Orders of the Day — The Economy

Part of the debate – in the House of Commons at 7:47 pm on 28th November 1989.

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Photo of Bill Cash Bill Cash , Stafford 7:47 pm, 28th November 1989

That is a perfect illustration of the need for greater understanding and information about the manner in which the treaty of Rome has operated. Up to and including the Single European Act, there has been adequate opportunity for co-operation. I believe that what we should be doing, and what we are doing on behalf of Britain is to ensure that there is some flexibility, so that we are not bound hand and foot to what a panel of central bankers determines. We should also ensure that we are not bound by the concerted attempts of other countries to make their economic policies prevail at the expense of ours.

In the original treaty of Rome, in the articles that deal with economic and monetary co-operation, the word "co-operation" appears and it is carefully preserved in the Single European Act. However, now they are trying to move the goal posts. As President Mitterrand said on 17 October, they do not merely want economic and monetary union, as opposed to co-operation, but political union. That is the basis upon which the new federalism is being constructed.

That is no joke. After 20 years of automatic progression by stealth, we find that we have blown their cover during the past year. In effect, we are now being threatened that, if we do not go along with something that is not in the treaty—contrary to what the hon. Member for Greenock and Port Glasgow (Dr. Godman) has just said—but a new set of rules, and we will be marginalised into one of the outer concentric circles of Europe. That is what is being devised by Delors and others. We will no longer have any control over Britain's economic policy.

Perhaps the Opposition are waiting to see what we do at the summit on 8 December. However, during the debate on economic and monetary union a few weeks ago, hon. Members on both sides of the House agreed that we would not pursue stages two and three of the Delors plan. I expect that we will resist the attempts to take us down the federal route, despite the political difficulties posed by the threat.

However, we still have a major problem. Under the present Government's policy we have effectively reconstructed our economy since 1979. In the early 1970s we threw away a golden chance, when we had the opportunity, to make certain decisions. My right hon. Friend the Prime Minister has been prepared, during the last few years, to take those decisions which were ducked at the time. However, the challenge to us as a nation, and to our will power, is the need to increase productivity, quality and saving, as they are necessary to put us back into competition with our rivals in Europe. The management and work force of Britain, aided by a structure that can be provided by the Government, are the only people who are able to produce the goods for the benefit of the British people.

Let us consider France and West Germany, where there is massive state aid. We have the recent example of Renault, which is a state-owned company that has had to withdraw from the position it had adopted—presumably with the full knowledge and connivance of the French Government who provided massive state aid.

Italy is doing the same. We know about that from figures recently produced by the Commission. The percentage of state aid in Britain is rapidly declining. However, other countries in the European Community are engaged on a policy to get inside the rules before 1992 bites.

West German companies have increased investment in Britain by as much as 200 per cent. in the past few months. For example, there has just been an agreed merger between Morgan Grenfell and the Deutsche Bank.

There have been massive increases in the amount of money made available to the southern parts of Italy, through the structural fund. The system is being abused and that is combined with massive fraud, yet the system provides an opportunity for a strong, liberalised, deregulated economy.

Britain will do well, but we have to take the opportunities open to us. We must be vigilant and ensure that other member states do not take us for a ride.