from the social chapter, the British Government have done a great disservice to many people in other member states. The climate of opinion was steadily moving in our direction across Europe. I encountered many German, French, Spanish and Italian employers who agreed that the British model was better for the creation of employment, and that the burden of social legislation—which, in most cases, had been implemented by their national Governments, although some was implemented as a result of European directives—was a serious disadvantage to them.

The argument was going our way, and I am afraid that the British accession to the social chapter is likely—for a short time, at least—to give a fresh breath of confidence to all those who adhere to an older model of how an employment market should be regulated. We will have difficulty in fighting off Padraig Flynn and his directorate as fresh proposals are made, because it is believed that we are back on the old agenda which ought to be discredited—that social legislation is somehow the way of providing more security in employment to people in the modern world.

My second objection is that Amsterdam failed to tackle the problems of enlargement. As I have said, I think that the enlargement of the Union is one of the great objectives for European politicians in the next few years. The most dramatic events of my political life—the first was before I came to this House—were the erection of the Berlin wall, which symbolised all that was worst about the division of Europe, followed by the moment I never expected to live to see; the demolition of the Berlin wall by the citizens of Germany, symbolising the end to the division of Europe.

As the European Union is one of the ways in which we strengthen our commitment to liberal democracy, human rights, the free market economy and the principles that we hold dear, the sooner we reinforce the reunification of Europe by admitting into the EU those countries in central and eastern Europe which steadily become ready for it, the better.

We cannot simply enlarge the present Union without tackling serious policy and institutional problems. Policy problems are to be dealt with under a separate heading. It is plainly necessary to reform the structural funds and the common agricultural policy.

I strongly support the German, Dutch and other politicians who say that, when enlargement is attained, the enlarged Community should have a budget limited to 1.27 per cent. of gross domestic product, as at present. That accelerates the need for reforms that were in any case desirable in the interests of the present members of the Union. That matter will be addressed at another time.

Institutional change has to be made, touching on the size of the Commission, weighted voting for majority voting, and other matters that we shall have to return to at an intergovernmental conference. I voted against Second Reading because I object to the social chapter, and I am disappointed by the outcome on institutional reform.

Mr. Roger Casale (Wimbledon)

The right hon. and learned Gentleman mentioned the importance of human rights in the context of European integration and enlargement to include eastern and central Europe. Does he agree with the shadow Foreign Secretary, who objected to the way in which human rights clauses were to be incorporated, referring especially to the importance of procedures for triggering sanctions in cases of human rights abuse? Surely it is crucial that, when we enlarge to include countries in central and eastern Europe, we anchor those countries' commitment to human rights.

Mr. Clarke

I intended to comment on that, so I am happy to do so in response to the hon. Gentleman. I listened to my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) last week, and I entirely share his commitment to human rights, in every ordinary sense of that phrase. He went out of his way to emphasise the fact that no one in the Conservative party challenges the principles of human rights, the need to protect individual liberty and free speech, and the right to demonstrate, to have parliamentary democracy and to be governed by the rule of law. There is no division in our party on those principles.

I agree that, as the Community is enlarged, we must consider what happens if any member state acquires a Government who fall short of those fundamental standards. That involves not only new members. One of the reasons why we admitted Greece was to reinforce the change that had taken place there, with a return to parliamentary democracy and a proper standard of human rights.

We have never known what would happen if, tragically, the Greek colonels were to return to power, or if some military regime were to take over in the Iberian peninsula. The idea of that happening in Portugal or Spain may be utterly fanciful these days, but it is legitimate for the treaty to consider the possibility.

If we enlarge into eastern and central Europe, where the tradition of stable democracy is hardly well established, some protection will be required. I believe that article F.1 is an acceptable part of the treaty. My right hon. and learned Friend shared my analysis but suggested that the matter should be tackled in some other way. As I understand it, he objected to the treaty rights of a member state being taken away if it remained subject to the treaty obligations, but I can envisage that being an attractive response.

I do not see why, if a military regime has taken over a country in eastern or central Europe, it should be released from the obligations, or why we should sever our trading contracts and the policing of those contracts by the European Court, simply because we disapprove of the Government; but I would strongly object to a Government who were not respecting human rights casting votes at the Council of Ministers, and perhaps blocking action, when vetoes were the order of the day, without effective action being taken to stop them.

It is difficult to say with certainty that the procedures will ever be invoked, because every relevant situation that arises will in itself be a political crisis, and will have to be responded to according to the facts of the case, but I personally have no objection to article F.1.

The fear is raised that the article might be totally abused, to remove the veto of the Government of a member state with a satisfactory record on human rights, but with some peculiar social provision that could be described as a breach of human rights. Anything is possible in international relations, and in debates on the treaty of Rome, the Single European Act 1985, and the treaty of Maastricht, I have heard some pretty fanciful suggestions about what might occur, but the provisions of the treaty envisage the clause being invoked only by the unanimous vote of all member states, except the one whose conduct is under examination, ratified by two thirds of the Members of the European Parliament.

5.45 pm

There is nothing in the treaty that allows me to turn to my hon. Friend the Member for Buckingham (Mr. Bercow) and say that what he fears is absolutely legally impossible, but when I consider the dangers of having a military regime inside the Union at some time in the future, I am prepared to say, as a matter of political judgment, that I do not think that anyone will deprive the United Kingdom of all its voting rights and leave it bound by the treaty obligations because, in the opinion of the heads of state of 14 other member countries, our refusal of the right to abortion on demand, or some such matter, is a breach of human rights.

One must consider the risks in both directions, and I personally share the alarm of those who were at Amsterdam about the lack of any provision in the event—again, we hope that it will never happen—of some member state being governed by a regime that is in breach of fundamental human rights.

Mr. Robert Jackson (Wantage)

It has been suggested that it would be preferable to expel a member state rather than suspend it in those conditions. Does my right hon. and learned Friend agree that the legal complexities, and the consequences and ramifications, of expulsion of a member state, including the suspension of contracts and the possibility of actions arising therefrom, would be so great that, in effect, the sanction would become a useless deterrent, whereas a suspension in the conditions that he has described would provide a relatively effective redress?

Mr. Clarke

I am inclined to agree with my hon. Friend. In practice, if some military regime seized power and started abusing human rights, article F.1 might not be the end of the story. The European Union could not tolerate the situation indefinitely.

My right hon. and learned Friend the shadow Foreign Secretary suggested that the proper course would be expulsion, but I agree with my hon. Friend the Member for Wantage (Mr. Jackson) that we would then have to consider whether to sever trading relations or renegotiate them and what would happen to existing contracts, and so on. I understand the fears about the article, but they do not seem to me to be totally credible.

The European Court of Justice always causes a certain agitation in the House. I was glad to hear my right hon. and learned Friend the shadow Foreign Secretary and my hon. Friend the Member for Stone (Mr. Cash) confirming that the European Union needs a strong and effective court of justice. It is impossible to have a single market in the European Union, with trading taking place on a fair basis, with the nations subject to the same obligations and specifications, including open access to markets and freedom from state subsidy—all of which we want—if there is absolutely no means of enforcing the rules.

In Britain, we labour under what I believe is a slightly exaggerated notion that we are the only ones who obey any of the rules, and that they are systematically broken throughout the rest of Europe. That perspective can be taken only on this side of the channel, but we do, indeed, bind ourselves by the rule of law and our treaty obligations, and we are entitled to expect that those in other states will do likewise. That is why we in this country go to the European Court of Justice with such persistence, and that is why we win most of our cases when we do so. That is why we shall have no redress against complaints of unfair trading, breach of treaty obligation and so on if the European Court of Justice is diminished. On that, I trust, we are now all agreed.

I shall not discuss specific judgments. In my surgery, I frequently meet disappointed litigants whose confidence in British justice has momentarily dropped because, unfortunately, they have lost a case before the High Court of Justice or the Crown court. I always listen with great sympathy. They are usually going to the Queen, they are going to the Pope after that and they are usually going to the European Court of Human Rights to get a finding of fact reversed. Recently, we lost one or two cases that I, as a Minister, was anxious for us to pursue, but I do not judge a court on the basis of whether we have won every action there. On the whole, we have used the European Court of Justice to considerable advantage.

Mr. William Cash (Stone)

Will my right hon. and learned Friend give way?

Mr. Clarke

No. I see that I am in danger of being drawn into the details of individual litigation. I will do that on another occasion.

Mr. Cash

rose—

Mr. Clarke

All right—I give way just once.

Mr. Cash

Does my right hon. and learned Friend concede that, although some of us accept the idea of a court of justice with limited functions, objections are made to the expansion of the court not only because it tends to go into judicial—and even political—activism, but because the functions that have been conferred on it under the process of continuing treaties, in the continuous rush towards ever closer union, are creating a situation in which the court is becoming a supranational body with power over areas of governmental activities, including economic and monetary union? That is the problem that many of us have with the European Court of Justice. If its powers were more limited, it would be more acceptable.

Mr. Clarke

I do not agree with that. We use the European Court of Justice and it seeks to reach its decisions judicially.

I will not be drawn into my full comments on the European Court of Justice. One of the dangers that makes all the court's judgments unpredictable is that it is usually required to interpret treaties, regulations and directives that have been somewhat carelessly drafted.

The decision-making process in Europe has been experienced by quite a few of my right hon. Friends, and it is less than perfect. I have probably taken part in more Councils than most people still alive, and I am used to late-night decisions being taken on texts, hurriedly exchanged between officials, looked at by Ministers and wrangled over in the Council. Anything that gets agreement is published, on the basis that it will be sorted out later. All too often it winds up before the judiciary in the European Court of Justice, who are expected to give some expression of what the draftsman of the regulation intended. As, at the time, different Ministers went out of the meeting and addressed their national press, each claiming that they had achieved a totally different type of triumph at the expense of the other, that can be difficult to resolve. That lies at the root of most of the problems.

The idea that the court is supranational has always been established and was accepted as part of our membership. It has been known for 25 years—ever since we entered the European Union—that legislation of individual national Parliaments can be set aside if it is inconsistent with a judgment of the European Court. I remember it being fiercely debated for days on end in the House of Commons soon after I entered the House. The idea that we supposed that we were entering only a trading arrangement is one of the great myths of our time.

I believe that the European Court serves its purpose quite well. The British win more cases than we lose there. We should use it more often in future. However, I strongly agree with the points that my right hon. and learned Friend the shadow Foreign Secretary made about our proposals for the European Court of Justice.

In my views on the European Union, I am not a starry-eyed idealist; I have seen it at far too close quarters for that. There are countless defects, not only in the decision-making process but in many of its institutions. The previous Government carefully prepared a lot of propositions for improving the workings of the European Court of Justice and protecting all member states against judgments that could have horrendous implications.

We wanted to limit the retrospective nature of judgments. As Chancellor of the Exchequer, I was extremely worried about the constant challenges that were made at the European Court to the scope and incidence of our VAT because, whereas in this country we have imposed limits on how far back in time such claims may extend, in the European Court, judgments might be awarded undoing the imposition of VAT all the way back to the introduction of VAT. Several countries risked billions of pounds of damages.

We also wanted to introduce a principle that member states were liable for compensation only in cases of serious and manifest breaches of their obligations.

We wanted national time limits to be respected when people brought actions before the European Court. That was not Euro-sceptic or Europhile. It was an extremely constructive approach to improving the workings of the European Court. It is no good dismissing what my right hon. and learned Friend the shadow Foreign Secretary said as though it was a frontal attack on the European Court; it plainly was not. Astonishingly, the new British Government, who I trust were advised—we cannot inquire about their advice—about the point of all those changes, appear to have abandoned them when they reached Amsterdam.

We had allies on that point. I may have had a biased view because I was attending ECOFIN, but I assure the House that Finance Ministers were rather enthusiastic about limiting the scope of the court's judgments. We have never had a satisfactory explanation of why those arguments were not pressed. I believe that those objectives could have been attained and it is a serious weakness that none of the arguments was advanced.

I understand the concern that my right hon. and learned Friend the shadow Foreign Secretary has about the ECJ and the home affairs pillar. I agree with him that the pillared approach of Maastricht was one of the best features of the Maastricht negotiation. In my opinion, the only proper way to proceed on foreign affairs and security and on home affairs was on the basis of intergovernmental co-operation and not using the institutions of the European Union. That was the best feature of the Maastricht treaty; it has led to some progress, and I would defend the pillared approach.

The pillared approach appears to have been encroached on marginally by giving the ECJ some jurisdiction in that area. If there are conventions and so on under the home affairs limb, it is necessary for someone to resolve disputes about their meaning, but we should be very cautious about the implications, and I trust that the jurisdiction of the ECJ will not be extended further into other pillared areas.

The failures at Amsterdam included not only the apparent adoption of the social chapter by everyone, but the failure to make any proper institutional reform. The Government failed to get any progress on what the weighting of individual member countries' votes would be in weighted majority voting. I have long believed strongly that qualified majority voting cannot continue on the present basis, whereby votes in an electoral college are given to individual member states rather arbitrarily, in a way that bears no relationship to their population.

That matter was raised by my right hon. Friend the former Prime Minister during the Greek presidency. When he returned to the United Kingdom, he took a lot of abuse for raising it. He was obliged to accept that the matter would be postponed until the Amsterdam conference so that we could not be accused of excluding the Scandinavians and others from membership; and then nothing was done at Amsterdam.

The bigger the European Community gets, the more necessary it becomes for states like our own to ensure that any risk of QMV is based on a weighting of votes that reflects the position of individual member states. The present voting system gives rise to the possibility that small states will be given overweening power; that position is not sustainable. We are drifting towards a situation where, if many more states enter the European Union, we might have Germany, Britain and France, or Germany and Britain, or Germany, Britain and Italy voting together and being voted down by the combined weight of all the other member states, despite the fact that, in population terms, nothing like an adequate majority had been achieved.

We must address the size of the Commission, which is far too big. It is absurd. If the Community gets bigger—for example, if we take in micro-states such as Malta if the Maltese resume their application—we cannot have a Commissioner from every member state. We should not have two Commissioners from the bigger states. We should have rotation between states with the right to nominate Commissioners.

People complain about the overweening power of the Commission; I believe that the power of the Commission is waning. The power of the Delors Commission will turn out with hindsight to have been the high watermark of the Commission. We are moving to a Union based more on the power of the Council of Ministers, subject to the democratic checks of the European Parliament and national Parliaments.

The problem is that the more Commissioners there are, the more they try to do. There is the continual attempt to extend their competence and jurisdiction to areas where subsidiarity should prevail. That problem should have been tackled at Amsterdam; it will have to be tackled again.

6 pm

I realise that many of the speeches by my colleagues in the debate have not always taken exactly the same approach as mine—[Laughter.]— although I have shown that there is quite a lot of common ground between us. Listening to the concluding remarks of my hon. Friend the Member for Buckingham, I realised that he remains concerned about this commitment to an ever closer Union, which appears again in the article under discussion, as amended. I have already made it clear that the European Union has for 25 years been a political as well as an economic endeavour. This House committed itself to ever closer union in the debates that I attended in 1972, when the implications were debated at inordinate length.

The process of ever closer union will continue, but it is a mistake to think that that means a united states of Europe, or that it is a threat to the power of the nation state. A united states of Europe is no longer contemplated by any of the members of the EU. 1 remember in my younger days meeting the founders of the Union, who actually believed in the blueprint: the Commission would become a European Government, the Council of Ministers would be a senate, and the European Parliament would be the European House of Commons. I believe it was that idea to which my right hon. Friend Baroness Thatcher emphatically said, "No, no, no." If my recollection is right, I say no, no, no to that too. It is a dead blueprint; no one pursues it any longer.

Since we joined in 1972 when all these fears were first raised, in my judgment this country has become a more powerful nation state and more respected around the world, with more influence than it formerly had. We have built on our membership of the Union and have become a more successful and self-confident nation. But we live in the modern world, where the political interdependence of nation states will grow ever stronger; where the power of each and every nation state in Europe will increasingly depend on our ability to act collectively; where we have common interests that reinforce our influence; and where our economies are going to become ever more integrated whatever Governments want, or do not want, to do about it. We are moving into a free trade, integrated global economy—and I welcome that.

What we need to retain—and what the Government are losing—is influence over the direction of this process. If we detach ourselves too much from what is going on, we shall lose our influence on the environment in which our political power and economic well-being can flourish. I read of the Chancellor's dismay at the fact that the other member states propose to proceed with an informal Council of Economic Ministers and may not let him attend. I share the Chancellor's view; I spent my time arguing with colleagues on ECOFIN that such a Council should not be created. I am not surprised, however, that the right hon. Gentleman has failed. Once he had made his statement that was supposed to clarify his approach to economic and monetary union; once it was obvious that he had done no such thing; once it was obvious that he had put off making any definitive decision, because hard choices are what the Government talk about but do not make readily; once all this had happened, I could sense the influence of the Chancellor weakening when he returned to Europe. He cannot ask to sit on the new informal Council and influence its decisions but also say that he has to go back and consult Alastair Campbell, Rupert Murdoch and perhaps even the Prime Minister to find out whether he can seriously commit this country to joining once the economic conditions are right.

This is an illustration of how, if we do not take clear decisions based on hard choices, when the circumstances eventually are right, British influence will be damaged. I do not say that it will be damaged by Amsterdam, which is a mouse of a treaty compared with what the people who first thought of the IGC intended. It has some good and some bad features. Among the latter was the failure to get the right deal on the European Court. I strongly agreed with the criticisms in that respect levelled by my right hon. and learned Friend the Member for Folkestone and Hythe.

Several hon. Members

rose—

The Chairman

Order. I should like to assist the Committee. This is a wide grouping of amendments, but it is not infinitely wide. I sense that the Committee is in danger of repeating the Second Reading debate, which would be out of order. I remind hon. Members that there is a debate arranged for Thursday, when it will be possible to roam far and wide on the subject of the European Union.

The other danger is that some of the speeches already made on this group of amendments are more pertinent to later groups. That will obviously influence the attitude of the Chair to the length of those future debates. I would therefore ask the Committee to bear it in mind that I have tried in my selection of amendments to allow every aspect of the Bill to be discussed in an orderly manner; and it would assist the flow of debate if the Committee kept strictly within the terms of each group of amendments.

Mr. David Prior (North Norfolk)

I am and always have been a pro-European. I have worked in almost every country in Europe; I have bought and sold products in every country in Europe; and I have run a business in Germany. I believe in free trade, in breaking down tariff barriers and in removing state aids, but we have a long way to go in practice before we can genuinely say that we have created a single market in Europe.

One has only to look at a set of Italian accounts, or to try to sell a product in southern Italy, to know that we have a long way to go before we reach a true single market. It is because I am pro-Europe that I am opposed to article 1 of the treaty of Amsterdam, and opposed to the monetary union foreshadowed in it.

I agree with my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) that the treaty of Amsterdam marks an unnecessary move towards further integration of the European Union. It contains a series of measures that transfer power to Brussels from the national parliaments".—[Official Report, 27 November 1997; Vol. 301, c. 1138.]. The treaty raises two issues that go to the heart of the European question. First: is the Conservative vision of Europe as a community of independent states compatible with the treaty and with monetary union, or is the treaty compatible only with the Government's vision of a Europe of the regions? Secondly: is the economic and industrial playing field being created in Europe, inspired as it is by a corporatist and dirigiste ethic, good enough to be competitive with north America and Asia in the future?

I shall deal with the first point first. The Conservatives have always focused on trade. Whether it was the European Coal and Steel Community, the Common Market or the Single European Act, our focus has been on trade—although I agree with my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) that there has always been a political dimension to Europe as well—but we in this country have not stressed that dimension as much as we should have for the purposes of a truly fair public debate. Indeed, we have played down the loss of sovereignty inherent in the moves afoot in Europe. Under this treaty, with the extension of qualified majority voting, the increased powers of the ECJ and the foreshadowing of a common defence and foreign policy, the political aspects of Europe become more explicit.

I believe that we are arriving at a watershed. No longer can we pretend to our constituents that Europe is solely about trade, because it is not. We must be more honest and accept that there is a sizeable political dimension to our continued involvement in Europe.

Mr. Ian Taylor (Esher and Walton)

My hon. Friend is right to say that the politics may not have been stressed enough in public debates, but one of the key achievements of Margaret Thatcher as Prime Minister was her realisation that qualified majority voting was essential in the about-to-be created single market to overcome the protectionist instincts of any one nation. She realised that it was vital to Europe's wider interests that there be no national veto in the single market—which I am sure is why my hon. Friend the Member for Stone (Mr. Cash) voted in favour of the Single European Act.

Mr. Prior

I, too, am in favour of the Single European Act, but when the Chancellor of the Exchequer says that monetary union will involve some pooling of economic sovereignty, that statement is disingenuous. I believe that monetary union goes beyond that. That view is not necessarily wrong, as I accept that there are different views on Europe, but monetary union goes way beyond some pooling of economic sovereignty.

The combination of Amsterdam and monetary union provides the basis for a single European state, and that is what the debate should be about. Although my personal views are against that, it is the nub of the issue that we should be debating. It would be a tragedy if, in the discussions on monetary union, we were diverted into a narrow debate about convergence criteria, and so on. We would be doing the public a great disservice.

Nothing could be more dangerous to this country than if the British public went into closer political union without fully understanding the facts, and that is what they are doing. In those circumstances, political union would unquestionably be damaging to Europe.

My second point is the economic one. In 1972, when we joined the Common Market, the continental systems had performed extremely well for 20 years. There is no doubt that, despite the high levels of state ownership and the more dirigiste approach to managing their economies, they were extremely successful That was before the general agreement on tariffs and trade had largely opened up free trade, before the globalisation of business and the capital markets, and at a time when the western economies were still pre-eminent technologically.

That has changed. Over that period, America has re-emerged as probably the great dynamic economy in the west. The UK's economy, as well, was transformed during the 1980s and 1990s. I would be the last person to write off the continental economies. No one who has seen Germany, France and Italy would dream of doing that; they still have very strong engineering and manufacturing bases. Nevertheless, to tie ourselves irrevocably into the continental social system at this time could prove to be a great mistake.

On both political and economic grounds, this is a bad treaty. It is a clear departure from the popular notion—albeit not the notion inside the House of Commons—that the EU is first and foremost about trade. Lastly, it will make Europe a more difficult place in which to do business.

Mr. Desmond Swayne (New Forest, West)

At the Committee's previous sitting, the hon. Member for Harlow (Mr. Rammell), who unfortunately is not in his place, suggested that the defeat that the Conservatives suffered on 1 May was a consequence of the events of September 1992, and our inability to control our interest rate in what he called a global international currency situation."—[Official Report, 27 November 1997; Vol. 301, c. 1169.] In some respects, I agree with the hon. Gentleman, but I want Labour Members to consider what would have happened if, instead of entering an exchange rate mechanism, we had been bound into a full currency union, and therefore were unable to take the escape route that we took—unable to reduce interest rates and make the best of the remaining four to five years to bring about an astonishing recovery. Had that not been possible, what vengeance might the electorate have wreaked? Perhaps Labour Members might learn from that experience.

The hon. Member for Harlow went on to complain about the sentiments expressed by the Opposition, which he called "xenophobic rhetoric". I do not know how tightly one should define the word "xenophobic", but it was not my experience that the arguments advanced by Conservative Members were xenophobic in any sense. However, the hon. Gentleman is a reasonable man, and if he wishes to call such sentiment xenophobic, that is his right, although we would disagree.

The hon. Member for Harlow may not have realised how grave an accusation he made, as the treaty goes some way towards outlawing such sentiments. The hon. Gentleman may believe that the sentiments expressed were xenophobic, but I am sure that he would also believe that we have every right to express them. That is not a point of view consistent with the treaty. Labour Members should consider voting for amendment No. 65 on precisely that ground.

6.15 pm

Mr. Bercow

Does my hon. Friend recall that, when the hon. Member for Harlow (Mr. Rammell) was invited to cite a single example of a xenophobic statement during the Committee's deliberations, he could not produce an example?

Mr. Swayne

I thank my hon. Friend, as I had indeed forgotten that. It is pertinent that I should be reminded.

I draw the attention of the Committee to article 1 of the treaty, which replaces article B of the Maastricht treaty. It states: The Union shall set itself the following objectives:". I draw particular attention to the fourth objective: To maintain and develop the Union as an area of freedom, security and justice, in which the free movement of persons is assured in conjunction with appropriate measures with respect to external border controls, asylum, immigration and the prevention and combating of crime. Attention has perhaps rightly focused on the abolition of border controls and the so-called flanking measures, whatever they might be. The United Kingdom, of course, has an opt-out, as is made clear in the protocols. Despite that, I find it difficult to believe that we will escape being drawn into some centralised process of interference in our administration of justice and law.

That is precisely because of further provisions. I draw the attention of the Committee to article K.1, which states: Without prejudice to the powers of the European Community, the Union's objective shall be to provide citizens with a high level of safety within an area of freedom, security and justice by developing common action among the Member States in the fields of police and judicial cooperation in criminal matters and by preventing and combating racism and xenophobia. Now we realise the gravity of the accusation made by the hon. Member for Harlow. How long will it be before my hon. Friend the Member for Stone (Mr. Cash) is arraigned before some court for xenophobia? How long will the teaching of history in our schools be secure from those who would revise it and interfere with it to exclude xenophobic tendencies?

The most important question is what on earth that has to do with a treaty that deals with the development of Europe along the lines that the Government have suggested. Where is the need for common action among all the member states on such activity? Why is that not left to individual member states? What became of the principle of subsidiarity?

The answer is in the treaty. The fifth objective set out in article 1 makes it clear what the attitude to subsidiarity shall be henceforth. It will be to maintain in full the aquis communautaire and build on it with a view to considering to what extent the policies and forms of cooperation introduced by this Treaty may need to be revised That is as far as we seem to be able to go on subsidiarity.

We are talking not of bland statements or of flowery words. Instead, we are dealing with legal documents, which will be interpreted as such. They must, therefore, be tightly defined and coded.

There is a great danger that the treaty creates a means by which the European Court of Justice—certainly article K.2 is fully justiciable before the ECJ—can extend its jurisdiction into the administration of criminal and civil law in the United Kingdom. That is precisely the process that took place in the United States with the 14th amendment after the civil war, which required that the states give equal protection to citizens under the law. That was an entirely unobjectionable amendment, but it gave the federal supreme court the ability to exercise huge jurisdiction over state law. It led to a great advance in federal achievement in the United States. That is fine if one is looking for that sort of development in Europe.

The article calls for an area of freedom and justice that affords a high level of safety and protection to the citizen, and I fear that it will create the 14th amendment for the European Union. I urge the Committee to vote for amendment No. 65.

Mr. Howard Flight (Arundel and South Downs)

The debate is important because it does not turn on a small, minor item that the approval of the treaty of Amsterdam represents. As my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) said, we are talking of a step down the path towards European integration.

It is interesting that no one is clear about the form of political integration. Will it be the United States federal model or a relatively undemocratic model that is run by the Commission? As my right hon. and learned Friend suggested, will it be a new model that will activate the power of the European Parliament? It is clear that we have reached a significant stage.

The treaty provides for universal, including British, membership of the social charter. As my hon. Friend the Member for New Forest, West (Mr. Swayne) said, the extension of powers to the European Court of Justice gives the potential power of veto over United Kingdom criminal law as well as creating the framework for a European model of the United States supreme court. The harmonisation of civil law must mean for citizens of the United Kingdom the erosion of UK common law. The progressive framing of a common defence policy, wherever that leads, is, self-evidently about attempts to pull together European defence activities.

Included also is the introduction of citizenship of the Union. As we know, everything to which I have referred is accompanied by other outside measures involving tax harmonisation.

Right hon. and hon. Members may claim that the House of Commons has known that Britain embarked a long while ago on the course of integration into a European state of some sort, which must mean inevitably the ending of the nation state as we have known it. It is clear, however, that the nation has scant awareness of that process. That leads me to ask why there is hiding and deceit. Why is it pretended that the treaty represents a little something that does not matter much? Why is it that the newspapers and other sectors of the media do not more clearly bring to the attention of the British public the fact that we are faced with a sequential stage? I am understanding of those who wish that to be, but it is astonishing that the citizens of the United Kingdom do not understand that that is what it is all about and that that is the path down which we are going.

I warn the Government and others who wish to advance down the path to which I have referred that, because citizens do not understand and have not been fully educated, there will be a major nationalistic backlash, when they suddenly realise where the treaty is leading us. We shall then be locked up in xenophobia.

The provision for a single currency is crucial. The other issues on which I have touched can ultimately be abrogated by a future United Kingdom Government, but inclusion of sterling in a single currency would be much more difficult to reverse than other processes.

It is still a controversial issue with some that a single currency is clearly to be accompanied by the harmonisation of taxation. We are all to sign a code committing ourselves to such harmonisation and it is inconceivable for any major currency—a fiat paper currency—not to have the backing of some form of single state. It would be impossible ultimately to pledge the assets of such an area, or even to manage that currency in the event of a major crisis, without there being at the back of it the concept of a single sovereign state.

Cross-subsidies would not be possible to organise without central power in some form of a single state. The two issues to which I have referred go hand in hand. It is not a matter of Ireland having been able to have its punt managed in line with sterling in the past. After all, Ireland is a very small economy.

I wish to focus on the economic arguments. It is self-evident that a single currency means the loss of ability to manage our own interest rates. There will be the loss of an independent exchange rate. As I have said, powers will be lost to pursue tax policies and tax rates.

Let us think of an economy that is facing serious problems. Let us consider the problems that are likely to spread round the world because of what is going on in Asia. The individual Governments of the surviving nation states in Europe will have lost virtually any individual power to manage their own affairs. That seems likely to cause major political problems and major nationalistic reactions.

I move on to the case study analogy of united Germany. Much has been said about the reunification of Germany, but there are some crucial points to bear in mind. Two economies have been put together—east and west—with entirely different capital stocks, work habits and skills. The east of Germany has on average a productivity level that is about 35 per cent. below that of western Germany. The rate at which things started does not matter because that represented about the value of east German savings.

I predicted at the time that German firms would be looking to Czechia, Hungary and Poland for investment, not to eastern Germany. Indeed, they looked to Britain as well. What has happened to eastern Germany? The answer is virtually permanent stagnation. It cannot compete with economies with much cheaper currencies to the east. It cannot compete either with the superior west German economy. That is what is happening in one country with one language with a fair degree of labour mobility. At the same time there is a major fiscal burden on the west German economy in subsidising the east German economy.

My fear is that one can apply that case study Europewide. Anyone who believes that a single currency can be operated without an increase in cross-subsidisation is living in a world not of this planet. From where is the cross-subsidisation to be raised? Who will pay for it? Who will take the political decisions? I cannot see any Government winning an election here or in Germany on a ticket of putting up taxes to give greater cross-subsidisation to Italy, Spain, Greece, east Germany, or wherever. I fear that a substantial undemocratic element will be involved.

Sir Raymond Whitney (Wycombe)

Do my hon. Friend's concerns, which, on the whole, I do not share, about the possibility of Britain joining the single currency lead him to conclude that we should never in any circumstances join a single currency union, whatever the impact on Britain, because of the fundamental objections that he sees? Therefore, it is not a question of postponing a decision for five years, 10 years, or whatever; it is a question of saying never.

6.30 pm

Mr. Flight

Clearly, joining the single currency means surrendering the existence of the country as a nation state. It means giving up a considerable amount. If we are to give up such an amount, the argument has to be powerfully in favour economically. I assert that the argument is, if anything, negative economically. It is certainly negative in terms of economic cycles being out of sync and, if anything, becoming more so. If one is to sell one's birthright, do not sell it for an economic mess of pottage. It is worth selling only if there are economic gains to be had.

Mr. Ian Taylor

My hon. Friend has raised an interesting point. If not for a mess of pottage, for what would he sell his birthright?

Mr. Flight

Like all Conservatives, I am ultimately a pragmatic person. Who knows what the circumstances will be in the future? There is no case for selling our birthright in the immediate future. One of the things that has most worried me is that the provisions of the Maastricht treaty for coming together are a completely wrong measure of the economic homogeneity that is needed for a common currency to work.

Even America, since the civil war, has had the problem that the deep south—anyone who has been there will know this—has remained a relatively depressed area. It was a backward plantation economy and has never really got off the ground.

Mr. David Curry (Skipton and Ripon)

Georgia?

Mr. Flight

The deep south, Sir. Certainly not Georgia, which is the mid-south.

The issue is that, if economic regions that are insufficiently economically homogenous are put together, it will cause major problems. The less successful areas will become worse. One then has to choose whether to subsidise them. If not, unemployment will rise on a massive scale. Considering when or whether this country should sell its birthright is a serious issue. The Maastricht criteria are by no means a measure of adequate economic homogeneity.

The second crucial point that I wish to make was made substantially by my right hon. and learned Friend the Member for Rushcliffe. Does the single currency encourage or discourage areas of Europe to adapt their economies towards economic success, towards competing with the new emerging parts of the world, towards the new world of free trade and free global flows? I do not see any evidence of that whatever.

For nearly a decade, there has been talk of setting up private sector pension funds. What has happened? Scarcely anything. A major problem, of huge unfunded debt, has not been addressed. What has been done to remove barriers to employment? What has been done to lessen the 40 per cent. employment taxes that keep people out of employment, and price people out of jobs? Absolutely nothing. It is Europe's priority, in terms of its own good in the world, as well as in terms of creating the single market, to address those items. For too long the excuse has been given, "You can push those under the bed; the single currency will do everything." The single currency will worsen Europe's economic problems, not solve them.

Thirdly, I shall talk about the role of the euro as a world currency reserve. I see a very great danger, because, to a large extent, there is an element of resentment and jealousy in wishing to compete with America, which is the leading world power and owner of the reserve currency, and in the desire to compete with and perhaps even overtake it. If one follows policies that are designed to achieve a strong, hard reserve currency, where one is running a substantial external surplus, one runs the risk of slipping into the very problems that face Japan. A country can have a substantial reserve currency only if it is in regular deficit, creating the external ownership of the currency, which others can buy, hold and trade among themselves. I severely warn Europe and the Government that, if that is the way in which the European central bank goes, there is a danger that Europe will face the same problems in a few years that have faced Japan this decade.

I conclude by making the essential point that the Committee should vote for the amendment, because at its heart is the single currency, and because it is a serious stage down the path of European political integration. That is something of which this country has little or no knowledge, which perhaps the House of Commons or others have deliberately concealed from it. It is time that the people of this country knew where we are going, what is involved and what the risks are and were free to express what I believe to be their view—that they do not wish to lose their nation statehood.

Dr. Julian Lewis (New Forest, East)

I wish to touch on three topics—two briefly and one in more detail. I shall say a few words about economic and monetary union, then a few words about the human rights provision of article F.1 and, finally, and in more detail, I shall speak about a common foreign and security policy.

On economic and monetary union, I have no difficulty with the intervention made by my hon. Friend the Member for Wycombe (Sir R. Whitney). I believe that, in principle, a single currency is wrong. It will not work and I cannot envisage any circumstances in which I would support our joining it. However, there is always the possibility that all one's predictions in economic and political forecasting may be proven by events to be wrong.

If, over a decade, everything that people believe—as I do—is wrong with the single currency were tried out by other countries in the European Union and, against all our expectations, all our fears were shown to be groundless, we would have to admit that we were wrong, but we do not expect that to happen. That is why it is possible for people who believe—as I do—that we should never join the single currency to live quite happily with the formula propounded by the Conservative Opposition: that we should oppose the single currency in this Parliament and the next.

Even someone as certain as I am that the single currency will prove to be a disaster for the countries that enter into it would have to admit that we were wrong if at the end of this Parliament and the next our fears were shown to be groundless. I am happy to give that hostage to fortune because I do not believe that we will be shown to be wrong. I believe that EMU will turn out to be an implosion on an even greater scale than was the implosion of the exchange rate mechanism in 1992.

It is rather strange that people—not necessarily hon. Members who are present for this debate—increasingly refer to European monetary union rather than to economic and monetary union, which is what EMU stands for. The distinction is important, because the term economic and monetary union recognises the fact that there cannot be monetary union without economic union. We cannot have a single currency without creating a single economy. I have said before—and I shall never tire of saying—that we cannot have a single economy without creating a single Government, and we cannot have a single Government without creating a single state. It therefore follows that those who oppose the creation of a single state of Europe must oppose the introduction of a single currency for Europe, because the one leads directly to the other.

I was interested in the comments of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). He said that he is not in favour of a single state, but that he is in favour of ever closer union, by which I take him to mean ever closer political union. My logical faculties may not be up to the task, but it seems to me that that argument is like saying that it is better to travel hopefully than to arrive. I remember a philosophical paradox that goes something like this: if a person starts out a certain distance from a fixed point and always moves towards it by covering half the remaining distance between him and that fixed point, he will move forward without ever reaching the fixed point. That is what my right hon. and learned Friend seems to have in mind: it is fine for us to go on having ever closer political union, but heaven forfend that we should end up with a politically united Europe.

People who believe in ever closer political union should have the courage of their convictions and say that they want a politically united Europe. They cannot say that they want one without saying that they want the other, because the one will inevitably lead to the other.

Conservative Members have gone into the human rights provisions in great depth and I do not intend to repeat their arguments. I shall merely point out that, in response to a question from me during the debate on 12 November, the Foreign Secretary said that he was willing to give me an undertaking that, so long as the Labour party is in power, it will not be possible to find 14 EU states that will agree that the Government are in serious and persistent violation of democracy or of human rights."—[0fficial Report, 12 November 1997; Vol. 300, c. 912.] Much has been made of the example of the Greek colonels and much has been said about what we would do if an undemocratic regime came to power. My fear about the provision is not so much that it will be used directly against this country as that it could be used indirectly.

Suppose this country were in a minority of one, not over a human rights question but over some other matter such as our budget rebate or the beef crisis. Would it not be tempting for other EU states to invoke the clause on a completely separate issue, such as discrimination on grounds of gender or homosexual rights in the armed forces, not so as to overrule us on the matter of the human rights that allegedly we were persistently abusing, but to deprive us of our veto so as to overcome the fact that we were the sole member state blocking progress on the other issue? My concern is not about direct application, but is about the indirect leverage given by article F.1, which would enable others to deprive this country of its protection, its veto and its voting rights.

6.45 pm

The main purpose of my remarks is to deal with common foreign and security policy. It may come as a surprise to Labour Members—

Mr. David Faber (Westbury)

Both of them.

Dr. Lewis

As my hon. Friend observes, the Labour party is represented in this important Committee by fewer than the proverbial contents of a telephone box.

I have a confession to make. It may come as a surprise to such of those dedicated Europhiles as are present on the Labour Benches to know that I am a Johnny-come-lately Euro-sceptic.

Mr. Bercow

My hon. Friend took far too long.

Dr. Lewis

My hon. Friend is absolutely right. I can even name the day on which I became a Euro-sceptic: it was 22 March 1995. I read an article in The Times, which was headed: Santer seeks right to shape foreign policy for Europe". It said: Brussels should have the right to shape Europe's foreign and security policy, a power currently jealously guarded by the governments of the European Union's 15 member states, Jacques Santer, the President of the European Commission, said yesterday. The article said that he had addressed the institutional committee of the European Parliament and had called for a strengthening of the European Commission as the guardian of the European treaties. He said the Commission should be given the right of initiative in foreign and security policy. I have another confession to make. One does not often hear a politician say, "I was wrong," but I was wrong in my assessment of integration theory, which I learnt about when I studied international relations. Integration theory was developed more than a score years ago. As undergraduates, we were told by our lecturers that if states could not directly be persuaded openly to coalesce and to become a single nation state, they could indirectly be lured into doing so by a process of functional integration. The idea was that common patterns could be created through a particular sphere of activity so that states would be drawn together and, before they knew where they were, they would be irreversibly interlocked.

In my naivety, I thought that that would never work because states have a hard-headed understanding of their national interests. I thought that they would be drawn part of the way along that slope, but that they would see what was happening, would turn round and would retreat from it. I confess that I underestimated the power of functional integration. The process of creeping federalisation has undoubtedly been far more successful than one could possibly have anticipated.

Mr. Bercow

I am following closely the logic of my hon. Friend's thesis. Does he agree that the people of Britain will never knowingly consent to being governed by those who do not speak their language, live in their country or depend on their votes?

Dr. Lewis

I agree with my hon. Friend, but I am not saying that that will not happen because the operative word in his intervention was "knowingly". The methods that have been adopted bear a frightening resemblance to the methods that were used by other philosophies in the past. During the cold war, I often had to look at Marxist doctrine and the speeches of Soviet leaders. The people who delivered those speeches tried to cram as many words as possible into the smallest amount of thought. They tried to deaden the perception of people who were attempting to establish the propositions that were being conveyed by obfuscating them with massive amounts of jargon. In the end, people gave up rather than continue to try to tease out the meaning in the small print.

Not only has the technique of trying to bore people into not knowing what they are being lured into been used; people have tried selectively to misquote history. I have in mind the attempts to cite Winston Churchill and his Zurich speech in 1946 as if he were recommending that Britain should be part of a united states of Europe. I shall read a few brief extracts from his speech of 19 September 1946. He said: I am now going to say something that will astonish you. The first step in the re-creation of the European family must be a partnership between France and Germany. In this way only can France recover the moral leadership of Europe. Later he said: Our constant aim must be to build and fortify the strength of UNO. The United Nations Organisation. He continued: Under and within that world concept we must re-create the European family in a regional structure called, it may be, the United States of Europe…In all this urgent work, France and Germany must take the lead together. Great Britain, the British Commonwealth of Nations, mighty America, and I trust, Soviet Russia—for then indeed all would be well—must be the friends and sponsors of the new Europe and must champion its right to live and shine. That was under the aegis of a world body because in 1945–46 the United Nations was seen primarily as a "world security organisation". The phrase was often used interchangeably with "United Nations Organisation". In that context, it was possible to envisage regional groupings and alliances for collective self-defence.

It was greatly to the credit of the post-war Labour Government that they signed the treaty of accession to NATO in April 1949. The treaty contained vital provisions, especially in articles 3 and 5. Article 3 stated: In order more effectively to achieve the objectives of this treaty, The Parties, separately and jointly by means of continuous and effective self-help and mutual aid, will maintain and develop their individual and collective capacity to resist armed attack. Article 5 stated: The Parties agreed that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all". When there is such a superbly strong, successful and impossible-to-improve NATO treaty, why is it necessary to create a common foreign and security policy? The answer is spelt out in article B of the Amsterdam treaty, which states: The Union shall set itself the following objectives: —to assert its identity on the international scene, in particular through the implementation of a common foreign and security policy including the progressive framing of a common defence policy". That is not an intention to replace the NATO treaty or to improve the security of Europe's nation states. The aim is to assert the identity of this creature, the European Union, on the international scene. If there were ever a case of poor motivation for a dangerous act, that is it.

Sir Raymond Whitney

I am listening to my hon. Friend with great interest, not least because he and I have collaborated in the past on many ventures. On this issue our views are somewhat different. Is he not satisfied that the Amsterdam treaty clearly secures the role of the Western European Union and its relationship with the European Union rather better than was done by the Maastricht treaty, which I am sure my hon. Friend would also condemn? Surely that was, from his point of view, a step forward. The close relationship between the WEU and NATO is not challenged or threatened. My hon. Friend is concerned about the potential loss of sovereignty. He spoke about our NATO defence obligations. Does he agree that to some extent our membership of and commitment to NATO are a derogation of our sovereignty?

Dr. Lewis

My hon. Friend makes two points. I warmly remember our joint ventures against the unilateralist policies of the Labour party in the 1980s. I could not have had a more staunch colleague in those battles. He was from the front rank and he held ministerial office during that important period for NATO as a whole. He asked about the pooling of sovereignty. I have another conceptual problem about that which is analogous to the one about closer political union without ever having a united political society. One cannot pool sovereignty any more than one can pool virginity. One either has it or has lost it. In the context of NATO, one must ask whether the loss of sovereignty is parallel to the loss of virtue.

Mr. Bercow

Does my hon. Friend recall that, in the past, he likened the process of European integration to the process of seduction? He has observed to me and to others that the outcome in both cases seems to be the same.

Dr. Lewis

I recognise my words of wisdom from the past, but I do not wish to be distracted from my words of wisdom in the present. On whether one has pooled sovereignty or lost virtue, the issue of NATO is a case in point. Nothing in the NATO treaty is irreversible, but the European treaties are irreversible. If there were a parallel with the NATO treaty, rather than a treaty from which one cannot withdraw or whose provisions cannot be reversed if they work out badly, I would be far more relaxed about these matters.

I am getting signs that I am using up my allotted time very quickly. The WEU is a useful political prop to NATO, but it could turn into the Achilles heel of the alliance because, naturally, the WEU does not have the involvement of America. The more that is done to build up the parts and aspects of NATO that exclude America, the more is done to undermine the basic security of Europe, which depends upon American involvement.

Mr. Damian Green (Ashford)

I am worried that my hon. Friend's characteristic eloquence is masking an illogical position. He says that the European treaties that the United Kingdom has signed are irreversible and that it is impossible to pool sovereignty, which is like virginity; but this country has already lost its virginity and sovereignty, so all his arguments are a waste of time. On his own terms, his argument that we cannot pool sovereignty and that it is like virginity must be wrong.

Dr. Lewis

With respect, that is not true; we are being asked to abrogate each aspect of sovereignty and we either keep that function or lose it irretrievably. Just as there is more than one person in a country, so there is more than one opportunity to lose one's virginity irrecoverably. There is no chance to recover subsequently each one of the functions that is lost.

7 pm

Mr. John Wilkinson (Ruislip-Northwood)

May I challenge one aspect of my hon. Friend's admirable speech? He says that the acquis communautaire is in essence an irretrievable process—an irrecoverable process. As a sovereign Parliament, could we not, if we had the support of the British people, abrogate the treaty on union, as we could any other treaty? We could make a unilateral declaration of independence at any time of our choosing.

Dr. Lewis

We could do that at present but, as I have explained, the idea of economic and monetary union is to have a situation in which we could no longer do that because we would be subject to the authority of a single Government. We would be in no position to abrogate any of the treaties that we had been drawn into over previous years.

I wish to place other Amsterdam treaty provisions on the record. It says: The European Council shall decide on common strategies to be implemented by the Union in areas where the Member States have important interests in common. Common strategies shall set out their objectives, duration and the means to be made available by the Union and the Member States… The Council shall ensure the unity, consistency and effectiveness of action by the Union… Joint actions shall commit the Member States in the positions they adopt and in the conduct of their activity… The Council shall adopt common positions. Common positions shall define the approach of the Union to a particular matter of a geographical or thematic nature. Member States shall ensure that their national policies conform to the common positions. The treaty fulfils the aim that Jacques Santer set out in that speech in March 1995. He intended that the intergovernmental conference should do for foreign and security policy what Maastricht attempted to do for economic policy. I fear that the treaty will do that. I wholly oppose it and support the amendment.

Mr. Ian Taylor

I take great pleasure in following two such cerebral contributions by my honourable colleagues. I am not sure that I can emulate them. My right hon. Friend the Member for Huntingdon (Mr. Major) might have said that they were perhaps a touch too ideological in tone. My hon. Friend the Member for New Forest, East (Dr. Lewis) touchingly spoke about his Pauline conversion and quoted the headline about Santer dictating foreign policy, which sounds like a proper offering for the Christmas season. Nevertheless, perhaps it did not have the same beneficial consequences as the original Pauline conversion, which I think was for the better: my hon. Friend's conversion was, sadly, for the worse.

I listened carefully to my hon. Friend the Member for Arundel and South Downs (Mr. Flight), who from his previous occupation is genuinely well informed on matters of currency and international currency movements. We need to put one or two factors about monetary union firmly on the record. Whether or not the Conservative party is in favour of a single currency, a single currency there will be. There will also be considerable consequences for world foreign reserves, not least because there will be considerable debt instruments. Under the convergence criteria and the terms of monetary union, it is likely that all Governments' deficits will be converted into euros and that those will be securitised.

The second factor that one needs to bear in mind about monetary union is that it will have a massive effect on world trade and the currencies held in world trade, largely because of the propensity to import by the European Union, which is greater than that of the United States of America. The consequence is that contracts are likely to be written in euros.

Let us be under no misapprehension: whether we like it or not, the euro will come and it will have a dramatic impact on world trade and on reserve currencies. In many different ways, it will also have a considerable knock-on impact on British companies, including—despite what the Institute of Directors erroneously says—medium and small companies, simply because they are part of the supply chains that will, inevitably, increasingly use the euro as part of their internal accounting, treasury and supply contracts. All the new systems will, to a greater or lesser extent—but at least to some extent—have a knock-on effect on hundreds of thousands of smaller British companies.

That will all begin from 1 January 1999. Many small UK companies will find that their price lists will have to be denominated in euros. Their computer databases will not be able to cope, because the convergence criteria are different from those established in international currency markets. The databases will in any case have to be updated. Those companies will have to learn all sorts of new and exciting things, such as triangulation, dealing in currencies that are not part of the euro, and dealing with the euro.

I am not trying to be too technical. I am pointing out merely that the euro will emerge and have a knock-on effect on British business, yet the Chancellor of the Exchequer still believes that he can sit around and wait and see what happens. Not surprisingly he has found—much to the UK's cost—that sitting around and not making a firm commitment to make sterling a part of economic and monetary union has excluded him from the conference table. That is a sad event. Once it is realised that the UK and sterling will be less influential in world markets—because of our exclusion from the controlling bloc that will influence the future of economic and monetary union and the euro—the British public will wake up to the fact that this is genuinely a loss of sovereignty. That is the opposite of the arguments that have been advanced over the past few weeks in the Chamber and outside.

It is not timely for us to enter a cerebral, intellectual and academic discussion of what the word "sovereignty" means. My hon. Friend the Member for New Forest, East showed the dangers of that when he started almost to decline the noun "virgin", as if it had different meanings. It has one meaning. One loses one's virginity—I would not understand that, of course—or one does not. The UK has lost its virginity many times and it has not been that painful, except, funnily enough, in relation to currency.

Currency is the one sector where we have not had sovereignty for a long time. It has been mismanaged and, sadly for exporters, over the past few months, it has been the opposite—it has been too strong. In those circumstances, if we are not going to be able to influence the principal currency used in 80 per cent. of our single market—namely, the European Union—we shall lose sovereignty. It is not only by joining that we lose sovereignty, but by not joining. We lose sovereignty by not having influence and not being able to ensure that the rules of the game are not only properly formed but observed. That seems to be the public's main concern as to whether the government of this country, now in the hands of the Labour party, is being properly conducted in the long-term interests of our people, not some semantic debate about whether joining might or might not mean the loss of some academic form of sovereignty. Conservatives are supposedly famous for practical politics, so we should be concerned about whether we can influence the economic well-being of our people if we are not part of something as dramatically important as economic and monetary union.

I wish to refer to another matter that has been touched on by other hon. Members. There is no doubt that the development of what is now called the European Union has been political. My political activity began in the 1960s. I became a member of the Conservative party because the party was positive about Europe. Europe was a political experiment. I never engage in debates about what it might become, and whether it might become more like the United States. Europe is a unique experiment, and there is nothing to compare it with. We are making it up as we go along. That sometimes leads to failure, and sometimes to success, but let us not fall into the trap of making comparisons. It was the attempt to experiment that attracted me to the Conservative party in the 1960s.

The European Union is a political exercise. After all, it stemmed from the most political exercise of all—the European Coal and Steel Community and the desire to pool the key industries of what had been the driving powers in the first and second world wars. Out of the Coal and Steel Community came the Common Market. At no stage has there been any attempt to disguise the political element.

In an intervention on my hon. Friend the Member for North Norfolk (Mr. Prior), I said that when Margaret Thatcher was Prime Minister, she made the greatest political gesture of all. She had deliberately given away—let us use those words provocatively—sovereignty, knowing that without qualified majority voting in the single market, there would be no single market. There would be no way to overcome the protectionist instincts of certain countries unless it was possible to override them in the voting structure. She understood that when she gave up national sovereignty—I would not insult her by saying that she did not understand, so I assume she did.

Perversely, it is not being said that the Amsterdam treaty is political. In fact, it is the least significant of the several treaties that the House has debated over the years. In some ways, it is beneficial because it tidies up some of the things that we did not get right at Maastricht.

Mr. Bercow

Does my hon. Friend believe that there is a ratchet for European integration which, to all intents and purposes, is irresistible?

Mr. Taylor

No, I do not believe in the ratchet theory any more than I necessarily believe in the train theory, for the reason that I started to outline a moment ago. There is no preordained destination. The whole point is that mistakes will be made in the European Union. None of us who regard ourselves as Europhiles, because we are supposed to have labels these days, would say that the European Union is always right and that no mistakes have been made. I will oppose things that are wrong in the European Union, but if I oppose them, or if the Prime Minister of the day opposes them, it is important that in doing so we have influence over the other members of the Union if we are to get our way. We shall not get our way if we sound abusive from the sidelines.

7.15 pm

It is important to make a clear commitment to being part of the most exciting political and economic experiment of our generation, one which we have to ensure succeeds. There is no benefit for this nation in any political party investing all its political capital in the failure of the euro. The failure of the euro would be a disaster for the economic interests of this country and its business men and women. Of course, no political party would dream of investing all its political capital in the failure of the euro—

Mr. Denis MacShane (Rotherham)

Except one.

Mr. Taylor

I do not know which one that might be, but I certainly hope that it is not the one to which I am proud to belong. It is important to understand that influence is part of the power structure that some call sovereignty, and our influence over the rest of the European Union is critically based on our credible attachment to it. In that respect, there are no half measures. If there are successful ways to bring about an ever closer union or unity, we shall pursue them because they are successful. The single market is one of them.

I am often puzzled by those who are worried about this form of ever closer union in view of the way in which the markets are driving that union. Within the single market of which we were, in a sense, the founding fathers, we are breaking down barriers and forcing the market to dictate terms to national Governments. It is not possible to have an independent fiscal policy if independence means that we pay no attention to what else is happening in the same market in which we are freely trading in goods, services and capital and in which people can move.

There are implications. No Chancellor in living memory has set an exchange rate without paying close attention to what is happening in the capital markets, and in particular the market in which there is free movement of capital—again, incidentally, something of which we were the leading proponent. It was as a result of our arguments that the French eventually opened up what had been a much more protectionist market.

Sir Peter Tapsell (Louth and Horncastle)

My hon. Friend is saying that markets are driving these matters but, if that is so, does he not think that they are driving them in a curious way? Today, there are FF10 and almost DM3 to the pound. No one who has considered the practicalities has ever suggested that we would join the single currency at a rate higher than DM2.6 to the pound. How would we relate to the practical currency in practical terms? One of the reasons why sterling is so strong against the deutschmark and the French franc is precisely that the international markets think that we are not going to join the euro, because it will be a disaster. If it is a disaster, it is better to be out than in.

Mr. Taylor

First, I repeat that the failure of the euro would not leave us immune and would be extremely damaging to our economy. Secondly, I do not draw the same conclusion as my hon. Friend. The position of sterling at the moment is due to a variety of factors, not least those being witnessed in Japan. They are a sign of the considerable turbulence and disruption that can occur on international markets. They also point to another factor that I have not yet mentioned, which is, once the euro is out there, sterling is likely to be buffeted up and down because of the squeezing effect of the euro as a reserve currency, the dollar and whatever happens to the yen. None of those factors is very comforting to any British Chancellor or British business man.

My hon. Friend the Member for Louth and Horncastle (Sir P. Tapsell) should not conclude that the markets have assumed that sterling will not join. I am not going to make a speech about economic policy, but I suspect that the Chancellor is holding back some information about the slowing down of the British economy towards the end of the cycle. We need more information from him about how he expects convergence to take place and then be sustained, and how he intends to run the economy to achieve the convergence that he says would be ideal. Those factors will have a big impact on sterling.

My hon. Friend the Member for Louth and Horncastle is absolutely right that one of the factors causing us to pause and preventing us from immediately entering economic and monetary union is the way in which sterling has bounced all over the place. There will have to be some currency stability and other types of stability as we join.

The market signals given by the Chancellor could be very encouraging. I dare say that, if he stood up and said, "We now have a clear timetable for joining monetary union," British exporters would be extremely happy, because sterling would begin to converge; and it would be a downwards movement.

The treaty's overall effect is to tidy and tighten up one or two aspects of previous treaties. I agree with my right hon. and learned Friend the shadow Foreign Secretary, who, in his opening speech for this debate, clearly said that there would have to be an institutional structure and a strong European Court of Justice. Such beliefs do not prevent us from saying that there should be criticism of or changes to the European Court of Justice. We can argue that case forcefully. Sadly, I do not believe that, at the Amsterdam summit, the Foreign Secretary argued the case as strongly as he should have done.

The point is that the European Court of Justice and the many other institutional parts of the European Union are vital to its success; and that is why I support them.

Amendment No. 65 merely confirms that article 1 is not part of the Bill. On that basis, and that basis alone, I shall be very happy to follow the shadow Foreign Secretary and Opposition Front Benchers into the Lobby.

The Minister of State, Foreign and Commonwealth Office (Mr. Doug Henderson)

When I am required to reply to debates, I try to keep myself in order by putting page numbers on my notes. Today, I have used not only page numbers but dates. We have had a very wide-ranging debate. Not all the speeches have been directed completely to the central point of the amendments, but—because of the nature of the subject and the way in which we have to debate the issues—that has largely been inevitable.

To help the Committee, I should like first to explain in reasonably technical terms my specific views on the amendments and new clauses. Subsequently, I should like to deal with some of the issues raised in the debate. It would be impossible to deal with all the issues, although I shall try to do my best.

The Government reject amendment No. 65 because it would delete sections of article 1 that are necessary to write into British law sections of the treaty and of the first pillar, such as the flexibility provisions.

The Government also reject amendments Nos. 13 to 15 and 17 to 21, which would also prevent us from adopting the necessary sections of article 1, but for different reasons. Although they accept article 1, they would make certain exclusions. Therefore, the effect would be the same.

The Government also reject amendment No. 1, which was tabled by some of my hon. Friends. The amendment would delete the section on economic and monetary union, which was originally included in the Maastricht treaty and repeated in the Amsterdam treaty. The Government wish that provision to remain.

We reject new clause 30. I believe that it would be inappropriate to delay the Bill's enactment so that the Attorney-General could report on any extension of the powers held by the European Court of Justice.

The Government also reject new clause 37, which would require a resolution of the House before any relations could be fostered between the European Union and the Western European Union. Anyone who has been involved in any of those matters will know that that is clearly impractical.

The Government also reject new clause 38, which would require a vote of Parliament before any decisions were taken on a common foreign and security policy. The right hon. and learned Member for Rushcliffe (Mr. Clarke)—who mentioned his involvement over the years in the Union's various forums—will know, as will the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), that dealing with such matters in the Chamber would be impractical.

The Government are committed to improving scrutiny of European matters, as we have already announced in Select Committees. The Leader of the House will soon be making a general announcement on the matter. If I have managed to assess correctly the response of Select Committees, they were reasonably warm to our plans to improve scrutiny.

In trying to deal with the issues raised by hon. Members, it may be useful if I start with the speeches that were made today, because they are most readily in the minds of hon. Members.

I used to think of the hon. Member for Esher and Walton (Mr. Taylor)—who tried to talk out my Access to Health Records Act 1990—as an errand boy from the Government. I have changed my view, as he is clearly a man of independent thought. The House welcomes his independence. Whatever one may think of his speech, he raised some very important issues, which have also been raised by members of the business and commercial community with whom I have met. I commend him for raising the issues in the debate.

I did not agree with all the points that the hon. Member for Esher and Walton made or with his comments on the Chancellor of the Exchequer, whose recent statement in the House has been well received by our European partners. Nevertheless, the hon. Gentleman pointed out that when a euro is established, it will have a dramatic impact as a reserve currency. Surely that must be true. He also said that companies will begin to price in euros because it will suit their businesses to do so.

Companies such as Marks and Spencer have already said that they plan to offer customers and suppliers the possibility of making transactions in euros. People from many small companies have told me that, because they are involved in the European economic chain, they would like to be able to quote in euros. They have formed their assessment on that basis.

The hon. Member for Esher and Walton was right when he said that the euro's failure would be disastrous not only for those involved but for all of Europe and for the entire European monetary system. Arguably, the consequences could extend even beyond Europe.

We heard an interesting speech by the hon. Member for New Forest, East (Dr. Lewis). He began by confessing his sins, reminding me that a militant tendency is not peculiar to one party, and that confessions by those belonging to such tendencies are not peculiar to one party. Nevertheless, I tell him that it is better to be honest with oneself and to be honest about the issues. The Committee will respect him for his honesty.

I do not know what the Committee will make of the comment by the hon. Member for New Forest, East that the United Kingdom should never join a European currency. He may have some difficulty, because, in the past six months, the Leader of the Opposition has held five positions on a European currency. Originally, he said, "Never"; then it was "Maybe"; then it was "In 10 years"; then it was "Maybe"; and now he is back to "In 10 years". At least the hon. Gentleman is consistent. He says "Never", and the House looks forward to his sticking to that position.

The hon. Member for North Norfolk (Mr. Prior) made the important point that Europe is not only about trade; it has a political dimension. I did not agree with his other remarks, but I concur with him on that point.

The hon. Member for New Forest, West (Mr. Swayne) said that he was concerned about the word xenophobic. He was worried, after listening to some Conservative Members' speeches, that they might risk being indicted. He has identified that risk, but Conservative Members know what to do if they want to keep themselves straight.

The hon. Member for Arundel and South Downs (Mr. Flight) said that if we had to sign up to the treaty, it would be the end of the nation state. He also thought that it was deceitful of other hon. Members not to own up to that in their comments on the treaty, and that they were particularly deceitful when they said that the treaty did not matter. I respect the fact that the hon. Gentleman holds a different view from mine, but I believe that he also holds a very different view from that held by many of his hon. Friends who have spoken in the debate.

7.30 pm

My hon. Friend the Member for Ilford, South (Mr. Gapes) said that this was a modest treaty and that he expected it to take us forward from Maastricht to an era of enlargement and reform of the common agricultural policy. He believed that if we accepted the amendments, we would hold up that process. He rejected the amendments for that important reason; I reject them for that reason and others.

My hon. Friend the Member for Harlow (Mr. Rammell) supported my hon. Friend the Member for Ilford, South; he opposed the amendments for similar reasons. He also said that he thought that the contributions from Conservative Members were unrepresentative of the views of the Committee and of the Opposition generally. That imbalance has been partially corrected today, because we have seen that there are very different views within the Conservative party on Europe.

Many Conservatives feel that the leadership of their party has got things wrong and risks alienating the British public for a long time. It is important for British democracy that that view has been put today and that the British people know that the Conservative leadership does not have the support of a significant section of the Conservative party on the issue.

My hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) said that she would not support the amendments because she wanted to move on to the real debate on structural funds which would follow the Luxembourg summit. She said that that was of great importance for her constituency and I can understand why she took that view.

I did not expect the same support from my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) and my right hon. Friend the Member for Llanelli (Mr. Davies) as I had from other hon. Friends. However, I was pleased that they highlighted the importance of seeking high employment. There may be some differences on how we can best reduce unemployment and get higher employment, but my hon. Friend and my right hon. Friend agreed that it was important that the treaty emphasised tackling unemployment, and they are right.

My hon. Friend and my right hon. Friend also asked, in different ways, whether it was possible to define a high level of employment. I do not think that it is possible to define that because there are as many different views on that as there are Members of Parliament. What matters is that we all recognise the importance of tackling the terrible problem of unemployment. That is a very important issue in the European context and in the context of our nation state.

My hon. Friend and my right hon. Friend said that by raising the issue of employment, we also raised the important issue of employability. I know that we shall discuss the matter later in Committee so I do not want to dwell on it now. However, it is crucial that as a wider European community, we consider how we best prepare ourselves to take on the jobs challenge of tomorrow. There is agreement on that in the factories and businesses of my constituency because the people who work there know that they must be employable tomorrow. If they are employable, businesses will flourish and will be able to provide them with employment.

Mr. Gerald Howarth (Aldershot)

Can the Minister explain to the Committee why the United Kingdom is enjoying increasingly lower unemployment while unemployment is rising on the continent? Is it, perhaps, something to do with the social chapter and all the burdens on business on the continent which we in these islands have resisted?

Mr. Henderson

I am tempted to say to the hon. Gentleman that seven months of a Labour Government have not done us any harm in that regard. The hon. Gentleman raises a serious question, however. One cannot measure employment over a short period; one must look at it over the long term. Over the long term, we have no better record than comparable countries in the European Union. It is arguable that for much of the period of Conservative Government, we had a far poorer record than many of our European partners. The main factor is that the business cycle is at a different point and that is the real reason why there is a difference between us and our European partners.

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

If we can have inflation targets, monetary targets and deficit targets, why can we not have employment targets?

Mr. Henderson

My hon. Friend will recognise that it is easier for the Government to be specific about inflation targets and to take measures that are tightly linked to achieving those targets than to set employment targets. Even if the Government had to set employment targets, it would not be easy to hit them, as my hon. Friend will understand. That is why it is important to get the approach right. My right hon. Friend the Chancellor made it clear in his statement to the House three weeks ago that the important thing is to fight inflation and to get the right monetary context, and then to take all the other measures to raise employability which will help to tackle the problem of unemployment.

Sir Peter Tapsell

The hon. Gentleman has just said what people are perpetually saying, which is that the economic cycle in Britain is different from that on the continent of Europe. The whole point of economics is to try to influence economic cycles. The reason why our economic cycle is in a beneficial phase is that we left the exchange rate mechanism in 1992. The reason why European countries are in a bad economic cycle is that they stayed within it.

Mr. Henderson

I know that the hon. Gentleman follows these matters closely. He would be dishonest with himself if he did not recognise that the reason why our unemployment levels are now lower than those in Europe is the stage of the economic cycle. One can then have an argument about the extent to which the economic cycle has been influenced beneficially or in a damaging way. The point my right hon. Friend the Chancellor made in his statement to the House three weeks ago was that we must influence European matters positively. The reason why there has been a marginal improvement in employment in recent years is that we were recovering from the devastation caused by the Conservatives' mismanagement of the economy from 1987 to 1992.

Mr. Flight

Unemployment can be caused by cyclical or structural factors. Surely it is clear that the major cause of unemployment in Europe is structural. The European economies have been in an up-cycle for the past 18 months and will probably reach the peak of that cycle during the next six months. There is still massive and rising structural unemployment which results from the social chapter and the huge cost of employing people.

Mr. Henderson

The hon. Gentleman is in a fantasy world. Of course employment is influenced by cyclical and structural factors, but the hon. Gentleman is surely not telling me that the reason why all the shipyards went bust in the north of England was cyclical issues or burdens on business. It happened because of fundamental structural imbalances in the economy. We have to improve employability to take on the challenges in Europe and the rest of the world. It is important to make progress in the Amsterdam treaty so that we can take up the other issues at Luxembourg and beyond.

Mr. Ian Taylor

rose—

Mr. Denzil Davies (Llanelli)

rose—

Mr. Henderson

My patience will be exhausted in a little while.

Mr. Taylor

I intervene to help the Minister. The flexible labour policies that the Chancellor has been preaching recently—he has begun to understand why we put those policies into practice when we were in government—are crucial to the success of economic and monetary union. Those of us who can envisage economic and monetary union taking place understand that flexible labour markets are at the heart of it. There is no confusion. The Minister can admit that flexible markets will assist the reduction in unemployment and the increase in the number of jobs created on the continent. That will be good news for the whole European Union.

Mr. Henderson

The hon. Gentleman makes an interesting point. I do not totally disagree with him. However, I do not think that there is any conflict between giving working people protection—in some instances at a European level, but in more instances at a nation state level—and having a flexible labour market that allows companies to change their production methods and reskill workers so that they can take on the challenges of tomorrow. I see the hon. Gentleman smile slightly. He knows that business people tell him the same as they have told me.

Mr. Denzil Davies

I apologise for interrupting my hon. Friend. As a non-economist, I have always been interested in the economic cycle. The Old Testament talks about seven lean years and seven fat years. I think that someone called Krondatieff talked about 50 years. How long will the economic cycle last?

Mr. Henderson

I am grateful to my right hon. Friend for raising that. If I knew the answer, I would be rich—although I am probably debarred as a Minister from allowing my bank to invest on my behalf. A cycle lasts as long as it lasts. We cannot predict how long the current cycle will last. We can only prepare for decisions that we may want to take in future on European currencies. It is crucial that we debate such matters and that businesses are aware of the debate, take part in it and prepare themselves for the decision.

I want to move on, because we have had a reasonable exchange of views on economic issues. The hon. Member for Buckingham (Mr. Bercow) seems to be in the Chamber only when he is speaking—which is quite frequently. He said that the provisions on basic rights were about meddling on issues such as the minimum wage, the age of consent and strikes in essential services.

As the right hon. and learned Member for Rushcliffe made clear, the hon. Gentleman has misread the purpose of those clauses, which is to prepare the European Union for enlargement. The provisions would be invoked only if there was a massive change in one of the new countries, or in one of the existing countries, that posed a real threat to democracy, such as the establishment of an entrenched fascist Government. That was the intention of those who were involved initially. I am sure the Conservatives who were involved in the discussions took part in that dialogue. I was involved for six weeks before Amsterdam and my right hon. Friends the Prime Minister and the Foreign Secretary continued that dialogue. The intention is clear. Being alarmist about the issue does no good.

Mr. Michael Howard (Folkestone and Hythe)

Does the hon. Gentleman recall my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) saying that there was no guarantee that the provisions would be interpreted in that way? Their interpretation is to be entirely at the behest of the other member states. Would it not be better if a power were taken in the treaty to expel any member state that was in serious and fundamental breach of human rights rather than attempting to hold that state to its obligations while depriving it of rights?

Mr. Henderson

The right hon. and learned Gentleman is not aware of the debate that has taken place with our partners. We are talking about how to deal with a critical situation, not an everyday situation. It is a political decision which would have to be taken by a 15 minus one majority. Every country other than the country involved would have to agree. The power would not be used in a trifling way, to take revenge on an existing member because one country or a group of countries disagreed with it. If that happened, the future of the European Union would be in great jeopardy. [HON. MEMBERS: "It is."] No, it is not. The member states of the European Union have a deep commitment to making changes when necessary, agreeing common positions when it is sensible and retaining our distinctiveness when that is better.

7.45 pm

I am sorry to be taking so long, but I want to reply thoroughly to the debate. We should have a full interchange of views so that hon. Members know all the arguments when we come to vote. I shall have to take some time to reply because there have been so many contributions.

The right hon. and learned Member for Rushcliffe said that there were two differences between his position and mine on the treaty. He disagrees with the social chapter. We have already had an exchange on those arguments. I do not believe that the social chapter threatens the economic integrity of the European Union or that the business community here or elsewhere believes that. The social partners recognise that it is an essential part of the development of the Union, and one with which they can cope. It is not the case that every idea put up for inclusion in the social chapter will be included. There is a firm understanding of that among the majority of the partners I have talked to. I understand the right hon. and learned Gentleman's concerns, but he will find, as business will find, that it will not damage his other objectives.

The right hon. and learned Gentleman also talked about enlargement. He wanted further progress on that in the treaty. So did I. My right hon. Friends the Prime Minister and the Foreign Secretary pushed hard on the final evening of negotiations for progress on institutional reform. Our inability to reach an agreement was not due to a lack of motivation or an unwillingness on our part to consider other views. The problem was the intransigence of other partners. We shall continue to press for progress. I agree that reform of the institutional arrangements is essential before enlargement. The treaty says that that will be the case. I hope that when he has more time to reflect, the right hon. and learned Gentleman will follow his original instinct to be a little bit in favour of a modest treaty. I hope that he will give that further consideration before Third Reading.

I want to link the comments of the right hon. and learned Member for Rushcliffe with the opening comments of the right hon. and learned Member for Folkestone and Hythe about article F.1 on basic rights. The right hon. and learned Member for Rushcliffe said that he had no worries about establishing the basic right that if a country joins the European Union, it must meet certain conditions, which must be broadly reflective of what is only wise and consistent with a democracy. That is different from the position adopted by the right hon. and learned Member for Folkestone and Hythe.

On the first day of the debate, the right hon. and learned Member for Folkestone and Hythe said that he had some concerns about the flexibility of articles K.12 and K.15 and that he had sympathy for the objective. I understand that; I have read his speeches. We both agree that there is a need for flexibility, but that when that flexibility is applied, it should be applied by unanimity. I think that there is a misunderstanding on the matter.

In effect, there is an unanimity provision in the treaty: it is called the emergency brake. If nine or 10 countries decide that they want to act together to do something that the rest of the Union does not want to do, they should have flexibility to do so. However, if one or more than one country outside those nine or 10 countries says that it is in their national interest that such a thing does not happen for a particular reason, they can invoke the emergency brake, and the decision would then need to be made by unanimity in the Council. What the right hon. and learned Gentleman is looking for is in the treaty. I hope that he will recognise that. That might make it slightly easier for him to vote with the Government.

Mr. Howard

I do not want to raise false expectations on the Minister's behalf. If that is indeed the explanation—it may be the explanation on a proper reading of the relevant portions of the treaty—why on earth does the treaty not make it clear that the article is based on unanimity? Why on earth does it use such circuitous language? Why does it use the language of qualified majority voting instead of saying straight out that such matters will be decided on the basis of unanimity?

Mr. Henderson

I am very glad that I gave way to the right hon. and learned Gentleman. I like to give those who wish to confess an opportunity to do so. That is not the first confession of a change of position in Committee. I genuinely welcome the fact that there has been a debate in Committee and that the Opposition have recognised that the Government have achieved what the Opposition said that they would have wanted to achieve had they taken part in the negotiations.

Mr. Cash

rose—

Mr. Henderson

I shall not incessantly give way to the hon. Gentleman, but I am tempted on this occasion.

Mr. Cash

Does the Minister accept that this new-fangled concept of flexibility has serious dangers not least because, as he suggested, it creates a legal framework in which there is a momentum towards the creation of functions for certain member states? There is a continuous momentum towards the kind of integration that, apparently, the Government on the whole do not want. Is not there a contradiction in their position in allowing, through the adoption of flexibility, a momentum towards integration, which they say they would rather not have?

Mr. Henderson

The hon. Gentleman is not aware that there was a discussion at the intergovernmental conference about whether flexibility is necessary in principle. The answer to that question was, by and large, yes, there may be circumstances in which different groups of countries want to do things at a different speed. The point was made that we could not have continual flexibility or it would destroy the single market, and everybody would want to do what they thought was in their interest and not combine over a common cause when it was not in their interest. There had to be some way of meeting the two objectives.

One of the ways, of which the hon. Member for Stone (Mr. Cash) may be aware, was to exclude all sorts of circumstances in which flexibility would not be possible. On reflection, and in the debate at the IGC—it was essentially agreed before the Prime Minister and the Foreign Secretary endorsed it on the final day—it was agreed that there should be a facility for an emergency brake. None of the EU partners thought that it would be applied on a regular basis. It was included because it was thought that it might be necessary in some circumstances and the possibility should not be excluded.

Mr. Bernard Jenkin (North Essex)

On that point—

Mr. Henderson

I think that I have exhausted that point. The Opposition have put a fair argument and the Government have given a fair response.

The right hon. and learned Member for Folkestone and Hythe mentioned policing and said that article K.2 empowers Europol to join national policing operations in a support capacity. Yes, it does, but it does only that. There are very strict limits on how that should take place.

British police forces are, and will remain, responsible for British policing in Britain. That is not in any doubt. Any Europol personnel would be involved on the invitation of the British police and have no powers of arrest. The operational rules for Europol, which would have to be agreed in future, would be agreed only by unanimity. That is in the treaty. Therefore, if there were any suggestion that any operational rule would put Europol officers in a position—in Britain or anywhere else in the EU—that we felt was not proper or right, we would be able to block it because unanimous agreement would be required. I hope that I have been able to reassure the right hon. and learned Gentleman on that point.

I apologise to hon. Members who have just joined the Committee. There has been a very long two-day debate and there are many issues to cover.

The next issue is foreign policy. The hon. Member for Reigate (Mr. Blunt) made a useful contribution-although not in support of the Government. Although he was trying his best to support his Front-Bench team, he said that it was firmly established in the treaty that NATO was the basis of British defence for the future. We strove hard to achieve that in negotiations in Amsterdam and I am pleased that he recognised it.

The hon. Member also said that he supported the enlargement process. Again, I welcome his commitment. I hope that, when he weighs up the commitment that we achieved on NATO and our commitment to move forward from Maastricht in the EU to a post-Maastricht enlargement agenda, he will see the need to endorse the Amsterdam treaty as a way of moving from one position to the other. If we fail to endorse the Amsterdam treaty, there will be such disruption in the EU Councils that we will not be able to take on board enlargement in a way necessary to make progress. I know that that would concern the hon. Gentleman.

Mr. Crispin Blunt (Reigate)

The point that I made was that the NATO aspect sits alongside the progressive framing of a European defence identity. I should like the Minister to address that issue.

Mr. Henderson

The point is clear. When it comes to defence, it is the responsibility of NATO. There is a need to co-ordinate—for the Western European Union to talk to the European Council about important issues such as foreign policy issues that were agreed under Maastricht's second pillar by the previous Government. There is a need to liaise and work together, but ultimately, if it comes to the defence of this nation, NATO will be the bedrock. That is firmly established in the treaty, but was a little ambiguous in the Maastricht treaty. We recognise that as one of the most important parts of the deal that we struck, although it is also part of a deal that other countries think is important.

Mr. Blunt

rose—

Mr. Henderson

If the hon. Gentleman will allow me, I shall move on to the points raised by the right hon. and learned Member for Folkestone and Hythe about foreign policy.

The right hon. and learned Gentleman asked whether there was a vision. The answer is yes, there is a vision. The vision is that we should be more co-operative with our European partners. After agreeing that foreign policy was a right area for the EU to be involved in under Maastricht, it is important that there is maximum co-operation, so that all the different organs know in which direction they are moving on any issue. Ultimately, there is a bedrock position on NATO.

How will the system work? It will require unanimity. The right hon. and learned Member for Folkestone and Hythe and others raised a question. Under the treaty, a strategy is differentiated from an action. A strategy must be agreed by unanimity, but an action in meeting a strategy can be agreed by qualified majority. The question was: if there was any possibility of force being involved, could it be agreed as an action to meet a strategy under QMV?

I know that the right hon. and learned Gentleman had serious worries about that issue, but I reassure him that such matters cannot be agreed by qualified majority voting. Anything that involves force—any defence issue—would have to be agreed by unanimity. If that decision were to be part of a strategy that involved a foreign policy initiative and defence considerations, the strategy would have to be agreed by unanimity. If force were not involved and a difference of view arose between one European nation and the other partners, an emergency brake could be applied, in a similar way to the one in the flexibility clause, which would put a stop to the proceedings and require unanimity. I believe that the right hon. and learned Gentleman's worries on that point have been met.

8 pm

I shall move on to the question of justice, on which several issues were raised. The first was raised by the right hon. and learned Member for Folkestone and Hythe and several of his colleagues. They asked why the European Court of Justice was not reformed by the Amsterdam treaty. The right hon. and learned Gentleman implied that a Conservative Government, had they been in power at the time of the Amsterdam talks, would have achieved reform, but I do not believe that that is the case.

The right hon. and learned Member for Rushcliffe said that support for reform existed in ECOFIN. He may be right, although I have my doubts. However, even if he were right, I assure the Committee that there was no question of our European partners agreeing to the proposals made by the previous Government to limit the retrospective effects of the court's jurisdiction. If the right hon. and learned Member for Folkestone and Hythe had been a member of the Government in June, he would not have been able to achieve reform, even if he had told his hon. Friends that it was his main aim.

Several of my hon. Friends and other hon. Members raised the question of extensions to the powers of the European Court of Justice. A strong case for the ECJ has been made in the debate, because if any doubt arises about what is intended by any agreement for Community action, we need a body that intervenes to decide. I am glad that the laudable principle behind the ECJ has been recognised on both sides of the Committee. The question then arises about the extent of the authority of the European Court of Justice, but I can reassure hon. Members that the extensions are third pillar extensions.

I wish to give specific answers to the points raised in the debate about the extensions. The first extension is that the ECJ can be asked to give a preliminary ruling on the validity and interpretation of framework decisions and other Council decisions. The right hon. and learned Member for Folkestone and Hythe will know from his time at the Home Office that such issues arose in the discussions that he had with me. I know that he has a deep interest in them. He will know that, under the Maastricht treaty, it was possible to provide in conventions in the third pillar that the ECJ could intervene to settle any arguments about the workings of the convention. Indeed, the previous Government, on at least two occasions of which I am aware, signed conventions containing specific provisions allowing the ECJ to intervene. They signed the conventions on the application of customs information systems and on the protection of the financial interests of the Community. They were right to sign those conventions, because it was important that the ECJ should be able to intervene if any argument arose.

This Government, like the previous Government, do not want to see massive extensions in the powers of the ECJ in the third pillar. That is why, in the Amsterdam treaty, we agreed provisions that made a modest increase in those powers, which now apply to any framework decision under the Amsterdam treaty. If a member nation—for example, the United Kingdom—felt that it did not want the ECJ to intervene in an argument, it could block the framework decision because that would be decided by unanimity. Therefore, we would have to be sure when we signed a framework decision that we were prepared, if necessary, to have any argument adjudicated by the ECJ.

The second area of extension of the ECJ's powers is its ability to review an action brought by the Commission or a member state on whether the Council had acted beyond its powers. The right hon. and learned Member for Folkestone and Hythe will be aware that it is extremely unlikely that that power would be invoked, because a member state would not be likely to give the Council the authority in the first place and then challenge it through the ECJ at a later stage. It might happen on an interpretation of the wording, but not on a point of principle. There is, therefore, no great extension of power in that area.

The third area of extension of the ECJ's power is its ability to rule on any dispute between member states. The previous Government accepted a limited form of that power under the Maastricht treaty, and it has now been widened.

The fourth area of extension is the ability to rule on whether a Council decision in the areas that I have previously outlined—preliminary rulings, actions brought by the Commission and disputes between member states—is lawful. The ECJ may intervene on such points, but it is unlikely that that power will be used very often.

The fifth area of modest extension is when a group of member states pursue a flexible arrangement in the third pillar. The role of the ECJ would not be to mediate on the substance of any agreement, but it could mediate on whether the procedure had been followed in reaching the appropriate decision on flexibility.

I put it to the Committee that the Amsterdam treaty will mean only a limited extension of the powers of the ECJ. That extension is essential, and the Government welcomed it in concluding the treaty.

Mr. Oliver Letwin (West Dorset)

Will the hon. Gentleman give way?

Mr. Henderson

No, I will not give way now. There is also no question of the ECJ's having any role in the maintenance of law and order in this country or our internal security.

I have given the Committee a fair opportunity to debate the issues. [HON. MEMBERS: "Hear, hear."] I hear a lot of hungry voices and I therefore wish to conclude my remarks. I hope that when the Committee votes on the amendments, it will reject them.

Mr. Howard

I shall attempt to be brief. We have had a good and wide-ranging debate. It is true, and I acknowledge it, that not every speech from my hon. Friends has been identical with the speech before or after. Nor would I wish that to happen, because the Conservative party does not encourage the kind of clone-like attitude that we see from the Labour party.

Notwithstanding the predilection of the Labour party for clones, it obviously escaped the Minister's mind that almost 50er cent. of speeches by Labour Back Benchers were seriously critical of the Government. The speeches by the right hon. Member for Llanelli (Mr. Davies) and for Merthyr Tydfil and Rhymney (Mr. Rowlands) went far beyond the one point to which the Minister referred—their questioning of a lack of a target for high employment. Their devastating speeches indicted the Government's whole strategy. It was a pity that the Minister did not acknowledge that.

I thank the Minister for the extent to which he endeavoured to answer the questions that we raised. He took much trouble over that and I am grateful, but he did not entirely succeed. For example—I do not wish to detain the Committee, but I wish to dwell on this example so that we may have a proper answer in the future—Iut an important series of questions to him on the way in which qualified majority voting would work in the implementation of a common foreign and security policy. The Minister answered my question by talking about brakes; the way in which the unanimity rules could be used in certain circumstances to stop countries taking certain action.

The question that I put to the Minister was entirely different. What happens if a common decision on strategy has been taken to take certain action, for example, against Iraq? What happens if a qualified majority decision is then taken that that action should stop short of the use of force? What happens if this country, for example, wishes to use force? In those circumstances, will this country be debarred from using force, according to the provisions of the treaty, by the qualified majority voting provisions? That is very important, and we have not had an answer. I hope that we shall have an answer; if not tonight, then at some future stage.

It has been clear from the debate that there are many different reasons for opposing article 1 and for voting for amendment No. 65. A number of my right hon. and hon. Friends have identified those reasons. There is the fact that the treaty brings in the social chapter. There is also the absence from the treaty of proper provisions for securing enlargement of the EU, to which the Opposition attach great priority.

My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) referred to the total failure of the Government to press the argument for the reform of the European Court of Justice. It is not a sufficient reason for failing to press the argument that there was not at first blush a tremendous amount of support from the other member states. In previous negotiations, we have secured our position by pressing home our case and by persuading our partners of its merits. That is what the Government manifestly failed to do at Amsterdam.

For all the reasons that I identified last week, and which my right hon. and hon. Friends have identified today, I urge the Committee to vote for amendment No. 65 and to reject article 1 of the treaty.

Question put, That the amendment be made:—

The Committee divided: Ayes 133, Noes 328.

Division No. 103]	[8.11pm
AYES
Ainsworth, Peter (E Surrey)	Fabricant, Michael
Amess, David	Fallon, Michael
Ancram, Rt Hon Michael	Flight, Howard
Arbuthnot, James	Forsythe, Clifford
Atkinson, Peter (Hexham)	Forth, Rt Hon Eric
Baldry, Tony	Fowler, Rt Hon Sir Norman
Beggs, Roy	Fox, Dr Liam
Bercow, John	Fraser, Christopher
Beresford, Sir Paul	Garnier, Edward
Blunt, Crispin	Gibb, Nick
Body, Sir Richard	Gill, Christopher
Boswell, Tim	Gillan, Mrs Cheryl
Bottomley, Peter (Worthing W)	Gorman, Mrs Teresa
Bottomley, Rt Hon Mrs Virginia	Gray, James
Brady, Graham	Green, Damian
Brazier, Julian	Greenway, John
Brooke, Rt Hon Peter	Grieve, Dominic
Browning, Mrs Angela	Hammond, Philip
Bruce, Ian (S Dorset)	Hawkins, Nick
Burns, Simon	Hayes, John
Butterfill, John	Heald, Oliver
Cash, William	Heathcoat-Amory, Rt Hon David
Clappison, James	Hogg, Rt Hon Douglas
Clark, Rt Hon Alan (Kensington)	Horam, John
Collins, Tim	Howard, Rt Hon Michael
Cran, James	Howarth, Gerald (Aldershot)
Curry, Rt Hon David	Hunter, Andrew
Davies, Quentin (Grantham)	Jack, Rt Hon Michael
Davis, Rt Hon David (Haltemprice)	Jackson, Robert (Wantage)
Duncan, Alan	Jenkin, Bernard
Emery, Rt Hon Sir Peter	Johnson Smith, Rt Hon Sir Geoffrey
Evans, Nigel
Faber, David	Key, Robert

King, Rt Hon Tom (Bridgwater)	Sayeed, Jonathan
Kirkbride, Miss Julie	Shephard, Rt Hon Mrs Gillian
Laing, Mrs Eleanor	Shepherd, Richard
Lait, Mrs Jacqui	Simpson, Keith (Mid-Norfolk)
Lansley, Andrew	Smyth, Rev Martin (Belfast S)
Letwin, Oliver	Soames, Nicholas
Lewis, Dr Julian (New Forest E)	Spelman, Mrs Caroline
Lidington, David	Spicer, Sir Michael
Lilley, Rt Hon Peter	Spring, Richard
Lloyd, Rt Hon Sir Peter (Fareham)	Steen, Anthony
Loughton, Tim	Streeter, Gary
Luff, Peter	Swayne, Desmond
MacGregor, Rt Hon John	Syms, Robert
McIntosh, Miss Anne	Tapsell, Sir Peter
MacKay, Andrew	Taylor, Ian (Esher & Walton)
Maclean, Rt Hon David	Taylor, John M (Solihull)
McLoughlin, Patrick	Taylor, Sir Teddy
Madel, Sir David	Tredinnick, David
Major, Rt Hon John	Trend, Michael
Malins, Humfrey	Viggers, Peter
Maples, John	Walter, Robert
Maude, Rt Hon Francis	Wardle, Charles
Mawhinney, Rt Hon Sir Brian	Wells, Bowen
May, Mrs Theresa	Whitney, Sir Raymond
Moss, Malcolm	Whittingdale, John
Nicholls, Patrick	Widdecombe, Rt Hon Miss Ann
Norman, Archie	Wilkinson, John
Paice, James	Willetts, David
Paterson, Owen	Winterton, Mrs Ann (Congleton)
Prior, David	Woodward, Shaun
Redwood, Rt Hon John	Yeo, Tim
Robathan, Andrew	Young, Rt Hon Sir George
Robertson, Laurence (Tewk'b'ry)
Rowe, Andrew (Faversham)	Tellers for the Ayes:
Ruffley, David	Mr. Stephen Day and
St Aubyn, Nick	Mr. Nigel Waterson.

NOES
Abbott, Ms Diane	Bruce, Malcolm (Gordon)
Adams, Mrs Irene (Paisley N)	Burden, Richard
Ainger, Nick	Burnett, John
Ainsworth, Robert (Cov'try NE)	Burstow, Paul
Alexander, Douglas	Butler, Mrs Christine
Allan, Richard	Byers, Stephen
Allen, Graham	Cable, Dr Vincent
Anderson, Donald (Swansea E)	Campbell, Alan (Tynemouth)
Armstrong, Ms Hilary	Campbell, Mrs Anne (C'bridge)
Ashton, Joe	Campbell, Menzies (NE Fife)
Atherton, Ms Candy	Canavan, Dennis
Atkins, Charlotte	Cann, Jamie
Ballard, Mrs Jackie	Caplin, Ivor
Banks, Tony	Casale, Roger
Barnes, Harry	Caton, Martin
Barron, Kevin	Chapman, Ben (Wirral S)
Battle, John	Chaytor, David
Bayley, Hugh	Chisholm, Malcolm
Beard, Nigel	Clapham, Michael
Begg, Miss Anne	Clark, Dr Lynda (Edinburgh Pentlands)
Beith, Rt Hon A J
Bennett, Andrew F	Clark, paul (Gillingham)
Benton, Joe	Clarke, Charles (Norwich S)
Bermingham, Gerald	Clarke, Eric (Midlothian)
Berry, Roger	Clelland, David
Best, Harold	Clwyd, Ann
Betts, Clive	Coaker, Vernon
Blears, Ms Hazel	Coffey, Ms Ann
Blizzard, Bob	Colman, Tony
Borrow, David	Connarty, Michael
Bradley, Keith (Withington)	Cook, Frank (Stockton N)
Bradshaw, Ben	Cooper, Yvette
Brake, Tom	Cotter, Brian
Brand, Dr peter	Cousins, Jim
Breed, Colin	Cranston, Ross
Brinton, Mrs Helen	Crausby, David
Brown, Rt Hon Nick (Newcastle E)	Cryer, John (Hornchurch)
Brown, Russell (Dumfries)	Cummings, John

Cunningham, Jim (Cov'try S)	Illsley, Eric
Cunningham, Ms Roseanna (Perth)	Ingram, Adam
	Jackson, Ms Glenda (Hampstead)
Dafis, Cynog	Jackson, Helen (Hillsborough)
Dalyell, Tarn	Jamieson, David
Darvill, Keith	Johnson, Alan (Hull W & Hessle)
Davey, Edward (Kingston)	Johnson, Miss Melanie (Welwyn Hatfield)
Davey, Valerie (Bristol W)
Davidson, Ian	Jones, Barry (Alyn & Deeside)
Davies, Rt Hon Denzil (Llanelli)	Jones, Helen (Warrington N)
Davies, Rt Hon Ron (Caerphilly)	Jones, Ieuan Wyn (Ynys Môn)
Dawson, Hilton	Jones, Jon Owen (Cardiff C)
Dean, Mrs Janet	Jones, Martyn (Clwyd S)
Denham, John	Jowell, Ms Tessa
Donohoe, Brian H	Kaufman, Rt Hon Gerald
Doran, Frank	Keeble, Ms Sally
Eagle, Angela (Wallasey)	Keen, Ann (Brentford & Isleworth)
Eagle, Maria (L'pool Garston)	Keetch, paul
Edwards, Huw	Kelly, Ms Ruth
Efford, Clive	Kemp, Fraser
Ellman, Mrs Louise	Kennedy, Charles (Ross Skye)
Ewing, Mrs Margaret	Kennedy, Jane (Wavertree)
Fearn, Ronnie	Khabra, Piara S
Fitzpatrick, Jim	Kilfoyle, Peter
Flint, Caroline	King, Ms Oona (Bethnal Green)
Follett, Barbara	Kingham, Ms Tess
Foster, Rt Hon Derek	Kumar, Dr Ashok
Foster, Michael Jabez (Hastings)	Laxton, Bob
Foster, Michael J (Worcester)	Leslie, Christopher
Foulkes, George	Levitt, Tom
Galbraith, Sam	Lewis, Ivan (Bury S)
Galloway, George	Lewis, Terry (Worsley)
Gapes, Mike	Liddell, Mrs Helen
Gardiner, Barry	Linton, Martin
George, Andrew (St Ives)	Livsey, Richard
George, Bruce (Walsall S)	Lloyd, Tony (Manchester C)
Gerrard, Neil	Llwyd, Elfyn
Gibson, Dr Ian	McAllion, John
Gilroy, Mrs Linda	McAvoy, Thomas
Godman, Norman A	McCabe, Steve
Godsiff, Roger	McCafferty, Ms Chris
Gordon, Mrs Eileen	McCartney, Ian (Makerfield)
Gorrie, Donald	McDonagh, Siobhain
Grant, Bernie	McDonnell, John
Griffiths, Jane (Reading E)	McFall, John
Griffiths, Win (Bridgend)	McGuire, Mrs Anne
Grocott, Bruce	McIsaac, Shona
Grogan, John	McKenna, Mrs Rosemary
Gunnell, John	Mackinlay, Andrew
Hain, Peter	McNulty, Tony
Hall, Mike (Weaver Vale)	MacShane, Denis
Hall, Patrick (Bedford)	Mactaggart, Fiona
Hanson, David	McWalter, Tony
Harris, Dr Evan	McWilliam, John
Heal, Mrs Sylvia	Mahon, Mrs Alice
Healey, John	Mallaber, Judy
Heath, David (Somerton & Frome)	Mandelson, Peter
Henderson, Doug (Newcastle N)	Marsden, Gordon (Blackpool S)
Henderson, Ivan (Harwich)	Marshall, David (Shettleston)
Hepburn, Stephen	Marshall-Andrews, Robert
Heppell, John	Martlew, Eric
Hill, Keith	Maxton, John
Hodge, Ms Margaret	Meale, Alan
Hoey, Kate	Michael, Alun
Home Robertson, John	Michie, Bill (Shef'ld Heeley)
Hood, Jimmy	Michie, Mrs Ray (Argyll & Bute)
Hoon, Geoffrey	Miller, Andrew
Hope, Phil	Moffatt, Laura
Hopkins, Kelvin	Moonie, Dr Lewis
Howarth, Alan (Newport E)	Moore, Michael
Hoyle, Lindsay	Moran, Ms Margaret
Hughes, Ms Beverley (Stretford)	Morgan, Alasdair (Galloway)
Hughes, Simon (Southwark N)	Morgan, Ms Julie (Cardiff N)
Humble, Mrs Joan	Morgan, Rhodri (Cardiff W)
Hurst, Alan	Morley, Elliot
Iddon, Dr Brian	Morris, Ms Estelle (B'ham Yardley)

Mudie, George	Southworth, Ms Helen
Mullin, Chris	Spellar, John
Murphy, Denis (Wansbeck)	Squire, Ms Rachel
Murphy, Jim (Eastwood)	Steinberg, Gerry
Norris, Dan	Stevenson, George
Oaten, Mark	Stewart, David (Inverness E)
O'Brien, Bill (Normanton)	Stewart, Ian (Eccles)
O'Brien, Mike (N Warks)	Stinchcombe, paul
Olner, Bill	Stoate, Dr Howard
O'Neill, Martin	Stott, Roger
Organ, Mrs Diana	Stringer, Graham
Osborne, Ms Sandra	Stunell, Andrew
Palmer, Dr Nick	Sutcliffe, Gerry
Pearson, Ian	Swinney, John
Pendry, Tom	Temple-Morris, Peter
Pickthall, Colin	Thomas, Gareth (Clwyd W)
Pike, peter L	Timms, Stephen
Pollard, Kerry	Tipping, Paddy
Pope, Greg	Todd, Mark
Powell, Sir Raymond	Tonge, Dr Jenny
Prentice, Ms Bridget (Lewisham E)	Trickett, Jon
Prentice, Gordon (Pendle)	Truswell, paul
Primarolo, Dawn	Turner, Dennis (Wolverh'ton SE)
Purchase, Ken	Turner, Desmond (Kemptown)
Radice, Giles	Turner, Dr George (NW Norfolk)
Rapson, Syd	Twigg, Derek (Halton)
Raynsford, Nick	Twigg, Stephen (Enfield)
Reed, Andrew (Loughborough)	Tyler, Paul
Reid, Dr John (Hamilton N)	Vaz, Keith
Rendel, David	Ward, Ms Claire
Roche, Mrs Barbara	Wareing, Robert N
	Watts, David
Rooker, Jeff	Webb, Steve
Rooney, Terry	Welsh, Andrew
Ross, Ernie (Dundee W)	Whitehead, Dr Alan
Rowlands, Ted	Williams, Rt Hon Alan (Swansea W)
Russell, Bob (Colchester)
Ryan, Ms Joan	Williams, Alan W (E Carmarthen)
Salter, Martin	Williams, Mrs Betty (Conwy)
Sanders, Adrian	Willis, Phil
Savidge, Malcolm	Wills, Michael
Sawford, Phil	Wilson, Brian
Sedgemore, Brian	Winnick, David
Shaw, Jonathan	Winterton, Ms Rosie (Doncaster C)
Sheerman, Barry	Wise, Audrey
Sheldon, Rt Hon Robert	Wood, Mike
Simpson, Alan (Nottingham S)	Woolas, Phil
Singh, Marsha	Wright, Anthony D (Gt Yarmouth)
Skinner, Dennis	Wright, Dr Tony (Cannock)
Smith, Jacqui (Redditch)	Wyatt, Derek
Smith, John (Glamorgan)
Smith, Llew (Blaenau Gwent)	Tellers for the Noes:
Smith, Sir Robert (W Ab'd'ns)	Mr. Kevin Hughes and
Soley, Clive	Mr. Jim Dowd.

Question accordingly negatived.

Mr. Rowlands

I beg to move amendment No. 2, in Page 1, line 13, after 'Articles', insert 1, paragraph 9 (Cm. 3780, page 10)'.

The First Deputy Chairman of Ways and Means (Mr. Michael J. Martin)

With this, it will be convenient to discuss amendment No. 8, in page 1, line 13, at end insert '(except Article 2 paragraph 57)'.

Mr. Rowlands

The amendment was designed to offer the Committee the opportunity to discuss the new article F.1, but it has been made semi-redundant by the contributions to the previous debate, so I hope to be brief.

The shadow Foreign Secretary took up at least two columns of Hansard on the subject of article F.1 when he opened the debate on amendment No. 65. He made a bit of a meal of the issue, and over-egged the pudding. I would not say that he was put in his place, but the position was, quite rightly, well qualified by the right hon. and learned Member for Rushcliffe (Mr. Clarke), who spoke from the Back Benches.

The shadow Foreign Secretary argued that the new article was vaguely defined and that it would be dealt with not by a judicial body but by politicians. I detected a somewhat derisory view of the idea that politicians should be involved. I think that he said that individual countries would be at the mercy of others. He argued that there was no need for such a provision, because if a country in the European Union fell into dictatorship, started persecuting its citizens, and confiscated private property or suspended the due process of law, there was one simple solution: expulsion.

I do not think that my hon. Friend the Minister had the full opportunity, despite his extensive reply to the previous debate, to remind us what procedures and effort would be required to expel a state under there sent provisions of the treaty, given that expulsion was the shadow Foreign Secretary's only solution. How difficult would it be to deal with a state that had offended?

When I tabled the amendment, I wanted to underline my support for the principle of the provision in the treaty. Despite some differences of nuance, I think that we all agree that it is essential that European Union membership—to become and to remain a member—should require good, fundamental democratic credentials. As many hon. Members said in the previous debate, it is almost impossible to envisage how one could sit on a Council of Ministers if one of the company was a colonel who had seized power in a coup.

That idea is not all that fanciful. The right hon. and learned Member for Rushcliffe reminded us of the fact that when I entered the House in 1966 Greece was governed by one of the most brutal abusers of human rights that western Europe has known for a very long time. As the right hon. and learned Gentleman also pointed out, the Iberian peninsula had been in a similar position. Therefore one need not go back into the mists of time to recall that, even within the existing membership of the European Union, in my parliamentary and political lifetime, we have had dictatorships and authoritarian Governments that would now be intolerable in the European Union.

Therefore it is important to assert that democracy is a fundamental obligation and to say that, if a member state persistently abuses fundamental human rights, it should be subject to discipline. However, I found it difficult to appreciate the argument by the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) that a country could go from nothing to expulsion without any gradation of action that could be taken by other member states to tackle the problem of persistent infringement of human rights.

We all support and endorse the argument made by the right hon. and learned Member for Folkestone and Hythe that, as are condition for membership, applicants must root their institutions in principles of democracy and human rights. It will be a matter of considerable scrutiny by the Commission and by the present Union that any applicant must fulfil those conditions and achieve those democratic institutions in a way that has a sense of permanence and does not look fragile or capable of being abused.

8.30 pm

I believe that we all agree with that, so one hopes that the situation envisaged in the article will not arise. If, as observations made by Front-Bench and Back-Bench Members on both sides of the Committee suggest, the provisions turned up in the treaty in anticipation of the problems that might possibly occur if applicant states enter the European Union but cannot sustain democratic institutions, obviously the key must be to ensure that the application process for membership ensures that the institutions that create and form that state are generally democratic.

I should be grateful if the Minister would reveal more about the origins of the article and tell us how and why it came into existence when it did. Was it anticipating some of the problems that may occur in the case of new applicants?

I wondered where I might get a feel for the issues that the article might wish to address. I believe that it is useful to bring to the Committee's attention the Agenda 2000 document and the Commission's assessment, under the Copenhagen criteria, of the political situation of the applicant countries. The document gives a flavour of some of the issues and arguments that may well arise, even after individual states have successfully joined the European Union, and of how, presumably, F.1 might address them.

I shall quote from two of the country reports of the Agenda 2000 Commission opinions. The first relates to an applicant country that I believe had expectations of being in the first group—Slovakia. The report obviously damaged those expectations. The following passage gives us an idea of the problems that might arise if a member state lapsed into certain behaviour. On the subject of applying the Copenhagen political criteria to Slovakia, the Commission said: The operation of Slovakia's institutions is characterised by the fact that the government does not sufficiently respect the powers devolved by the constitution to other bodies and that it too often disregards the rights of the opposition. The constant tension between the government and the resident of the Republic is one example of this. Similarly, the way in which the government recently ignored the decisions of the Constitutional Court and the Central Referendum Commission on the occasion of the vote on 23/24 May 1997 directly threatened the stability of the institutions. That is a powerful assessment of the fragility of the institutional position in an applicant state—Slovakia.

As a result of that Commission opinion, it now appears that Slovakia would not achieve membership without tackling, and satisfying the present European Union that it had tackled, those fundamental problems. In fact, as the Commission report says, Despite recommendations made by the European Union in a number of demarches and declarations, there has been no noticeable improvement. Would the provisions of article F.1 apply if a similar situation arose in a state such as Slovakia after it had joined the European Union? Are those the areas of constitutional and democratic concern that were considered when the article was drafted? If a member state in a sense persistently abused its own constitution in key respects relating to human, rights, would that allow the European Union to act as the article suggests?

I do not want to take too long because these arguments have been discussed, but I want to prise out of my hon. Friend the Minister some illustrations of the persistent breaches of rights that would trigger the processes described in the new article.

The other Commission opinion that raises a similar set of arguments is that on the political institutional position of Bulgaria. The Commission says that democratic institutions in Bulgaria need to be reinforced by fuller respect in practice for the rule of law, at all levels of public administration". It says: the operation of the judicial system needs to be improved to protect individual liberties in the face of too frequent abuses by the police and the secret services. That is another opinion in the context of an applicant state and the Commission giving its view. If such behaviour had occurred in a member state in the enlarged Union, would it be the type of behaviour that the article was meant or designed to start to bite on?

Those are the questions that have been left in my mind. I have listened in the Committee to most of our previous debates. I want to know more about the way in which Ministers envisage the operation of the provision.

If the article relates to the types of problems that have been identified in the Commission opinions on applicant states, I say to the right hon. and learned Member for Folkestone and Hythe that I believe that there is a case for a political judgment, not a judicial one. These are decisions about politics and democracy. I am not sure that judges are necessarily the best guides in that area. There is a case for saying that, in assessing whether certain behaviour is acceptable, the collective view of democratically elected politicians who represent public opinion is as good as that of a judge.

I have thought about the subject, because obviously one wants very clear criteria and they do not exist. I agree with the right hon. and learned Member for Folkestone and Hythe that there is a vagueness in the wording, but I do think that, in many cases, those will be matters of considerable political judgment as opposed to judicial interpretation. Therefore the decision to place the matter in the hands of the European Council, to allow the heads of state of every other member of the European Union to make these difficult assessments, probably achieves a balance in respect of such problems and issues. So I do not share the queasiness about the provisions of the article that the right hon. and learned Member for Folkestone and Hythe feels.

I certainly thought that the right hon. and learned Gentleman over-egged his case when talking about how one country can be left at the mercy of a random choice by other members of the Union. He should remember that a most elaborate procedure is involved. The decision must be unanimous; one third of the member states have to make an approach; the decision must be endorsed by two thirds of the European parliament. So built into the article is a fantastic number of hurdles that must be crossed before any state charged with persistent breaches of human rights can be suspended.

Mr. Cash

Would the hon. Gentleman be good enough to bear in mind the fact that although the Union is founded on principles of liberty, democracy and the rule of law, if we dig a little deeper into the behaviour of current member states of the EU we find that "fundamental freedoms" and the rule of law do not apply with equal validity to all member states? I am not even thinking of Greece at this point. It is not xenophobic to claim that there is a serious problem in the EU already.

Mr. Rowlands

I defer to the hon. Gentleman's more detailed knowledge of the political performance of members of the current Union. I cannot think of any immediate examples of member states seriously abusing human rights. If the hon. Gentleman can, perhaps he will list them in his speech. As I understand it, the safeguards will apply to current members as well. I do find it difficult to believe that the sort of breaches envisaged in this article are being committed by any of the present 15 member states—but if they are, we should be aware of them and shoulder perhaps invoke a procedure to deal with them. There might be some virtue in that.

I certainly believe that the Union should uphold and stand up for these rights, and if there are any breaches of the kind the hon. Gentleman has in mind a power should be created to bring offending member states to book.

Earlier, my right hon. Friend the Member for Llanelli (Mr. Davies) rather wickedly suggested to me in conversation that some of the European Union's current institutions might not be up to the mark in certain respects. Certainly, no one can sack the Council of Ministers. One could play around with these arguments endlessly, but I for one do not share the qualms expressed by Conservative Members about the article. I just wanted to prise out of the Minister a better understanding of the context that gave rise to the article, and of the situations that might trigger its use.

When I entered the House in 1966, three of the current member states in the Union were then autocratically governed. That is why I believe it important to buttress the idea that the chief obligation on a joining state should be to uphold these fundamental rights—hence my support for the new article.

8.45 pm

Mr. Howard

As the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) has said, I deployed my arguments on this matter fairly fully last Thursday and I do not intend to go over the same ground again. I would like, however, briefly to respond to the points that the hon. Gentleman has just made.

We start from the common position of wanting to do all we can to safeguard and advance basic human rights. The hon. Gentleman says that the treaty may not contain procedures at the moment that would enable a country seriously and persistently breaching fundamental human rights to be expelled, which would be my referred remedy if it ever came to it. My answer to that is put such procedures in the treaty. Just as the Government have put procedures into the treaty of Amsterdam to permit this much more unsatisfactory course to be adopted—depriving a member state of its rights but continuing to subject it to its obligations—so it would have been possible at Amsterdam to deal with the problem in the way I think preferable: providing procedures for expulsion.

It is not right to say, either, that on this alternative approach there would be nothing between the first step and expulsion. It would be perfectly possible for the other member states to give measured warnings to the offending state and to make it clear that unless it mended its ways expulsion would follow. So there is no question of expulsion coming out of the blue.

I suggested last Thursday that it was difficult to identify any precedent for the procedures that have been put in to the treaty of Amsterdam. The Minister has not volunteered any precedent. I do think it extraordinary to say of a member state, however badly it has behaved, that it will continue to be fully bound by all the obligations of the treaty but deprived of all its rights under it.

As my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) conceded in his speech earlier today, the procedure could be used and abused to take away the voting rights of a recalcitrant state. The hon. Member for Merthyr Tydfil and Rhymney calls that a fanciful scenario. perhaps so, but if this Committee is to carry out its responsibilities in relation to the scrutiny of a treaty, it is incumbent on us to identify scenarios that may not be very likely but which could be turned to the disadvantage of this country. It is also our duty to point out the dangers.

It is, after all, not entirely unprecedented for provisions in European treaties to which we have signed up and agreed to be used in a way that was never predicted at the time. One obvious example would be the way qualified majority voting procedures in respect of health and safety were used to introduce a 48-hour maximum working week. No one in the previous Government who agreed to QMV for health and safety measures at the time of the Single European Act ever contemplated their use to introduce a maximum length of working week. Indeed, none of my hon. Friends during the debates on that treaty made this point, to my knowledge. I have no doubt that had they made it that, too, would have been dismissed as fanciful or extremely unlikely.

The point is that we have a duty to examine the provisions of treaties such as this and to make sure that there is no scope for abuse or for their use in a way that may never have been intended or which might be to the disadvantage of our country. That is the basis on which I offered my observations on Thursday, and I remain unconvinced by the doubts expressed by the hon. Member for Merthyr Tydfil and Rhymney.

Sir Raymond Whitney

My right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) is right, and we would all agree that the Committee has a duty to examine legislation such as this, especially legislation of an international nature, to make sure that there are no traps or hidden dangers or faint possibilities that might endanger our national interest. However, there is a danger of that awareness and alertness turning into paranoia. We can take matters so far that they verge on the absurd.

I hope that there is no dissension on either side of the Chamber from the view that article F.1 of the treaty of Amsterdam is well intentioned and necessary. It is directed not only at the potential new members of the European Union, but possibly at existing members. It started as an initiative at the Copenhagen summit, where all attention was focused on the enlargement of the European Union, to which my party has traditionally attached a good deal of weight.

We want to ensure, of course, that the character of the European Union does not fundamentally change. That is what the article is surely designed to achieve. As the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) pointed out, before any candidate member is accepted, there is a test to be passed. We must recognise the possibility that a country can be in a state of grace and pass the test one year, but—especially in the case of democracies that are not deeply rooted—a few years later the standards achieved to pass the test may no longer be met. Therefore criteria are required.

By their very nature, such criteria cannot be spelled out in every last detail. I believe that the drafting of the treaty is adequate. I shall not read the treaty out; the hon. Gentleman mentioned it and we went over this ground in the earlier debate. It is clear enough. We know what we mean when we say that human rights are persistently and seriously breached. It is chopping logic to suggest that we do not understand. Even if one nation did not know, the other 14 or 15 would surely get it right.

Mr. Letwin

All of us throughout the Chamber know what is meant, and we all agree that it is necessary to do something about a member state in such circumstances. Does my hon. Friend agree, however, that sometimes, regrettably, there has been a tendency for the European Court to apply interpretations of clauses in treaties that go far beyond the ordinary meaning of those terms, with a view to establishing certain patterns of integration? Does he agree that that could give rise to the problems to which my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) alluded?

Sir Raymond Whitney

No, I do not agree. I suggest that my hon. Friend read article F.1 of the treaty. He will see that, before the matter ever came near the court, it would have to be approved by unanimity minus one—that one being the state in the dock. It is for the Council of Ministers to make the judgment and activate the other criteria—one third of the Council to bring the charge and two thirds of the European parliament to go along with the conviction, so to speak. At a subsequent stage, if the accused state wanted to apply to the European Court of Justice, it would have a right to do so.

My hon. Friend may fear what might happen to Britain, but that is another safeguard. There are so many hurdles in the procedure that we should rest assured. I am not saying, and my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) made the point that one cannot say definitively, that the world will not go mad tomorrow, but compared with the prospect of no such provision being included in the Amsterdam treaty, and compared with the risk of the provision being absurdly abused, common sense would judge that we need the provision.

Earlier in the debate, some pretty rum options were offered to the Committee. We were told that the provision might be applied to a Communitywide minimum wage. Our minimum wage would allegedly be set at too low a level, and that might be interpreted—or misinterpreted—as a serious and persistent breach of human rights. Misguided as the concept of a minimum wage might be, the possibility that Greece would be in a position to vote with the rest of the Community and condemn us does not bear contemplating.

We were told about the possibility that if we had—orerhaps if we did not have—abortion on demand, that would be seen as further evidence that we were in serious and persistent breach of human rights. Another such possibility might arise if we changed—or failed to change—the age of homosexual consent from 18 to 16. My hon. Friend the Member for Stone (Mr. Cash), who, happily, is not in his place, even mentioned the risk of paedophilia. How crazy can we get?

It is fun to have an after-dinner debate, but this is a serious issue. We want to ensure that any criticisms of the Amsterdam treaty—the Opposition do indeed have some criticisms—are legitimate and well founded.

My right hon. and learned Friend the Member for Folkestone and Hythe wants the treaty to contain a mechanism for expulsion. There might be a case for that, or perhaps such a mechanism exists already. I look forward to the Minister of State explaining the exact legal position, as the hon. Member for Merthyr Tydfil and Rhymney invited him to do.

Perhaps there could be a sanction of total expulsion, but the suspension option strikes me as sensible. This situation is posited: a state passes the entrance exam; it would be up to snuff to be allowed in. A few years later, things go wrong—a military coup, or whatever. Surely the sensible approach would be for the other member states—14, 21 or however many there are—to say to the offending state, "You are suspended. All the rest of us abhor what you are doing, and you are suspended until you return to the paths of righteousness." That would be the common-sense approach.

I hope that we will not pursue any amendment that would expunge article F.1, which is a perfectly sensible and necessary element in the Amsterdam treaty.

Sir Teddy Taylor (Rochford and Southend, East)

My hon. Friend the Member for Wycombe (Sir R. Whitney) and I have been in the House of Commons for a very long time. That being so, it is only fair to tell my younger hon. Friends that, although we have great respect for my hon. Friend's sincerity, kindness, aptitude and integrity—I am sure that he is kind to animals as well—he has been wildly optimistic about all the previous treaties that we have signed. There are those of us who have said that it would all end up in a horrible mess, and we have been proved right.

My hon. Friend has said that he is rather worried about the attitudes of some of those who occupy the Opposition Front Bench, right hon. and hon. Friends whom I regard as having great integrity and wisdom. At the same time, there is a great danger of over-optimism. We hear it said that things will work out in the interests of the people and it is to be hoped that all will go well. I hope that, on reflection, my hon. Friend—and certainly newly elected hon. Friends—will bear in mind what has happened.

So many glorious opportunities have been offered to us—for example, signing the treaty of Rome, enacting and implementing the single Act and signing the Maastricht treaty. I am certain that they have all worked out terribly badly for the people of Europe. I am thinking not of big business but of the people and how they have suffered. I am thinking also about the abuse of public money, of which some of my hon. Friends and I warned.

9 pm

My hon. Friend said that we did not need to worry about that, but think of all the money that we are spending on, for example, destroying food. I wonder how my hon. Friend can sleep at night while thinking about poverty in the world and misery in the United Kingdom against the background of the vast sums that are spent on destroying food as a result of the absurd policies that he and others are supporting.

Let us be extremely careful about agreeing to new and splendid sentences being written into treaties. Unfortunately, treaties are ratified and they look lovely—they state, in effect, that we are all in favour of nice things happening—only for the wretched European Court, or individuals, including some of the Euro-enthusiasts, to come along and to interpret legislation in a ridiculous way that causes us to wonder why we agreed to it in the first place.

I am sure that the hon. Member for North Durham (Mr. Radice), who has this moment entered the Chamber, will remember how we were passing rules to the effect that dumping would be handled by the European Union. We thought that that was all right because it was necessary only to prove conclusively that someone was selling something cheaper abroad than at home and that nasty commercial activity was taking place. We used to have a splendid organisation in this country that enabled us to take action if someone was dumping. There was an appeal process and it was necessary to provide evidence. What happens now? The Commission decides whether dumping has taken place. It comes to a conclusion and there is no appeal. No proof is required. Let us be extremely careful about approval, because things do not always work out as we would wish or think.

We must bear in mind the interests of big business. There are some who wonder why it is so enthusiastic about extending the powers of the European Union. It seems to me, however, that the reason is clear. Big business much refers to deal with organisations such as the Commission and other non-democratic organisations than with democratic Governments.

Philips, for example, can obtain a far better deal for itself by involving itself with the Commission rather than trying to deal with a democratic process. That being so, I hope that right hon. and hon. Members will be extremely careful. I hope also that they will support the amendment and not agree to the insertion of the ridiculous article F.1. Surely we should not vote in the House of Commons for something that is completely nonsensical. Article F.1 states that the EU is a democratic organisation. Younger Members—apart from the old gentlemen, my hon. Friend the Member for Wycombe and me—should think carefully. If they do, they will find that the EU stands basically for the destruction of democracy. All the things that we fought to reserve in a democratic process will be undermined by the EU.

Democracy means that the people's voice should count. It means that people should be able to express opinions and that others should listen to them. It is sad that in the context of the EU people's views do not matter and public opinion is largely irrelevant.

I shall give some examples from my own experience. For some time, I have been a member—there was only a brief interruption—of the Conservative party. The party has an annual conference where many of its supporters come together. The Conservative conference this year was held in Blackpool. Apart from the wisdom that we heard from those who occupy the Opposition Front Bench in this place, delegates were handing out badges. That is one of the things that we do in the Conservative party. We tend to demonstrate our affiliation to something by wearing badges. One of the badges read, "Save Duty Free in 1999". That is something that some members of the Conservative party support.

In fact, democracy can do nothing about saving duty-free goods. Even if every Member in the House of Commons, including the Prime Minister and my right hon. Friend the Leader of the Opposition, said, "We want to keep duty free in 1999," nothing could be done, unless there was a unanimous decision of the Council of Ministers to allow Britain to preserve the duty-free system.

I fear that the Conservatives, most unusually for them, were misleading themselves by handing out badges about preserving the duty-free system. Another wee badge was handed out about saving Britain's fish. I should love to save our fish, and I think that most Members of this place—especially young Members—would support me. Unfortunately, given the wording of article F.1, there is nothing that we can do to that end. If the Prime Minister, my right hon. Friend the Leader of the Opposition and all Front-Bench and Back-Bench Members were to say, "We shall save Britain's fish," nothing would happen. Decisions are made by a majority vote of the Council of Ministers. Why put in the words supporting democracy? It is not democracy at all. The democratic process can do nothing whatever.

Mr. Martin, you are, as we know, one of the most conscientious Members of parliament that we have, and you have a surgery just like everyone else. people come to our surgeries to complain. What do they complain to me about? A big deputation of 12 people, including a clergyman who brought a dog to show that he was fond of animals, came to see me. They asked me to vote to stop the export of live cattle. I had to tell them, "I am terribly sorry, but we cannot do anything about it," to which they replied, "Well, the Liberal Democrats support us." I said, "That does not really show anything. It is a sad fact that, even if you had a Liberal Democrat Government, which would bring many advantages, there is nothing you could do about the export of live cattle."

People complain to me about VAT, saying, "Why should we pay VAT on things that are wrong? Will you vote against it?" I have to say no. To that, some people might say, "Well that shows that you MPs are a useless crowd and you should have done something about it." But there is nowhere else to go.

Mr. Mike Gapes (Ilford, South)

Does the hon. Gentleman agree that the policies about which he is complaining were introduced as a result of the Single European Act, which was introduced by Baroness Thatcher and the Government whom he supported? Therefore, he should criticise himself rather than the European Union.

Sir Teddy Taylor

Younger Members who are conscientious and good attenders sometimes do not check their facts. I assure the hon. Gentleman that I voted against every single clause of the Single European Act. He is trying to make party political points when we are talking about democracy, and that is what is wrong with these amendments. Instead of people talking about democracy, freedom and liberty, they try to make silly party political points. I am glad that the hon. Gentleman has come to the debate, because quite a few newer Members do not bother, but please check up. Some of us have been warning and voting against this legislation time after time.

I also remind the hon. Gentleman that his Government are introducing this legislation. All Governments do this for the best of reasons. I knew Baroness Thatcher very well. She is a very fine woman who did great work, but she, like all Prime Ministers, started off saying, "Europe is in a mess. It is not going well. I am going to sit around the table and try to sort them out." She brought out what she thought was a very good treaty to try to improve free trade. In fact, it did not. The Prime Minister before her said that he was going to do the same.

The First Deputy Chairman

Order. The hon. Gentleman is going rather wide of the amendment. I note the examples that he has given. One or two examples are fine, but when he goes on at great length to give the Committee examples, he is going wide of the amendments before us.

Sir Teddy Taylor

You are absolutely right, Mr. Martin. I am sorry that I was distracted. This is what happens. We try to make a conclusive case, younger Members sometimes ask questions, which I am sure are well intentioned, and we get diverted.

The simple point that I should like to make is: how on earth can Members vote for a clause that is utter and complete nonsense? Can anyone say with any sincerity that things are decided in the European Union on the basis of democracy? Democracy means the rights of the people. What can the people do? Say, for example, Mr. Martin, your constituents said, "I am upset that £1.2 billion is spent on subsidising the growing of high-tar tobacco. I want to do something about it." I am sure that, with the splendid Member of Parliament that they have, they would ask, "What can you do about it?" The answer is absolutely nothing. [Interruption.] Hon. Members might laugh, but I assure them that some people feel very sincerely about the issue of tobacco. They think that it is shocking to waste money on subsidising the growing of high-tar tobacco. They think that the health risks of tobacco should be taken very seriously. Some hon. Members might disagree, but for goodness sake do not forget that many people think that.

What can people do? For whom can they vote? The sad fact is that, under the European Union, the powers have gone. people's views are of no consequence whatever. By all means, if we are to have treaties, let us put in things that are sensible. Do not write into treaties things that are simply untrue. That is vital. Happily, I have never been on trial, but I should hate to be tried by a law that was nonsense. How would hon. Members like to be tried on the basis of a law that was a load of codswallop and nonsense? Some unfortunate country—perhapsortugal, Greece or Britain—will be on trial, and liable to expulsion on the basis of a law that is utter nonsense, illogical and silly and does not add up. If someone is on trial, it should be on the basis of a law that is sensible.

I hope that hon. Members will think about my final point. My hon. Friend the Member for Wycombe and I know what goes on, because we have been around for a long time, but new Members may not be aware of it. Decisions are made in the European Union, not on the basis of what is right or wrong. The Council of Ministers is not like some of our splendid Select Committees with their excellent Chairmen. We ask what is right and what is wrong, what we should support and what we should oppose, whereas decisions in the European Union are arrived at by horse trading.

We may want to export beef because there is so much of it that we do not know what to do with it, and we may want the French and the Germans to support us. We would support them on one Council to get their support on another. That is worrying. Britain may do something that others do not like. Our splendid shadow Foreign Secretary is a man of integrity and toughness, but in government he may do something that others do not like. The danger is that we are creating circumstances in which we may be subject to such horse trading. It is a very bad thing indeed.

I hope that hon. Members will think carefully about the amendment. We have passed piles of laws, and we never know what we are doing when we pass these treaties, because the courts interpret them widely. We have some protection, because the courts would not take us up on the basis of this provision as they do with other provisions: we would have to have a vote beforehand. Quite honestly, it is silly to write something into a treaty that is nonsense. Any treaty that says that the European Union is founded on the principles of democracy is utter and complete nonsense. There may be good intentions, and those who support the European Union may think that it will do people good, although it has not yet shown that it will, but the plain fact is that we should not write into treaties provisions that are utter and complete nonsense.

Conservative Members have many attributes, but Labour Members in particular care about democracy. It mattered to the Labour party: people were prepared to be locked up and beaten up to protect the rights of working people. Sadly, the rights of working people are being undermined massively—in some areas, totally—by the European Union. I do not like it, and I do not think that the majority of people like it. We should not write nonsense into law, and those who argue that the European Union is democratic are misleading themselves. It is not true, it has not been true, and it never will be true. Let us get rid of this silly nonsense, and support this excellent amendment.

Mr. Swayne

I want to speak in favour of amendment No. 8. Several hon. Members have outlined the extreme unlikelihood of the provisions in article F.1 ever being brought into force. That begs the question: why is the article in the treaty?

This provision is difficult to oppose: after all, who could oppose the principle of human rights? However, there are widely differing conceptions of what constitutes a right and how it should be implemented. Those different conceptions arise from the different traditions and histories of member states. That is the proper way to implement such human rights.

The intrusion of the European Union into the realm of human rights in this article of the treaty is a retrograde step. As a consequence, because of differing national traditions, the form of human rights that is adopted will be diluted and remote from our view of human rights.

The treaty states that the European Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms and the rule of law. Those principles are common to all member states. They are fine-sounding words, but they bear only an approximation to reality.

Rights in England are usually understood as vetoes, such as the right not to be imprisoned without due process and the right not to have one's house searched or occupied. By and large, rights in the continental tradition have tended to be regarded as claims on the Executive, obligations that must be fulfilled. For example, such an obligation on the state might be the right to some form of social protection. It is precisely on the basis of that difference that my hon. Friend the Member for Wycombe (Sir R. Whitney) was wrong in not perceiving that there could be a dispute between member states on the basis of different perceptions of what constitutes a human right. It is all very well for my hon. Friend to rely on the good sense and fair play of other member states, but our experience in this matter bids us to be cautious.

My recollection of the case that we brought over the European working time directive is that the European Court ruled against us on the basis that what constituted a health and safety measure was what the Council of Ministers thought constituted such a measure. No protection is afforded by relying upon the words or their plain meaning.

It is questionable whether the member states even rely on any common understanding of the rule of law. Our understanding of the rule of law in England is based on the fact that the Executive are subject to the law because it makes the king. There is a different concept in some continental traditions. The treaty, which ignores the distinct European traditions and relies on the concept that is outlined in article F.1, is most definitely a step away from our tradition. What have we to gain from it, we who already have the advantage of habeas corpus and trial by jury? We have much to lose and little to gain. In that respect, it is instructive to note the way that article F.1, by being brought into the treaty, effectively demotes the old article F.1 which, of course, required the European Union to respect the different traditions of the member states.

9.15 pm

Mr. Doug Henderson

I have been called earlier than I expected. I am grateful to my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) for moving the amendment in a supportive way. He often does that, although not always. As the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) said in his short speech, there was much discussion on the issue to which the amendment relates during our debate on the earlier group of amendments. We are debating an important part of the Bill. The Government cannot accept the amendment, but I know that its purpose was to enable the Committee to debate the issues. I hope that my hon. Friend will eventually withdraw his amendment.

Hon. Members have asked about the expulsion procedures. They might find this strange, but there are no procedures for expulsion in the rules. As far as I am aware, there was no amendment to the draft documents that were circulated at the intergovernmental conference before 1 May. The previous Government did not table an amendment to insert an expulsion clause. I have checked with officials at UKREP in Brussels and as far as I am aware no amendment was tabled.

Where did the concept of expulsion come from? It came from the potential enlargement of the European Union. The hon. Member for New Forest, West (Mr. Swayne) asked what we had to gain. The answer is a constructive role in the EU's enlargement, to which the previous British Government were also committed and to which the Opposition, I think, are committed. It is an important issue, which we may discuss in more detail when we reach other clauses. We will certainly discuss it on Thursday in the debate in the House on the Luxembourg summit.

Enlargement is an important issue for Europe's future security and economic prosperity. We in democratic countries were the first to criticise the Governments in central and eastern Europe before 1988. Now we have to offer those countries the hand of friendship. We have to say that we want them to be part of our wider Community and that, if they can meet the conditions that have been laid down—we want to help them to do that—they can be part of the enlargement.

However, there has to be a little protection for the integrity of the European Union. That is why the provision is important. It is not so much that it is going to be used. I think that all countries would want to use it only as a last resort and after a serious and persistent breach of the regulations and repeated warnings that countries have to change their act. If they do not, the provision will be invoked. If, after all that, the nations of the European Union agree unanimously, except for the one country involved—at the moment, 15 minus one—and the European parliament has its say, a country could be suspended.

We would have to be extremely careful about how an expulsion provision is drafted because being a member of the European Union is a privilege and obligation not only for the nation, but for its citizens. One part of a nation being in serious and persistent breach of the basic obligations of EU membership does not mean that other citizens, who perhaps have nothing to do with that, but who have contracts with other EU citizens, should be penalised. That serious question has to be investigated if we are to introduce an expulsion provision.

That point was discussed in the short time that I spent at the intergovernmental conference, when the original proposals were considered. It was felt that a suspension clause, which could become permanent for the nation, although its citizens might still have certain obligations and privileges, would be in place unless the wrong was put right.

Mr. Cash

Has the Minister given serious thought to the question that I tried to raise earlier about the common principles that apply to the existing European Union? Has some form of analysis been made, even within the existing EU, let alone with any prospective new members, of what the common principles are in relation to democratic procedures, accountability, trial by jury, habeas corpus and such things? Otherwise, simply stating that there are common principles, which are supposed to be endorsed into our law as a result of these debates, is meaningless.

Mr. Henderson

I am sure that the hon. Gentleman has read the Commission document "Agenda 2000" on enlargement.

Mr. Cash

indicated dissent.

Mr. Henderson

I refer the hon. Gentleman to it. In it, the Commission outlines the sort of tests that a country has to meet to gain admission to the European Union. Many of those principles, which are accepted without any serious doubt by all EU partners, are the ones that, at the minimum, would apply. However, in response to a similar question, which the hon. Gentleman asked me in the Select Committee, I said that those principles change over time.

There are fundamental principles such as habeas corpus and others to which the hon. Gentleman referred, but others relating to the interpretation of democracy, the relationship between the police and the justice system and so on change as circumstances change. I think that the nations of the European Union are sensible enough to interpret that fact. It is a political interpretation, which was an important point made by the right hon. and learned Member for Rushcliffe (Mr. Clarke). I am satisfied on that point and I know that our partners in the European Union are too.

The hon. Member for Wycombe (Sir R. Whitney) put it as well as it can be put, if he does not mind my saying so, when he said that article F.1 is well intentioned and necessary. I hope and believe that it will be interpreted sensibly by nations. We are all clear about the reasons for it: when the new countries, which have changed a great deal over the past 10 years, apply to join the European Union and begin to meet some of the economic criteria, they know that they must enshrine in their democracy the political test put to them. Their response must be lasting and sustained; if not, they would risk being caught under the article. The importance of the article is that it concentrates the minds of new countries and, indeed, our own on ensuring that we continue to meet those desirable standards. With that explanation, I hope that my hon. Friend the Member for Merthyr Tydfil and Rhymney will feel able to withdraw the amendment.

Mr. Rowlands

On this occasion, I accept my hon. Friend's reasons for not accepting the amendment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Howard

I beg to move amendment No. 3, in page 1, line 13, after '2', insert '(except paragraph 19)'.

The First Deputy Chairman

With this, it will be convenient to discuss the following amendments: No. 4, in page 1, line 13, after '9', insert '(except Article 2 paragraph 22)'. No. 59, in page 1, line 13, at end insert 'except Article 2(3)(c)'.

No. 34, in page 1, line 13, at end insert 'other than in Article 2, paragraph 19)'. No. 36, in page 1, line 13, at end insert 'other than in Article 2, paragraph 22)'. New clause 21—Appointments to Employment Committee— '.—Pursuant to Article 2 of the Treaty of Amsterdam, paragraph 19 (Cmd. 3780, age 31), Her Majesty's Government shall make appointments to the Employment Committee in consultation with employers' and workers' organisations.'. New clause 27—Social Chapter: Report to parliament— '.—Her Majesty's Government shall make a half-yearly report to parliament on the implementation of Article 2, paragraph 22 of the Treaty setting out the United Kingdom legislation and employment implications arising from the new Employment Chapter and Social Chapter as agreed in the Amsterdam Treaty which shall be subject to resolution by each House of parliament.'.

Mr. Howard

The amendments deal with European social policy, in particular the scrapping of Britain's opt-out from the social chapter, and the new employment chapter agreed at Amsterdam. Let me make it clear at the outset that the Conservative party is opposed to both. We believe that they will lead to more regulation, less flexibility and lost jobs. They are bad for Britain and bad for Europe.

In 1992, my right hon. Friend the Member for Huntingdon (Mr. Major) negotiated an opt-out for Britain from the social chapter. That was no mean achievement. It was a hard-won gain which was warmly welcomed by British business. Even Jacques Delors acknowledged that it was an excellent deal for Britain. The United Kingdom would, he said, become a paradise for Japanese investment". That prediction has been amply justified.

Let us consider the facts. The United Kingdom is the No. 1 destination for inward investment. In 1995–96, Britain attracted a third of all inward investment into the European Union. That included more than 40 per cent. of all Japanese and American investment and more than half of all Korean and Taiwanese investment. With this investment have come jobs—British jobs.

The UK has a higher proportion of its working population in work than any other major European Union country and, unlike France, Germany or Belgium, our unemployment rate is well below the European Union average. The truth is that because we have a flexible labour market, excellent industrial relations and low overheads, Britain is a good place in which to do business.

Our strike rate has been lower than the European average for the past nine years and we have the lowest labour overheads of any member of the European Union. For every £100aid in wages, employers must add non-wage costs—such as social security contributions and health insurance—of £32 in Germany, £41 in France and only £18 in the United Kingdom. It is those non-wage costs, not the level of the wages themselves, that do such damage to a company's ability to compete. By signing up to the social chapter, the Government risk having those burdens imposed on British business—burdens that will chip away at our competitiveness, destroying British jobs.

Ministers talk endlessly of the importance of job creation. The trouble is that they fail to understand how jobs are created. As the chairman of the German equivalent of the Confederation of British Industry has said: Excessively high German labour costs are costing more and more German jobs. On another occasion, he said: we have too rigid labour laws. We have too high social costs and taxes. We have the shortest working week in Europe. The German Government spends 50 per cent. of GDP as opposed to 42 per cent. in Britain. No wonder we have problem.

The chairman's assessment is backed up by The Wall Street Journal, which pointed out that Britain imposes a much lower burden of social charges on employers than any other European country. British social taxes were less than half those in Switzerland, 40 per cent. of those in Germany and 29 per cent. of those in France.

The French newspaper Le Monde has explained that if unemployment is dropping in Britain it is because they have done everything to deserve it. For several years, considerable efforts have been made to improve the workings of the labour market, thereby boosting job and new company creations".

What, then, are the benefits that our opt-out from the social chapter has denied us? What is the pressing need that has not been met since that opt-out was won? What is the injury, the damage and the detriment that the opt-in agreed at Amsterdam is supposed to remedy? The Government have never answered those questions. Why? Because there are no such benefits and no such need. There is no injury, damage or detriment. If there were, it would be perfectly possible for this parliament to remedy it.

9.30 pm

I understand that the Labour party has different views on these matters from Opposition Members. No one who saw the Minister of State, Department of Trade and Industry reply to yesterday's debate on burdens on business could be in any doubt that old Labour is still alive and kicking. The Government have a large majority. If they take the view that further social legislation is desirable, they can introduce such legislation in the House. There is no need to make—and no justification for making—our economy vulnerable to measures imposed on us against our will by the European Commission and other member states.

The Prime Minister once pretended that such an imposition could not happen. He once claimed that we could pick and choose the elements that we wanted to accept. The Prime Minister and the Government would be powerless to prevent damaging measures being imposed on the United Kingdom against our will because, under the social chapter, so many subjects are decided on the basis of qualified majority voting.

The Government are keen, when it suits them, to pray in aid the views of the director-general of the CBI. They would do well to listen to him on this subject. If you sign up to the social chapter, he warned, you can't actually be sure that you'll have your way, because some directives will be covered by qualified majority voting. There is, however, a way to pick and choose, and that is available to the Labour party if it wants to have it as its policy. The way to pick and choose is actually not to sign up to the social chapter. The president of the Board of Trade has already come up against the problem. As my hon. Friend the Member for Sevenoaks (Mr. Fallon) pointed out in yesterday's debate, when the president of the Board of Trade—having told BBC television's "On the Record" that she did not support Commissioner Flynn's proposals for national works councils—was asked how the Government could prevent the proposals becoming law, as they would be introduced under qualified majority voting, there was a long pause and then she said: Well, er, we shall see how things go. That is the clarion call of the president of the Board of Trade to British business.

Under the social chapter, legislation in any of the following areas can be adopted by qualified majority vote: working conditions, informing and consulting workers, equality between men and women in relation to work opportunities and treatment at work, the integration of people excluded from the labour market, and health and safety at work. The social chapter allows burdens to be imposed on business in virtually all areas of social and employment policy.

Already, two pieces of legislation have been introduced under the social chapter: the European works councils directive and the parental leave directive. The more profound danger of the social chapter, however, lies in the potential it provides for more far-reaching social legislation, such as the European Commission's proposal for national works councils. The existing works councils directive affects only large, multinational companies, but Commissioner Flynn has suggested that companies with as few as 50 employees should be forced to set up works councils. What is to be gained from agreeing to provisions that would enable British firms to be forced to do that? The Government are opposed to the proposal. A raft of further social legislation is currently under review.

The treaty also contains a new employment chapter. It makes member states' employment policies a matter of common concern and requires member states to co-ordinate their action in that respect within the Council. The European Council will consider the employment situation each year and adopt conclusions. On the basis of the European Council's conclusions, the Council, acting by a qualified majority on a proposal from the Commission and after consulting the European parliament, the Economic and Social Committee, the Committee of the Regions and the Employment Committee…shall year draw up guidelines which the Member States shall take into account in their employment policies. Member states will also be required to submit an annual employment report to the Commission. Once again, the Council, acting by a qualified majority on a recommendation from the Commission, may, if it considers it appropriate in the light of that examination, make recommendations to Member States. Employment policy will cease to be a matter for individual member states. Britain's employment policy will become a matter for all European Union members. Guidelines which "shall"—not "can" or even "should"—direct employment policy will be determined by qualified majority vote in the Council. If the Commission and the Council are not happy with a member state's efforts to harmonise employment policy, they can, again on the basis of qualified majority voting, make recommendations to that member state.

What repercussions could such a chapter have? What guarantees can the Minister give us that it cannot be used to impose on this country an employment policy that we oppose and which would destroy, not create, jobs? What assurances can be given that a British Government will not find themselves having to support and implement employment policies that may be wholly inappropriate or unrealistic? Is it not the case that the European Court of Justice could interpret the employment chapter as placing a duty on the British Government to pursue employment policies dictated by other European states—policies that could well be against Britain's national interest?

Under the new employment chapter introduced at Amsterdam, we can expect yet more interference and regulation. In particular, the treaty introduces a mechanism for so-called "incentive measures" which will be adopted by qualified majority vote. That is a potential source of expensive employment programmes for which we would have no need, but for which the United Kingdom would be expected to pay. Will the Minister explain the scope of the "incentive measures" that can be agreed by qualified majority voting under the employment chapter? Is it not the case that moneys could be voted under those provisions to finance worthless schemes in other countries despite the opposition of the British Government?

The future of our country and of all our fellow citizens depends on our ability to earn our way in a world that is more fiercely competitive than ever. In that competitive world, all the crucial decisions are made at the margin. Marginal differences in price, in quality and in delivery can make all the difference between winning orders and losing them, between creating jobs and destroying them and between building prosperity and undermining it. Over the years, Conservative policies have given this country a critical competitive advantage that has enabled the British people to win orders, to create jobs and to build prosperity.

The cumulative consequence of the Government'solicies—of which their signing up to the social chapter is one of the most prominent examples—will be the destruction of that critical margin of competitiveness. It will happen throughout the country, particularly to small and medium firms. In the end, we shall see what we have seen under every Labour Government—newspaper headlines that read, "Unemployment up again".

That is the harsh reality behind the debate. It is why the Conservatives will continue to speak up for the men, women and children throughout the country who will lose out. There is only one sure way to protect the country from those unwanted burdens—to stay outside the social chapter. We should keep our opt-out and delete the provisions from the treaty. That is why I invite hon. Members to vote for amendments Nos. 3 and 4 and new clause 27.

Mr. Laurence Robertson (Tewkesbury)

My background is in industry. I started on the shop floor at the age of 18 and eventually moved into industrial management. I have had many clients over the years and worked with many thousands of people. I have also been active in small business—it was getting smaller and smaller—for about 14 years. The nearer the election came, the smaller it got.

I have also been unemployed. I know how wasteful unemployment is of people's energies and talents. I know how hard it is for families. Unemployment is my main concern. The social chapter and a range of other measures from Europe will cause unemployment.

The social chapter does not contain a great deal at the moment. It is a procedure. However, that is what makes it dangerous. Not only could it grow to incorporate many things, but the countries involved in it could move on to the social charter. They have agreed to move towards it. That would involve many more measures than are contained in the social chapter. We should consider that carefully.

Europe has had employment regulations for many years. That is why growth in Europe has been comparatively sluggish. European countries have had low levels of job creation, particularly compared with the United States. My visits to the United States have shown me that, much though I like the country, it is hardly as efficient as Britain. However, it is less regulated. That is the difference between the United States and the European Union.

There is high unemployment in the European Union. Unemployment is lower in this country. That is not a coincidence. Our unemployment rate is approximately 7.2 per cent., as against 10.6 per cent. on the continent. Why is that? We have been doing well for some years, but we cannot be complacent. There are many threats to the well-being of our national economy, not just from Europe. Economies across the world are starting to challenge us. Those low-tax, low-spend economies are creating jobs and growth. They are a direct threat to employment in this country. We must be conscious of that.

How do we meet that threat and come out on top? We cannot do it through the old jobs-for-life syndrome. Those days are long gone, regardless of which party is in government. We have to do it through efficiency. Will the social chapter and all the regulations that are coming from Brussels help us to be more efficient? They cannot. It is no coincidence that we are doing so much better than other European Union countries. We do not have the labour laws that exist on the continent. We do not have the social chapter. We have better industrial relations and fewer add-on labour costs. In short, we are basically less European.

What do we mean by less European? It seems that we are attracting a great deal of investment into this country for one reason: we are so much better than the rest of Europe. If we were exactly the same as the rest of Europe, I should have thought that inward investment would have gone right to the geographic centre of Europe. It would make sense to invest in the very centre. The Japanese are not investing in the very centre of Europe, because it is not as efficient as this country.

9.45 pm

As my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) said, we must look at the add-on labour costs—the extraordinary amount that it costs to employ a person in Germany, and on the continent generally, compared with this country. The difference between what it costs to pay somebody and what that person takes home is crucial. In Germany, it costs a fortune to employ a worker, but that worker does not take as much home. That crucial difference creates jobs. Jobs are created not by Governments, regulations or even businesses, but by customers with money in their pockets.

The social chapter and all the employment laws that are coming forward will stifle business in this country. As my right hon. and learned Friend said, if the measures are so good, why cannot the Government introduce them in this country? When they are found to fail, the Government could repeal them in this country. If companies want to live by the rules and laws anyway, that is a matter for them.

The debate is about something more important than just the contents of the social chapter. I refer to a letter that I received only yesterday from a company in my constituency. It states: My company is product of the Thatcher revolution. Founded in 1984 with just eight people, we now employ approaching 300. Our growth is directly attributable to changed attitudes in both the factory floor and management. We have built up a worthwhile export business. What I do not understand is why sensible British businessmen should see any advantage in belonging to such a high cost club. That is the crucial point. The regulations have not helped that man to build up his business. He describes very well what has helped him to do so: efficiency.

The social chapter is bad in itself, but the issue goes an awful lot deeper. Taken with a range of other things, it is about who governs Britain. We have the social chapter and economic and monetary union, under which the monetary and fiscal policies of countries that join it will be determined not in each country, but in Brussels.

I am not frightened to address the issue of sovereignty. I know that we have had a little debate about sovereignty, just on Conservative Benches. We should not walk away from it. Sovereignty is not just some romantic theory. It enables us to create the economy that suits our own industry, our own businesses and our own work force. We should not be afraid to claim the right to govern ourselves in the areas of employment, monetary policy and fiscal policy.

We have done remarkably well in this country. I speak genuinely on behalf of people on the shop floor. I am concerned about their jobs. I see a great threat to jobs in this country. We need only look across to Europe to see the 18 million people who are unemployed. Do we want to join them and go along with the sluggish growth that we have seen in Europe for far too long, or go our own way and be able to compete with the Asian tigers and all the growing economies in the world?

Mr. Gapes

Listening to some of the Conservative Members' speeches has reminded me of the old saying, "Just because you are paranoid doesn't mean they are not out to get you." Conservatives have the view that, as the hon. Member for Tewkesbury (Mr. Robertson) said, we are less European. Geographically and culturally, people in the United Kingdom are European. We have been members of the European Community and then the European Union for many years. We have had a role and we have had an opportunity to shape the future of Europe and the European Union.

Anyone listening to the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) would have assumed that he was making his speech in March or April of this year. The fact that the Conservatives went down to an election defeat and that the British people overwhelmingly rejected the party that was opposed to the social chapter seems to have escaped him. He did not seem aware of the fact that a majority of people in this country wanted us to join the social chapter. The majority wanted the right to consultation for workers and the right to parental leave. [Interruption.] The hon. Member for South-West Devon (Mr. Streeter) is shouting from a sedentary position.

Mr. Swayne

Will the hon. Gentleman give way?

Mr. Gapes

In a moment. I am addressing my remarks to the hon. Gentleman who is shouting at me.

The Chairman of Ways and Means (Sir Alan Haselhurst)

Order. I hope that the hon. Gentleman is addressing his remarks to the Chairman.

Mr. Gapes

I apologise, Sir Alan. I am happy to give way to the hon. Member for South-West Devon if he wishes to make a point without shouting at me from a sedentary position. He obviously does not, so I shall give way to the hon. Member for New Forest, West (Mr. Swayne).

Mr. Swayne

Given the huge majority that the Government achieved, they could enact whatever social protection they wanted for the British people. What was to be gained by giving away our right to prevent social protection provision of which the Government might disapprove and which might cost jobs?

Mr. Gapes

Nothing has been given away, in the sense that the hon. Gentleman suggests. We have gained the right to influence discussion in a European Union with a single market containing multinational companies and transnational corporations that operate in this country. The largest of those had already started to apply the provisions of the social chapter to their work forces in the European Union single market, including those employed in the United Kingdom. Therefore, by signing up to the social chapter, the British Government and people have an opportunity to influence provisions that are already being applied and are indirectly influencing employment conditions for employees of British companies that are subsidiaries of European or multinational companies.

Mr. Swayne

Will the hon. Gentleman comment on the fact that the social chapter has remained a dead letter and has not influenced employment practices, because other member states were not prepared to disadvantage themselves through regulations that did not apply in this realm?

Mr. Gapes

The hon. Gentleman should consult some of the largest multinational companies that operate in Germany, France, Italy and the United Kingdom and ask them whether they had adopted different provisions that affected the way in which they treated their employees. In many cases, they had not.

Mr. Howard

If business is so keen on the social chapter, why has even the director-general of the Confederation of British Industry advised against doing anything about the opt-out, as I pointed out in my speech?

Mr. Gapes

This Government have to represent the interests of workers as well as those of big business. The hon. Member for Rochford and Southend, East (Sir T. Taylor) made disparaging remarks about big business, but business wants Britain to be at the heart of developments in the European Union. We have a responsibility not just to business, but to employees. The rights to consultation, paternity leave, paid holidays and, under other provisions, limits on the number of hours worked should be protected by a Government who care about the people as a whole. I am pleased to say that since 1 May we have had such a Government in this country.

Sir Teddy Taylor

What does the hon. Gentleman think is causing the horrendous level of unemployment, which is getting worse, on the continent of Europe?

Mr. Gapes

For the hon. Gentleman's information, unemployment in this country has fallen since the Labour Government signed up to the social chapter. Therefore, the argument that increasing unemployment is related to the social chapter cannot be used—it is palpably untrue. There are many complex reasons for unemployment. They include our position in the business cycle, which is why my right hon. Friend the Chancellor of the Exchequer has said that we do not meet the convergence criteria for the single currency. The business cycle in different European states is at different points.

Other practices in European countries have not contributed to falling unemployment. They have older industries that have not shed employment as this country did in the 1980s. There are many complex reasons, but I suspect that I shall be told that I am drifting away from the subject of the amendment, so I shall not go down that line further.

It is essential that this country contributes to shaping the social and employment policies that the EU develops. If we are to do that, we need not only to build co-operation and partnership with other member states, but to bring into the domestic debate the important concept of social partnership. That is accepted widely throughout the rest of EU among Christian Democrats, Liberals and Social Democrats.

Mr. Swayne

Shame.

Mr. Gapes

The hon. Gentleman says, "Shame." The European People's party—the group in the European parliament of which Conservative MEPs and their party are members—talks about the social partnership. It believes that it is important to have a dialogue and a relationship with both sides of industry, and that it is important to build consensus on employment legislation for the future of all the people of this continent. That European model—the Christian Democrat, Social Democrat and Liberal consensus on the socialartnership—will lead to success in European economies in the long term.

Mr. Letwin

I am grateful to the hon. Gentleman, who has been extremely patient. Moreover, by sitting down for a moment, he may rescue himself from imminent explosion. How many years of persistent high unemployment on the continent of Europe would it take to convince him that there is a structural problem? Would 20 do, or 30, 40 or 50? At some point, presumably, his view of the economic cycle would collapse. Could he give us some guidance?

Mr. Gapes

I dealt with that point in my answer to the hon. Member for Rochford and Southend, East. Regrettably, since 1945, living standards in this country have fallen below those of France and Germany. That is not unrelated to the fact that, for the bulk of that period, this country has, unfortunately, been under Conservative Governments. According to recent statistics, living standards in this country are below those of EU countries which, historically, were not as affluent as the UK.

In European countries, there are currently some problems with unemployment, which is unfortunate. That is why the EU summit at Amsterdam decided that we needed co-ordinated measures among the different states. That is why the Swedish Government—with the support of the British and French Governments—proposed that an employment chapter be contained in the Amsterdam treaty. That is a positive and important step. Last week, I said that the employment chapter was limited, and it does not go far enough. More work can be done in that area. The important principle is that there is a commitment that the European Union is about not only the single market but social aspects and employment.

We are trying to create a people's Europe, a Europe not only for those who can move money around and are in charge of big business but for those with economic and social aspirations and employment aspirations.

Mr. Swayne

Does the hon. Gentleman accept that large companies that can afford compliance favour the social protection legislation of which he has spoken, and that small companies, which cannot afford that compliance, are being driven out of business to the advantage of the large companies that increasingly dominate the market?

Mr. Gapes

If the hon. Gentleman studies the social chapter and the social provisions, he will notice that there are size limits in the regulations and that the smallest companies are not expected to comply.

It being Ten o'clock, THE CHAIRMAN left the Chair to report progress and ask leave to sit again.

To report progress and ask leave to sit again tomorrow.—[Ms Bridget Prentice.]

Committee report progress; to sit again tomorrow.