European Union

Bills Presented – in the House of Commons at 3:35 pm on 1st March 1995.

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Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons 3:35 pm, 1st March 1995

I have two short announcements to make before we begin the debate. First, I have selected the amendment standing in the name of the Prime Minister. Secondly, so many Members want to participate in today's debate that I have put on a 10-minute limit from 7 o'clock; but I would hope that Members fortunate enough to be called before then will voluntarily limit their speeches. I want to hear as many voices as possible in this debate.

Photo of Tony Blair Tony Blair , Sedgefield 3:45 pm, 1st March 1995

I beg to move, That this House does not support Her Majesty's Government's policy towards the European Union and does not believe it promotes the interests of the British people. The case that we make today is that it is in Britain's interests to be fully at the heart of Europe. So far from pandering to Conservative Members who may take a different view, let me say at the outset that I intend to try to deal with their arguments head on. Let me also tell our Ulster colleagues that I support the Government's position on Northern Ireland and that that support will not change. The crux of this debate, therefore, is not the parliamentary arithmetic but the policy towards Europe.

At each stage I shall set out the Labour party's position, and I shall then ask the Prime Minister to clarify the Government's. Let us dismiss straight away, however, the bogey of some federal united states of Europe. The choice is not between a federal and a non-federal Europe. The true choice is whether Britain's interests are best served by remaining at the heart of Europe, engaging constructively with further European co-operation; or by retreating to a different relationship altogether with the European Union. Both are logical and sustainable positions, but they imply quite different visions of Britain's future.

At one time the position of the Government was clear. It was the Prime Minister himself who said, just a short time ago: It is absurd to believe that Great Britain would voluntarily separate itself from the mainstream of European development … Great Britain stands at the centre of Europe and will remain as such. Indeed, at an earlier stage he even said: There is no more important issue facing the European Community than the path we choose towards economic and monetary union. We are all committed to this goal. That is no longer news. Of course the right hon. Gentleman was right to want to be at the centre of Europe. Europe and NATO have given Britain and Europe peace. The single market, now combined with a proper social dimension, offers huge opportunities to British business. British businesses such as ICI, British Steel and British Telecom can only gain if competition rules are enforced across Europe. The European Union acts as a powerful magnet to inward investment. And British people—we support this—have been given rights: decent health and safety, equality for women, fair treatment for part-time workers. In our view at least they would gain more were we to join other Governments, Labour and Conservative, in the European social chapter.

Britain has enhanced its voice in the world through Europe, especially in trade. It offers, therefore, a range of chances across a range of areas, from research to the environment to technology and infrastructure, to act and co-operate where the nation state is insufficient.

The question is: do the Government still believe that we should be at the centre of Europe in future co-operation, or has their position changed? That is the question in the debate.

Photo of Mr Richard Tracey Mr Richard Tracey , Surbiton

Will the Leader of the Opposition clarify one point? In recent years, the party that he leads has changed its mind five or six times on its attitude to Europe, and in his time in the House he has himself changed his attitude to Europe several times. How can Europe or Britain take the Labour party seriously on the matter of Europe?

Photo of Tony Blair Tony Blair , Sedgefield

For those who do not know it, this is all set out in the Conservative research department brief. [HON. MEMBERS: "Answer the question."] I will answer it. I would prefer to be leading a party that was anti-European and is now pro-European than leading a party that was pro-European and is becoming anti-European.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

Will the right hon. Gentleman comment not just on his party's position but on his own position and the views that he put forward in his election address in 1982 and 1983, when he actually stated that the EEC removed Britain's freedom to pursue its own economic policies? Will the right hon. Gentleman tell us whether that reflected his own view and, if it did not, why could he not have pursued the course taken by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who made no mention of the European Community in his election address?

Photo of Tony Blair Tony Blair , Sedgefield

I can think of no one worse to level the charge of inconsistency than the right hon. Gentleman, who took Britain into the exchange rate mechanism and the Maastricht treaty. With all due respect, he is the one who has to explain the changes—[Interruption.]

I was asking whether—[Interruption.]

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Order. That includes the Government Whips.

Photo of Tony Blair Tony Blair , Sedgefield

I was asking whether it was the case that the Government's position of being at the centre of European co-operation has effectively changed. I think that it has and, with gathering force, the centre of gravity in the Conservative party is shifting and shifting fast.

Just consider it. The nine Whipless Tory Euro-rebels publish a separate manifesto calling, in effect, for withdrawal from the European Union. What was remarkable was not that document but the reaction to it. Almost immediately the Chief Secretary took to the airwaves to say that there was much common ground between the rebels and the Government. Not one single Minister condemned it.

Indeed, at times over the past few weeks, the Euro-rebels have appeared to be almost like some alternative Cabinet. Perhaps in time they will be. Perhaps the fate that awaits the hon. Member for Billericay (Mrs. Gorman) is to become the Foreign Secretary in a future Portillo Government, or the hon. Member for Wolverhampton, South-West (Mr. Budgen) is to become the Chancellor in a future Government. At least, I suppose, that would mean that the top two economic spokesmen in the Government agreed.

Photo of Patrick Cormack Patrick Cormack , South Staffordshire

Will the right hon. Gentleman give way?

Photo of Tony Blair Tony Blair , Sedgefield

Later.

The former Chancellor of the Exchequer has said that we should contemplate withdrawal from the European Union. A former vice-chairman of the Tory party says that he wishes that we had never joined. Daily, there are fresh converts to that cause, most noticeably recently the right hon. Member for Brent, North (Sir R. Boyson). On Monday, another sceptic document was published. It was rewarded with a Prime Ministerial foreword no less, praising it as a lively contribution to the debate. The only people, apparently, who cannot debate Europe, are the Cabinet who have responsibility for it.

Lord Tebbit, Baroness Thatcher: their views are well known. I thought it most interesting that, at the Tory youth conference a couple of weeks ago, when the row was at its very height, not a single Minister was called to defend the pro-Europe position—not one. The Home Secretary went. What did he do? He pandered to them. There was no defence of the Union, no explanation of its benefits. One can tell a lot about a party from the buttons that the politicians press for applause.

There remains, of course, a group of pro-Europeans, but they are increasingly beleaguered. Indeed, Lord Tebbit, when asked whether the nine Tory rebels were not damaging the party, said, "There are nine MPs damaging the party, but unfortunately they are all in the Cabinet." [Interruption.] They may wear the badge with pride, let us say.

The result of all that, at best, is immobility in policy, and, at worst, retreat. That is most clear over the single currency, to which I shall now come.

Photo of Patrick Cormack Patrick Cormack , South Staffordshire

Is the right hon. Gentleman really seeking to persuade the House that he, surrounded by the hon. Members for Bolsover (Mr. Skinner) and for Great Grimsby (Mr. Mitchell), and by the right hon. Member for Bethnal Green and Stepney (Mr. Shore), leads a united party on Europe?

Photo of Tony Blair Tony Blair , Sedgefield

In my speech I shall deal specifically with the issues of division in both parties. But let me tell the hon. Gentleman what the difference is: my position is clear. Is the Prime Minister's?

That is most clear over the issue of the single currency. Let us remind ourselves: at the beginning of February, the Chancellor was calling for an open, sensible debate about the single currency and its merits. Is that not right? Within two weeks, such was the disarray that the entire Cabinet was asked to undertake some Trappist vow of silence. We are therefore in the extraordinary position that Ministers, including the chief economic spokesman of the Government of Britain, cannot speak on a vital issue of national importance.

Indeed, let me draw attention to the Secretary of State for Employment, who, the day after the injunction not to speak, attended a Rotary club lunch at the Marriott hotel. I read from The Times: Mr. Portillo toned down his usual Euro-scepticism so much and refused to comment on so many points, that guests were forced into asking him questions about the food they were eating.

Photo of Tony Blair Tony Blair , Sedgefield

As my right hon. Friend says, they probably got better answers.

These issues do not demand to be suppressed. They demand to be answered and the principles governing them resolved.

Several hon. Members:

rose—

Photo of Tony Blair Tony Blair , Sedgefield

I have taken some interventions from one wing of the Conservative party. It is only fair to take one from the other.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Southend East

As the Leader of the Opposition rightly pointed out, there are divisions on both sides of the House, as we well know. He accepts that the issue is important. He must also accept that people have changed their minds. Is the right answer, when we are very near the edge, simply to seek the views of the people of Britain as to which way they want to go? In a democracy, is not that the right way to go ahead, instead of throwing things across from one party to another?

Photo of Tony Blair Tony Blair , Sedgefield

I am coming to the referendum issue. I have already said that, if progress is made towards the establishment of a single currency, it must be made with popular consent, whether that consent is established by a referendum or by other means. I must tell the hon. Gentleman, however, that a referendum will not ultimately absolve the person concerned of the need to decide what his position is. A referendum is a means of obtaining popular consent; it is not a substitute for government.

The single currency raises three sets of issues—economic, political and constitutional. Let us take them in turn. In the context of the economic conditions, it is correct to say that if there were monetary union without real economic convergence, a single currency would be bad. If economies were locked together when they differed widely in strength and performance, unemployment in the weaker ones might result. If there were real convergence, however, a single currency could have benefits. That is the Labour party's position—and, indeed, following his recent speech, it seems that it is effectively the Chancellor's position.

The political question concerns the issue of popular consent. Again, some agreement is possible in that regard.

The key question, however, is constitutional. Is a single currency, as a matter of principle, inconsistent with our identity as a nation state? Does it imply a federal Europe? Is there, therefore, a constitutional barrier? If there is, we should not join, even if the economic conditions are right.

On that issue, many Cabinet Ministers have expressed a concluded view. The Chancellor of the Exchequer says: It is quite possible to have monetary union without political union. and again, in The Daily Telegraph, that a single currency is not a threat to the nation state. A few years ago, the President of the Board of Trade wrote: No truly unified market can exist without a single currency. A close association of monetary policies will be needed if the single market itself is not to be put at risk. Those two views are quite clear. So is the view of the Chief Secretary to the Treasury, who said a few weeks ago: I don't want to see a single currency, period, for as far as I: can possibly foresee. I would hesitate for an eternity before I came out and said I would vote for a single currency. When asked whether he wanted a single currency, the Secretary of State for Employment replied, "No." He said: A single currency is a long way towards political union. No British Government can give up the government of the UK. That is impossible. That could not be plainer either. No one would dispute, surely, that those views are diametrically opposed.

Photo of Tony Blair Tony Blair , Sedgefield

I will give way in a moment. [HON. MEMBERS: "What is your view?"] I am about to say what our views are. There is no sensible halfway house, because although the economic issues may vary, the constitutional issue is clear as a matter of principle. It does not alter over time. The question is, given that Cabinet Ministers have expressed concluded views on the constitutional issue—although they differ—which of the two opposing views is the Government's? That is what we need to know from the Prime Minister today.

I will put five questions to the Prime Minister. What is more, at the conclusion of each question I shall answer it and then ask the Prime Minister to answer it. I cannot put it more fairly than that. First, does the Prime Minister agree with his Chancellor that a single currency is not a threat to the nation state? I say that his Chancellor is right; I assume that he says the same. [HON. MEMBERS: "Answer."] He cannot say.

Let me put this question to the Prime Minister. Does he agree with his Employment Secretary that having a single currency is a long way to political union, and would mean giving up the government of the United Kingdom? May we have an answer to that? I say that the Employment Secretary is wrong; what does the Prime Minister say? Thirdly—this is a question that he must surely be able to answer—

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Order. The right hon. Member for Sedgefield (Mr. Blair) appears not to be giving way; is that correct? In that case, the right hon. Member for Kingston upon Thames (Mr. Lamont) must resume his seat.

Photo of Tony Blair Tony Blair , Sedgefield

I shall conclude this passage and then give way to the right hon. Gentleman.

The Prime Minister has been unable to agree with either of those two Cabinet Ministers. If he is re-elected, can the Prime Minister say whether a single currency will be a possibility in the next Parliament, assuming that the economic conditions are right? It must logically follow from signing the Maastricht treaty that the answer to that question is yes. But what is the Prime Minister's answer? Is it a possibility or not? He cannot say. Let me put another question. [Interruption.]

Several hon. Members:

rose—

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Order. The right hon. Gentleman has said that he will give way later. Hon. Members should not persist.

Photo of Tony Blair Tony Blair , Sedgefield

Conservative Members say that this is not a quiz, but it is precisely to hold the Prime Minister to account that we called this debate. Anyone would think that I was asking the Prime Minister to do something quite extraordinary. I am merely asking him to agree with his Chancellor. We have a situation, do we not, where I as the Leader of the Opposition can agree with his Chancellor, but he cannot get up and agree with him.

The fourth question is that if the economic conditions were right, would the Prime Minister be in favour of persuading the country that it was right to join a single currency? He must be able to answer that.

Photo of Tony Blair Tony Blair , Sedgefield

I say yes to that. Is the Prime Minister able to answer the question? With all due respect, that is the position of his Chancellor. That is what the Chancellor said in his speech a couple of weeks ago.

Finally, let me ask the Prime Minister whether he can agree with this statement: Some observers hope—and others fear—that economic and monetary union as set out in the Maastricht Treaty will be a step in the direction of a federal Europe … I believe that such hopes or fears are unrealistic. Can the Prime Minister agree with that? I can; can he? Shall I tell the House the author of that statement? It was the Prime Minister. That is the position to which he has reduced the Government. I find it odd that he cannot agree with his Chancellor, I find it strange that he cannot agree with his Secretary of State for Employment and I find it unbelievable that he cannot agree with himself.

The Prime Minister says that he cannot decide this constitutional issue now. But the point is that he decided it then. He was prepared to say expressly that it was not a step to a federal Europe. Now, of course, he cannot say. The truth is that this issue of constitutional principle is being postponed not because of circumstances that the Cabinet cannot foresee. The issue as a matter of principle is there: it is being postponed because the Cabinet cannot agree on it. Members of the Cabinet do not have open minds on the issue. They are not sitting round the Cabinet table wondering about the answer. They have the answer: it is just that there are two different answers for the different factions in the Cabinet.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham

If the Maastricht criteria were met in full, would the right hon. Gentleman sign up to a single currency?

Photo of Tony Blair Tony Blair , Sedgefield

If the economic conditions are satisfied, the economic conditions that we have set out for real economic convergence; and if people can be persuaded on the necessary political consent—those are the two conditions—then I say yes. I also say that there is no constitutional barrier to joining. The question is whether that is the position of the Prime Minister. When the Prime Minister speaks, perhaps the right hon. Member for Horsham (Sir P. Hordern) will put the same question to him and see whether he can get a straight answer.

On this point I totally agree with the former Chancellor. He said the other day, and I think that he is right, that the issue of constitutional principle can and should be decided now. If, in truth, there is a constitutional barrier, such a decision makes a dramatic difference to our future foreign and economic policy. Not merely does it render void—indeed, in some sense deceitful—our participation in all the formulation of the institutions for monetary union, but it means that the whole of our future relations with Europe, the United States and others would change. We should prepare for that change now. It would be appalling to drift into a decision that there was, in fact, an insuperable constitutional barrier, without thinking through the consequences of that.

Let me take that one step further.

Photo of Tony Blair Tony Blair , Sedgefield

No.

The Chancellor recently made a speech on the single currency, and spoke about its potential benefits.

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Order. The right hon. Gentleman is a long-standing Member of the House and he knows that when another Member will not give way, he should not persist. I must ask him to remain in his seat for a while until the right hon. Member for Sedgefield is prepared to give way.

Photo of Tony Blair Tony Blair , Sedgefield

If I have time, I shall give way in a moment.

Recently the Chancellor gave a speech about the potential benefits of the single currency. Could the Secretary of State for Employment make such a speech? Would he make such a speech? Of course not. Has he made such a speech? Of course not. Have the Chief Secretary, the Secretary of State for Wales, the Secretary of State for Social Security or the Home Secretary made such a speech? They are not people postponing the decision on a single currency; they are merely postponing the fight over which side wins. That is not in the interests of Britain.

Think for a moment that the Government were re-elected. Can anyone imagine the negotiations during the next Parliament and the state of our discussions with other countries in the run-up to monetary union? It does not bear thinking about. One day, our European colleagues may meet the Chancellor; the next day, the Chief Secretary; the day after that, the Secretary of State for the Environment followed by the Secretary of State for Employment. They would need not more interpreters but more psychoanalysts.

Precisely the same problems beset our attitude to the intergovernmental conference. The Government are driven, once again, to raise the phantoms and bogeys of a federal Europe. In fact, there is little support for co-opting the intergovernmental pillar on defence, for example, into the treaty. There is support, of course, for extending the role of the Western European Union. The IGC needs to make progress on closer co-operation on foreign policy and defence. We have long urged that the role of the WEU should be reinforced as the defence component of the European Union and as the European pillar of NATO. The WEU Heads of State and Government might meet at a WEU summit in parallel with the European Council. Those bodies could he strengthened. We do not favour a European army, but we can see a case for greater use of co-operation between European forces. That would be a modest but worthwhile step.

No one wants, or is suggesting that the Commission should run defence policy or that we should give up the national veto. There will, however, need to be change, primarily because of enlargement. A body of 20 members or even 15 is plainly different and requires a different form of decision making from a body of 12 or fewer.

The Prime Minister said on the Frost programme that he would oppose and not countenance any extension of qualified majority voting. [HON. MEMBERS: "Hear, hear."] I note the cry from the troops behind him. With all due respect, such a stand is absolutely foolish and not in Britain's interests. [HON. MEMBERS: "Oh."] Let me give hon. Members an example. On trade or the common agricultural policy, qualified majority voting is plainly in Britain's interests; we do not want small countries to be able to block change that is in our commercial interests. Sir Leon Brittan made that very point the other day. A sensible policy would be to approach such issues, piece by piece, on their merits.

Perhaps most absurd of all was the attack launched on me the other day in an early-day motion signed by 100 Tory Members. They launched it because I am in agreement, on some issues, with Mr. Santer, the European Union President. Who is responsible for Mr. Santer? [HON. MEMBERS: "You are."] I am, apparently. Next time, we may be responsible for the appointment of that President, but the Prime Minister was responsible this time. And why? For all the usual reasons. Mr. Dehaene was proposed, but he was then pilloried as someone who would impose a united states of Europe upon us. The Government panicked and opposed him. Mr. Santer stepped forward and was sold to us on the basis that he was something completely different. Literally within 48 hours, he was saying that his views were indistinguishable from those of Mr. Dehaene.

Is it any surprise that in those circumstances our credibility in Europe is close to zero, or our influence minimal? A Danish diplomat was apparently recently quoted as saying: When we saw Hurd last time, he could hardly say anything. Or, according to Geoffrey HoweLord Howe, I should say—writing in the Financial Times: The ratchet effect of Euroscepticism now risks doing huge damage to British interests. For too many months, the debate on Europe within the Conservative party has been shifting destructively in the direction of disengagement and isolation. That is the view from all around.

Of course, there are differences over Europe in every party. In a sense, it would be a poor reflection on our democracy if there were not because these are questions of fundamental importance. It is right that politicians do not treat them lightly or regard them merely as matters of party, but the view of the Government must be clear. There may and will be debate as to what the policy should be, but there must be a policy. There is only one choice—to be at the heart of Europe or to be in retreat from it. Both are coherent positions, but they take the country in different directions. What is unacceptable is to have no direction at all.

In truth, the Government can have unity without clarity or clarity without unity, but they cannot any longer have both. Now is the time to decide. This decision is too vital to be pushed aside. In that I agree with the Thatcherites and the sceptics. The danger is that their view of Britain in Europe will prevail if it is not challenged. I challenge it, and I challenge it at its fundamental point.

Recently, in a robust assertion, the Employment Secretary talked of what he called the defeatism of those who saw Britain's future as lying in closer co-operation in Europe. I say that, on the contrary, what is defeatist is to believe that Britain's identity is so fragile, its character so weak and its will so unimpressive that we cannot co-operate in Europe without destroying ourselves as a nation. I reject that view, and I say that this country should be and can be a leader of nations in Europe. That is its destiny. It should be leading in Europe and it can lead in Europe, but only under a different Government.

Photo of Mr John Major Mr John Major , Huntingdon 4:17 pm, 1st March 1995

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House rejects the policy of Her Majesty's Opposition towards Europe, which would destroy United Kingdom jobs, erode the United Kingdom's competitiveness in world markets, place new bureaucratic burdens on business and industry, destroy the veto and diminish the role of Europe's nation states and their national parliaments. In the 20-odd years since we joined the European Community, as it then was, our membership has always been controversial, so I welcome this debate to set out what our policy is, what the choices are and what those choices may mean for this country in the future.

None of those choices is easy, none of them is without risks and none is without opportunities, but the belief that those choices are simple, and the belief that those choices can be made without a detailed examination of all their implications for living standards in this country, is not something that I accept. I shall deal with those choices in detail when I come to the question of a single currency later in my speech, as I promise the House I shall most surely do.

Some hon. Members on both sides of the House have always been instinctively hostile to our membership of the European Union. Others are uncritical supporters of the European Union, but most of us in this House—I believe on both sides of the House—believe that we are right to be in the European Union and that it is overwhelmingly in our national economic interest to be so but that we should be cautious about the way in which it evolves in the future. That is my belief and that is the Government's position.

Over recent years, the benefits of the European Union have tended to be taken for granted and many of the negative aspects of the Union have been highlighted. The result has been that the debate over recent years has become more sour and public opinion has become more hostile than once it was to our membership of the Union.

I think that there are essentially three reasons why public opinion has moved in that direction. The first is that people fear, not only here, but out in the country, that some aspects of the Community have changed from the Community that we originally joined. Secondly, they resent in many cases what my right hon. Friend the Foreign Secretary has referred to as the nooks and crannies interference of the European Union. But, above all, many people fear the direction in which they believe the European Union may go in future.

I do not believe that we would be wise to ignore those fears—I shall address them directly in a few moments—but I think that, to put them in a proper context, it is worth recollecting precisely why we joined the European Union in the first place. We joined it because it was in our national interest to join it. It was not idealism or romanticism and it was not just because it seemed an appropriate thing to do at the time. It was a hard-headed decision to join because we saw that membership meant jobs, investment, prosperity and potentially greater influence and would make. a contribution to peace right the way across western Europe.

Photo of Mr John Major Mr John Major , Huntingdon

If the hon. Gentleman will forgive me, I shall make a little progress first.

The United Kingdom is perhaps more dependent on trade than any other large industrial economy. The European Union is the world's largest trading bloc. We trade far beyond it, of course. We have interests in every part of the world, and they are growing interests. We are not dependent on the European Union, but it is a very large slice of our trade and very important to us. We are the world's fifth largest importer and exporter and the Union now takes more than one half of our visible exports. The single market was fought for by a Conservative Government leading in Europe to change the nature of Europe from the heart of Europe.

The choice that the right hon. Member for Sedgefield (Mr. Blair) gave us on the future of Europe was only a partial choice about being at the centre. Being at the centre does not mean automatically agreeing with what everybody says. Being at the centre means fighting to move the European Union in the direction that we believe is right for this Parliament, as we did with the single market, as we did with enlargement, as we did with reform of the common agricultural policy, as we did with subsidiarity and deregulation and as we did with much else.

The single market offers huge opportunities to this country and we are taking them, in car exports, at record levels—

Several hon. Members:

rose—

Photo of Mr John Major Mr John Major , Huntingdon

In a few moments I shall give way to the hon. Member for Swansea, East (Mr. Anderson).

We are taking those opportunities in record earnings from financial and business services, in record levels of inward investment, which have led to more than 600,000 well-paid jobs in the past 16 years that we would not have had but for our membership of the European Union, and in record business and increasing business for the City of London. Nine out of every 10 European cross-border equity deals now go through London. Even the Deutsche bank has moved its foreign investment banking to London from Frankfurt.

Most important of all—a point often overlooked, but it ought not to be by a nation such as ours—the European Union, together with the NATO alliance, has delivered a prize without precedent to those of us in western Europe: 50 years of peace across Europe; the western democracies working together in world affairs to maximise their influence, and war between them made utterly unthinkable. They are huge benefits.

Photo of Mr Donald Anderson Mr Donald Anderson Shadow Solicitor General

Accepting all that, does the Prime Minister agree that we did not join a static Europe, a Europe which will stand still? We joined a dynamic Europe and the choice for us is either to be part of that dynamism or to be moved into a second category, a second division. Is the Prime Minister prepared, by his negativism, to contemplate that for our country?

Photo of Mr John Major Mr John Major , Huntingdon

The hon. Gentleman could not have been listening. Of course it is not static. If we thought that it were static, we would not have been seeking enlargement. If we thought that it was static, we would not have promoted the single market. If we thought that it was static, we would not have changed the position on subsidiarity, deregulation and much else. If we thought that it was static, we would not be promoting the matters in the intergovernmental conference, which I shall come to in just a moment. The question is not whether it is static but what sort of Europe we wish to build in the future.

Photo of Mr John Major Mr John Major , Huntingdon

Let me refer—[HON. MEMBERS: "Give way."] I propose to give way. If hon. Members will give me the opportunity to continue, I will make a little more progress. There will be occasions when hon. Members will wish to intervene on substantive matters.

The often unspoken fear of many people—we should address it honestly and clearly and examine it—is that Europe might develop into a super-state, an overarching Government with no national veto, no control over our own borders, prescriptive decisions, a single currency imposed and the nation state retreating to a wholly subordinate role. That fear exists out there in the British nation, and we should recognise the fact that it exists.

I am sure that in Europe there are a few people who have ambitions for that sort of European Union; rather more people do not have any such ambitions for it. I for one would find such a Europe wholly unacceptable for this country. I do not believe that it is remotely likely, hut, if that were to be the future, it would not be a future that would be suitable for this country.

In 10 months' time, the intergovernmental conference will formally begin. The preparatory work begins earlier, but, in 10 months the conference itself will begin. Frankly, it is too early. It is too soon after the Maastricht treaty, and Governments right across Europe themselves know that it is too soon. The fact that it is too soon reinforces my view that there will be no majority for ambitious plans for centralisation in the intergovernmental conference. There will be no such plans because such schemes would not be ratified not just by the Government but by other Governments across Europe.

Photo of John Reid John Reid , Motherwell North

Does the Prime Minister agree that the timing of the IGC, whether it is too soon or too late, does not alter the fundamental question that he has refused six times to answer in past weeks and as late as yesterday, when he said that he would answer it today? Does he agree with his Chancellor that a single currency is not a threat to our nation state? Will the right hon. Gentleman now take the opportunity to agree fully with his own Chancellor or to dissociate himself from that statement, but, for God's sake, go one way or the other and show some leadership?

Photo of Mr John Major Mr John Major , Huntingdon

I indicated a moment ago to the hon. Gentleman that I shall refer at length to a single currency, and I will deal with those issues in my own way at that time.

Europe's pre-eminent task for the coming years will be further enlargement of the European Union—enlargement to bring in the countries of central and then eastern Europe, and to bring in Cyprus and Malta. I believe that that is desirable to spread the benefits not just of the free market further across eastern Europe but of security further across eastern Europe, and to discharge what I believe most people in this country would regard as our historic obligation to the people of central Europe who, in many cases, have suffered so much in the past half century.

That enlargement is now agreed. It is agreed overwhelmingly because of British pressure for that enlargement. What everyone recognises across the European Union is that a Union of 20 or more states—we can now foresee the date when there may be up to 25 or 27 members of the European Union—is bound to be more flexible and less prescriptive than the original tenets of the European Community when it began with a handful of nations. Unbending centralisation will simply not be feasible in a wider Union, and many of the fears that people have about it will be seen to be fantasy fears as the European Union develops.

Photo of Bill Cash Bill Cash , Stafford

My right hon. Friend refers to unbending centralisation. He is, of course, aware that the Maastricht treaty contains detailed recommendations—indeed, a legal requirement—for a central bank. What could be more centralising than that? If my right hon. Friend rejects centralisation, why does he not therefore make it crystal clear in principle now that he objects not only to a central bank but to the single currency that goes with it?

Photo of Mr John Major Mr John Major , Huntingdon

The hon. Gentleman knows of the position in the Maastricht treaty regarding a central bank. He knows that we have the option to decide whether to join a single currency at a later stage. As I said to the hon. Member for Motherwell, North (Dr. Reid), I shall deal with that matter in a few moments.

I shall speak first about the intergovernmental conference, which will begin in just a few months' time. I do not believe that it will make huge changes in Europe. No one can be absolutely certain what our partners will bring forward, but I doubt whether any serious significant changes will be proposed.

However, the conference can and should usefully improve the way in which Europe operates, and we shall present a range of our ideas at the conference. We shall suggest ways of developing the common foreign and security policy, and ways of stepping up the fight against organised crime and terrorism. We shall set out ways of achieving a stronger role for national Parliaments. and more subsidiarity. We shall build on the steps agreed at the Essen summit to crack down on fraud.

Under qualified majority voting, a larger say should be given to the larger states, and we shall set out our plans for that. At the intergovernmental conference we shall also seek to reinforce the democratic authority of the Council of Ministers. For reasons that will become apparent as my speech proceeds, we shall not accept the end of the national veto, or significant constitutional change that would impact adversely on the House.

We shall argue that foreign, security and home affairs must continue to be agreed between sovereign Governments, and must not be collapsed into Community competence. On that basis they can, and in many ways they should, be expanded to the benefit of countries and people throughout the European Union.

Reform of the common agricultural policy is bound to feature, but not at the IGC, for it is not a matter for treaty revision. But it will inevitably happen before enlargement proceeds, because the present CAP is unsustainable as we move towards a larger EU.

Europe does not have just one agenda, as hon. Members sometimes seem to assume. There is not one agenda set by others that this country must blindly follow or reject. That is the choice that the right hon. Member for Sedgefield tried to put before people, but it is a false choice. We have the opportunity to set out how we think the Community will develop, and there are areas in which the United Kingdom has led and will lead in future.

The right hon. Gentleman touched briefly on one central matter—the question of defence. The Western European Union, of which 10 European Union states are full members, is both NATO's European pillar and the vehicle for European defence co-operation. The intergovernmental conference will review that arrangement and we shall make our own proposals. I have written today to the European Heads of Government about the way in which we might develop those ideas at the intergovernmental conference, and I have placed a memorandum in the Library.

The approach that we propose is both practical and intergovernmental. Some points are incontrovertible: NATO has been the most successful defensive alliance in history, it must remain the bedrock of Europe's security and its capabilities should not be duplicated. However, we also need a stronger Western European Union so that European countries can take on their proper share of the burden and act effectively in situations in which the United States may not wish to be involved.

Our proposals fall into three parts. First, we must define the tasks that European countries could realistically take on themselves. The defence of member states and major combat operations will of course remain the task of NATO, but the WEU should be able to deal with lesser crises. It should be able to engage in support operations and handle embargo or sanctions enforcement, and it should be equipped for humanitarian operations of the kind seen in Rwanda, and for rescue missions such as the evacuations that we have twice undertaken in Yemen. [Interruption.] Hon. Members want to know how the European Union will develop; they should listen and find out.

Secondly, new arrangements are needed to mobilise European collective capabilities. A separate European force would be wasteful, and might diminish NATO. NATO has proposed that we draw on, rather than duplicate, its own capabilities. We agree that that should be achieved through the concept of combined joint task forces, which NATO developed last year. NATO's resources would then be available on a separable—not separate—basis wherever that was necessary.

Thirdly, we need to take high-level decisions of policy and military action involving western European countries at summit level. That would keep co-operation on an intergovernmental basis, and not on the basis of Community competence.

Photo of Sir Nicholas Bonsor Sir Nicholas Bonsor , Upminster

I am sure that the House would welcome closer alliances within Europe and closer collaboration in terms of Bosnia-style operations and in the development of our high-technological defence industry in projects such as the European fighter aircraft and the future large aircraft. Will my right hon. Friend allay the fears of hon. Members on both sides of the House that the Western European Union may be integrated into the European Union? Can he assure us that that will not occur, and that the Government's capability to run our defences independently when required will be maintained?

Photo of Mr John Major Mr John Major , Huntingdon

I can give my hon. Friend both those assurances. It is necessary to co-operate on an intergovernmental basis, and it will operate on an intergovernmental basis. There is no question of the WEU being integrated within Community competence. It is precisely to make sure that that is the case that we have set out the proposals for greater co-operation, and that is the way in which, intergovernmentally, the Community will develop, not just in defence but on a range of other matters as well. That is the right way for European co-operation to develop.

Let me now turn directly, and at length, to a single currency. I say at the outset that I still believe that Europe would have been wiser in its own interests to proceed first with a parallel currency—a common currency—which could have circulated alongside national currencies. It would have had the advantage of being market driven and, in my view, would have been far more likely to deliver worthwhile economic convergence. I believe that it was not wise not to proceed on that route. I still believe that Europe may find itself being forced to return to that route as it faces up to the necessity of economic convergence—which, when one comes to seek it, will not be easily obtained across Europe even among a small number of nations—and when it faces up also to the sheer technical difficulties of introducing a single currency. But we will see what Europe decides as it approaches the possibility of a single currency.

As far as a single currency is concerned, I reiterate today what I have made clear before. Britain will not join a single currency in 1996 or 1997 and, frankly, I increasingly doubt whether anybody will be ready to do so. Europe is not ready for it, and the sooner that is universally recognised, the better. I see no chance whatsoever that the economic conditions set at Maastricht, or the other economic conditions which are also necessary, will be met, and I see no one suggesting that they should be weakened at present.

Quite apart from the other arguments, the economic conditions are absolutely crucial to the success of a single currency. If a single currency were used to bind together artificially countries which were not marching in step economically, the strains upon the economies of Europe would be immense and unsustainable. I have been making that clear since 1990, and I am glad that the Opposition have finally caught up. That is relevant. [Interruption.] I was saying that while the Leader of the Opposition was still saying that he did not want to be in Europe. Those economic points are relevant—[Interruption.]

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Order. The Prime Minister is on his feet. He knows that hon. Members are attempting to intervene and I am sure that, if he feels so inclined, he will give way, but it is up to him. He does not need help or indications from Opposition Members.

Photo of Mr John Major Mr John Major , Huntingdon

That is relevant because there are huge differences between the European economies. Italy, Sweden and Belgium have Government debts that are at or above their annual national income, whereas in Britain, Germany and France the ratio is only half that. Unemployment is 24 per cent. in Spain, 15 per cent. in Ireland and 12 per cent. in France, whereas it is 9 per cent. in Germany, 8.5 per cent. in Britain and 7 per cent. in the Netherlands. There are also big differences in labour market flexibility, which may leave some countries poorly placed to respond to the shocks that would inevitably occur in a single currency in future.

Photo of Mr John Major Mr John Major , Huntingdon

I will give way in a moment.

There is a large body of opinion across Europe that believes that a single currency could proceed around the turn of the century.

Clearly, all 15 members of the European Union could not join such a single currency around the turn of the century—there is no chance of the economics being right—but a core group of countries could conceivably be ready to go ahead then, a small group of nations that, economically speaking, could include the United Kingdom.

If that core went ahead, it would radically change the nature of the whole European Union. At this stage, no one can safely predict what that would mean for those within the core and, equally important, what it would mean for the majority of members of the European Union, who would remain in the Union but beyond that core number of nations.

Photo of Iain Duncan Smith Iain Duncan Smith , Chingford

My right hon. Friend clearly laid out where the real problems in the convergence criteria lie, should people try to move down those roads without following them correctly. Furthermore, he pointed out that those are essentially good management techniques. Surely the key factor is that the real problem lies in establishing a timetable that makes people drive to a point that they might not have arrived at naturally. Does he agree that at the 1996–97 intergovernmental conference we should do our level best to take out the timetable mechanism completely and to leave it so that countries may or may not converge?

Photo of Mr John Major Mr John Major , Huntingdon

My hon. Friend is entirely right that the timetable is arbitrary but, under the provisions of the Maastricht treaty, the economic criteria set out in the treaty supersede the timetable. If those are not met in 1999, 2009 or 2019, the provisions of the Maastricht treaty are such that no one would proceed. That is not merely the view in this country—it would certainly be the view of the Bundesbank or others.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

Does my right hon. Friend agree with Mr. Paul Volcker, the former chairman of the American Federal Reserve Board, and my right hon. Friend Lord Lawson of Blaby that monetary union inevitably means political union, or does he agree with the Chancellor of the Exchequer that it is possible to envisage monetary union without political union?

Photo of Mr John Major Mr John Major , Huntingdon

No, I do not—[Interruption.] With one important qualification: I believe that it is possible to move forward to monetary union without necessarily moving forward to political union, but the qualification depends on the nature and style of monetary union and I will deal with that in a moment.

If the core went ahead, it would need to determine very carefully what that would mean for the rest of the European Union. To consider whether we should join that core at some future date means that we should consider the practical implications of joining it and, equally important, the practical implications of not joining and letting other nations go ahead without us.

Let me set out in detail what those implications might be, because I believe that both this House and the British nation concerned in that argument beyond this House need to know the practical implications of what going into the Union or staying out of it would mean for them, their political institutions and their economic future.

Photo of Mr John Major Mr John Major , Huntingdon

First, I shall give way to the right hon. Gentleman.

Photo of Mr Tony Benn Mr Tony Benn , Chesterfield

I listened carefully to the Prime Minister's arguments about the possible effect on the Union of two tiers, but has he turned his mind to the effect on the domestic democracy of Britain if two fundamental principles that have existed over many centuries are broken: first, that there is a route through the ballot box for electors to choose the policies and laws under which they are governed and, secondly, that no Parliament can bind its successor? If the right to tax, borrow and set interest rates is transferred out of this country, we face the serious danger that people will lose confidence in the ballot box as an instrument for remedying the problems that confront them.

Photo of Mr John Major Mr John Major , Huntingdon

It is an interesting illustration of the unity on the Opposition Benches to have had that point put to me by the right hon. Gentleman.

On his first point about a two-tier Europe and its implications, I think that, with respect to the right hon. Gentleman, he oversimplifies the position of the two tiers. What we are seeing develop—it is not new but has been developing for some time and will accelerate—is not just a first and second tier but a much more flexible European Union that does not base itself simply on one tier or two tiers but is wholly flexible across a range of subjects. That is bound to become more necessary as the Community gets bigger. Frankly, it is both unrealistic and impractical to imagine that 15 nations—soon to be 19 and, within a decade or so, up to 27—will operate inflexibly on the basis of rules determined entirely centrally. That simply will not happen in the future.

Let me consider what it would mean if we were to decide that we were to go into a single currency at some future stage. If we were to join, we would need to lock exchange rates with other members; agree what the single currency should be—perhaps the ecu; and possibly abolish the pound and the Scottish and Northern Ireland pounds. I say "possibly" because—

Photo of Brian H Donohoe Brian H Donohoe , Cunninghame South

Oh no, no; you cannot do that.

Photo of Mr John Major Mr John Major , Huntingdon

When I referred, a moment or so ago, to some of the practical implications of moving towards a single currency, I had not expected, in trailing my coat, that I would get such a splendid response from the Opposition. But the reality is that one can see the turbulence and difficulty of moving forward in that direction. The relevant difficulties in terms of absorbing the Northern Irish pound and the Scottish pound and just having the pound sterling are absolutely trivial compared with the difficulties of replacing sterling with a single currency across 15 nation states, so perhaps the large number of Scots in the shadow Cabinet might address their minds to the possible—

Photo of Mr John Major Mr John Major , Huntingdon

Ah, I shall give way to a Scot.

Photo of John Home Robertson John Home Robertson , East Lothian

Can the Prime Minister grasp the fact that Scotland and England have had a single currency since 1707?

Photo of Mr John Major Mr John Major , Huntingdon

That is because Scotland and England are part of a single Union, and I am determined that they will stay so.

Photo of Alex Salmond Alex Salmond Leader, Scottish National Party

Surely the question at issue is: could Scotland and England currently have different currencies and still he part of a single Union?

Photo of Mr John Major Mr John Major , Huntingdon

If the hon. Gentleman recalls what I just said, he will know the answer to his question.

Let me reiterate the changes that need to be made. They are: locking exchange rates, agreeing a single currency, abolishing domestic currencies, making the Bank of England independent and passing control of interest rates and monetary policy as a whole to an international bank, on which this country would be represented as one among many. Those are the practical implications of going forward to a single currency, and the House and the country should be aware of them.

In addition to that, we should accept the possibility—perhaps even the likelihood, although no one can be certain about that—that a unified monetary policy would require a far greater alignment both of spending and of tax rates. If the House were to proceed with them, such changes would be the most sweeping changes in fiscal and monetary management that the House, with its history of control of supply, had ever considered and accepted in all its long and proud history.

The House knows, from the Maastricht negotiations and the opt-out that I negotiated there, that I am wary of a single currency for those economic reasons—wary of its economic impact and of the serious political and constitutional implications. However, if some of our partners do go ahead, there will be implications for this country in any event, albeit different ones. There is no way in which we can sit out that argument without affecting us in one way or another.

If we go in, we shall have the changes that I have set out, but if we stay out there are other serious implications to consider, and I shall spell them out to the House. No one at the moment can be entirely certain what the implications of staying out might be. We cannot know what the impact of a single currency might be on the pound sterling if the pound were outside it. We cannot know what the impact would be on the reputation and work of the City of London as the pre-eminent European centre if we were outside a single currency. We do not know what the impact would be on domestic or international investment in this country if we were outside a single currency, and we cannot know what the impact would be on employment.

Crucially, no one can possibly know at this stage the way in which market forces would react to the decision either to go in or to stay out of a single currency.

Photo of Mr John Major Mr John Major , Huntingdon

If the hon. Gentleman will forgive me, I shall make a little progress.

The purpose of spelling out those implications is to communicate the fact that at the moment those matters are necessarily unknown. They will become clearer as we move towards the point of decision; that is beyond doubt. We shall be in a position to know more of those. However, as of this moment, the answer to those questions cannot possibly be known, except as a matter of hunch. It is for that reason that I believe that it is in our own national and economic interests to keep open the option of going into a single currency—[Interruption.]—and equally to keep open the option of deciding that it will not be in our national interest to go in.

Several hon. Members:

rose—

Photo of Mr John Major Mr John Major , Huntingdon

I shall give way in a moment to the hon. Member for Stoke-on-Trent, South (Mr. Stevenson).

I make no apologies now, nor will I in future, for deciding as an act of policy, in the interests of the country, that we should not make such a decision without the facts at our disposal to know the right answer. If a future Government decide to go ahead, they will need the consent both of Cabinet and of the House. They may also need the consent of the country in a referendum because, as the right hon. Member for Sedgefield said, we shall need to carry the opinion of the country with us, whichever way we proceed, but most definitely if we decided that we were to go into a single currency.

If a decision of great constitutional significance were to arise over a single currency or, for that matter—although I do not for a moment expect it to be the case—from the intergovernmental conference, a referendum could be necessary; it could be desirable, and I am prepared to keep that option open.

Photo of Mr George Stevenson Mr George Stevenson , Stoke-on-Trent South

The Prime Minister has expressed his caution about entering a single currency, but will he answer a question? If the conditions are right and if the criteria are met, would he then agree to join a single currency—yes or no?

Photo of Mr John Major Mr John Major , Huntingdon

I do not know where the hon. Gentleman has been for the past 10 minutes—he has clearly not understood a single word. No wonder he is in favour of going in: he does not understand the implications of going in or staying out.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

My right hon. Friend has said categorically that we will not seek to enter the single currency in 1997. He will know that article 109j of the Maastricht treaty states that if we were to join on 1 January 1999 there would be a two-and-a-half year lead time. That means that, to keep the option open, we should have to join the exchange rate mechanism by 1 July next year. Is it conceivable that my right hon. Friend would put such a proposal before the House?

Photo of Mr John Major Mr John Major , Huntingdon

I certainly do not anticipate joining the exchange rate mechanism in the lifetime of this Parliament.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

The Prime Minister would have us believe that he has not made up his mind and that he wants to leave his options open. Does he not understand that what we object to is the fact that he is prepared to tolerate the activities of members of the Cabinet who have made up their minds? They are saying no, no and no again. How long will he put up with that dissent?

Photo of Mr John Major Mr John Major , Huntingdon

I think that the hon. Gentleman will find, when we get to 10 o'clock tonight, that the line that I have set out for the Government will receive the consent of the Conservative party—he need not worry about that.

It is important over the next few months that people understand what this debate means. In recent months—from time to time in this House too—far too many people have been playing off against one another as supporters of Europe, opponents of Europe, nows, nevers, wets and drys and those who have been implacably for or against a single currency. Every phrase has been analysed, every nuance noted, every speech dissected to see whether it represents a shift in one direction or another.

I must tell those concerned that such an artificial tournament is nonsense. I passionately believe that the freedom of choice which I obtained at Maastricht must be fought for and held in the interests of this country. It is by far the best vantage point from which to conduct a single-minded and successful campaign for our national interests in the European Union.

We are going to maintain the option because the decision that may have to he taken will be the single most important economic decision to face this country this century. To take it at long range, without knowledge of the circumstances, without knowledge of the daily details, without an examination of what is happening in the markets or without anything else besides would be folly in the extreme.

Photo of Mr James Molyneaux Mr James Molyneaux , Lagan Valley

May I gently chide the right hon. Gentleman for his failure to thank the Leader of the Opposition for his assurance that in the lifetime of this Parliament the Government will not be defeated—unless, Madam Speaker, you are invited to discount nine votes?

May I return the Prime Minister to the point about sovereignty, which he may touch on later? It was always clearly understood that there would be a pooling of sovereignty by all the member nations. May I ask the Prime Minister for an assurance that there will be no horizontal transfer of sovereignty to any other member state on a bilateral basis?

Photo of Mr John Major Mr John Major , Huntingdon

From the moment we entered the European Community—now Union—there have always been areas in which we have pooled sovereignty and also to some extent lost sovereignty. But we also gained sovereignty over the actions of some other nations. There have been semantic arguments about that question, but it is a fact that there has been a pooling of sovereignty in some areas. That has not applied to issues of great national concern, and I do not believe that the concerns which clearly activate the right hon. Gentleman are ones that he need worry about. I do not believe that we are going to face the difficulty that he, envisages.

I come now to some of the related fears about the Community that I mentioned earlier. Let me address directly some of the fears that people have.

Photo of Tony Blair Tony Blair , Sedgefield

The Prime Minister was describing what he saw as the balance of economic advantage one way or another which would progress over time, but if, over time, the balance of economic advantage is, in his view, in favour of entering a single currency, is he in principle in favour of doing so?

Photo of Mr John Major Mr John Major , Huntingdon

It is a matter of practice, not principle. What matters—[Interruption.]. It is a serious point. The right hon. Gentleman asks a serious question and he deserves a serious answer. What is relevant is what the practice of entering would mean for Britain—[Interruption.] Of course, predominantly, in economic terms. We have to make a judgment about what is in the national interest. I repeat what I have said in the past. If I reach a decision that it is in the national interest to stay out, I will stay out. If I reach a decision that it is in the national interest to go in, I will recommend to Cabinet and the House that we go in. But we cannot reach such a decision without having the information in front of us; the right hon. Gentleman has done so. I decline to do so as an act of policy because I believe that we need to make that judgment when we have that information before us.

Photo of Tony Blair Tony Blair , Sedgefield

Will the right hon. Gentleman now say whether he sees a constitutional barrier to it? Does he agree with the Chancellor of the Exchequer that it is a threat to the nation state or not? Now let him answer.

Photo of Mr John Major Mr John Major , Huntingdon

The right hon. Gentleman is trying to tie this up into tiny little parcels. It is a serious point. What is relevant is what the whole package means for the House, the country and our future. If the whole package says that it is in our interests to go in, we go in, and if the whole package says that it is not, we stay out. But there is no point dancing round semantically on these points. At the end of the day, the only thing that matters is the British national interest. We cannot judge that except in the round. We cannot judge that until we have all the information available and we know the consequences of going in and the cost of staying out.

I come now to the fear that I mentioned earlier that many people in Britain have—whether there will ever be what some refer to as a European super-state. In the sense of a European Government, I believe not, and personally I would prefer to leave the European Union before I accepted a European Government, but the degree of integration in Europe is a matter of dispute, not least between Government and Opposition in the House.

Upon some things we are agreed. The Government are not prepared to lose the border controls that we have at present and the Opposition have said that they will support us in that. I hope that that proves to be the case. In any event, particularly to protect our improved race relations, we are not prepared to weaken our immigration and other controls for non-European citizens. The Heads of Government across Europe pledged their word on that years ago and we expect them to keep it. We shall lake whatever steps are necessary to that end.

The right hon. Gentleman accuses us of divisions. He should look behind him a little more carefully before he levels that charge at us. We know what he has had to say about his Members of the European Parliament, but what is his attitude to his nearly 60 hon. Friends who opposed the Second Reading of the Maastricht legislation? What is his attitude to the 40 who rebelled against his leadership over the European finance legislation?

What is the right hon. Gentleman's attitude to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who believes that the nation state is outdated and wants us to accept the increased jurisdiction of a centralised European authority"? Does he agree with his right hon. Friend the Member for Copeland (Dr. Cunningham), who said: I personally am in favour of a single currency"? Or does he agree with his right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), who says: I am not a fan of a single currency"? Not only is the Labour party divided, but the right hon. Member for Sedgefield failed to explain all the aspects of Labour's policy. He promised to, but he failed to keep that promise. I am not prepared to give up Britain's national veto. I am not prepared to give up the right to say no.

Photo of Mr John Major Mr John Major , Huntingdon

The right hon. Gentleman says, "Neither are we," but he is. The right hon. Gentleman did not mention that Labour would undermine the veto by making majority voting the rule. The right hon. Gentleman shakes his head but it is in the European socialist manifesto, co-authored by the right hon. Member for Copeland, who said, subsequently, We stand by everything in this document. It is no good the right hon. Gentleman shaking his head and looking embarrassed. That is what the right hon. Member for Copeland said. With whom does he agree—his right hon. Friend the Member for Copeland, his right hon. Friend the Member for Kingston upon Hull, East, socialist Members of the European Parliament or the European socialist partners whom he goes to visit and signs things with so often? Whom does he agree with? Does he agree with himself on this issue? Do we know?

If we gave up the veto we could not only be outvoted on own resources, tax harmonisation, foreign policy, immigration policy, protected areas of environmental policy and any policies which, in the words of the treaty, are deemed necessary to attain … the objectives of the Community".[Interruption.] It is a spirited discussion. If it were possible, I would give way to let the right hon. Member for Copeland intervene upon the right hon. Member for Sedgefield, but I am sure that they can discuss it elsewhere.

Photo of Dr Jack Cunningham Dr Jack Cunningham Shadow Secretary of State, Shadow Secretary of State for Trade and Industry

I am grateful to the Prime Minister for giving way. [HON. MEMBERS: "Resign."] If anyone should resign around here it is the Prime Minister and his right hon. and hon. Friends.

The Prime Minister should withdraw his allegation that either the European socialist party manifesto or our own manifesto for the European elections last year said that we should abandon Britain's veto. Neither document did so and to suggest otherwise is to tell an untruth.

Photo of Mr John Major Mr John Major , Huntingdon

The right hon. Gentleman said that the Labour party would make majority voting the rule. If it is the rule, what else could it be other than the abolition of the veto? He can wriggle and wriggle and wriggle, but he is on the hook and he knows it. Without that veto how would the Labour party protect our interests?

The right hon. Member for Sedgefield had some other memorable omissions as well. He did not mention the memorable indication by the shadow Chancellor to have some renegotiation on our rebate. Our rebate was protected at Edinburgh. It saved the country billions, but without the veto it might not be possible to save it.

Neither did the right hon. Gentleman mention those Labour Members of the European Parliament who voted to double the European budget and dramatically increase Britain's net contribution. I do not know whether that is Labour party policy or whether they were simply being infantile again. He did not mention that Labour wants to avoid a tax-cutting competition between member states". What does that mean? At the moment British taxes are lower than those of our European partners. Does he want to raise British taxes to higher European levels or does he believe he can negotiate with the Europeans to bring their taxes down to our level when they all have fiscal deficits in their countries?

We know that the Labour party would impose the social chapter and drive out investment and competitiveness. We know that the right hon. Gentleman has said that he will never allow this country to be isolated … in Europe".

Photo of Mr John Major Mr John Major , Huntingdon

If the hon. Gentleman will forgive me, I will not. I have given way on a number of occasions.

How will the right hon. Member for Sedgefield win battles in Europe that are in our national interest if he is too frightened to be isolated in those battles? Does it mean that he would never be prepared to stand alone, never be prepared to defend any position, any principle, any vital interest, if it would mean offending his socialist colleagues across Europe?

What happens if Europe wants to do something that is genuinely against our national interest? How would the right hon. Gentleman prevent it? He does not want to disagree. He does not want to use the veto. The fact is that the Labour party's policy is one of weasel words and soundbites. It is not a policy for Britain. It is an abject surrender by the right hon. Gentleman.

We have fought for the changes that we want—the single market, enlargement to the east, a new accent on competitiveness and free trade, less new European legislation with national action as the norm and development of the Union through intergovernmental consent. None of that suggests that the Government would be dragged along by others in a direction in which we do not want to go. That may be the stuff of tabloid tales, but it does not stand up to detailed examination of our record.

We are prepared to be isolated and fight our corner, and the House does have to choose—between our hard-headed, commonsense, pragmatic approach to Europe or the politically correct federalist posturings of the Opposition. It should not be a difficult choice and I invite the House and all my hon. Friends to make that choice tonight.

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Before I call the right hon. Member for Yeovil (Mr. Ashdown) I have some good news for the House. Because the right hon. Members on the two Front Benches have co-operated so well, for which I thank them, I can now bring the 10-minute limit forward to 6 o'clock. That means that I can call more hon. Members today.

Photo of Mr Paddy Ashdown Mr Paddy Ashdown Leader of the Liberal Democrats, Leader of the Liberal Democrats 5:10 pm, 1st March 1995

The Prime Minister, in a speech that will, I suspect, in some of its places, come back to haunt him later, asked us at the end of it to express our confidence in the policies of the Government on Europe. To do so would require either blind loyalty to the Conservative party or a suspension of our judgment—probably both. The Government's policy on Europe has been a catastrophe for the Conservative party and a tragedy for Britain.

The question of Europe, as the Prime Minister rightly said, and this country's part in the development of the European Union, is, in my view, without question the single most important issue now facing this country. That question should be the subject of a widespread public debate about the long-term best interests of our country. But it has instead been dragged down into an internal spat in the Conservative party about how far the Prime Minister is willing to appease a tiny minority of his own right wing, whom, so far, he has not had the courage to face down.

The Prime Minister has brought this present predicament on himself. Right from the start, in the Maastricht Bill, he had the chance to lift Europe above party politics. If he had done so, he could have mobilised a cross-party majority in the House, which would have isolated the hard-core minority of anti-Europeans in his own party, who are now his scourge.

Lord Howe put it clearly and fairly in an article in the Financial Times on 30 January, when he said: When the UK joined the EU in 1973, and during the referendum of 1975, the governing parties of the time included"— as they do now— irreconcilable cores of opposition, anxious to thwart membership. They were defeated by the determination of those governments to mobilise a wider majority in Westminster and in the country. He concluded: The current government could have pursued the same approach. It had the opportunity to do so in 1992, when the Commons overwhelmingly endorsed its achievement at Maastricht But this position of strength has been progressively undermined … by a willingness to concede ground to those expelled from the parliamentary party in late 1994. Quite so. That is exactly what has happened. Or, to put it another way, the Prime Minister chose to put party before country and is now paying the price. Like all who venture down the road of appeasement, he has ended up not master but servant to those whom he has sought to appease.

What is the Government's European policy, for which the Prime Minister now asks for our support? It is a policy driven not by the best interests of the country but by the divisions in the Conservative party and in the Cabinet. It is a policy that depends on internal appeasement and external obfuscation. It is a policy, the aim of which extends no further than to enable the Government to survive by any means until the next election, when they can wrap themselves in the flag and play the English nationalist—no, the Essex nationalist—card, not because they believe it to be right, but because they know very well that it is the only means to ensure the survival of the Conservative party.

Photo of Mr David Shaw Mr David Shaw , Dover

Will the right hon. Gentleman give way?

Photo of Mr Paddy Ashdown Mr Paddy Ashdown Leader of the Liberal Democrats, Leader of the Liberal Democrats

In a minute.

So, as we heard in the Prime Minister's speech, he is now condemned to an eternal search for new words to describe a non-position. We heard that at length during his speech of nearly 45 minutes. He has become a Prime Minister permanently impaled on the fence, because he dare not get off it. While he sits there, his party drifts closer and closer to outright opposition on Europe, his Government remain divided, his authority continues to be weakened and Britain's influence in Europe is unquestionably damaged.

The truth is that the Government are now so split and at war with themselves over Europe that they are no longer capable of governing effectively at home or of representing Britain's interests in Europe in the intergovernmental conference of 1996–97.

The Liberal Democrats are clear about what the European Union must now do, and about what Britain's role in that process should be. After a thousand years of war and conflict on our continent, the purpose of the European Union is absolutely clear: to bind the nations of Europe more closely together to ensure peace, prosperity and new opportunities for Europe's peoples.

Liberal Democrats are also absolutely clear about the way in which we want Europe to develop.

Photo of Iain Duncan Smith Iain Duncan Smith , Chingford

Will the right hon. Gentleman give way?

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

Will the right hon. Gentleman give way?

Photo of Mr Paddy Ashdown Mr Paddy Ashdown Leader of the Liberal Democrats, Leader of the Liberal Democrats

If the hon. Member for Newham, South (Mr. Spearing) will give me just a few moments, I shall give way to him, and then to the hon. Member for Chingford (Mr. Duncan Smith).

We want to see a democratic Europe in which the bureaucracy in Brussels is held to account by the European Parliament, and in which national Parliaments have greater control over the Council of Ministers. But that cannot be done without strengthening the powers of the European Parliament and without strengthening the powers of scrutiny of the House of Commons.

We want reform of Europe's institutions, starting with the programme of the common agricultural policy and the common fisheries policy. But that cannot be done without an extension of qualified majority voting in the Council. It cannot be done if Britain is always sitting obstructively on the periphery, instead of working constructively with others to secure the changes that are in our nation's interest. The Government must understand that it is no good calling for reform without willing the means that make reform possible. If they stick to no further extension of qualified majority voting, the consequence will be that the CAP will not be reformed, and that is not in this nation's interest.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

Of course the right hon. Gentleman is right to say that Ministers should be more accountable to the House for their actions in a secret Council of Ministers, but does he agree that, whatever we did, we would still be only advisory, because Ministers act there as our representatives, not our delegates? Are not the treaties an authority above all parliaments, including the European Parliament, and is not what he wants when he talks about more accountability and vision limited entirely by the treaties as they are?

Photo of Mr Paddy Ashdown Mr Paddy Ashdown Leader of the Liberal Democrats, Leader of the Liberal Democrats

There is an interesting contradiction between what the hon. Gentleman said and what the leader of his party said just a moment ago, which, no doubt, will be noted by all those who read the record. Wherever power resides, whether it be in a local council, in this place, or pooled with others in the European Union, it should be made accountable to the democratic process. That is why we must strengthen the powers of accountability, and of scrutiny, not only in this place but in the European Parliament. It is hypocritical of the Government and others to say that they oppose the decisions that are handed down by bureaucrats in Brussels, and then to say in the next breath that they are not prepared to see strengthened the powers of the European Parliament that would hold them to account. Those are contrary positions.

We Liberal Democrats want a decentralised Europe in which power resides as close to the people as possible, but that cannot be achieved without a clear constitutional settlement of powers between the institutions of the Union and those of the nations, regions and local communities that make it up. We want a Europe that integrates its defence and foreign affairs more closely—and some of what the Prime Minister said was very welcome, if it meant that the Government are at last moving towards such a position.

We want that closer integration in our defence and foreign affairs to ensure that our voice is heard in the world, and so that we can project our power around our borders to secure peace in our area; but it cannot be achieved unless we are prepared to move towards a common European foreign and security policy. We want a Europe that opens up new opportunities for its citizens—opportunities for work and, perhaps especially, for education—that can be taken up throughout the Union; but that cannot be achieved unless we establish new rights for our citizens, and provide for free movement within the Union itself.

We want a Europe with clean beaches, less polluted waters and cleaner air, but we will protect our shared environment for future generations only by working together and sharing the immediate costs of high environmental standards. My party wants a Europe in which—yes—our economies are more closely integrated, because that makes for a more efficient internal market within the Union and a better chance to win external markets outside it. But that cannot be done unless we strengthen the single market and work constructively towards a single currency.

That leads us straight to the question on which both the Government and the Labour party are so uncertain and ambivalent. Having listened to the speech of the Leader of the Opposition, I am bound to say that I do not believe that he is personally ambivalent on the matter: he has staked out his position, and has done so with admirable clarity. He knows as well as I do, however, that the question is not what he wants but what his party will vote for—and it must be said that his party has more rebels against his view on the single currency than even the Government. The question is not what the right hon. Gentleman stakes out, but whether he could carry it through if his party were in government. That is the question to which he and his party must address themselves.

Photo of Iain Duncan Smith Iain Duncan Smith , Chingford

I must return the right hon. Gentleman to the subject of peace in Europe. He constantly talks of achieving and keeping peace in Europe through ever-closer union and integration. Within the boundaries of the present European Union, which countries does he expect to go to war with each other if we do not adopt that course of ever-closer union? How will such integration achieve much?

Photo of Mr Paddy Ashdown Mr Paddy Ashdown Leader of the Liberal Democrats, Leader of the Liberal Democrats

I can give the hon. Gentleman a very clear answer. First, however, let me say that we know very well—having seen it far too many times in this and in previous centuries—that, if Europe is seen simply as a collection of competing states, competition will turn into confrontation. The rise of nationalism and of fascism in some European countries should cause considerable concern about the way in which matters will develop.

If the hon. Member for Chingford wants a straightforward answer to his question, let me give it to him: Greece and Turkey. Indeed, the hon. Gentleman knows as well as I do that the developing situation in Bosnia could lead to European nations moving towards war with each other.

I do not underestimate—and nor does my party—the pain that monetary union might entail for Britain. It would he folly to underestimate that, not least because monetary union will force us to accept disciplines that we have ducked for half a century. I am certain, however, that whatever the difficulties of being part of monetary union when it comes, the cost of being outside it would be immeasurably greater. If this country can be partf monetary union if and when it comes, it is clearly in its interests to be so.

The Prime Minister has told us that we cannot assess the advantages and costs at this stage. He is wrong: there are four clear reasons why such an assessment can be made. The first is investment. As the world moves towards a truly global economy, industrial nations such as ours will depend increasingly on inward investment. If monetary union comes, the bulk of that investment is likely to flow into the core single currency area, not into countries that choose to be outside it. Both the Japan Times—speaking for Japanese car manufacturers—and Ford have recently warned of the effects on their operations and investments in this country if it chose to be outside the core of Europe. The cost will be measured in lost jobs, lost trade and lost opportunities; we know that now.

Secondly, being within a monetary union will almost certainly mean lower interest rates and lower inflation. We know that now. Our long-term interest rates are already at least 1 per cent. higher than those of Germany because of the market's uncertainty over the Government's ambivalence on Europe, and question marks over their determination to keep inflation low. Our inflation record may have been good over the past two years, but the markets have a long memory. Over the past 25 years, inflation in Britain has averaged 8.7 per cent.—double the German average.

Even if the price of being outside monetary union were no more than the present 1 per cent. risk differential, according to the Chancellor's own figures £25 billion a decade would have to be paid in extra costs associated with debt servicing by British industry. That cost would be met by British firms and British jobs, and added to the price of British goods in the global market. We know that, and we know it now.

Thirdly, staying outside monetary union will not increase our control over our economy; it will decrease that control. We shall continue to have sovereignty over our short-term interest rates, but that will be largely illusory, for the markets will continue to have sovereignty over our exchange rates. That means that the markets will dictate long-term interest rates too. That is the practical reality—words used by the Prime Minister—of our theoretical economic sovereignty in a go-it-alone Britain. As a periphery economy outside monetary union, we would have as much control over our macro-economy as a cork has over the wake of an ocean liner. Inside monetary union, we would certainly lose the illusion of sole national control, but we would gain the reality of a share in genuine economic power strong enough to withstand the speculation of world markets.

Lastly, keeping Britain outside monetary union would mean a further major loss of British influence in Europe and abroad. Our capacity to shape and reform Europe's institutions, including the common agricultural policy and monetary union itself, would be greatly diminished. As was made all too clear to me in Washington last week, so would our influence with our closest allies abroad, particularly those in the United States.

For all those reasons, we Liberal Democrats are clear about where Britain's interests lie. We understand that the ambivalence of both the Conservative party and the bulk of the Labour party arises not from a calculation of national interests, but from a need to cover internal party divisions.

Photo of Robert Key Robert Key , Salisbury

Will the right hon. Gentleman give way?

Photo of Mr Paddy Ashdown Mr Paddy Ashdown Leader of the Liberal Democrats, Leader of the Liberal Democrats

I hope that the hon. Gentleman will forgive me if I do not.

Of one thing I am sure: Britain needs a clear lead on Europe, and it will not get it from this divided, uncertain, weakly led Government. That is why they should be defeated tonight—and afterwards, as soon as possible, in the ballot box.

Photo of Mr Edward Heath Mr Edward Heath , Bexley Sidcup 5:28 pm, 1st March 1995

I know that Madam Speaker wants us to be brief, and I think that I may he able to help in that respect.

My views on Europe have not changed since I made my maiden speech on 26 June 1950. I can therefore dispense with the considerable amount of the time taken by both the Leader of the Opposition and the Prime Minister in exchanging quotations from their own past or someone else's.

I shall come straight to the question of Europe. The Prime Minister rightly emphasised that in taking a decisive step such as entering a common currency one should do one's best to carry people with one. Of course I agree with that. I do not entirely agree that the option of a referendum should be kept open. One reason is that the Conservative party has always been opposed to referendums. We had them only when one was forced upon us by the Labour Government in 1975 and in the case of Northern Ireland where there was no Parliament. I do not want to depart from that principle because I believe that Parliament should take the sovereign decision and it is impossible to visualise the House voting against the result of a referendum. We should stick to our historic positions.

Secondly, we well know from European experience that it is difficult to get voters in a referendum to vote on the point that is wanted. It starts with one question and ends with an entirely different one, and referendums usually produce a vote against the Government if people dislike them. The argument against a referendum on a single currency is absolutely convincing in all circumstances. What will happen to our own currency while we spend four or six weeks stumping up and down the country arguing whether we should go in or stay out? If a public opinion poll suggests that we will go in what will the speculators do? The next poll a week later may say, "No, we will stay out." Barings would be child's play compared with what the speculators would do then. It is unthinkable to have a referendum on the question of whether to enter a single currency. It would be exactly the same as a referendum on devaluation of any kind. Quite apart from the time factor it is just not possible. I am against a referendum in all circumstances and particularly on the question of currency.

The Prime Minister said that the problem of carrying public opinion is now very evident, and that there are various indications that public opinion in the country has moved away from support for the European Union. He asked about the reason for that. I can give him one very sound reason. Not a single good thing has been said about Europe and the European Union by the Government or their representatives over the past 15 years. We have had nothing but quite unjustified condemnation and there has been no information for the public about the good things.

The Foreign Secretary knows how much we did between 1961 and 1963 during the first round of negotiations and how much we did between 1970 and 1972 in the second round to ensure that everybody was fed with all the details. The pamphlets which were published have never been challenged. Nobody says that we gave out wrong information: it was correct. Some of it proved to be better than we thought. We thought that prices would go up by more than they did, and that was good.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

Will my right hon. Friend give way?

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow

I am flattered that my right hon. Friend should recognise me. I should like to ask him about information, or misinformation. I have a letter which he wrote in 1971—during his time at No.10—to fishermen in the west of England. The letter states: For our part, as the White Paper said we are determined to secure arrangements which will safeguard the interests of British fishermen. Does my right hon. Friend know that today there is scarcely a fisherman in any harbour in the British Isles who believes that his interests have been safeguarded?

Photo of Mr Edward Heath Mr Edward Heath , Bexley Sidcup

If my hon. Friend looks up what happened in the negotiations and examines the agreement that we reached he will see that the fishermen got complete protection. What has happened has occurred in the past few years, not because of the treaty but because of the complete change in the fishing industry and in its technology and other matters. I hope that hon. Members with fishing constituents have the strength to point that out to them.

The other reason is that we have not taken opportunities to move into other fishing areas that were open to us. We had the Iceland crisis and we were finally kept 200 miles away from Iceland. At that time I set up an investigation into fishing on the west coast of Latin America. The report said that the fish looked a bit odd but there were plenty of them and fishing there would be beneficial. Could I persuade any fisherman even to go to look at them? Not at all. We saved fishing in 1971 and i is all on the record.

There is still much to be done in terms of the good things of Europe. At this moment the Prime Minister should set in hand a fresh campaign to tell people about the good things that come from the Union. His speech put all the questions and all the doubts but did not deal with the great possibilities that can come from Europe. Some 80 per cent. of people in business and industry want a single currency because they know that it would be beneficial to them.

Photo of Mr Edward Heath Mr Edward Heath , Bexley Sidcup

No, I am sorry.

It would save industry much money in trading because instead of needing 12 or 15 invoices a company would need only one in one currency. It would also save businesses the cost of offsetting currencies in case they got caught out on the exchanges. That would be a great help to industry, manufacturing and sales and it would also be a great advantage to the consumer and the traveller who would not have to stop at every border and change his money. In a journey around 12 states he would save over 30 per cent. All those are good things about a single currency and they should be taken into account when looking at the difficulties.

I should like to comment on the political side. We have heard little about the views of the rest of the Union but a great deal about standing on our own. I agree that at times one has to stand on one's own, but it is infinitely better when one has friends who will offer support and see one through. The past two years have shown that we have not had the friends. We did not have them over the devaluation of sterling or in the attempt to change the voting system. We were exposed and, diplomatically, that is not a good situation to be in. We have to make sure that when working for change we have the support of the other countries.

On the question of voting, the small countries are determined not to give up their position. When the Community was founded those countries were given a more than fair position. Germany with 60 million people had 10 votes. Luxembourg had one vote, which suggests that its population was 6 million, but it is 450,000. The attitude of the European Union is to give more than a fair share to the weaker members in the organisation and in society. We should keep that attitude.

I ask people to be realistic on the issue of new membership. The eastern countries will not be democratic by our standards and nowhere near our economic standards for a long time. To start thinking ahead and working out various projections over five years is to be out of real touch. We cannot encourage them to think that in five years' time they will all be just like us, because they will not.

I am afraid that more and more some of the people who were in the old regimes have taken hold of the new regimes. That is worrying. Some of those countries have a standard of living which is only 20 per cent. of ours. We should consider how much they have to catch up before they start moving with us. We must be realistic. We do not need to work out voting positions for 20 or 25 countries until the next century. However, we can do everything else to help them.

Photo of Mr David Nicholson Mr David Nicholson , Taunton

Will my right hon. Friend give way?

Photo of Mr David Nicholson Mr David Nicholson , Taunton

I am grateful to my right hon. Friend for that signal of approval. I agree that there is considerable divergence, not necessarily in democracy but certainly economically and especially in agriculture, which concerns many of us. Does not that add weight to what my right hon. Friend the Prime Minister said about the need for the Union to develop flexibly so as to take account of those divergences?

Photo of Mr Edward Heath Mr Edward Heath , Bexley Sidcup

I shall deal with being flexible straight away; it is also tied up with the attitude of the rest of the European Union towards us. Flexible means one has no real control over what is going on. That is what it amounts to in the end, but no one is prepared to accept that. The great suspicion against us in Europe now is that all the talk of an enormous Union, flexibility and the rest of it means that we are trying to get back into the old European free trade area. The suspicion is that we want to return to that old free trade area, in which we just said what we wanted to, when we wanted to and there was no control over it. As a result, it made little progress. I sat on EFTA as the British Government representative for three years, so I know full well what it is like. One cannot get it to make any decisions. When one sees the speed at which the Community acts, the old free trade area has nothing in it.

Our European partners suspect that flexibility means gradually getting rid of all the Community's mechanisms—getting rid of the Commission, weakening the power of Ministers and weakening all the Community's powers. I notice that we heard nothing today about more powers for the European Parliament, but that is important. We treat our European Parliament Members worse than any other country in the Union. We treat them thoroughly badly and that, too, does not pass without notice.

We are subject to that suspicion from Europe all the time, but we must get rid of it. We must do so by showing that we are wholehearted members of the Union in every respect. That means getting the machinery to work fully. We must also put forward proposals to improve the Union, instead of trying all the time to take away its powers and merits. That has tended to happen.

As for defence and foreign policy, we should get as close as we possibly can in our joint policies. I am not quite sure whether I agree with what the Foreign Secretary said yesterday, because I have been unable to get a full report of his remarks. I hope that he will not try to separate everything and say that we must become so nationalistic.

Having sat in the House for 45 years, it is interesting to see the extent to which, suddenly, we are hearing about the nation state. Decades went by when no one spoke about the nation state—a form of nationalism. We were a country of which we were proud and we wanted to work with others in the Community. I wish that we could return to those days, because the Europeans do not like our remarks about the nation state. When we say, "Look what we have done," that prompts Europeans to say, "The British treat us like colonies. That is what they think we are." I was told that just the other day in Europe. We cannot possibly make friends and have successful policies if we treat those count in that way.

Photo of Mr Edward Heath Mr Edward Heath , Bexley Sidcup

I am not accusing the right hon. Gentleman of being a colonialist.

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

I do not know why the right hon. Gentleman is worried and puzzled by the frequent references to the nation state and the loss of sovereignty. It so happens in this country that our democracy is coterminous with the frontiers of our national community. It is the loss of that democratic power to European institutions that are not democratic which is one of the principal worries of those of us who are serious about this matter.

Photo of Mr Edward Heath Mr Edward Heath , Bexley Sidcup

I do not agree that the countries of the Union are not democratic. Most of them are pretty sceptical about some of the things done by our democracy, so I do not accept that argument.

As for the nation state, the right hon. Gentleman may be right, but when I am up in Scotland, I find that the Scots do not accept that we are a nation, nor do the Welsh. I will not mention the Irish, but the English think we are the nation. The situation is entirely different from that suggested.

We are now in an entirely different world from what it was when there were two super-powers. We now hear about the emergence of a super-state, should there be any changes in the constitution of the Union. If that happens, why should we become a super-state? We do not say that we are off to New York to visit that super-state—never for a moment—nor do we say that we are going to the super-state of Moscow. That is ridiculous propaganda, but, of course, it is perpetuated by the press.

Should our colleagues take the heavies on a Sunday, I wonder how many of them realise that 60 per cent. are foreign owned. Those newspapers do not have any interest in Europe, except to try to disrupt it and the royal family in the process, if they can. Nearly 50 per cent. of the daily press is foreign owned. Those papers are not concerned about our position in Europe and produce every sort of scandal they can make up.

I had an interesting experience the other day with The Sun. It related to the European Court of Human Rights, which had made an award of £59,000 to a British person and said that the Government ought to repay it because they had no right to take it away. That was reported in a stinking leader in The Sun, which said, "Here it goes again—Brussels and the European Union telling us to give back £59,000." That paper had no idea that the European Court of Human Rights at Strasbourg has nothing to do with the Union in Brussels. That court was founded largely by Britain, four years before the first Community was formed.

I wrote a polite letter to The Sun—well, the first two paragraphs were polite—to explain the true situation. It was sent on the day that that article appeared, Friday. Nothing happened on Saturday and so, on Sunday, my office rang The Sun. We were told that they did not realise that Mr. Heath wanted his letter published. My office said that if those responsible had read the third paragraph of my letter it said, "Will you kindly publish this letter and apologise to all your readers for misleading them?" They said that they would have to read it again. They did so, but on Tuesday I was told that they were sorry, but they did not have enough room to publish my letter. Presumably there were too many sex scandals. That letter finally appeared on the Friday. Why? Because they hoped that, by then, everyone would have forgotten what had been originally published. The British people who read that paper were misled. That is what we are up against.

I took part in a discussion on Sunday morning with Lord Lawson—it was amiable and well behaved—on that subject. A report appeared on Monday in The Sun, which set out what Lord Lawson had said, but not a word about my counter-arguments. Is that impartial journalism? That is what it has descended to. We were brought up on the basis that all reporting should be impartial and the leader should publish the views. That has all gone.

We are now in a new world with five powers. One is the United States, which is now having to learn a new way of life, rather painfully. Russia is still a great power militarily and behaving in a way that is absolutely unjustifiable. Have the western nations shouted about that? No, not a word. The next great power is the People's Republic of China. Of course, what happened in Tiananmen square and the 3,000 people affected is still held in horror. It has a population of 1.25 billion and the standard of living is increasing on average by 12.5 per cent. a year. It has enormous potential.

The next power is Japan, which is ahead of us all in technology. Those four countries are the four powers. What is the fifth? The European Union. What chance have we got against those powers unless we are in the Union? What chance has the Union got unless we put our hearts, souls and minds into making it the success that it deserves to be?

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney 5:48 pm, 1st March 1995

I made my first point during my intervention on the speech of the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), when I reminded him that the fact that our nation is coterminous with our democracy is a serious point. I did not say that we were handing over the powers of our democracy to other countries that are not democracies. That was not my point. I was saying that we were transferring them to European institutions that were far from being democratic in the way that we would accept for a mature country. That is a very different point but one that must be insisted on.

I listened with great attention to my right hon. Friend the Member for Sedgefield (Mr. Blair), who made a scathing and intellectually very effective speech. In terms of the argument, he certainly won hands down in the duel that then followed. However, although I applaud the speech for its form and effectiveness, on two matters of judgment I cannot fully subscribe to what my right hon. Friend said.

The first was my right hon. Friend's conclusion that there was no constitutional barrier to our joining a single currency. That is a very important matter, and I do not believe that my right hon. Friend has yet realised all the implications of transferring the powers of economic management which would certainly and necessarily be lost if we were to join a single currency. I shall develop that point a little further before dealing with what the Prime Minister had to say.

We are committed as a party to an economic policy as well as a European policy. One of our problems is that our economic policy and our European policy are now in violent contradiction. No Labour Member would dispute the fact that our economic policy is to make our first priority the attempt to regain full employment as fast as we can. That is the great aim of our economic policy, as reiterated many times in the House and elsewhere. To that end, as outlined specifically first by John Smith and then by his successor at three successive Labour party conferences, we have said that to promote the goal of full employment we would use all the major instruments of macro-economic policy—interest rates, exchange rates, public expenditure and borrowing.

How can that economic policy be reconciled with an acceptance in our European policy that we can go along with third-stage economic and monetary union, a European central bank and a single currency? We would lose control specifically of our interest rates. Control of them would pass, of course, to a European central bank. No one denies that—it is self-evident. We would lose the possibility of using exchange rate policy to assist our own economic recovery and goals. We would be bound to do so because permanently fixed exchange rates and a single currency inevitably mean that that very important weapon, or safety valve, is lost for ever.

We have accepted, or at least the Maastricht treaty would make us accept in the provisions spelt out at great length in its protocols and articles, that the European central bank would discipline our borrowing requirement—the balance between our public expenditure and revenues—to a limit of 3 per cent. of gross domestic product.

The macro-economic powers which I have outlined are still available, although sometimes with great difficulty, to the British Government. How can we possibly surrender them to European institutions, the most important of which—the central bank—is wholly independent of any influence from national or European Governments? That is a major problem that has yet to be resolved.

The resolution may be in what was said about the economic conditions as well as the purely Maastricht treaty conditions being right. What we mean must be spelt out clearly, and the same is true for the Conservatives, too. I am thinking of what the Prime Minister said about the convergence criteria and "other conditions" that would need to be met before he could recommend that we join a single currency. It would be interesting to know what those "other conditions" were, and I hope that, in winding up, the Foreign Secretary will tell us. That is a critical point.

The Prime Minister ended a recent speech by saying that the Chancellor of the Exchequer was about to state what the additional conditions for convergence not contained in the Maastricht treaty were. In the event, the Chancellor did not explain but made a speech saying something very much to the contrary, which delighted the Europhiles in the Conservative party and offended the Europhobes.

Photo of Mr Hugh Dykes Mr Hugh Dykes , Harrow East

The unsatisfactory part of the right hon. Gentleman's argument is that it reflects the theory of economic management, the theory of supply and the theoretical ritual of independent states, with their own parliamentary activity, acting independently of others. However, in the real world, currency management also has an external value expression. Does not the right hon. Gentleman feel that people should be alarmed at the fact that, for example, the pound sterling—our national currency—has lost more than 90 per cent. of its value against the deutschmark, most of that slide having occurred under successive Labour Governments? Is that not more important than foolish theorising about a pretend world?

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

I should not have given way to the hon. Gentleman. As the Germans have well known since the war, it is of course better to have an appreciating rather than a depreciating currency because that reflects the growth in output and the strength of the economy. Germany is now a more prosperous country than Britain, but let us consider for a moment the events of 16 September 1992—black, or white, Wednesday. We were then frozen into an exchange rate which was costing us an increase in unemployment of about 1 million a year, and we were uncompetitive with the pound standing at DM2.95.

The present level is something like DM2.30 or DM2.35, although it might be a little better in other circumstances. The change is enormous and has made all the difference to this country's exports recovery in the past two years. To say that we should have been better off had we stuck with a permanent rate of DM2.95 beggars belief. I do not believe that the hon. Gentleman, in spite of his great enthusiasm for all things European, can sustain that argument.

Photo of Mr Edward Heath Mr Edward Heath , Bexley Sidcup

Does the right hon. Gentleman agree that, had the Government joined in 1985 when the then Chancellor of the Exchequer wanted to do so, the rates would have been almost exactly what they are today and we should not have had the devaluation?

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

I am not sure about that. I was going to mention the important fact that the convergence of the economies of member countries that share a currency is crucial. There are very great dangers in their not converging. I thought that the Prime Minister was remarkably frank in covering this ground. I give him credit for the fact that, despite much barracking and hostility, he put forward the idea not of a single currency but of a common currency. He put forward the idea of a hard ecu as a reserve currency for the growing European Union. It is a very sensible idea.

I could go along with a common currency but I, and, I suspect, half of Europe, could not live with a single currency for the reasons that I shall develop in a moment. The importance that the Prime Minister has always attached to his opt-out is, I think, a reflection of his own fears and worries about the consequences for Britain if we were jammed into a single currency when our economies had not converged.

A new and serious contribution to the argument about convergence and single currencies has been made in recent weeks. I am thinking especially of the Governor of the Bank of England's Winston Churchill lecture on 21 February. The Governor, of course, balanced his arguments very carefully, but I do not think that anyone who read what he said could fail to conclude that, in the Governor's judgment, the costs—the dangers—of going into a single currency were far greater than any possible prize that might be won through it.

The Governor made the point, which is the starting point of any serious debate, that there is a real difference in the economic performance of different countries in Europe and that nominal convergence criteria, of the kind stated in the Maastricht treaty, are simply not enough. He cited in his lecture that the lack of convergence is reflected in the current unemployment statistics. Western Germany has 6 per cent. unemployment, Britain has 9 per cent., France has 10.5 per cent., Italy has 11 per cent. and the figures lead up to Spain with 24 per cent. It is true; those are enormous differences.

The Governor went on to say that he did not think that those differences could be easily or readily resolved and that they would remain. He then, of course, made the point that to join a single currency with such differences in economic performance would sacrifice the great safety valve—it always has been in the past—of exchange rate adjustment and that we would be faced with continuing stagnation for the less successful economies and rising unemployment.

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

Will the right hon. Gentleman give way?

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

No, not at the moment. The Governor went on to say what, given that consequence, the alternatives could be. He cited two alternatives. First, he said that there would have to be a mass movement of labour from countries where unemployment was high to countries where jobs were still available. That, of course, is why we have the absurd emphasis on free movement of labour, with virtually no constraint, throughout the European continent. The second great danger which he posited—he did not posit it so much as a danger—was that there would have to be an enormous increase in the budgetary expenditure of the Community to compensate, if it were minded to do so, the regions and countries that had suffered from the consequences of a single currency.

Photo of Mrs Edwina Currie Mrs Edwina Currie , South Derbyshire

The unemployment rate in my constituency is 6 per cent, the unemployment rate in the right hon. Gentleman's constituency—I believe—is probably about twice that and the unemployment rate in the constituency of, for example, Liverpool, where I was born, is more than 20 per cent. How come we can run with a single currency?

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

It is not the same at all. If the hon. Lady were to think for the moment, she would realise that we have the resources of the British state. The 43 per cent. of our gross national product which comes to us in taxation is distributed around the country to the different areas to meet the different needs of our people. I admit that, in Europe, we are talking about a mere 1.25 per cent. That is entirely different and it would be very wrong to confuse them.

As I said, the Prime Minister knows the costs of joining a single currency only too well. His speech today was, once more, pretty sceptical about the prospects of it. I wish that he had been more definite. In fact, I wish that he had followed his own arguments to their conclusions and said that he had come to the conclusion that, as far ahead as he could see, it would not be possible on economic grounds for Britain to join a single currency. Further, since he insisted on inserting the word into statements made by the Cabinet a week or two ago, I wish that he had said that there are constitutional and, indeed, political implications of membership of a single currency and not only economic implications, even though those are very grave indeed.

The Government are divided—very obviously so. There is nothing necessarily odd about Governments being divided, but this Government have been peculiarly incoherent in their policy pronouncements on European matters. I would like that dissonance of voices to be stopped. I would like a more positive and single line to come out and I would like it to come out as a clear statement that the Government are opposed to Britain joining a single currency and that, as far ahead as they can see, it cannot be a course of action that the Prime Minister would recommend to his colleagues and the House.

I hope that, in addition, we would agree—both the Prime Minister and my right hon. Friend the Leader of the Opposition are very near to pledging it—on a referendum. For constitutional reasons, for the importance and significance of what is involved in the transfer of democratic power from Britain to Europe if we were to have a single currency, I believe that the Prime Minister and the Leader of the Opposition should pledge that they would hold a referendum before any further significant transfer of powers is agreed.

Photo of Mr David Howell Mr David Howell , Guildford 6:05 pm, 1st March 1995

When I hear speeches about the weakness of Britain in Europe—I exclude the speech of the right hon. Member for Bethnal Green and Stepney (Mr. Shore), to which I shall return—I have to ask why, if that is so, this country continues to attract the vast bulk of investment from overseas into the region of the European Union. Britain not only continues to do that, but, from all the evidence, is set to do so in future. That at least requires an answer from those who insist that we have completely denuded ourselves of power and influence in the European Union. I do not believe that that is so and going on and on without answering that question does not help our cause.

I am genuinely grateful to the Leader of the Opposition for securing the debate today as it has already done a number of things. It has made it pretty clear that the right hon. Gentleman and some of his hon. Friends are hell-bent on a single currency. Whether it happens or not does not seem to worry them; whether there are dangers, as I believe that there are, does not seem to worry them; what it will do to the whole of the Europe for which we have worked over 20 or 30 years does not seem to worry them; and whether it will be pro-European or anti-European does not seem to worry them. They are going that way and it is very good to hear where they stand.

It is also interesting to hear Labour's view that there is a need for leadership in Europe, although listening to the right hon. Member for Sedgefield (Mr. Blair), leadership seems to imply following the rest of Europe. If that is the kind of leadership that Labour Members want, my right hon. Friend the Prime Minister was quite right to say that there is a different kind of leadership in Europe, which is more pro-European than merely following the Franco-German agenda, as served by whoever happens to be in power in Paris and Bonn. It is very useful to have clarified some issues.

I am less clear about why some of my hon. Friends want to continue rebelling, or being Whipless or whatever the state is, over European policy. My right hon. Friend the Prime Minister has set out with the most excellent clarity what may be called a Euro-realist position, which commands a great deal of support throughout the party, in many other parties and groups throughout the European Union and among member countries that are to join the Union. I cannot understand what the remaining grounds for rebellion are all about. I honour and respect my hon. Friends' views and I do not question their motives, but it is very hard to understand what on earth they are rebelling about when the Euro-realist position has been set out with such clarity.

The argument boils down to three issues, which I shall rattle through because we have so little time: the referendum, the single currency and how much muscle we put into the intergovernmental conference agenda.

I do not have any great difficulties about holding a referendum. I see the point made by my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath), that it would be silly to have a referendum on the single currency. However, there is a case after the next IGC, when there will be major institutional changes—perhaps not constitutional changes, but huge changes—for going to the British people and saying that, having reached that point, we should have another referendum, after the one in 1975. Provided that we were offering a Europe of nation states and not some sort of greater confection or construction that nobody—or very few people—wants, we would have the overwhelming endorsement of the British people and settle the issue for 20 years. I see no problem with that. I am one of the few ex-Ministers who have taken a referendum Bill of sorts—the Northern Ireland poll Bill—through the House, so I cannot object in principle to referendums. That is what we should go ahead and say that we shall have after the IGC in late 1996 or early 1997, or whenever.

I now refer to the single currency. The first question, after listening to the right hon. Member for Sedgefield, who is all for it, is whether it will actually happen in the way that some enthusiasts say. We know what is going to happen. Inevitably, there will continue to be a deutschmark bloc of some kind. We can see its workings in the market now, causing enormous currency disturbance. The magnetism of a bloc that has Germany at the centre of it will remain, with other countries around it—perhaps the Swiss, in a currency union, although abolishing their currency is very unlikely, as they are not even a member of the European Community; perhaps the Austrians and the Dutch; perhaps the Belgians, although they will have great difficulty in converging; almost certainly not the Italians, unless the criteria are fudged; and presumably, I hope, not ourselves. The deutschmark bloc is inevitable.

The other thing that is not so much inevitable as highly desirable is the convergence discipline. The convergence criteria are excellent aims and targets for any sensible and well-run monetary and fiscal policy, as my hon. Friend the Member for Beaconsfield (Mr. Smith) said in an excellent speech on Monday night. That will happen anyway, and will remove much of the freedom and so-called sovereignty that the right hon. Member for Bethnal Green and Stepney, who looked back rather nostalgically to the high days of Keynesian Labour policy, seems to hanker after. That does not exist any more. Ninety per cent. of the freedom of monetary and fiscal manoeuvre has gone anyway and will remain surrendered.

Do we then move on from that, living in a world of 90 per cent. of sovereignty being surrendered to the disciplines of the global market, to 100 per cent? Do we lock the whole thing in permanently? That step is the crazy one. Any engineer, designer or architect will say that some flexibility, an element of adjustment and some freedom of movement make a structure much stronger, not weaker. Therefore, the idea that we move on from having to co-operate very tightly indeed in the global monetary system, to locking currencies in for all time, is engineering and scientific nonsense. It is out-of-date nonsense and it is centralising nonsense.

Anyone who can understand the sensitivities of the currency market must begin to comprehend that moving from the close monetary co-operation and the discipline imposed on us, certainly from common currencies of any kind—I am all for those—to a single currency, the surrender of national currencies, is a huge step and it is bound to be dangerous and to open up all sorts of new tensions. As the Governor of the Bank of England said the other night, it means that it forces adjustment on to migration, as has been said, and on to fiscal transfers of a kind far greater than anything the Community or Union budget could conceivably cope with. Worse than that, it obviously splits the European Union—the Union that we have backed and fought for over many years.

There is no way in which the Italians could meet the criteria which the Germans insist are necessary if, as they say, the new currency—not to be the ecu—must be stronger and as strong as the deutschmark. There is absolutely no way that that commitment can be squared with the state of the Italian, Belgian or several other economies.

Several hon. Members:

rose

Mr. Howell:

I do not have time to give way.

It is not really in Britain's interests—it is easier for me than for my right hon. Friend the Prime Minister to say that—to take our own global financial system into a regional, rigid currency framework. That simply is not in our interests. I can say that; perhaps my right hon. Friend cannot, but I believe that that is the position that we shall come to. All shrewd and far-seeing business men and financial people now are realising that that is the position and are beginning to question the generalised view that, somehow, it must be a good thing to be in a single currency. That is all that I want to say on the single currency, because that is all I have time for.

On the IGC, I plead with my right hon. Friends that, although there may be no constitutional matters coming up in 1996—everyone will disagree, so the situation will be neutered—inevitably there will be major institutional matters, even if we confine ourselves only to the enlargement issues. I hope that we come forward with a very positive institutional reform agenda, which says, first, that we do not take the Franco-German line on everything as gospel; secondly, that we entrench multi-speed Europe; thirdly, that we enshrine our national Parliaments effectively in the decision-making system rather than just talk about it—we have some ideas in the Foreign Affairs Select Committee on that; fourthly, that we clarify the Council of Ministers' supreme role in the system; and, fifthly, that we limit and define the powers of the Commission.

The Commission is much too powerful. It is much too insidious in trying to make its way into common foreign security policy and defence policy, which it is not qualified to administer or to pronounce upon. If we want to keep matters democratic and to build our security system on the successes of NATO, we shall ask the Commission to support clear delineation, clear definition and clear limitation of its own powers. Also, we must ask for the reform of the highly political European Court of Justice.

Those are the things that we must do at the IGC. We should have the confidence as a nation to put forward a very positive agenda for the intergovernmental conference. Please do not let us stand back and hope that nothing much will happen if we keep our heads down. We need to be very positive, and we need to say that we can help to shape a Europe of nation states and put ourselves at the heart of Europe, but it has to be the right kind of Europe.

Photo of Peter Hain Peter Hain , Neath 6:15 pm, 1st March 1995

I begin by nailing a lie that has been levelled at Labour Members. The Prime Minister said that we had abandoned Britain's veto in Europe. Labour's manifesto at the European elections last year stated: The Labour party has long argued for qualified majority voting in important areas such as the environment and social affairs. But we have always insisted, too, on maintaining the principle of unanimity for decision-making in areas such as fiscal and budgetary policy, foreign and security issues, changes to the Treaty of Rome, and other areas of key national interest. In other words, we have said that we will keep the British veto, contrary to what the Prime Minister asserted.

I welcome the speech of my right hon. Friend the Leader of the Opposition and join him in making a plea for a change in the terms of the debate on Europe. I am someone who voted yes in the 1975 referendum but no to the monetarist economics of the Maastricht treaty. I am pro-European, but anti-Euro-monetarism.

Europe is imperilled not by the chauvinist fantasies of the Conservative right, but because it is straitjacketed by monetarism and gripped by the mania for deregulated free markets that has been so disastrous across the world. Instead of full employment, growth, investment and redistribution being the overriding goals of European economic policy, price, currency and interest rate stability are being obsessively pursued, together with tight restrictions on public spending, public borrowing and public debt.

As a result, poverty across the European Union has shot up—53 million people were under the poverty line in 1992. Total European Union unemployment has been driven up to nearly 20 million in 1994, or 10 per cent. and, according to the OECD, on present policies, that will rise to about 14 per cent., or 30 million, by the end of the decade, with all the social disintegration that that 'would imply. The toehold on power that was established by the fascists in Italy, and the serious outbreaks of racism and Nazism across the European Union are disturbing enough with present unemployment levels without being fanned still further by rises in poverty and unemployment.

The goal of European unity has always been noble. There could be few more desirable ambitions than overcoming the divisions that plunged the world into two devastating wars. But the central problem is that, in practice, the political goal has always been secondary. European unification has progressed by putting economics before politics and markets before democracy. Economic integration has occurred ahead of the democratic mechanisms to hold it accountable.

European monetary union would bring undoubted efficiency gains by eliminating the costs of exchanging currencies, which are currently estimated at about £12 billion annually, eliminating risk due to exchange rate uncertainty and preventing currency speculation. Those benefits can he significant for an open economy such as that of the United Kingdom, which, in the past, was often prey to the vagaries of currency speculation. There are undoubted advantages in avoiding that through fixing exchange rates.

Monetary union would impose major restrictions upon the use of macro-economic policy instruments. Without offsetting policies, that would give rise to increasing unemployment in less competitive regions. With monetary union, each country ceases to be able to change the price of its currency and has less control over its monetary policy. With monetary union, a worsening in a member country's competitive position inexorably gives rise to growing unemployment unless there are offsetting interventionist policies.

Within existing "nation state" monetary unions there is substantial Government intervention, such as active regional and industrial programmes and redistributive budgets. Such intervention helps to offset the impact on weaker regions of the fact that they cannot price themselves back into competitiveness by devaluing their "currency" since those regions do not have a currency of their own. Intervention may be passive, through benefit payments from the centre offsetting lost income, or positive, through regional aid provision. Effectively, what happens through that process is a redistribution of income from more to less prosperous regions.

National Governments typically appropriate and spend about 40 per cent. of national income to enable redistribution of income to poorer citizens and regions to take place. The equivalent European Union budget is just over 1 per cent. of EU countries' national incomes. Of course, the remaining national state budgets mean that a literal comparison stressing the 40:1 ratio of national to European budgets is not valid. But even taking account of that fact, the authoritative 1977 MacDougall study recommended a budget of 5 to 7 per cent. at a European level.

The Governor of the Bank of England, Eddie George, pointed out in his speech last month that fiscal transfers from west to east Germany after the monetary union that followed reunification amounted to 4 per cent. of all German GDP. That represents the equivalent of a budget three times the present European one.

The implications seem clear to me. Monetary union should be supported only if there is a much larger centralised European budget—perhaps four times its present size—and/or other automatic redistributive mechanisms, as well as highly interventionist regional and industrial policies.

However, it is not desirable to shift member states' resources to the central European Union level without its thorough democratisation. That means much greater power for the European Parliament over the Commission and the Council of Ministers and also, crucially, over the European central bank. The policy, legally enshrined in the Maastricht treaty, of a European bank independent of democratic control and dedicated almost exclusively to price stability must be reversed at the next IGC. It is economically disastrous and politically dangerous.

Putting monetary integration first is putting the cart before the horse. For managed exchange rates and, ultimately, monetary union to be feasible, let alone desirable, requires convergence in the real economies of member states. As my right hon. Friend the Leader of the Opposition and the shadow spokesman on foreign affairs, my hon. Friend the Member for Livingston (Mr. Cook) said, we do not want convergence in the rate of inflation and in interest rates alone. That would be unsatisfactory and unacceptable. The right-wing monetarist policy of convergence by recession and by squeezing out demand should be totally rejected.

Monetary union can proceed only on the basis of real convergence in growth, balance of trade and employment levels. If it is argued that those criteria are utopian, it must he pointed out that they are no less so than monetary union pursued without them. Above all, without a much larger European Union budget, monetary union is not worth having. The prospect of raising member states' contributions to about four times their present level may not be practical politics, especially for us, because Britain is one of the largest net contributors.

Monetary union is also probably incompatible with enlargement. At present our taxpayers are subsidising the citizens of Ireland, Greece, Portugal and Spain as the main recipient countries—although I have no quarrel with that process. The three new members will be net contributors, but if enlargement includes Hungary, Poland and the Czech and Slovak Republics—indeed, the Prime Minister said that the EU could eventually include up to 25 nations—there will be real problems in imposing monetary union, because of the large size of the European budget tat will be necessary.

To survive and to succeed, Europe needs to break from its current monetarist trajectory and adopt the socialist themes of full employment, economic equity, democracy and decentralisation. To achieve those aims, we need a change of Government. The Tories have no credibility in Europe. Under the Conservative Government, Britain is acting like a death's head at the feast. The Tories' miserable stance of grudging mean-mindedness towards Europe means that we cannot influence the debate. To influence it, we must be part of the European family, and our partners must feel that we are part of it. That is the only way to shift European policy.

In conclusion, if we do not change our policy, monetary union may take place, even if only for some countries—but if it does, it will happen on the wrong terms and for the wrong reasons. As has happened consistently on Europe, Britain will be left outside until the multinationals, the unelected bankers and the deregulated financiers progressively corner us into joining a monetary union on their terms, rather than on terms that might favour our people.

Photo of Patrick Cormack Patrick Cormack , South Staffordshire

On a point of order, Madam Deputy Speaker. Can you advise me whether the rules of the House have changed? Is one now allowed to read every word of a speech?

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Strictly not. The Chair is fairly tolerant, but perhaps I ought to restate the rule that, according to "Erskine May", it is not in order for Members, apart from Front Benchers, to read a speech, although recourse may be had to fairly copious notes.

Photo of Stuart Bell Stuart Bell , Middlesbrough

On a point of order, Madam Deputy Speaker. As we have had one point of order, may I raise another? The Prime Minister said that our European election manifesto stated that we were against the veto. My hon. Friend the Member for Neath (Mr. Hain) has already mentioned that. [HON. MEMBERS: "That is not a point of order."] It is a point of order, because I wish the Chair to get the Prime Minister to come to the House and withdraw that statement—

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. I can deal with that now. It is not a point of order, because the Chair is not responsible for the content of speeches.

Photo of Mr Norman Fowler Mr Norman Fowler , Sutton Coldfield 6:25 pm, 1st March 1995

I should dearly like to follow what my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) said about the press in the latter part of his speech, but I shall not be drawn down that road, because the most extraordinary feature of the debate is the fact that the Labour party should have had the nerve to table such a motion and to call for leadership on Europe.

Had the motion been tabled by the Liberal Democrats I might have had some time for it, because at least they have been consistent—consistently wrong, in my view, in pressing for a centralised Europe, but at least they have stuck to their guns. But who can take the Labour party seriously on Europe?

When I entered the House in 1970, Labour voted against going into the European Community, as my hon. Friend the Member for Staffordshire, South (Sir P. Cormack) will remember. In 1975, half the Labour Cabinet voted to come out and the other half voted to stay in. By 1981, the anti-European tide was running so strongly that most of the able figures in the Labour party left it to form their own party. In 1983, less than 12 years ago, Labour pledged that, if that party were elected, it would withdraw from the Community altogether. That is the leadership that Labour Members are talking about. If I led a party that had those credentials, I should go a bit easy on lecturing anyone on European policy.

Of course, the Labour party now tries to rationalise the issue. The smart-suited public relations men and women who now speak for the new Labour party say with a wink and a nudge that it is the older Labour Members who hold that view. "What can one expect of those poor old codgers?" they ask.

Photo of Mr Norman Fowler Mr Norman Fowler , Sutton Coldfield

I shall not give way, but at least I have woken up the debate a bit after the speech by the hon. Member for Neath (Mr. Hain).

My right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) was absolutely correct about the Labour party. It was not only the older members who opposed our entry and said that we should come out of the European Community; the present Leader of the Opposition made a specific comment in his election manifesto in 1983, and I do not think the Labour party will be able to challenge this quotation: We'll negotiate withdrawal from the EEC which has drained our natural resources and destroyed jobs. The same message came from the hon. Member for Livingston (Mr. Cook), who now speaks for the Labour party on foreign affairs, and from the deputy leader of the Labour party, the right hon. Member for Kingston upon Hull, East (Mr. Prescott).

The very last set of people from whom I will take lectures on European policy are the members of the Labour party.

My right hon. Friend the Prime Minister was entirely right in saying that the debate today is about the kind of Europe we want. It is not about whether we are in or out of Europe, but about the kind of Europe that we want to fashion. Where does the Labour party stand after its debates on whether we should be in or out and the incredible political hokey cokey it has been doing in past years? It has ended by supporting a federal Europe, with more and more laws being made in Brussels.

The Labour party's support for the social chapter is a prime example of that. There is no clearer division between the parties than on that issue. This party wants decisions on labour regulations left to individual nation states, and preferably to individual companies. We believe that European-wide laws of the kind envisaged in Brussels will add to industrial costs and unemployment, and will make European companies less competitive around the world. That is why Conservative Members welcome so much the opt-out which was negotiated successfully by the Prime Minister. I cannot think of any Tory who supports Labour's attitudes in that area.

The Prime Minister was again right in saying that being at the centre of Europe does not necessarily mean agreeing with everything that comes out of Brussels. I do not agree with my right hon. Friend the Member for Old Bexley and Sidcup who said that at no stage have the Government sought to set out positive themes in Europe. One need only think of the single market and all that the Government did with regard to that to recognise that that is simply an untrue statement of the Government's position.

It would be a mistake—here I agree with the Leader of the Opposition—to believe that every issue of policy on Europe can he decided by the normal process of party politics, and I speak as someone who, in my time, was more party political than most. We must recognise that, on some issues, all political parties—certainly the Opposition parties—contain different views but that nevertheless there are profoundly important decisions to be taken.

In my view, a single currency is one of those decisions. It is also my view that, if and when that decision is required, it would be best reached by a public referendum. I very much welcome the fact that my right hon. Friend the Prime Minister has so clearly kept our options open on having a referendum. If I were Prime Minister, I would have reservations about promising a referendum on Europe; frequently, the case against a referendum is put by his opponents on the European issue.

For all that, it would be a profound mistake to reject the case for a referendum on the grounds of guilt by association. I cannot be the only person who supports our continued membership of the European Community while believing that an overwhelming case has now grown for giving the public an opportunity to vote. A single currency, and the single European bank which goes with it, raises obvious questions of the deepest political and economic differences. No party is at one on the issue, and the right hon. Member for Bethnal Green and Stepney (Mr. Shore) made that completely clear in terms of the Labour party. No party is at one, and no one knows in what circumstances a decision will be asked for.

A referendum would allow industry and business to put their views, and would also allow the public to decide. A recent BBC programme on the subject of a referendum showed that the arguments can be clearly presented. It is patronising to believe that the public cannot understand the argument on the subject.

In 1991, I committed the ultimate unsceptical act of defeating my hon. Friend the Member for Stafford (Mr. Cash) for the chairmanship of the Conservative party European committee. Let me make it clear that I am not prepared to change my position now that I have been liberated from officially explaining the Government's policy. I entirely support my right hon. Friend the Prime Minister's European policy, and he was entirely right to keep our options open on a single currency as an act of policy.

I would say to those on both Front Benches that I do not believe that it is remotely possible for the single currency issue to be settled in cross-party deals between Front-Bench Members at Westminster. It is an issue of such importance that it deserves to be settled after a campaign of public debate which a referendum would allow.

Photo of Geoff Hoon Geoff Hoon , Ashfield 6:34 pm, 1st March 1995

The Prime Minister today appeared to set out his commitment to a multi-speed and multi-layered Europe. He seemed to argue that that was both inevitable and possible to achieve. That may reflect the current state of thinking in the Conservative party, but we must ask ourselves whether it is realistic.

The assumption underlying the idea of a multi-speed Europe is that different countries will proceed at different speeds towards European integration in different subject areas. That seemed to be what the Prime Minister meant before the European elections last year, when he talked about Europe being multi-track, multi-speed, multi-layered". He went on, however, to give the game away by saying: It is a Conservative idea in line with the mood of people everywhere". I doubt whether that mood extends far beyond No. 10 Downing street, and I also doubt whether it commands widespread support among the deeply divided Conservative Back Benchers. It is an idea to paper over the present political cracks in the Conservative party on questions to do with Europe.

Why should I be so doubtful about that? Simply because, at Maastricht, the Conservative Government negotiated an opt-out for the UK in respect of both economic and political union, as well as in relation to the social chapter. It is necessary to look at the effects of that opt-out, specifically in relation to the social chapter, on the legal and constitutional coherence of the European Union.

The opt-out allows the other 14 member states to make laws by majority vote in respect of social chapter subjects; those laws are binding on every member state, with the exception of the United Kingdom. It will leave UK citizens in a different legal position on precisely the same facts from citizens of other member states. Those citizens might well be working on standard form contracts. Yet the European Court of Justice must try to resolve legal and constitutional issues against the background of a different legal test according to whether a member state has accepted the social chapter.

That builds a legal incoherence into the responsibilities of what is in effect the supreme court of justice for the European Union. It is difficult to imagine—even in relation to the social chapter—how the Court of Justice could apply one set of rules to 14 member states and a quite different set to the remaining member state, the UK; yet that analogy will have to apply if we are to proceed along the Prime Minister's route towards a multi-layered Europe.

That will inevitably mean that there will be different legal standards in different subject areas according to the particular subject and the number of member states that have proceeded towards greater European integration. I do not believe that the Prime Minister believes that, and it seems to me to be no more than a device to try to unite—for the moment—the Conservative party.

There is little doubt that the Prime Minister was opposed to the idea of a two-speed Europe relatively recently. In November 1990, he said: I don't want a two-speed Europe. I think a two-speed Europe is unequivocally bad for Europe. In October 1992, the Prime Minister said: No fast track, no slow track, no one left behind". That was his constant theme when referring to the European Union.

The Foreign Secretary has made exactly the same criticism of the idea of a two-speed Europe. How is it possible to equate that clear objection to a two-speed Europe with the concept of a multi-speed Europe about which we now hear consistently from Cabinet members? It is unclear how that division can be breached, and it is unclear how the Prime Minister can resolve the differences in the Cabinet on these questions.

The Chancellor has said: We shall have to ask ourselves about the dangers that could be involved in assuming a marginal role in Europe. It would be a serious mistake to exclude Britain from the major decisions concerning economic and monetary union. On the contrary, the Prime Minister said that it was necessary for Britain to stand out and for the Chancellor to set out new conditions before we could accept the principle of economic and monetary union. He appeared to repeat the view that there were further conditions, over and above those contained in the Maastricht treaty, in his speech today. Yet, given the opportunity, the Chancellor significantly failed to respond to the invitation to set out the conditions when the country expected him to do so. Instead, he delivered a thinly disguised polemic in favour of a single currency, arguing that it was not a threat to the nation state. It is impossible to see how that view can be reconciled to the views of the Chief Secretary, who said that he would "hesitate for an eternity" before voting for a single currency.

That is an uncertainty at the heart of Britain's Government—an uncertainty that is deeply damaging to this country's best interests at a time when our economy is ever more closely integrated in the European Union. Our future economic prosperity does not depend simply on the prosperity of businesses in the United Kingdom but must inevitably depend on the performance of the European economy as a whole. That is why we must have a British Government who clearly accept the principle of a single currency. Only then can they argue the case in the European Union positively. Only by accepting the principle can we influence the nature and conditions of the development of a single currency. The Prime Minister appeared to refer to the style of a single currency in his speech. We can influence whatever he means by the style of that currency only if we accept the principle and argue Britain's case as it develops.

A practical example of the Government's failure to negotiate effectively on our behalf must be the position of the City of London. The Prime Minister talked about protecting the City as a centre of European financial activity, which it clearly is. As such, it must be the obvious place for the location of a European central bank, yet we are unlikely to be given that considerable political favour while the Government's position on the single currency is so unclear and ambiguous.

The European Monetary Institute is the central bank in embryo and it is already located in Frankfurt, which has long nurtured ambitions to become the financial capital of Europe. The attitude of our Government is assisting in that process.

Photo of Geoff Hoon Geoff Hoon , Ashfield

No. I am sorry, but I have only 10 minutes.

That is why it is necessary for a British Government to be at the heart of Europe, but to influence the nature and development of the debate. Unless we do so, we will simply end up on the outside of a single currency. We will have had no control over its development. It will be difficult to see then how Conservative Members will be able to argue that Britain is an attractive place for third-country investors. How many companies will want to invest in the United Kingdom if we are on the outside of a single currency that involves the major countries of the continent of Europe? That is why the Labour party argues for the convergence of the real economic performance of the member states as a vital precondition of moves towards economic and monetary union. That is why we said last year in our European election manifesto—a manifesto that was overwhelmingly endorsed by the people who voted in those elections—that Convergence must be based on improving levels of growth and employment, and not just on monetary objectives alone". That is why that progress towards economic and monetary union inevitably involves not only institutional questions, as the Prime Minister seemed to concede, but constitutional questions. That is why it is important that the Economic and Finance Council is democratically accountable and is developed as the political counterpart of a European central bank. We would expect that bank and ECOFIN to report to the European Parliament and to national Parliaments. In the United Kingdom, we would expect Treasury Ministers to report regularly to the House of Commons on the work of ECOFIN and the European central bank, and to a proposed European Grand Committee.

We do not agree with the Prime Minister's charge that we simply accept all that comes from Europe. We want a developed European institutional solution to the changes that we believe are in principle necessary to bring about a single European currency.

Clearly, different developments are likely in relation to that currency. Before 1996, we will discuss which countries can move to that idea. Secondly, we will discuss which countries will be ready before 1999 and whether there will be a majority. There is a clear danger that, unless we participate in that process, we will simply stand aside and watch the development of a deutschmark zone—a currency based on the deutschmark over which we will have no control or influence. I do not think that any hon. Member would be prepared to agree that Britain should accept the decision of the Bundesbank on a de facto Euro-mark or single currency based on the deutschmark. That is why Britain must play its full role—

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. I call Sir Archibald Hamilton.

Photo of Sir Archie Hamilton Sir Archie Hamilton , Epsom and Ewell 6:44 pm, 1st March 1995

It is a sign of the diversity of the debate that I find myself agreeing more with the right hon. Member for Bethnal Green and Stepney (Mr. Shore) than with my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath). Euro-sceptic that I am, I feel that far too much power has already been transferred to Brussels. Everyone in Britain, and increasingly everyone in Europe, is concerned by the lack of accountability of the Euro-institutions and about the fact that, as the right hon. Member for Bethnal Green and Stepney said, our democratic institutions are very weak. I have to differ with him, however, in that he wants to withdraw from Europe, but I do not think that we should consider that option.

My right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) has suggested withdrawal. When I discussed it with him, he pointed out that if we joined some sort of free trade area we would have to be consulted on any measure taken by Europe. That would not be enough. Let us think of the objections that the French put forward to the import of Japanese-made cars from the north-east of England. If we had merely been asked to consult on such a measure, rather than negotiate from within the European Union, we would have had difficulty in getting that decision overturned. France demonstrates very protectionist instincts all the time and we have to be in a position to combat them. Even if that were not the case, if we were not part of the European Union there would always be a perception that goods produced in this country might be excluded from Europe. In those circumstances, inward investment would be very much less than it is at present.

I am proud to be a sponsor of the excellent pamphlet that I have here entitled, "A Europe of Nations". It is remarkable for its endorsement by Members of Parliament from 28 centre-right parties in 20 different countries. I would not pretend that Europe is suddenly swinging to a Euro-sceptic stand, but this pamphlet is a good start—an embryo of a different attitude towards the institutions of Europe and a view that the nation state will have a much greater role. It is encouraging that it is not British Conservatives alone who are becoming alarmed about the powers that are being assumed by the Commission and the European Court.

It is typical of the Labour party that, having swung from one extreme to the other on Europe—it once took the view that we should come out—it should start to embrace Euro-federalism when wiser heads throughout Europe are having second thoughts, but then the right hon. Member for Sedgefield (Mr. Blair) is a past master at bad timing. We only have to look at the extraordinary debate that he has created over clause IV to realise that. It has produced extraordinary left wingers in the Labour party, who have come crawling out of the woodwork to praise nationalisation, when most of us thought that the issue was dead. When we consider movements throughout the world, with the collapse of the Soviet Union, it is remarkable for anyone in this country to advocate nationalisation. Such policies are followed only in communist China and Cuba—I do not know whether they are communist in North Korea. The issue has even split the Labour luvvies—some of them who are failed playwrights seem to think that nationalisation is a good idea.

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. I am sorry to interrupt the right hon. Gentleman, but he seems to be straying rather wide of the general topic.

Photo of Sir Archie Hamilton Sir Archie Hamilton , Epsom and Ewell

My comments have a European dimension because no European parties or countries advocate nationalisation at present, and I find it unbelievable that the Labour party raises that issue. I admit that I follow the advice of the hon. Member for Jarrow (Mr. Dixon), who told the Leader of the Opposition that the issue should not have been raised in the first place.

I welcome the Prime Minister's analysis of a single currency. He referred in his speech to the "core" of nations that might join a single currency. Everything would depend on the number of countries that joined a single currency at that point. As my right hon. Friend the Member for Guildford (Mr. Howell) said, a minority of member countries may decide to do so. It would depend on how many countries joined as to whether a single currency would even survive. If it embraces the vast majority of countries in Europe, as some of those countries' economies subsequently deconverge, even if they converged when they joined, that will produce massive strains. Hon. Members have already referred to migration and the need for significant fiscal transfers across Europe.

Photo of Mr John Butcher Mr John Butcher , Coventry South West

Does my right hon. Friend agree that the Conservative party has been handed the most wonderful gift this evening? We have been told that the Labour party is committed to a single currency. Opinion is rapidly changing in the City of London among more informed industrialists. We now know that hundreds of thousands of jobs would have to be shed in this country to meet the convergence criteria necessary to join a single currency. Cannot we now say, honestly and legitimately, that the Labour party is adopting a policy of high unemployment?

Photo of Sir Archie Hamilton Sir Archie Hamilton , Epsom and Ewell

That would be consistent with many other Labour policies, such as a minimum wage and the social chapter, which would deprive this country of a large number of jobs.

The ultimate question, when considering the effects of migration as people move from areas of high unemployment to areas where they could get jobs, is whether the people of Europe feel more European than, say, the French. There is no great evidence, for instance, that the French feel so European that they are prepared to take a broad-minded view towards Polish workers in the ferry industry. They might be equally intolerant of poverty-stricken Italians coming up from Naples to work on the ferries. Europe cannot be compared to America, which takes a much more tolerant view of its people migrating from one side of the country to the other. The difficulties in Europe would be far greater.

What is needed is a wholesale repatriation of policies that concern purely domestic matters. There is a growing agitation in the country that Europe is interfering in far too many matters for which it does not have a mandate. Foremost among those should be the common agricultural policy. There is no doubt that if we want the Visegrad countries to join Europe, the CAP must be completely overhauled. However, we are limited in our ability to overhaul it further as long as it is held by the Commission. It should be repatriated in stages, the CAP budget should be reduced, and the cohesion fund should ultimately be phased out.

The European Commission must be reduced to what it should be—a civil service to carry out the wishes of the Council of Ministers. The European Court, to which my right hon. Friend the Member for Guildford alluded, must stop making laws on the hoof.

Finally, the motion before us has been carefully drafted by the Opposition to seduce my hon. Friends on the Euro-sceptic wing of the party into supporting a Labour party motion. But, let us face it, that Labour party is even more divided than we are on Europe. It is committed to the social chapter, which will increase costs and make many of our industries uncompetitive. It cannot quite make up its mind how quickly it would go into a single currency, but it would certainly be quicker than we would be prepared to go. We have now had a great argument about majority voting, but there is no doubt in my mind that we would see a massive extension of majority voting if Labour ever came to power.

So I ask my hon. Friends—I am sad that there are not more present who are on the right of the party—to oppose this cynical measure root and branch, or they will fall into the trap that has been carefully laid for them by the Leader of the Opposition and support a party whose vision of Europe is the antithesis of everything which the Euro-sceptics, including me, stand for. I should like to see my hon. Friends back in the fold of the Conservative party tonight and I hope that they will support the Government in the Division Lobby.

Photo of Jimmy Hood Jimmy Hood Chair, European Legislation Committee, Chair, European Legislation Sub-Committee on Roads Safety Competence 6:54 pm, 1st March 1995

I welcome this debate and the opportunity to take part in it. I have listened to most of the debate and two speeches were outstanding. I mean no disrespect to any of my right hon. and hon. Friends, or to Conservative Members, but the speech by my right hon. Friend the Leader of the Opposition was the best that I have heard from him and I compliment him on it. I may do the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) harm if I say that his speech was another exceptional contribution to the debate. I judged it by the responses that he had from some of his colleagues behind him and I was reminded where the Opposition are, as opposed to where the enemy is. His speech was enlightening and well worthy of the debate.

Tonight's debate is about government. It is about government of the European Union, but we should not overlook the fact that it is also about government of the United Kingdom. It is about national interests and sovereignty. This country is suffering because of indecisive government. The Prime Minister is a prisoner within his own Cabinet and party. Any Government should go that extra mile for their country, but, far from doing that, they do not want to leave the starting blocks. To judge by some of the comments that I heard this afternoon, some of them do not even want to move forward from the starting block but would rather run backwards.

In my capacity as Chairman of the European Legislation Select Committee, I have a chance to meet colleagues who represent their Governments in other member states. I have just returned from COSAC, the Conference of European Affairs Committees, in Paris this week. Those who listened to the Prime Minister in the Frost interview recently will have had the impression that the intergovernmental conference in 1996 will be a status quo conference, but that is not the view of other member states. Hon. Members had better understand that they will not sit back and allow Europe to stagnate because of the domestic problems of one member state.

My Select Committee has just started its inquiry into the IGC and hopes to report before the end of the summer. I suspect—I may be wrong and the Prime Minister and Foreign Secretary may disagree—that the discussion of the 1996 IGC will cause great problems for the Prime Minister, and I honestly do not believe that he has any intention of going to that conference before a general election. I welcome the notion of a general election in the summer of 1997, but I doubt whether we shall have one. I say to my hon. Friends and to my party in the country, whenever I get a chance to do so, that we must prepare for a cut and run general election. I believe that the Government dare not go to the IGC as divided as they are; no doubt there will be some pasting together.

The former chairman of the Conservative party, the right hon. Member for Sutton Coldfield (Sir N. Fowler), spoke about the Labour party coming and ebbing with its opinion on Europe. I remember him going to join his family and then coming back into the Government and then going back to join his family. He has done some ebbing in his time.

Photo of Jimmy Hood Jimmy Hood Chair, European Legislation Committee, Chair, European Legislation Sub-Committee on Roads Safety Competence

I do not think that it is cheap at all. If the right hon. Gentleman wants to criticise the Labour party, he should look in before he looks out.

On the single currency, I have to tell some Conservative Members that when they voted for the Single European Act, they should not have been surprised that the single currency was coming further down the line. When I hear the Chancellor of the Exchequer trying to say that there could be monetary union without political union, I think that he either discredits himself if he believes it, or he discredits the House if he expects us to believe it, because I suggest that it is nonsense.

When the Prime Minister talks about enlargement of the European Union, as he did today, he talks about a super 25 or 27 membership in 10 or 15 years. Does he really believe that? The right hon. Member for Old Bexley and Sidcup said the same thing today. Are we being realistic when we say that?

It is impossible to say that one wants to maintain one's veto, double the size of the Union and leave every small country with a veto and also to say, as did the right hon. Member for Epsom and Ewell (Sir A. Hamilton), that one wants changes in the common agricultural policy. If anyone in the House tonight believes that we can change the CAP without getting rid of the veto or introducing qualified majority voting, they are kidding themselves. I do not think that those people are kidding themselves because, at the end of the day, we are all professionals. It is worse than that. They are kidding the public, and they are kidding the electorate. Of course it is impossible to reform the CAP without qualified majority voting. If the Prime Minister says that he wants to double the size of the Union and retain the veto, he argues the incredible.

At Question Time today, the Minister of State at the Foreign Office, the hon. Member for Boothferry (Mr. Davis), mentioned the French initiative on Cyprus. Cyprus was promised that it would be allowed to apply to join the Union this year, but that has now been put off until 1997 after the IGC, as has been suggested by the French. In my opinion, the fact that our Government voted for that, when they are part of that guaranteeing power, has let down the people of Cyprus. I do not accept that that is the right thing to do. They were not doing enough to get Cyprus into the Union.

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Witney

I do not know what the hon. Gentleman is talking about. At Corfu, it was agreed by everyone that, for the first time, Cyprus and Malta would be part of the next wave of enlargement. No date was set. It is now in prospect—it may be agreed next week—that there should be an undertaking for the first time. I support that. It is a very big step forward, and the Government of the Republic of Cyprus warmly welcome it. I do not know what the hon. Gentleman is on about.

Photo of Jimmy Hood Jimmy Hood Chair, European Legislation Committee, Chair, European Legislation Sub-Committee on Roads Safety Competence

I shall help the Foreign Secretary out. [Interruption.] In a recent Council of Foreign Ministers, there was a 14 to one vote about the position in Cyprus, when the Greeks voted against the proposal to leave the consideration of Cyprus until after the 1996 IGC. We know that moves are afoot to postpone that even longer, into 1997. We are walking away from our responsibility to Cyprus when we repeatedly put it off, as we have done.

I am not opposed to the principle of referendums. They are part of a democratic process. However, I think that my right hon. Friend the Leader of the Opposition said today that, before one has referendums, one should have leadership. It is nonsense to talk about referendums when any changes are two years away. I have been persuaded away from that point of view.

The only referendum that the Union needs, and the only referendum that the nation needs, is a general election. The sooner that that general election takes place—the sooner we have a Government who will go into Europe and represent the best interests of the people, not the interests of the domestic party—the better.

Photo of Mr Cranley Onslow Mr Cranley Onslow , Woking 7:04 pm, 1st March 1995

I shall not follow the speech of the hon. Member for Clydesdale (Mr. Hood), even the parts of it that I understood, because I disagree with most of what I understood him to say. Specifically, I think that he was less than charitable. The best speech in the debate was made from the Government Front Bench, by the Prime Minister. It was straightforward and factual. It covered all the ground, and it should have given every possible reason for every hon. Member on the Conservative side of the House, or all hon. Members who ought to sit on the Conservative side of the House, to be in the Government Lobby tonight.

I shall not be unkind about the Leader of the Opposition, because his speech will no doubt look very good on television, but if one analyses it one will realise that it is most remarkable for the things that he did not say and the arguments that he left out.

If I may make an argument that is perhaps new in the debate, a great many people in the country are sceptical about Europe. I am talking not about in the House but in the country as a whole. Some are very sceptical and some are mildly sceptical, but it does not follow that most people want us to leave the Union. Being sceptical about Europe is not the same as opposing Europe. We should clear the confusion about that.

If the Union cannot stand constructive criticism, there is something very wrong with it. If it cannot tackle fraud and cheating on the common agricultural policy and the common fisheries policy, there is something wrong with the Commission; we should never forget that. We should never forget, as participants in a national Government, that national Governments in the Union are giving illegal aid to their industry to the detriment of our industry. We should seek to ensure that that is put right.

I was especially glad to note the action that is being taken by the Department of Trade and Industry on the steel industry. The European steel industry is in a shambles. It is ironic that that should be so, because that was one of the original reasons why Europe combined.

Photo of Denis MacShane Denis MacShane , Rotherham

Will the right hon. Gentleman give way?

Photo of Mr Cranley Onslow Mr Cranley Onslow , Woking

No; I will not give way. I am sorry but I have no time.

The Department of Trade and Industry has found it necessary to set up a steel subsidies monitoring committee to gather information about illegal subsidies and to pass that on to the Commission for action. The Department, I understand, warned British contractors that if they buy steel from certain fabricators overseas, they need not necessarily expect that it will meet the tariff entry requirements, because it has been illegally subsidised by the Governments concerned.

That state of affairs is not confined to the steel industry. Anyone who takes an interest in the subsidy issue at Commission level will know that there have been good grounds for criticising the Governments of Italy and Spain for subsidising their aluminium industry and good grounds for criticising the Government of France for subsidising their aviation industry. Both of those ran clean counter to the letter and the spirit for which the Union is supposed to stand.

I think that the scepticism about those subjects extends to others as well. Most people in this country are pretty sceptical about the European Parliament. I found it interesting that, just as the Leader of the Opposition said that the Union was important to our steel industry as long as the regulations were enforced, but did not say that they were not being enforced, he did not pay tribute to his socialist Members of the European Parliament for the work that they do to defend British interests in Strasbourg or Brussels; I have no evidence that they do anything to defend British interests. I am not surprised that people are sceptical about that.

We must recognise that there is a need for Europe to perform and to be judged by its performance, but that does not amount to a case for leaving and for turning our backs on Europe, which exists and in which we must live and fight for our own interests.

Scepticism in this country extends to scepticism about a single currency. The right hon. Member for Bethnal Green and Stepney (Mr. Shore)—I am glad to see him in his place—quoted at some length an admirable lecture given by the Governor of the Bank of England, but he did not complete the quotation by drawing on the last few paragraphs of the lecture, in which he said about monetary union: it must be in the interests of the European Union as a whole that that decision is informed by a careful and dispassionate assessment of the economic arguments. If that is scepticism—it is certainly not a full commitment in either direction—then it is shared by the Governor. He went on: It is not a decision that can or should be taken now. We all have our work cut out to achieve economic and monetary stability, and to address the problem of structural unemployment within Europe, through our independent national efforts and through European co-operation … The important thing at this point … is that we all carry forward this work patiently and with an open mind. That indeed is the spirit in which the House should approach tonight's opportunist motion. It is not a motion tabled by people who are prepared to be patient or open-minded. The only thing that unites the Opposition is not Europe but a lust for power and for office. All their actions are conditioned by that. I believe that they will be disappointed. In the meantime, it is important for us to support to the hilt a Government who genuinely defend the national interests of this country. They work patiently and cautiously and keep their options open. The referendum option is an important one, and I am sure that the Prime Minister is right to keep it open. It is extremely important that we show our resolution and unity in the Lobby tonight by supporting the Government amendment.

Photo of Mr Derek Enright Mr Derek Enright , Hemsworth 7:11 pm, 1st March 1995

The right hon. Member for Sutton Coldfield (Sir N. Fowler) got just one thing right in his speech, which was that tonight's debate is about differing visions of Europe. The Opposition certainly have a distinct vision of Europe. Perhaps I may illustrate it by referring to shops. Do people want Flash Harry's cut-price shop, selling cheap goods of cheap quality, and giving no training to the staff; or do they want Marks and Spencer, selling quality goods, giving staff decent training, paying them decently, consulting them and giving them consideration when they have to be moved from one branch to another? That precisely illustrates the difference between us.

I should like to correct my hon. Friend the Member for Neath (Mr. Hain) and various Conservative Members about the social charter. I remind hon. Members of the Coal and Steel Community treaties. Fundamental to those treaties was the manner in which the workers of the European Community should be treated. The whole idea was to improve their treatment and raise their standard of living. The same idea is to be found in the EURATOM treaties, and it permeates the treaty of Rome, article 119 of which covers equal rights for women, and did so well before we started to do anything about them.

Essentially, the European Union is about people and their welfare—not just the people of one small part of the Union, but all its people. We are concerned for other people just as much as we are concerned for ourselves. Unless we hold true to that ideal, we are finished as a nation.

This evening I have heard a series of thoroughly depressing speeches containing no vision for Europe and showing a fundamental misunderstanding of how it works. Hon. Members seem to have a misconception of how the Commission is controlled, and about what the European Parliament can and cannot do and does and does not do. Hon. Members share a misconception about Pauline Green, leader of the socialist group. She has worked extraordinarily well, drawing together a programme for all the peoples of Europe, including the people of this country. I have heard Ministers praising her efforts, and rightly so.

We seem to be hung up on the question of sovereignty. What on earth do we mean by sovereignty? It means giving people power over their own lives. That in turn means enacting, at the right level, legislation that defends people, that acts positively in their interests and that encourages them.

My constituents ask what happened to sovereignty when it came to pit closures. It was not the bureaucrats of Brussels who got rid of the pits; it was Whitehall and Westminster that infringed my constituents' sovereignty and deliberately stopped them having work. The result is that one in three men in the area is out of work and actively seeking work.

My constituency is a good example of the need for a social chapter. We used to have what were disgracefully referred to as women's jobs, because they paid enough only to supplement a wage. People work 40 hours for £100 or £120, but these salaries are no longer an adjunct to other people's wages; they are now the wages for whole families. What sort of pay is that on which to keep a family together?

I applaud the idea of a minimum wage, which should apply across the European Union. The EU can ensure that we do not go in for competitive beggar-my-neighbour policies. Hugh Gaitskell's speech, which I saw on television that evening, contained a basic illogicality that depressed me enormously. He said that we could not wipe away a thousand years of history. That was an appalling statement, because it did not recognise the fluidity of history. It looked to the past, not to the future. It did not regard history as something to be built on and looked out from. The Government are falling into the same trap.

We have to face up to the problem of monetary union which, for the first time, the Prime Minister mentioned this afternoon. My hon. Friend the Member for Clydesdale (Mr. Hood), the Chairman of the Select Committee on European Legislation, mentioned what I am about to say as well. It is clear to me, having talked to representatives from Germany, France and the Benelux countries, that they are looking to monetary union: it will come. It may not come in 1997 or in 1998, but it will come as soon as possible after that. The House should be in no doubt about that, and it will impinge cm our sovereignty. Once a bloc of countries has entered into monetary union, the leeway that we shall enjoy to manage our own economy will be restricted. My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) said that our policy was one of full employment and that we could not achieve that under the terms of the Maastricht treaty. But we cannot have full employment by regarding ourselves as an island, putting a fence all round so that no longer do we consider ourselves part not only of the European economy but of the world economy.

Instead of pretending that we can solve problems within these islands, we must perform the much harder task—it is harder, let us not kid ourselves about that—of persuading our partners within the European Union that by bringing our policies together we can tackle the problem of unemployment. There is no lack of willingness on the continent to adopt such policies. It is Her Majesty's Government who have opposed every single proposal that has been made by the Commission with the support of the majority of the Council and who have blocked the really substantial measures.

Monetary union can and should help in that respect. It is what we use monetary union for that counts. No one can tell me that monetary union takes away our independence as we now know it.

Photo of Mr Derek Enright Mr Derek Enright , Hemsworth

My right hon. Friend says, "Of course it does." Yet this weekend we have had an example of a young bit of a lad on almost the other side of the globe who can bring down a bank, ruin the value of the pound and send shivers throughout the entire world community. If that is some sort of sovereignty, I do not know what we are coming to.

We must be realistic about sovereignty. We must pool our sovereignty to obtain more power over ourselves. To do that, we have to know in what direction we are going, and that, I am afraid, is what the Prime Minister did not tell us today.

Photo of Mr Timothy Renton Mr Timothy Renton , Mid Sussex 7:21 pm, 1st March 1995

The aim of the Opposition's motion today is purely party political. It is an attempt to create an unholy alliance between Labour, Liberal Democrats, Scottish nationalists, Ulster Unionists and those of my hon. Friends who wander in that nether world between heaven and hell, the Whipless ones, in the hope of embarrassing the Government and defeating them tonight. I am sure that, as some of my right hon. and hon. Friends have already said, the Opposition will be defeated in that aim and I hope that all Conservative Members will vote firmly in the No Lobby.

My right hon. Friend the Prime Minister made a wise and balanced speech. One aspect of it on which I wish to concentrate in the few minutes available to me is his remark that Europe does not have just one agenda, and here I pick up the remarks of the hon. Member for Hemsworth (Mr. Enright). Of course, that is true. Germany has a different agenda from us. Its agenda is to maintain the strength of its currency and its fantastically strong record on low inflation and low interest rates. France, too, has a different agenda, which is to bind Germany into the European Union while Germany is still interested in being so bound and before, as could happen after unification, Germany turns its eye eastward and is not that interested in membership of the European Union.

We have a great challenge in that respect. How do we, as a wholehearted member of the European Union help to lay the foundations of an ever closer union among the peoples of Europe"? Those words cause shivers of apprehension in some hon. Members on both sides of the House, but they are not new words. They appear in the original treaty of 1951. That original grand purpose, always undefined, has been reaffirmed many times. For example, article 1 of the Single European Act signed by my noble Friend Baroness Thatcher in 1986 has as its objective making concrete progress towards European unity. Ever since 1973, the Conservative party has been a willing signatory to treaties that contain those words.

The free trade area is nearly complete and, as we look ahead to new challenges, there are great problems, which I fully understand, in working out how that ever closer union is to be achieved. But hon. Members should not think that that concept will go away, especially as we move from a European Union now of 15 countries to one of 20 or more as east European countries apply for membership.

Organisational changes are already required in the European Union. The roles, portfolios and numbers of the Commissioners need to be redefined; the rules about qualified majority voting need to be reconsidered. I am not one of those who in any way thinks that the present structures and administration of the Union are perfect, but we cannot and must not expect that 250 million of our European neighbours will turn their back on the concept of ever closer union just because some in Britain have momentary doubts, agonies and hesitations about it.

I have no doubt that the progressive solution will lie in what Churchill foresaw in 1950 when he referred in his book "Europe Unite" to some sacrifice or merger of national sovereignty along with the gradual assumption of that larger sovereignty by all nations concerned which can alone protect their diverse and distinctive customs and characteristics and their national traditions". What does that mean? It means that we all voluntarily give up some individual national sovereignty in order to play an effective part in a wider sovereign organisation of which we are part.

Up until now, we have pooled sovereignty over such matters as trade, agriculture, fisheries and the implementation of the single market programme in order to have more force in the world as a trading bloc, but we have kept it, for example, on tax harmonisation, foreign policy and defence.

Those boundaries are bound to move as the European Union develops and I understand that over each move there will be fierce argument, but the moves will take place, and that is one reason why I regard it as essential for the issue of subsidiarity to be properly defined at the intergovernmental conference so that there is clarity between what does and does not lie within the competence of the European Union.

The main issue that lies immediately ahead, which has occupied the House much this afternoon, is that of a single currency. I fully agree with all of those, starting with the Prime Minister, who say that much rational discussion is obviously needed about how much control over monetary and fiscal policy should pass to centralised European authorities when a single currency is likely to happen. That discussion must take place before Parliament decides whether to join a single currency and whether at that time to recommend a referendum.

I disagree very much with the right hon. Member for Yeovil (Mr. Ashdown) over his wish to force the Prime Minister to take that decision now. It is much wiser to stand back and not take the decision but to wait until the arguments are better known. That may not be an exciting posture, but it is a sensible one. It is much better to do that than to take the wrong decision now.

My own judgment is that in about the year 2010 there will be only four major trading currencies—the yen, for Japan and the Pacific basin; the dollar, for north and south America; the Chinese currency unit, which would embrace mainland China, Taiwan and Hong Kong, and a European currency unit. Other minor currencies will continue in existence, such as the rouble, but they will be subject to the regular risk of devaluation.

Before then, Britain as a trading country and a financial centre will have joined the European currency unit with all that that implies of no risk of devaluation and therefore of low interest rates and low inflation and higher employment. We will join it because it will be self-evidently in our interests at that time. But it is not a decision for today.

I remind the House of two dates. First, it is the 21st anniversary of my election as a Member of Parliament. [HON. MEMBERS: "Hear, hear."] I thank my hon. Friends for their support. I came to the House as a member of the Conservative party, which had just taken this country into the European Community, and ever since then, unlike the Labour party, we have been a lead player in the development of the European Economic Community, to the advantage of Britain. We have always believed in a powerful Britain at the heart of a powerful Europe. We believe in being a participant, not a spectator. I trust that that will remain a basic plank of the Conservative platform.

Secondly, we are only two months away from the 50th anniversary of VE day. I remember that day very well. I remember the mixed feelings of triumph and relief. We have now had 50 years of peace in western Europe—a longer period of peace than at any time in the past 120 years. I believe strongly that the development of the European Union—its steady progress from a Coal and Steel Community to a European Economic Community and to the Union—has played a key part in bringing western European nations closer together in peace. I look to the European Union and to our active, positive membership of it, to give us peace for the next 50 years.

Photo of Mr Peter Mandelson Mr Peter Mandelson , Hartlepool 7:31 pm, 1st March 1995

I compliment the right hon. Member for Mid-Sussex (Mr. Renton). I agreed with much of what he said. I found his speech all the more welcome because it was in such stark contrast to the normal diet of speeches that we hear from many of his colleagues, which so often consist of false claims about the secret, socialist, centralising European agenda of the Labour party, coupled with attacks on wild, federalist ambitions across the channel, which only the Conservative party is capable of seeing off; about wicked continentals, in league with my colleagues in the Labour party, who, apparently, spend every waking hour dreaming up new ways of suborning the British way of life—one Aunt Sally heaped on another, for the Government to knock down.

It is quite clear to me why the Conservatives have had to construct such a ludicrous spectre on the continent. After all, they have made so many enemies of each other within their own party that the only way in which they are capable of coming together is by creating even bigger ones outside. Of course, it is very tempting to allow them to stew, to delude themselves, fighting one another, edging themselves steadily but surely out of office. But, in my view, the process in which they are engaged carries far too many dangers for our country for us simply to sit back and enjoy the spectacle of the Conservative party tearing itself apart, however enjoyable that is at one political level.

As I think the Prime Minister's speech revealed this afternoon, the Conservatives are incapable of uniting on anything other than platitudes, short-term postures and a postponement of every important decision that our country faces in relation to Europe. What, after all, were the Prime Minister's most frequently used words in his speech this afternoon? "Don't know"; "not yet"; "perhaps"; "maybe"; "wait and see". Why was that the theme of his speech? Because, on any long-term vision of Europe, the Tories have a fundamental, gut, irreconcilable divide between those who merely want the loosest possible European free-trading area and those who see Britain's economy, our trade, our defence, and foreign policy, intimately linked to Europe, and rightly so. That is why Government policy, as confirmed during the Prime Minister's speech this afternoon, is seemingly permanently on the fence, alternately paralysed or in retreat—never going forward, because looking ahead means falling out among themselves.

The Prime Minister is well practised now at looking both ways. Nothing in his Jekyll and Hyde performance this afternoon alters the fundamental reality of the divide in his own party. In my view, he has only himself to blame for that impasse. From the very moment he prevailed over his Maastricht rebels—thank God he did—in the summer of 1993, then inexplicably, to many of us, decided to cave in to them with his appeasing article in The Economist of that autumn, they knew full well that they had him on the run. He has been running ever since.

These are intolerable conditions in which to conduct Britain's European policy. We are heading, as the Prime Minister said, towards another European intergovernmental conference of great magnitude. Although it is likely to fall well short of being a Maastricht mark 2, for there seems to be no great appetite anywhere for any great integrationist leaps forward in Europe, the IGC is forming an extensive tidying-up and reforming agenda, which Britain must address seriously and play a full part in shaping, on the basis of a clear, coherent and, above all, consistent vision of where we want Europe to go and what we want our place in it to be. If we do not—if the IGC fails, from our point of view—it will harm Europe's ability to co-operate more effectively on matters that are of key national importance to Britain: our economy, foreign policy, defence, environmental protection and much else besides.

That is why the Tories' fight over Europe is so damaging to Britain. The Government are so hamstrung by their need to condemn everything that their own sceptics label "integrationist" that they cannot embrace the necessary moves towards greater co-operation which are in Britain's interests, and they cannot take proper and full advantage of what I believe is a more realistic and practical political mood throughout Europe. I do not believe that that is any way to serve Britain's interests. I say that not because the Labour party wants to put Europe first, as is often bayed by Conservative Members, but because Britain's interests can be put first only by fully co-operating in Europe.

Let me offer some examples of where I believe that greater European co-operation is signally in Britain's national interest. I believe that we need a strengthened single market and guaranteed British access to it, and that often requires a strong Commission to enforce the rules if that single market is to work properly. It also requires, from time to time, a speedy and effective European Court, to provide adjudications of disputes, to ensure that we and our British companies gain access to that market. It is in our interests for the European Union to pull its weight on trade, to liberalise in some areas and to combat dumping in others; yet, for some, that is just portrayed as the European Union throwing its weight around.

We would benefit from common action, on unemployment and competitiveness, yet all we hear from Conservative Members is constant talk of deregulation, Government doing less. At the moment, there is even resistance among some to closer working among the police and judicial authorities. We would have much to gain from the formation of a Europol, yet for some that is too much like supranationalism. We need the decisions and actions taken through the common foreign and security policy better prepared and executed, and that will mean closer and stronger, not weaker, co-operation. As for defence, we need not only a bigger role for the Western European Union but moves to create common procurement procedures and greater burden sharing in defence expenditure.

Enlargement towards the east is in the interests of our peace and security; but does any hon. Member seriously doubt that it has implications for Europe's workings, the size of the Commission, the operation of the Council of Ministers and the performance of the European Parliament? Of course not. All that must change. Are we really going to block any extension of qualified majority voting, with small new members being given the same veto rights in the Union as Britain, Germany and France on matters of crucial importance to us? Of course not. All those matters must be on Britain's agenda; they are certainly on the Labour party's.

There is, in fact, a big agenda for Britain to get right in time for the intergovernmental conference. We must identify the areas in which action is needed and the changes that we want, and frame proposals for the necessary reform. The Government must accept, however—this is important—that we shall get nowhere with those proposals unless we are in a strong negotiating position. We shall succeed only if we have already won friends and influence in Europe, and have created such an atmosphere and commitment that our partners are anxious to reach agreement with us. That is what is missing now, and that is the crux of this debate. It is why the Government—

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham 7:41 pm, 1st March 1995

About a fortnight ago, I feared that the single currency could be discussed only by consenting adults in private. I am pleased to note, however, that today hon. Members on both sides of the House have indulged in the practice. I was particularly interested by the way in which the Leader of the Opposition so clearly expressed himself to be in favour of a single currency.

I do not think that the hon. Member for Hartlepool (Mr. Mandelson) had any idea of the extent of the disagreement that emanated from the Labour Benches behind him. The idea that the Labour party is united on the single currency is absurd. I do not believe that the Leader of the Opposition himself has any notion of what being tied to a single currency really means, particularly in view of all that we know of past Labour Governments. I shall say more about that later.

I welcomed the Prime Minister's approach. As he said, we must wait and see exactly what the conditions are—and they certainly will not apply before the turn of the century—before deciding whether to join the single currency. However, I am not one of those who believe that monetary union necessarily leads to political union: it seems to me that political union means losing control of defence policy, foreign affairs policy and the budget.

Although we are making sensible arrangements in the Western European Union, we manifestly have our own defence policy. The same applies to foreign affairs—although we clearly could not have secured the terms and conditions that we managed to secure in the negotiations on the general agreement on tariffs and trade without the offices of the European Union. As for the European budget, it is controlled by the Council of Ministers, but it must be passed by national Parliaments—in particular, by the House of Commons. I therefore do not see why monetary union should necessarily lead to political union.

Indeed, it would be dangerous were monetary union to do so. It is important for democracy never to depart too far from its grass roots. Whatever may be said about democracy in the European Parliament, it evidently does not enjoy the sustained support of people in this country; we need only look at the turnout in European elections to see the truth of that. While national Governments retain a majority of support, it is clear that that is where power should reside.

The single currency is, however, of constitutional importance, if only because the European central bank will have to manage a monetary policy. If we adopted a single currency, we would give up our right to devalue. That has been a precious right for past Labour Governments; it is absurd for Labour to lecture us about the benefits of a single currency, given their progress in that regard—rake's progress, I should say.

In 1974, the exchange rate was just over DM0.6 to the pound; only five years later, it was DM3.8 to the pound. The result of that slide in the value of sterling against all other currencies was that interest rates had to be significantly higher than they would otherwise have been. They were just below 15 per cent. in 1974, and finished at just below 15 per cent. in 1979, having risen to 18 per cent. at one stage. That is the price of a policy that allows the currency to devalue. Whatever we may think of the philosophical benefits of floating the pound, our experience is that it has always floated downwards.

That has consequences. In the case of medium or long-term loans, the market will insist that a higher rate of interest be applied to sterling securities because of the fear of devaluation. That is why our interest rate on loans for between 10 and 20 years is always at least 1.5 points higher than the deutschmark rate.

Arguments about whether we should join the single currency tend to be conducted in a vacuum. Now, in 1995, we are arguing about whether it is a good idea; but in 1999 at least three countries will qualify—Germany, France and the Netherlands. We currently have 40 per cent. of our visible trade with those countries, and the decision will therefore be extremely important. I believe that those countries will adopt a single currency. We shall not be able to avoid that; we shall not be able to opt out of it. The currency will be widely traded—probably more widely traded in the City than anywhere else in the European Union—and a great many businesses and people will want to deal in it.

There will be an obvious advantage in businesses doing so. The interest rate on the European currency will be significantly lower than that on sterling, making it extremely attractive to European businesses. It will not be a single currency at first, but it will be a very powerful common currency. We can no longer discuss the desirability of such a development in a vacuum; it is going to happen.

Whether the currency will spread more widely, and whether that is desirable, is another matter. We cannot possibly know until much nearer the time; but if, for example, the Greeks, Italians, Spaniards and Portuguese by some miracle qualified to join the European single currency on nominal terms, I would guess that the currency would be extremely unsafe, simply because the margins between employment levels in Spain are so different from those in Germany. I do not think that such a policy should commend itself to those countries, although of course it is entirely up to them. Whether we join a single currency must surely depend on the number of countries that join, and the terms and conditions operating at the time.

As a common currency will be formed in any event, I think it likely that we shall join in due course, because it will probably be in our long-term interest to do so—particularly as the interest rate will be substantially lower than the sterling rate. The outlook for sterling in such circumstances, however, cannot be so strong. The currency will be not only weaker but less widely held than it is today. Consequently, the shifts of fortune, which are bound to occur, and the fluctuations in the value of sterling are likely to be much sharper even than they are today.

It will eventually be in our interests to join a single currency as long as it is confined, which I think it would be, to the stronger countries of the Union. It is important to retain control of the budget as at present and carry out the reforms which my right hon. Friend the Prime Minister spelt out in his speech. We should also try to extend Europe's boundaries. All those features work in our national interest.

Clearly, joining any monetary union must exert considerable financial discipline on this country of a kind that we have not experienced for many years. For 300 years we used a currency convertible to gold and for 20 years after the war we abided by the Bretton Woods agreement and were tied to the US dollar. That suited us very well. When I first came to the House—I have been here a little longer than my right hon. Friend the Member for Mid-Sussex (Mr. Renton)—interest rates for Government borrowing were 4 per cent. for 20 years ahead. Low interest rates have much to commend them, and I hope that we can return to those conditions. However, it is rather too early now to say whether we shall be able to do that and it is much better to reserve judgment.

Photo of Mike Gapes Mike Gapes , Ilford South 7:50 pm, 1st March 1995

I get the impression that many Conservative Members are positioning themselves for the battle to come in six months, a year or two years. Many speeches seem to be shifting slightly towards a more sceptical position. I refer in particular to the speech by the right hon. Member for Guildford (Mr. Howell), who has become a Euro-sceptic. That is clearly a sign of the way that the wind is blowing for a party that faces defeat at the coming election.

I was with the right hon. Member for Guildford two weeks ago in Bonn with the Select Committee on Foreign Affairs. We also went to Rome in the course of an inquiry into these matters. I was struck by the clear, unanimous view in Germany, which was emphasised by Chancellor Kohl in all his public statements and by the Social Democratic party and even extended to the Greens, that Germany believes in European integration and not in the European Union as some kind of glorified, Thatcherite free market. It believes that the political side of the process is as important as the economic and monetary sides. We must recognise that now because when the single currency is established—not if, but when—it will undoubtedly be based on the German economy. As is the case today, Germany, with a population of 80 million people, will be the motor of the overall, integrated west European economy.

The right hon. Member for Horsham (Sir P. Hordern) spoke about the relationship between Germany, France and the Netherlands. It is clear that they will be in the new arrangement. One of the few things said by the Prime Minister with which I agreed was his allusion to the fact that it would cost us if we stayed out of a single currency. We should consider the problems that we would face with speculation, and people wanting to trade internationally and using the European currency rather than ours. For those of us who represent London constituencies with large numbers of people who work in banking and insurance in central London, that rings an alarm bell. If we are outside the system, there will be job consequences for my constituents and those of many other hon. Members.

The timetable for the intergovernmental conference has been mentioned. If I recollect correctly, the Prime Minister said that it would start 10 months from now. I was not aware that a firm date had been set for the start of the conference, so perhaps that is new information. I understood from the discussions that we had in Germany that the date was flexible. It might start in 1996 or it could be delayed until 1997 to make sure that the preparations are right. Perhaps in his winding-up speech the Foreign Secretary will clarify that.

Preparations for that conference are going ahead in other countries, on an agenda which is not the same as that of the British Government. Our Government's agenda is minimalist and it is one of stopping, restricting, pulling back and reducing. Other Governments recognise that they must take actions that will make the European Union successful. That includes going forward in some areas. Unfortunately, we heard little about that in the debate, but that is not surprising because we have a hamstrung, lame duck Government.

The German agenda will be to keep the Bonn-Paris link central to the relationship. It will also concentrate on economic questions and on enlargement. For Germany, that cannot be done without democratic changes to make the European Union less remote and more accountable. The clear call from the European Parliament and from all those to whom I spoke in the German Parliament is for the question of the democratic deficit to be addressed. By that they do not mean some mythical repatriation of sovereignty to a centralised Westminster Government. They mean democratic accountability, with more power to national Parliaments and the European Parliament. That would do far more than spurious talk about referendums.

While I am on the subject of referendums, perhaps it would be appropriate to hear the words, generally wise, of the then deputy Prime Minister, Clement Attlee, in his letter to Prime Minister Churchill on 24 May 1945. He said: I could not consent to the introduction into our national life of a device so alien to all our traditions as the referendum which has only too often been the instrument of Nazism and Fascism. I accept that that is a strong statement, but Mr. Attlee had a point because Governments who write the question, control the expenditure and fix the terms of the debate can easily rig a referendum to get the result that they want. When the Conservative party calls for a referendum, which is probably inevitable, we should understand why it is doing so.

Photo of Mike Gapes Mike Gapes , Ilford South

I shall come to that in a minute.

We should understand that such a call is not for a democratic device, but for a device to maintain a Government who are in such desperate trouble that they can find no other way out. I tell the right hon. Member for Sutton Coldfield (Sir N. Fowler) that I voted no in 1975. I stand by what I did at that time, but the world has moved on.

People of my generation, those who were born after the second world war, must recognise that we are talking about a European Union that consists not of six or of nine but of 15 and potentially 20 or 25 states. We must recognise that it is not a free trade area, but a political and economic union, which we must build in co-operation with the rest of the peoples of Europe to establish peace, prosperity and an outward-looking Europe for the future.

Photo of Charles Wardle Charles Wardle , Bexhill and Battle 7:59 pm, 1st March 1995

I am grateful for the opportunity in the time available to express my concern about the vulnerability of Britain's frontier controls under European Union law.

At the outset, I should like to make three things clear. First, there has never been any difference between my right hon. Friends and myself about the need to maintain our immigration controls. There is a fundamental difference between us, however, about our ability to keep those controls in place under EU law, as it now stands. Secondly, there is a highly topical element to my concern. The legal action in the European Court taken by the European Parliament against the Commission; the decision of the Schengen countries to begin dismantling their internal frontiers, thus leaving the United Kingdom increasingly isolated; the response of Mr. Santer to the court action; the National Audit Office report underlining the far greater effectiveness of our port of entry controls over the European style in-country enforcement measures; and the Flynn case now before the High Court, have all lent a fresh urgency to the problem. The immediacy of the need to act positively at this juncture is dictated by the Government's own call for an open debate on the agenda to be decided this summer for next year's IGC.

Thirdly, my underlying concern is that of someone who is in favour of a Europe in which the United Kingdom can compete and trade without hindrance, but not a Europe in which our quality of life is jeopardised by a provision in the treaty that we failed to tackle.

The fundamental difference between the Government and myself has been about the legal status of the declaration negotiated at the time of the signing of the Single European Act in 1985. The Government have asserted time and again during the past decade that the 1985 declaration preserves the right of individual member states to retain their own frontier controls. I maintain that it does nothing of the kind; we need something in EU law that does.

The House will be aware that, in 1985, the Luxembourg IGC agreed the Single European Act, which inserted a new article 8a in the treaty of Rome, requiring an area without internal frontiers. At Luxembourg, the then Prime Minister was rightly concerned that that article would create a new Community objective of bringing an area without internal frontiers into effect with which the United Kingdom would, sooner or later, be forced to comply. Article 5 of the treaty—I believe that it has now been changed to article B—imposed a duty on member states to take measures to facilitate Community objectives, or otherwise face infraction proceedings by the Commission.

Advised by the Foreign Office, Margaret Thatcher, therefore, took two forms of evading action. First, she had added to article 8a the eight extra words: in accordance with the provisions of this Treaty in the hope that that would limit its effect to EU citizens. It rapidly became clear that that advice did not limit the primary objective of the article. Her second tactic was, therefore, to negotiate a general declaration, which began: Nothing in these provisions shall affect the right of Member States to take such measures as they consider necessary for the purpose of controlling immigration from third countries. Indeed, the then Prime Minister told the House when we ratified the Single European Act that without that declaration, she would not have been prepared to sign the Act.

That view of the declaration as the British opt-out from article 8a was reasserted by two Home Secretaries—by my right hon. Friend, now the Foreign Secretary, at Madrid in 1989 and by my right hon. Friend, now Lord Waddington, in Naples in 1990. My right hon. Friend the Prime Minister has clearly accepted the same interpretation, because he has stuck consistently to the same line. In the House and elsewhere, he has continued to pray in aid the Luxembourg declaration. He did so again this afternoon. The declaration has therefore been accepted as a copper-bottomed opt-out, but the trouble is that it is nothing of the sort and it was never regarded as such by our European partners.

My right hon. and noble Friend, Baroness Thatcher, has said in her memoirs, in a chapter ironically entitled, "Jeux sans frontières", that neither the Commission, the Council nor the European Court would be prepared in the long run to uphold what she had agreed in the declaration. So at some critical point, she concluded that the advice she had been given had been duff. My right hon. Friend the Member for Mole Valley (Mr. Baker) said in his recent autobiography that he was advised by Home Office officials, before Maastricht, that the declaration was worthless. He asked my right hon. Friends the Prime Minister and the Foreign Secretary to negotiate a proper opt-out. He has recently repeated that claim. Presumably he received the same advice that reportedly was given to my right hon. Friends before Maastricht, making it clear that the declaration did not constitute a derogation from article 8a.

As I have said, it is no secret among other member states that the declaration cannot deprive the now entitled article 7a of its practical effectiveness. That article establishes a clear and simple objective, which allows no margin of discretion, which is that passport controls exercised only on the occasion of crossing an internal frontier would be contrary to EU law. The Commission made that clear in its May 1992 paper addressed to the European Parliament.

It is also pointless to claim that our EU partners will consider that the declaration, which is not legally part of the treaty, will have any bearing on the objective clearly established by article 7a. Declarations are not part of the treaty texts; they are declarations of the conference representatives and are not, as the treaty texts are, the acts of the high contracting parties themselves. Declarations are not, as such, ratified in the same way as treaty texts.

There is no practical advantage either in reminding other member states of some sort of moral commitment to a declaration that has no legal force in a treaty. There can be no comfort either in Jacques Santer's hints that the Commission would somehow accommodate our concerns about our internal frontier controls, when he said in his speech the week before last that he had an unfailing commitment to enforce EU law. In any case, it is open not just to the Commission, but to any private individual to challenge the legality of our internal frontier controls through the British courts, which will then be advised to refer the case to the European Court of Justice under article 177.

As I said, the Flynn case has already reached the High Court this week. When, sooner or later, there is a European Court ruling against us, it will not be something that we can simply ignore, because non-EU passengers arriving at our internal frontier ports would be able to apply for judicial review if they faced an immigration check that the European Court had declared unlawful. A flow of similar cases would follow quickly, paralysing the judicial system and rendering our frontier controls useless. The administrative confusion and the cost to the taxpayer of many of those who then entered unchecked would cause massive public disenchantment. Uncontrolled immigration is not what British people, regardless of their ethnic origin, want. They have never been asked whether they want to leave Britain's back door open; if they were, their answer would be an emphatic no.

By and large we are a civil nation, welcoming millions of visitors here from around the world each year. That is quite different from letting in the world and his wife to settle here indefinitely. An influx of migrants, freely walking into this country without so much as a by your leave, would quickly heighten racial tension. The first to suffer from those tensions would be British ethnic minorities, born and bred here and peacefully and constructively contributing to British life.

For those reasons, I urge my right hon. Friend the Prime Minister to put article 7a openly on the IGC agenda and to insist to our EU partners that the purpose intended by Margaret Thatcher for the 1985 declaration, but not achieved, must now be embodied in a substantive change to the treaty itself.

That is a pro-European argument. It is a Conservative solution, which has already left the Opposition hopelessly divided, as every recent debate on immigration has shown. It is an issue on which my right hon. Friend the Prime Minister can lead the way and which, I can assure the House, will continue to command a great deal of public support.

Photo of Mr Ieuan Wyn Jones Mr Ieuan Wyn Jones , Ynys Môn 8:07 pm, 1st March 1995

We have had a lot of interesting contributions to the debate, which has at least given us the opportunity to consider some of the wider aspects of the European debate, in particular, the steps that we need to consider in the run-up to the intergovernmental conference in 1996 and the discussions leading to a single currency either in 1997 or 1999.

As well as looking at the single currency, I should like to consider the institutional changes that the Community must face as we consider the possible applications for membership from a number of central and eastern European countries. I should also like to consider the ways in which the Union needs to become more democratic and accountable. We must consider the means of carrying the population of Europe behind the momentous changes that we inevitably face.

Some argue—some have done so today—that the Union that we joined in 1972 is vastly different in 1995. In other words, the Community, as it was, is now a vastly different animal. We have to recognise that the principles enshrined in the treaty of Rome in 1957 have their inevitable consequences in what was decided at Maastricht. Although the decisions taken at Maastricht were clearly a compromise, and even a fudge, we must recognise that the seeds of Maastricht were sown in 1957.

I remind the House that the treaty stated that the original signatories were determined to lay the foundations of an ever closer union amongst the peoples of Europe. That has to be the basis on which subsequent developments have to be judged. The imperative for action was clear. The continent of Europe had been devastated by two world wars in a generation but, while the instruments of co-operation in the early days were economic, the impetus was clearly political. In the immediate aftermath of the second world war, France and Germany decided that it was in their best interests to move towards economic integration.

The need for such action was recognised by Winston Churchill in his famous Zurich speech in 1946. He posed the most pregnant question of all: how should Europe respond to the devastation inflicted by war? He answered it thus: It is to re-create the European family, or as much of it as we can, and provide it with a structure under which it can dwell in peace, in safety and in freedom. We must build a kind of United States of Europe. We may agree or disagree with the prescription, but it is clear that in that speech Winston Churchill recognised the importance of political and economic integration.

Britain's refusal to join the original six was based on a profound misunderstanding of its position in the post-war world. The British economy, as we have heard from hon. Members of all parties tonight, could not hope to compete outside the Union, and its political influence was severely diminished. However, when that realisation dawned, it was too late to shape the kind of Community that many people in Britain wanted. The original six had pressed ahead, and the terms of the treaty of Rome, and subsequent developments, were fixed in 1957.

The debate in Britain on the single currency has echoes of the past. There is no doubt in my mind that every decision taken since 1957 has led to the setting up of a single currency as envisaged at Maastricht. It should not have come as a surprise to anyone. In fact, there is very little debate on the issue in other member states. They do not have an opt-out or the kind of sterile debate that we have in the United Kingdom.

I cannot understand the argument about the loss of sovereignty because that argument should have been faced in the debates leading to the Single European Act. It did have consequences for the sovereignty of member states because its purpose was to set up an internal market by bringing down trade barriers, removing customs controls and moving to harmonisation of indirect taxation. The move to harmonise indirect taxation impinges directly on sovereignty.

The Government agreed to the formula set out at Maastricht to achieve a single currency. It is now a treaty obligation. The convergence criteria apply here. We constantly have to ask ourselves what will happen with price stability, reducing Government deficits and borrowing and so on. What happens in 1997 or 1999 when the criteria have been achieved, if they are achieved? How can we agree to the convergence criteria and set our targets accordingly but, once the targets have been achieved, say that we wish to remain outside the single currency? It is inconceivable that, having got that far. any Government would want to say no.

Alongside the debate on economic and monetary union, we must consider the Union's lack of accountability and transparency in its decision-making process. It must also become demonstrably democratic. For example, the Council of Ministers should open its doors and allow its proceedings to be publicly scrutinised and, as has been said, the European Parliament should be given greater powers of co-decision and new powers to amend the Commission's proposals.

In the short term, my party would like the Committee of the Regions to develop in such a way that it can take responsibility for regional policy, including structural funds and Community initiatives and, in the medium term, become the second chamber in a European bicameral parliamentary system.

I also want a change in the way that portfolios are allocated when Commissioners are appointed. The initial choice should be in the hands of the President of the Commission, subject to the approval of Parliament. This year's proceedings were a total farce because the horse trading between member states meant that it had already been decided which Commissioners should have which portfolios.

The Commissioners appeared before Parliament but it was merely a facade to suggest that Parliament was involved in some form of scrutiny. I should like the President to be able to decide on the portfolios, subject to real scrutiny, and the European Parliament should be given the opportunity to reject particular portfolios being allocated to particular Commissioners in certain circumstances. That would make the Commission more accountable to the European Parliament. I can see no problems with that. One cannot say that the European Commission is unaccountable and unelected but then deny it the legitimacy that it should have through its responsibility to the European Parliament. They are some of the institutional changes that should be taken on board at the 1996 intergovernmental conference.

Plaid Cymru recognises that the Union has to take further steps to achieve political as well as economic union through institutional change and the development of a common approach to defence and foreign policy. In that development, it is right that institutional and constitutional change is not limited to the European stage. There should be accountability at all levels. That is why there has been a growth in autonomy and self-government throughout western Europe—in Germany, Spain and Belgium and the small member states of the European Union. The best way to make progress is to ensure that, while it is necessary for some decisions to be taken at the European level, others can be taken at a local, national or regional level.

In recent years, Wales has forged new and exciting links with the motor regions in Europe, but those other regions possess a degree of autonomy and self-government that is denied to Wales. If one takes the small—

Photo of Bill Cash Bill Cash , Stafford 8:18 pm, 1st March 1995

I heard the Prime Minister's speech with some misgivings and sadness. I believed that we had a tremendous opportunity today to hear a speech that could have defined a new way forward for a new Europe, instead of which we heard, in effect, an endorsement of the position under the Maastricht treaty. Unless and until we renegotiate that treaty, I fear that we are locked into a legal framework from which there is no escape.

The Prime Minister spoke today about a number of matters, including the question of a single currency, without giving us any hope that we would find a way out of the trap that Maastricht has presented. I believe that we have now reached a point where it is becoming ever more evident that the people not only of this country but elsewhere in Europe have increasingly moved against the single currency.

Opinion polls in Der Spiegel in Germany recently indicated that people there do not want a single currency. In a Harris poll of 250 top executives in the City of London, 63 per cent. wanted a referendum. On Central Television on Sunday, I debated against one of my positive European colleagues and we had a phone-in after the debate on a single currency. The motion that I put forward to reject the single currency was carried by 71 per cent. of the people who phoned in, compared with 29 per cent. who favoured a single currency.

What concerns me is that we are not making the kind of progress, which seemed to be implicit in the language of the Prime Minister and for which I had been looking over the past few years. Certainly there has been a trend in the right direction. Unfortunately, the promise has not been matched by the performance. For example, in The Economist on 25 September 1993, my right hon. Friend said: I hope my fellow heads of government will resist the temptation to recite the mantra of full economic and monetary union as if nothing had changed. If they do recite it, it will have all the quaintness of a rain dance and about the same potency. I would have very much liked to have heard such language again in this debate.

In the speech that my right hon. Friend the Prime Minister gave in Leiden on 7 September, almost exactly a year later in 1994, he said: I see a real danger, in talk of a hard core, inner and outer circles, a two-tier Europe. I recoil from ideas for a Union in which some would be more equal than others. There is not, and should never be, an exclusive hard core either of countries or of policies. The problem is that the Maastricht treaty has created that very situation. By failing to veto economic and monetary union and by allowing it to take effect irrevocably on I January 1999, as I indicated in my intervention during the Prime Minister's speech, the circumstances are being created; the trap has been fallen into. The result is that our Government are truly on the line. By that, I mean that it will be impossible for us to escape from the question that I put to the Prime Minister in the confidence motion over the Maastricht treaty. I asked him if he had not presented the British people with the unnecessary question of whether we would have to leave the European Community after 1996. There is a deadline.

Today I was looking for a commitment that we would not have a single currency at all in principle. When the Prime Minister said that we would not yield to any unbending centralisation, I made the point, with which people surely cannot argue, that a central bank goes with a single currency, so if we make a commitment to refute unbending centralisation, we must be absolutely clear that we will reject the single currency. It is a practical question as well as a matter of principle. It seems, therefore, that there is no contest on the argument. The question primarily is one of timing. I have to say to my right hon. Friend the Prime Minister that the logic of his position is that we would say, "Not yet; we will make the decision later." He is pretty well saying that we must be practical about it and we must view the circumstances at the time.

Let me turn the minds of hon. Members back to the circumstances of the exchange rate mechanism and apply a practical application of the same principle. When we went into the exchange rate mechanism, we were not bound into a legal framework from which there was no retreat. As we know, although we were ignominiously ejected from the ERM because the Government refused to listen to those of us who were saying that it was a disaster—we had to get out and the sooner the better—at least we had the option of being able to get out on our own terms, however expensive that may have been for the British economy and however disastrous the policy.

If one applies the same principle to economic and monetary union under the Maastricht treaty, who is to say what will happen by 2001 or 2002, bearing in mind, for example, what the Governor of the Bank of England has said about the dangers of monetary union—the practical application of the principles that I am advocating—to jobs?

As we know from a recent survey, Europe is suffering the worst unemployment for 30 years—despite the Cecchim report; despite all the promises that were made. Therefore, if we get ourselves into a position by not rejecting a single currency now and kick the ball into the long grass, which is basically what the Prime Minister is suggesting, we shall end up being told in the treaty negotiations that everything was decided in the Maastricht treaty.

When my right hon. Friend the Prime Minister refers to the fact that there will be no constitutional implications with respect to the Maastricht arrangements, which I would not resist if they were to have a significant constitutional impact on the United Kingdom, which is what he said virtually the other day in the "Breakfast with Frost" programme, he is effectively saying that we have adopted a position already, through the Maastricht treaty, which is a matter of principle, but that if we go further down that route, it would be construed as a constitutional issue with very severe practical implications. In fact, it is already a constitutional issue. That is a problem. It is the lack of logic in my right hon. Friend's argument that I find so difficult.

If we get to the point, as we did with the exchange rate mechanism, that we do not want any more truck with economic and monetary union, yet we find that we have locked ourselves into it, there is no way out. As a matter of principle, we should be getting out of it now.

If we had the leadership and the determination to look to the landscape of the next few years and consider the fact that the French presidency may last for seven years—that will be decided in April or May this year—there would be a real possibility that we could change, by that leadership, the nature of the debate in France. If we said that we were not going to have a single currency and said it soon enough—now—the people in France, let alone the leaders who are squabbling with one another, would realise that they faced being pretty well left in a Europe on their own with Germany, just as in the Maastricht referendum, which got through by only a whisker and would not now if it were put back to the French electorate. We would, therefore, present circumstances in which we would change the nature of the debate in France and, at the same time, ensure that we could renegotiate the Maastricht treaty on those practical considerations to which I have referred.

There are profoundly good economic reasons as well as political reasons for rejecting a single currency, but above all else, it is a question of principle. It is a question of the democracy of the United Kingdom and the question is, who governs Britain—

Photo of Mr Calum MacDonald Mr Calum MacDonald , Na h-Eileanan an Iar 8:28 pm, 1st March 1995

We listened with great interest to the speech by the hon. Member for Bexhill and Battle (Mr. Wardle). It is a notable illustration of the tensions and divisions which afflict the Conservative party over Europe that there is a long list of ministerial victims, who have been either pushed out or have fallen on their swords because of Europe. Indeed, it is a long and prestigious list of names: Lawson, Howe, Ridley, even Thatcher, to which I suppose that we must add the name of Wardle. As consolation for the hon. Member for Bexhill and Battle, he can at least be sure that he will not be the last—others will go the same way.

The reason for the fundamental division within the Conservative party on the issue of Europe is that the Conservatives simply do not understand Europe. They certainly do not like it; they have no affection for it, but they do not understand it, either. They do not understand Europe because they do not really understand Britain. They do not understand what Britain is all about.

We have heard much this evening about Britain being a nation state. Of course that is true; Britain is a nation state in one sense—it is obviously a state—and we all feel a national attachment towards the notion of Britain. We all feel British in an important part of ourselves. But, at the same time, Britain is a multinational state. It is a union of four nations: Scotland, Wales, England and Northern Ireland. We can have a multinational state, a multinational identity, and a strong British identity as well. We can be both Scottish and British. Truly to appreciate that should put to rest the exaggerated worries of some Euro-sceptics about the dangers to national identity of further integration within Europe.

I do not argue or recommend that the pooling of sovereignty within the European Union should lead to a multinational union such as the United Kingdom. The way in which the European Union will evolve will be completely unique—it will evolve in its own original way. It will not be like the United Kingdom, the United. States of America or the federal constitution of Germany. Indeed, I would not want it to be like the United Kingdom, because, in the 20th century, in particular, the United Kingdom is a model of a multinational union which is much too centralised economically and politically.

The United Kingdom shows the absurdity of the fear that European integration will lead to a loss of national identity. British integration has not lead to a loss of Scottish identity. With European integration, we are not losing identity; we are gaining a new identity. In addition to our Scottish, English, Welsh and British identities, we will develop a European identity. Indeed, that is already happening throughout Europe and within the United Kingdom. That factor has been missing from the debate. In particular, it has been missing from Conservative Members' speeches. People are beginning to feel European. They feel wholly British, of course, but they are beginning to feel European as well. It has become more natural for young people in particular to think of themselves as Europeans.

If Conservative Members really understood and empathised with the new European identity, they could concentrate on the real agenda—the real issues—instead of the bogeymen that they constantly raise. I refer, for example, to the need for radical reform of the common agricultural policy. The Government claim to be in favour of reform, but their claim is completely false and spurious. The Government were one of the main parties to block the fundamental changes which Ray MacSharry wished when he was Agriculture Commissioner. The reason for that is that, although the United Kingdom is a net loser through the CAP, a small but politically powerful group of farmers gain greatly out of the CAP.

Twenty per cent. of farmers receive 80 per cent. of all CAP funds. The bulk of funds goes to a small minority of farmers. That is a fundamental iniquity that the Conservative Government would never even think of challenging, and that is why we need a Labour Government to push through fundamental reform of the CAP.

The same could be said of the common fisheries policy. Again, there is need for a fundamental reform to make its operation more regional and more sensitive to the new enforcement mechanisms. Again, the Conservatives simply do not have the will to pursue such radical reform, because they simply do not care about fishing communities.

The Government are now claiming some credit for trying to move along greater co-operation within Europe on defence. But the Government, year after year, resisted the notion of building a strong European pillar on defence. They constantly told us that that would accelerate the withdrawal of the United States from involvement in the affairs of Europe. Now they are beginning to turn. I welcome that, but I cannot believe that their hearts are really in that development, either. That is a fundamentally important development to pursue. Without a common defence policy as set out in Maastricht and without giving substance to it, there can be no credibility or substance to a common foreign and security policy.

I will not say much about the social chapter, because my colleagues have covered that matter comprehensively, but how can the Government talk about increasing the conditions for genuine convergence among the different European economies when they opt out of the social chapter? Surely social convergence has to exist along with economic convergence.

On the issue of the single currency, the reality is that it will come. It is not a question of whether it is a good thing for Europe or whether Europe should go ahead. Europe will go ahead. There will be core countries, probably by 1999—France, Germany, Benelux, and probably Austria. The question for Britain is: when that European core goes ahead, should we be part of it or stay outside? We have only to ask that question to receive the answer. It is inconceivable that the United Kingdom should stay outside. We really would then be in the second division.

I give a final warning that, if Europe goes ahead and Britain tries to stay outside, we could not retain the status quo in Britain. If that happened it would set up tensions within the United Kingdom itself, particularly in Scotland, which could lead to the break-up of the United Kingdom. The status quo is not a serious alternative. We have to be part of the process of European integration.

Photo of Mr Christopher Gill Mr Christopher Gill , Ludlow 8:36 pm, 1st March 1995

The whole House will have listened with great interest and attention to what the Prime Minister said this afternoon, but I refer to a speech that he made at the beginning of February to the Conservative Way Forward group, when he said: Europe's future matters to us … we should debate it. And we have an obligation to shape it and make it more congenial to us. He then went on to say: Popular opinion across Europe cannot be ignored. I agree with that, and I am sure that the whole House would agree with it, but the fact of the matter is that, especially in this country, every stage of the process towards European integration has been rammed through Parliament, to the virtual exclusion of what people outside this place are thinking. The treaty of accession was rammed through the House against the better judgment of several prominent and principled Conservative Members of Parliament. The Single European Act was rammed through Parliament after a guillotined debate. The Maastricht treaty itself involved a vote of confidence. More recently, of course, the European finance Bill involved a motion of confidence to which seven of my colleagues and I declined to respond.

Since then, I and my eight colleagues have been on the receiving end of thousands of letters, the majority of which have said three things: first, "We agree with you on the issue"; secondly, "Thank goodness someone is at last standing up for what we believe in"; and, thirdly, "Don't give in!" Very sadly, many of them sign off as "Disillusioned Tory", "Ex-party Worker", or "Former Tory Voter".

Those are signals which our Government simply cannot afford to ignore. With a general election two years away, those are messages which they must heed or face the consequences. It is no longer a question of appeasing foreign Governments, placating querulous Cabinet Ministers, or wooing the Whipless Back Benchers. The Government must listen to the people. Sooner or later, the political classes will have to obtain a mandate for their European policies from the very people who put us here. Sooner or later they will have to recognise that there are only two ways of doing that—either through a referendum or by offering a real choice at the next general election. To my colleagues I say simply that if by the next general election the Conservative party does not offer that real choice, make no bones about it, others most certainly will.

I make no secret of my own preference. It would be for the Tory party to be seen as the party offering a clear and unambiguous alternative to the sell-out promised by the socialist Opposition parties. I should like to hear my right hon. Friend the Prime Minister, who has been kind enough to write the foreword to a pamphlet entitled "A Europe of Nations", say that he stands four-square behind the 49 conclusions that my 11 colleagues and I published in that pamphlet.

Those conclusions are supported by 28 centre-right parties in 20 other European countries. They are not the findings of an isolated minority but the considered opinions of respected mainstream politicians in this country and on the continent—indeed, across the whole of Europe.

The conclusions are in no way demands. They represent a series of serious and thoughtful suggestions that in our opinion would strengthen the Government's hand at the forthcoming intergovernmental conference and significantly improve the Tory party's prospects at the next general election. Whether the Government adopt those suggestions is of course a matter for the Prime Minister and the Cabinet to decide. But that is a judgment that they must now make—and by their judgment they will themselves be judged.

I shall make one final point. There is at the moment a depth of disillusion with politicians, and a contempt for the arrogance and deceit of the political classes that will not be dispelled by empty rhetoric. To use a modern idiom, the voters want to see the beef.

It has been a long time coming, but the moment has finally arrived when we must start unbundling the European Union so that different groups of members can co-operate flexibly in different areas of policy, all within the constant nexus of the single market. Areas of policy that are of purely domestic concern should be ring-fenced or reserved exclusively for national Governments. That arrangement should be enshrined in national constitutions, which in the United Kingdom would entail an Act of Parliament guaranteeing national sovereignty in specified internal areas.

The institutions of the European Union must be overhauled to reverse the current one-way drift to federalism. The Commission should be reduced to the role of a civil service, and the European Court must stop making law on the hoof. The European Parliament should be prevented from competing with national Parliaments for power. Last but not least, all articles that provide for monetary union should be removed from the treaties so that a single currency could come about only by evolution and with the full consent of all participating countries.

I believe that the whole nation would rejoice to hear the Government endorse a message of national sovereignty, of national self-confidence and the reassertion of the Conservative party as the only truly national party in British politics.

Photo of Denis MacShane Denis MacShane , Rotherham 8:43 pm, 1st March 1995

We have heard three speeches tonight—one for Europe from the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), one for the nation from the Leader of the Opposition, and one for and to his party from the Prime Minister. If I put myself in the position of any other member of the European Union, or of its newspapers or of its politicians, and went through the Prime Minister's speech looking for some guidance or direction, I should find none.

On a Euro-currency the Prime Minister said, "Yes, maybe, not sure, wait and see." On a referendum he said, "Possibly, could be." He said something strong about defence, but I am not sure whether our friends and partners in NATO would be quite as keen as the Prime Minister seems to be to regard Britain as the Gurkhas or the Spartans of Europe in exchange for being left alone to pursue our own course in so many other areas.

A key part of the debate has been about a single European currency, although more properly under the treaty we should be talking about economic and monetary union. We have not heard much this evening about the aspects of economic union that go far beyond the simple, single market, free trade area that is the lowest common denominator uniting members of the Conservative party.

The debate has been extremely interesting, and listening to it has made me realise that the Conservative party, or some of its members, oppose economic and monetary union because it requires a pooling of sovereignty. They believe in the mythical concept of a currency of which this country must under no circumstances lose control.

If the British currency were so powerful and of such great value, and if in the past 15 years it had maintained a common value against any other currency for more than 18 or 20 months, there might be some sense in that argument. But the plain fact is that since 1979 our pound has been the sick man on the roller coaster of other world currencies. Some Labour Members demand the right to devalue, saying that the weapon of devaluation should always be in the armoury of a national Government. I tell them, and some Conservative Members, too, that devaluation was, is and always will be the soft option.

The hard option—the socialist option, or at least the social democratic option—is to remake our labour market and our economy on the basis of partnership, of industry and of fairly distributed growth to ensure, as in Germany and in the dynamic Asian economies, that we become a world beater rather than a country whose companies are taken over one by one and whose banks collapse when some wide boy from Watford goes on a spree in Singapore.

In a nutshell, I am a hard currency and cheap money man; I favour a hard currency outside and low interest rates inside. I am glad to say that, after many deviations, that is a policy for which I hope the Labour party now stands.

However, we must go beyond the currency question, because the historic duty of 300 years of British statespersonship has been to ensure that there does not develop on the continent a military, an ideological or a religious bloc so powerful and predominant that it reduces our capacity for independent and sovereign manoeuvre.

I tell both my colleagues and Conservative Members that with the formation of a Franco-German deutschmark bloc—surely that will come—there will exist exactly such an economic hegemonic unit that will control so much of the European economy that from the people who will then be running Europe the message will come to Britain, as an offshore island with an offshore currency, that the line has been determined and that Britain can play no part in determining what that line should he.

A point that has not be raised much today concerns the present fundamental democratic deficit in Europe. Yes, the people of this country and of the other European nations are unsure of the direction in which they are being taken. The answer to that problem is not to opt out again and again but to make the procedures of Europe more transparent and to make the Commission, whether it is a civil service or consists of former Ministers, far more accountable and to put it under democratic control.

That will mean accepting that we must tackle the problem of the free movement of people, which is a fundamental part of the more integrated European model that we are trying to create. The free movement of people, which has been wickedly confused with the question of immigration from outside the European Union, is very precious to Europe. We cannot have the free movement of goods and capital without the free movement of peoples, and anybody who pretends otherwise and puts up border patrols and road blocks at every port, road and tunnel into the UK will find that if that is how we treat our partners' people, they may start treating our goods in a similar way.

Photo of Mr Michael Shersby Mr Michael Shersby , Uxbridge

The hon. Gentleman is talking about the citizens of the European Union moving about freely within the Union, and that is one thing. There are 5.5 million people inside the European Union from other countries. Is he suggesting that they should be able to move about freely within the Union and come to the UK without restriction?

Photo of Denis MacShane Denis MacShane , Rotherham

If Europe recreates the controls over all roads and methods of transport which it had immediately after the war, it will be a disaster. If Britain alone recreates or overemphasises those controls, the rest of Europe will not necessarily be happy when dealing with other areas such as the movement of goods, services and capital.

The point has been put that the IGC is simply a minor tidying-up affair and the Prime Minister said that, in due course, the Government will put the proposals to the House. He may be indulging in some wishful thinking, because the IGC will have to look at the substantial question of how European nations—those now in the EU and those seeking to join—relate to each other. Every enlargement of the European Union has led not to a loosening of relations, but to a tightening of them. If we want the free movement of goods, capital and people, we need regulations.

There is an idea that 27 countries could exercise a veto over all the issues. We know which issues are important to us, but other issues are important to other countries. What if Poland, for example, said that it would veto any changes or reforms to the common agricultural policy? Placing the veto on a pedestal outside the specific area of military or defence co-operation is extremely dangerous. That will not bring the Europe which the majority of Members want. It would create a conglomeration of principalities, like Germany in the 17th century.

The only way forward is through dialogue and partnership with our partner countries, between all sectors of our society and—above all—with the workers and employees who have so far been excluded by the Government from the European debate. That dialogue and partnership is not available from the Conservative party, and only a change in Government can deliver it.

Photo of Mr David Martin Mr David Martin , Portsmouth South 8:52 pm, 1st March 1995

I cannot remember when I last spoke on European matters in the House. In recent years, I have been closer than some to the trials of the Government, who have often wrestled with a party and a Parliament rightly sensitive to the increasing impact of the European Union on British interests in crucial spheres of our domestic policies. Animal exports and immigration and border controls are merely two examples currently in the news.

The European Union also has elements which are ambitious to gather to themselves defence and foreign policy matters. Among those who describe themselves as positive about the European Union, there is bewilderment that people do not share their enthusiasm about the benefits of our membership. They blame the Government for not being positive enough, when heaven knows, the case has been put by my right hon. Friend the Foreign Secretary and by many other Ministers for many years.

What obscures the advantages of our membership is that there is a pervading sense of being carried along at a forced pace towards European political union without any hope—which in the event proves to be real—of having significant allies in the European Union on crucial occasions to arrest the process.

My right hon. Friend the Prime Minister said in his speech that there are many in Europe—there are some in the House—who do not want to arrest that process at all. They speak of the destiny of a united Europe, in the sense of one people, one state. They are disdainful and dismissive of concerns about sovereignty, nationhood and the major constitutional changes that are required. It is like a faith to them. There have been such visionaries before. Theirs is an old concept in modern form.

Whether we like it or not, the question of a single currency in the context of the Maastricht treaty is plainly set to dominate the European agenda in a way which will dwarf the "will we-won't we" debates which preceded our entry into the ERM. The Prime Minister was right in accepting that a single currency is more than an economic or business matter, but that it has serious constitutional and political consequences. It would be, of course, an enormous step towards political union, just as the single market has taken us inevitably further down the centralist road.

The opt-out has been negotiated, but that begs the question—which will not go away, as 1999 grows nearer—whether the Government will exercise that opt-out or recommend that we participate fully in the single currency in 1999, less than four years away.

Why should the Cabinet have to pretend to be united on this great subject? We know that some Cabinet members have no objection in principle to signing up, and we know that some do object in principle. Throughout the ages, all Cabinets have found difficulty on such matters. All Cabinets and Governments are composed of the principled, the more flexible; the bright, the pedestrian; the cautious, the impetuous; and are as subject to folly and wisdom, sound judgment and profound misjudgment as any body of people thrown together by caprice, merit, fortune, sycophancy or necessity.

There is no way that any Government—whatever the Leader of the Opposition may naively believe—in this Parliament or the next can be united on the question of a single currency, when the question whether to opt in or out will have to be decided before 1999.

I wish that my right hon. Friend the Prime Minister would announce now that he is still of the view that he expressed to the Treasury and Civil Service Select Committee when Chancellor of the Exchequer in July 1990—that a single currency would involve a transfer of sovereignty from the UK Parliament of a sort neither Government nor Parliament would find themselves able to accept". I recognise that we as a party are as split as Labour is—and most certainly would be in government—on such a question.

Although I heard what my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) and others have said, I would say that—as with Balfour, who was faced with the equally explosive tariff reform question before the 1910 general election—the best way forward for my right hon. Friend the Prime Minister lies in promising a referendum. I am convinced that my right hon. Friend believes that, but has not yet found the moment to say so.

The mechanism that I would prefer would begin with a vote in Parliament. Then, if Parliament voted to join a single currency—only if it so voted—a referendum would ensue.

Finally, despite the Government's self-inflicted minority voting position in the House, I hope that they will achieve a majority tonight with the help of the Whipless. [HON. MEMBERS: "The witless?"] I said the Whipless.

If I were the "Chief Whipless"—that position is unenviable, and is a sort of parliamentary Moloch—I would recommend that course upon my colleagues. That is not only because I want to see the Whip restored to all of them without preconditions as soon as possible—a quiet letter from the Chief Whip would suffice—but because my right hon. Friend the Prime Minister has moved as far as reasonably can be expected at present. The rebels, or the Whipless, have had a real and lasting effect on that. In addition, the experience has proved salutary for the Government. Since removal of the Whip from so many, they have found control of the agenda even more difficult than usual.

All Conservative Members who see disunity as the main threat to our fortunes and as doing the work of opposition—work that official Opposition Members are incapable of doing, as we witnessed in all its glory today with either their people or their policies—must hope that harmony will be restored in the Government's victory tonight.

9 pm

Photo of Tommy Graham Tommy Graham , Renfrew West and Inverclyde

Earlier today we heard the Prime Minister, who was going to make a statement to the nation and make it clear to the rebels why they should back the Government tonight. Our motion is that this House does not support Her Majesty's Government's policy towards the European Union and does not believe it promotes the interests of the British people. The past 15 years have shown that the Conservative Government are totally incapable of managing the country. They have sent the wrong signals to the rest of the world and especially to the people in Europe. They have an absolute xenophobia—something that the Opposition and the rest of the nation must reject. I have always believed that British people are not anti-foreigners. We welcome all cultural divisions.

When I hear the Conservative rebels and look at the divisions on that side of the House I find it unbelievable. Who would believe that the Prime Minister is coming here tonight to plead with his nine rebels? He called one of them "barmy" in November 1993. Not long after that, in early 1995, he said that they were very "conservative", and I quite agree. Then one of those barmy rebels said: I would be extremely surprised about the manhood of any of them who didn't refuse to retake the Whip. I think most of my male colleagues are men who can be trusted and we are staunch patriotic Conservatives. We are one group of people that have been foolishly treated by the very immature people who are running the country. The rebels were talking about their own Government. They have put in place this Government and the Cabinet to run the country and they are calling them an immature Government. I fully agree with the statement by the hon. Member for Billericay (Mrs. Gorman)—this is an immature Government.

We have seen a divided nation—the rich get richer, while the poor get poorer—a divided Government and one unbelievably divided party. The Government cannot see any direction in which to go. They have no hope for Britain and are trying to make some arrangements, but we must remember that we joined the market. In those days, I was an anti-marketeer. [HON. MEMBERS: "Ah!"] Hon. Members may say, "Ah!" but when I was a young kid and used to be wild and run across the road, my mother told me, "Listen son, if you keep doing that you'll get knocked down." I have changed my mind and I do not run across the road now. So, some of us do make decisions and I am telling the Government that it is time for them to change their minds. There is nothing wrong with changing your mind. Many of us do in immaturity things that we do not do with experience.

The Conservative Government have had 15 years, but they are so inexperienced and immature that they are running Britain down in the eyes of Europe and our competitors because they are no longer making Britain great. They are making us fools in the eyes of the world.

I believe that we should go for a single currency and I believe in monetary union. That is the way forward for the people whom I represent and look after. I am sure that if we went among the business folk in my constituency and asked the ordinary men and women, they would agree. We are in Europe. We have paid for membership of the club. Let us get the best deal possible. Let us sit at the management table and not go with the cop-out and the opt-out that the Government back.

Today, the Prime Minister faced in every direction and he sat on the fence. You know what happens if you sit on a fence too long—you get the sorest backside ever. The way that they are carrying on, this Government are going to get one big kick up the backside at the next general election.

We have also heard about the fast track, the slow track and every track. I will tell the Minister this—if you walk in the middle of the road, you end up getting knocked down. The Government have to make decisions for our people. One decision that they could have reached, which would have got the backing of the nation, was to support the social chapter. I see Conservative Members smiling, but in my constituency the unemployed people are not smiling.

I remember when the referendum took place and the Tories were marching up and down the country telling the workers to vote to join the Common Market. I remember the promises that they made—everything was going to be rosy, there would he new jobs, pensions and holidays and our health scene would improve because we would have a big market. I remember the days when the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) and the others were travelling the world and telling us how good it would be. When they got an opportunity to sign the social chapter, however, they knocked it back and let working-class men and women in this country down because they were not prepared to put their money where their mouth is and back the ordinary men and women who make this country and who produce. Those men and women want to he in the market, and they want to get a benefit from it.

Clearly, the Government's role is to iron out the difficulties and to manage the country's affairs with those other countries. Let them come to good sense and arrange them. When we join a club we all participate and take part in its functions, but if the club has something the matter with it, yes, we argue and debate and try to get a consensus arrangement. This Government have abandoned that. They do not want to sit at the table, they want to sh—I was going to use another phrase—[Laughter.] Let me put it this way, they want to spill a drink on the table. They do not want to contribute in the way that we expect a Government to do.

I am delighted that the Prime Minister has considered a referendum. I have always supported referendums and have never seen them to be a weakening of anyone's position. Occasionally, we have to go to the country and give the people the right to vote and to make decisions. It is appalling that in this House we think that ordinary men and women cannot make up their minds, that they are all thick and dummies. We are the biggest dummies and this Government is one of the worst in the past 15 years. Why do they not listen to the wishes of the people, have a general election now and let in a Labour Government, who will meaningfully discuss and debate and take Britain on to better things with our European partners?

Photo of Robin Cook Robin Cook , Livingston 9:07 pm, 1st March 1995

At the start of the debate, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) lamented the fact that the Government never said anything positive about membership of the European Union. Had he stayed to hear the rest of the debate, he would have heard excellent speeches explaining positive reasons why Britain must remain in the European Union from my hon. Friends the Members for Ashfield (Mr. Hoon), for Hemsworth (Mr. Enright), for Hartlepool (Mr. Mandelson) and for Rotherham (Mr. MacShane). I confess that none of those speeches quite managed the vigour and clarity of language of the speech by my hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham). The whole House is grateful that he accepted his mother's advice and stopped running across the road.

My hon. Friend the Member for Ilford, South (Mr. Gapes) made a telling point about the nature of the open debate that we have heard in the House this evening when he pointed out that it had shown up Conservative Members' shift in favour of Euro-scepticism. The right hon. Member for Guildford (Mr. Howell), whose position on the Foreign Affairs Select Committee makes his view especially significant, made it plain that he was against a single currency in principle. The right hon. Member for Epsom and Ewell (Sir A. Hamilton), whose constituency I know quite well, came out clearly and said that he was in favour of wholesale repatriation of policies generally; then, with a flying change of leg in his logic, he appealed to all Euro-sceptics to vote in support of the Government's European policies.

The hon. Member for Ludlow (Mr. Gill) also made it plain where he stood in relation to Europe and why he believed that the rest of the party should join him rather than him rejoining the rest of the party. He referred to letters that he received signed by disillusioned Conservatives. Labour Members also receive that kind of letter and the hon. Gentleman deludes himself if he thinks that, by playing a nationalist card at the next election, all those disillusioned Conservatives will forgive the Government for having wrecked their families' domestic budgets over the past three years.

However, the debate has revealed a delusion that appears to be more widely held on the Conservative Benches, which is that the Labour party supports a political super-state in Europe and a federal Europe—an argument sometimes put forward by the same people who say that we have no policies on Europe. That version of Labour's policies bears as much relation to reality as their giant, inflatable versions of our spending plans. Let me remove that apparent confusion so that Conservative Members do not, through genuine misunderstanding, mislead their constituents again.

Labour does not support a federal Europe. On the contrary, we recognise that the nations of Britain have a powerful and healthy sense of their identity. Indeed, that sense of a shared identity is one of the important sources of social cohesion and commitment to social justice within the nation. That is why we shall take no lectures on the importance of national identity from a Conservative party that has taken every possible step over the past 15 years to undermine the social cohesion of our nations and has left a Britain more divided by inequality than at any time this century. Nor will we take lectures from the Government on the importance of subsidiarity in Brussels when they refuse to practise subsidiarity in Britain.

In the past six months, I have frequently travelled on the continent and I have met a number of politicians there who are perplexed at finding that they are lectured on the dangers of a centralised Europe by a Government who have built the most centralised state in Europe, abolished whole local authorities and packed quangos from Land's End to John O'Groats with appointments from Whitehall.

Only last Friday, the Prime Minister came to Scotland—indeed, he came to my constituency—to tell us that subsidiarity was not for the Scots. The Prime Minister cannot preach the importance of national identity in Leiden and deny it in Livingston.

I assure Conservative Members that we do not intend to support a Europe that is as centralised as the Britain that they have created. Our vision is of a Community of free member states, associating on the basis not of surrendering national identity but of sharing national interests. Having listened to Conservative Members, it is not clear that they all recognise that we have a common interest to share with the rest of Europe. Over the past months, news bulletins have been studded with gems from Conservative Members suggesting that they are not prepared to share a taxi ride with our partners in Europe, never mind our economic future.

The right hon. Member for Kingston upon Thames (Mr. Lamont), who graced us with his presence earlier this evening, called on Britain to get off the escalator and, if the rest of Europe insists on continuing to go up on it, to wave it good luck and goodbye. I am bound to say that it provides an insight into why the economic management of the past 15 years has been marked by such extraordinary incompetence that the last Chancellor thinks that Britain has an economic future by going it alone outside Europe.

That brings me to the other context for this debate. Alongside the strong sense of national identity in Britain, we must also recognise the powerful move to a global economy in which industrial production is now not the property of any one nation state but is internationalised, in which world-wide sourcing by companies has meant that trade has expanded twice as fast as output. Throughout the world—in Latin America, in the Asian Pacific area and in north America—the fastest-growing industrialised countries are coming together to form immense trading blocs.

Against the background of that dramatic growth in the global economy, I marvel that Conservative Members appear to think that the best way to prepare Britain for the challenge of that world is by being as difficult as possible to our nearest neighbours. Britain needs Europe because it provides our largest market, because it provides the largest reason for inward investment to this country and because it gives us the clout of a large trading bloc in negotiating with the rest of the world. The reason why we support Britain's membership of the European Union is that it is vital to exports from the country, to investment in the country and to the jobs of the working people of the country.

That is why we believe that Britain's role is that of an independent member nation state of Europe, co-operating to make a success of Europe. It is what Lord Howe described last month as "Labour's balanced approach" on Europe—I assume that he meant that as a compliment. Lord Howe has been much less complimentary about the European policy of the Conservative party to which he belongs, which he described as dragged into a ghetto of sentimentality and self-delusion". When the Prime Minister came to office, he made a very different speech from the one that he made today. In that speech in 1991. he said that he wanted to put Britain at the heart of Europe. Today, he told us that he was prepared to be isolated in Europe. It is just as well that he is prepared to be isolated in Europe, because he heads a Government stuffed with Ministers who delight in being isolated in Europe.

When the Employment Secretary was asked at Davos about the Government's agenda for the intergovernmental conference, he replied that their agenda was to veto everyone else's agenda—no to any change in the European constitution, no to any change in the European Parliament, no to ending Britain's right to say no. That was not only a negative approach but a triple negative approach.

I have to suggest to the Foreign Secretary—as a negotiator, he probably understands—that the problem with always saying no is that one ends up being left out of the game. There can be no more dramatic illustration of the price that one pays for a strategy of isolation than the fact that, in the recent argument about the access of Spain to our fishing waters, Britain could not persuade a single ally to vote with us to block such a damaging change to our national interest. Isolation could not prevent Spain gaining access to our fishing waters. Isolation ensured that Britain could not prevent Spain doing so.

Being isolated will not secure the fundamental changes that are needed in the common agricultural policy, the costs of which have doubled under the present Government, and which is the source of most of the fraud in Europe. Every year, that fraud costs European taxpayers losses of the same amount that led to the collapse of Barings bank.

We shall obtain those fundamental reforms only if we build alliances, if we form partnerships. We cannot do it from a position of isolation. To be sure, when the Prime Minister vetoed the appointment of Mr. Dehaene, he reduced Britain to a position of splendid isolation.

Photo of Mr Michael Colvin Mr Michael Colvin , Romsey and Waterside

The hon. Gentleman speaks about isolation, yet in his earlier remarks he spoke about the importance of inward investment to the European Union and the fact that there was a great deal coming to this country. Does he believe that we are isolated from Europe in terms of the social chapter? Surely it is for the reason that we have not signed up to the social chapter that so much investment comes to this country, rather than going to the continent of Europe.

Photo of Robin Cook Robin Cook , Livingston

I can absolutely confirm to the hon. Gentleman that we are isolated over the social chapter. Indeed, the only party in Europe that agrees with the Conservative party's opposition to the social chapter is the National Front of France. That is the degree to which the Conservative Government have formed alliances over the social chapter. I shall discuss later what we believe should be done in relation to the social chapter.

I was about to ask the Foreign Secretary what possible national interest was served by isolating us over the appointment of Mr. Dehaene. He merely swapped Mr. Dehaene for Mr. Santer, who immediately said that he came from the same party and shared the same idea of Europe. The truth is that the veto was used on that occasion not to promote any national interest but solely so that the Prime Minister could prove that he was tough on Europe—because the only way he can unite the Conservative party is by being divisive inside Europe.

Photo of James Clappison James Clappison , Hertsmere

In the interests of the clarity about which the hon. Gentleman's party leader spoke earlier, will the hon. Gentleman now come clean and admit what the right hon. Member for Copeland (Dr. Cunningham) would not admit—that the European socialists' manifesto commitment to make qualified majority voting the rule means weakening our national veto?

Photo of Robin Cook Robin Cook , Livingston

I am sorry that the hon. Gentleman did not stay through the debate. Had he done so, he would have heard my hon. Friend the Member for Neath (Mr. Hain) quoting our manifesto on the veto; but, for the avoidance of doubt, I am happy to correct the hon. Gentleman again so that he does not again mislead his constituents. We said: we have always insisted … on maintaining the principle of unanimity for decision-making in areas such as fiscal and budgetary policy, foreign and security issues, changes to the Treaty of Rome and other areas of key national interest. I hope that we can bury once and for all the canard that Labour is in favour of dropping the veto.

I am happy to say that the whole Labour party is united on that. The Prime Minister's problem is that he cannot put Britain at the heart of Europe because he heads a party that is split from top to bottom about whether it wants to be at any part of the anatomy of Europe.

Of all the quotations from Cabinet Ministers in the trenches of the dispute over Europe in the past three months, the one that I most relish came from the Chancellor, who said: We've run out of ways of making it clear there aren't any divisions. Cabinet Ministers have had plenty of opportunities to make it clear. Never have so many studios been open to so many Cabinet Ministers on the same topic. Tory Ministers used to air their differences in code—after they appeared, television commentators had to be wheeled in to interpret what they had been saying. Now, the divisions come neatly packaged as soundbites and headlines. Whole photocopiers have expired in the basement of Labour party headquarters trying to keep up with the recycling of conflicting quotations from the Cabinet.

The Prime Minister addressed the House for a whole hour, half of it on the single currency. At the end of it all, we still do not know whether he agrees with the Chancellor that those who reject monetary union because it leads to political union are being too simplistic or whether he agrees with the Chancellor's No. 2, the Chief Secretary, who is apparently one of those simplistic people. As I understood the Prime Minister's speech, we are meant to conclude that he agrees with both of them—or, at any rate, he wants to keep his options open to agree with both of them, depending on the nature and style of their speeches.

The Prime Minister made a passionate speech for the don't knows. When my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) intervened to ask whether, if the economic conditions were right, the constitutional arguments would keep the Prime Minister out of the single currency, the Prime Minister replied that he did not know where my hon. Friend had been for the previous 10 minutes. The truth is that he had been listening to the Prime Minister.

The really interesting feature of the Prime Minister's speech was that three or four times he was given the opportunity to back the statement by the Chancellor of the Exchequer that a single currency would not be a threat to the nation state. Not once did he take that opportunity. It seems a simple enough question: does the right hon. Gentleman agree with his Chancellor, given that he has assured us that the Cabinet is united? If it is so united, why cannot the Prime Minister, in the spirit of unity, say that he agrees with his Chancellor? I understand why not: he cannot say that he backs the Chancellor, because to do so would be to offend his own Euro-rebels. After expelling all nine of them only four months ago because they did not agree with his policy, he is now reduced to avoid announcing a policy in order to reduce the area that they have for disagreement with him.

I am bound to say that, compared with the Prime Minister's speech, the Euro-rebels' manifesto is a model of decisiveness, conviction and clarity. At least we know where they stand. They stand for a substantial repatriation of decision making. They stand for abolishing the elected European Parliament. [HON. MEMBERS: "Hear, hear."] It is not just policy of the Euro-rebels. Apparently, a large chunk of the Conservative party agrees with this. Those people stand for reducing the powers of the European Court. [HON. MEMBERS: "Hear, hear."] Well, there we are. They want to see the foreign and security policy removed from the competence of the Union. [HON. MEMBERS: "Hear, hear."] I have to tell the Foreign Secretary that at Labour party conferences this is the moment when we call for a card vote.

If all those hon Members who are agreeing with the Euro-rebel manifesto intend tonight to vote with the Government, would they help us by pointing out which of the commitments are now shared by the Government with which they are voting tonight? If the Foreign Secretary wants them to vote tonight, perhaps he could tell the House which of those commitments will be in his negotiating brief for next year's intergovernmental conference. The rest of us are entitled to know. When he goes to the IGC, he goes to act for Britain, not just for the Tory party. That is why the agenda should be determined in the interests of the 60 million people of Britain, not the prejudices of a handful of Tory Members of Parliament.

I move to one clear example where the people of Britain are at present discriminated against because of those prejudices. We are, as has been helpfully pointed out, the only country in Europe where working people are denied the advantage of the social chapter—another area where the Prime Minister is prepared to be isolated in Europe, isolated by offering worse working conditions to the people whom he represents than can be obtained on the continent.

I heard the Prime Minister say in his speech that Europe was increasingly accepting our agenda of deregulation. That is a curious delusion since we are the only country that has opted out of the social regulations. It appears to be based on a view that he is in step and everyone else in the European continent is out of step. I should warn the Prime Minister and his Cabinet that not only are they out of step in Europe; increasingly they are out of step with their own backers in big business.

In the Queen's Speech debate, I pointed out to the House that United Biscuits, one of the all-time great donors to the Tory party, thought so little of the opt-out on the social chapter that it had been the first to form a works council in Britain. On cue for today's debate, yesterday Coats Viyella announced that it had also achieved an agreement to set up a works council—a company which has given £27,000 over four years to the Tory party, a company which was apparently prepared to be a donor to the Tory party but is not prepared at any price to buy its policy on the social chapter. Its chief executive said that that was a sensible agreement which will he of competitive advantage to Coats Viyella. The truth is that business knows that it will never compete on the basis of lower wages and worse working conditions. It will compete only on the basis of higher skills and higher technology. The bosses at the top of the industries that the Government have privatised have no intention of seeking competitiveness through lowering their wages, and they will not raise the commitment, the motivation, the skills of their work forces by telling them that they must achieve competitiveness through lower wages.

Labour will sign up for the social chapter. We will sign up for the social chapter because we believe that it is offensive that people employed by British companies in Britain should settle for fewer rights at work than people employed by those same British companies on the continent.

Photo of Mr Hartley Booth Mr Hartley Booth , Finchley

Will the hon. Gentleman give way?

Photo of Robin Cook Robin Cook , Livingston

I shall give way on this occasion, but it must be the last.

Photo of Mr Hartley Booth Mr Hartley Booth , Finchley

I am grateful to my hon. Friend for giving way. [Interruption.] Regardless of the friend bit, which comes from being a barrister—we call everyone friend as a member of the Bar—why did the hon. Gentleman decide that he wishes to create large-scale unemployment through our accession to the social chapter in Europe?

Photo of Robin Cook Robin Cook , Livingston

I am glad that the hon. Gentleman explained why I was thought to be his hon. Friend. I was aware that the arguments that we are deploying here are compelling, but I had not anticipated that I had had quite that degree of success.

As to the increase in employment, the hon. Gentleman had better go back and discuss it with the chief executive of Coats Viyella, who pays the Conservative party and has come to the conclusion—he is right, of course—that if we want to be competitive, we achieve that competitiveness not by lowering wages, not by lowering working conditions, not by producing a casualised, demotivated work force, which would be a low-skill work force, but by building a work force who are committed, who are involved in their company and who have high skills.

Photo of Robin Cook Robin Cook , Livingston

No. Not even the promise that the hon. Gentleman might make to call me an hon. Friend will persuade me to give way on this occasion. I anticipate that his right hon. Friend will wish to make a speech.

The Labour party will sign up for the social chapter. We will sign up because it is in the interests of working people in Britain. We will sign up also because it will provide a clear demonstration that we will break with the opt-out mentality of the Government. It will show that we are prepared to play a full part as a full member of the European Union. It will establish that Britain once again can be taken seriously in Europe, because we will take Europe seriously. It will provide a flat contrast with the Government, who are incapable of covering up their divisions over Europe, of agreeing a strategy for Europe, and who are therefore incapable of negotiating for Britain in Europe.

Today's debate provided the Prime Minister with an opportunity to tell the country where the Government stood on the central question facing Europe. His speech proved that he did not even dare tell his own party where it stood. Such a Government do not deserve to remain in office. Such leadership does not deserve the support of the House.

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Witney 9:32 pm, 1st March 1995

What the House has taken part in today is a new production of a fairly well-worn classic play. There have been some familiar figures in the cast, and some new ones too. There has been a remarkable dominance of Scottish voices during the debate. Perhaps that is because the producer is the hon. Member for Livingston (Mr. Cook), who, whatever his failings as an actor-manager, gave an entertaining, though insubstantial, contribution as an actor.

As often happens when people plan what they think is a clever debate long in advance, it does not usually work out quite that way. Of course there is a discussion about Europe, which runs through all political parties in this House and in this country—and not only this country—but the Labour party is singularly ill-equipped to mount this debate and this dramatic production today.

As has been pointed out—though I think rather too gently—by my right hon. and hon. Friends, over the past 35 years the Labour party has changed its policy on Europe six times. I am not talking about the elegant nuances of difference, with which Conservative Members are familiar; I am talking about six changes, each of 180 degrees. It happens that during that time there have been six Labour leaders, but I must tell those who like a simple plot to their play that, disappointingly, there is no parallel between the two facts. There have been six leaders and six turns of 180 degrees, but some leaders have had more than one policy.

Lord Wilson set the pace. He had three policies during his time as leader of the Labour party: out, in, out. That is clearly the model that the current Leader of the Opposition is emulating. I am not sure of the number of months for which he has led the party, but he has already moved from his original view that we must come out to the view that we must do whatever is proposed in Brussels. We listened to his speech carefully; but if he listened to the speech of the hon. Member for Livingston, or studied what the hon. Gentleman has been saying on television and radio, he would find that the hon. Gentleman is now looking desperately for another fence on which to sit.

Anyone who studies the six fundamental changes to which I have referred will find that only one thread runs through them: the thread of inconsistency. Why? Because the only consistent thought is of scurrying around for the sake of tactical advantage. Having lived through a good many years of this, I am driven to the conclusion that the Labour party—with one or two notable exceptions—does not actually know or care about Europe or European policy. Labour Members see Europe simply as a board on which they can play little parliamentary games.

As I have said, I have lived through this for some years. Over and over again, I have seen the overriding Labour party desire for some form of words on the Order Paper enabling Labour to gather into the Division Lobby people of all shades of opinion. All that they need share is some criticism of the Government's policy. Labour is at it again tonight: it wants to lure the leader of the Liberal party—enthusiastic for a single currency—into the same Lobby as some of my hon. Friends, and Opposition Members. It does not matter what people believe in; they are all welcome in the Labour Lobby, provided that somewhere among their views is a criticism of the Government.

We lived through all this during the debates on Maastricht. I became familiar with the hon. Member for Hamilton (Mr. Robertson) when he was the actor-manager, and I must say that I developed a certain admiration for his skill and subtlety, damnable and opportunistic though it was on all occasions. Now the hon. Gentleman has been packed off to shadow the Secretary of State for Scotland and to answer the West Lothian question, and we have a different actor-manager. This, I must say, is much less subtle. Here we have a trap with "TRAP" marked clearly on it, plonked in the middle of the motorway; and we are invited to walk into it.

I do not know whether the hon. Member for Livingston obtained part of his education in the kirk. Had he done so, he would be familiar with the book of Proverbs, which states: Surely in vain the net is spread in the sight of any bird. That is what the hon. Gentleman has tried to do, but he has done it in the presence of a good many fairly wise and wily birds on both sides of the House.

Speaking of wise and crafty birds brings me naturally to the right hon. Member for Lagan Valley (Mr. Molyneaux). He intervened in the Prime Minister's speech, and I feel that the question that he put—now that we have reflected on it—requires a fuller answer. I believe he referred to horizontal transfer of sovereignty between member states. He knows, or I hope that he knows, that there is no proposal for joint authority—for horizontal transfer of sovereignty—in the framework document. He also knows, and I am happy to confirm, our view—which has long been clear—that there can be no change in the sovereignty of Northern Ireland except at the wish of the greater number of the people who live there. If that is the assurance that he wanted—and I think that it is—I gladly give it.

There have been some notable contributions to the debate. My right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) chided Ministers for not setting out the advantages of membership. I thought that that was a little hard because my right hon. Friend the Prime Minister did exactly that in his speech. When I come to enlargement, I shall deal with what my right hon. Friend said on that subject.

My right hon. Friend the Member for Guildford (Mr. Howell) urged us—we need no urging—to put forward positive ideas at the intergovernmental conference next year on how the structures and procedures of the Union's institutions can work better. He listed the Council, the Commission, the courts and the Parliament. All those existing institutions are clearly necessary, but we believe that they could work better. We certainly think that the Commission should do less, and do it better.

My right hon. Friends the Members for Mid-Sussex (Mr. Renton), for Woking (Sir C. Onslow) and for Horsham (Sir P. Hordern) made thoughtful speeches which need to be taken into account in any analysis from upstairs on where the Conservative parliamentary party now stands. My right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) made a rumbustious and welcome speech in which he made the case for a referendum on a single currency. He was supported by my hon. Friend the Member for Portsmouth, South (Mr. Martin). I think that everybody understands the force of those arguments, which are deeply constitutional. Both my hon. Friends will have heard what my right hon. Friend the Prime Minister said about keeping that choice before us.

My hon. Friend the Member for Bexhill and Battle (Mr. Wardle) spoke along lines that we could have anticipated, but which were nevertheless clear. He acknowledged what is certainly true: that there is no difference in objectives or policy between my right hon. Friend the Prime Minister and the rest of us and himself. The question is one of timing and tactics. My hon. Friend quoted article 7a and agreed that it was accompanied by a general declaration which made it clear that nothing in the Single European Act would prevent member states from taking necessary action against illegal immigration.

The legal position is not quite as straightforward as my hon. Friend suggested. I refer him to the opinion of, say, Lord Oliver of Aylmerton, a Law Lord, in a Select Committee of the House of Lords. In any case there is a clear commitment by the Heads of Government of the time—1985—which included the present Federal Chancellor and the current President of the European Commission on the point.

We have sustained for 10 years without challenge or difficulty immigration controls at our ports and airports. The Prime Minister said today, as he has said before and as my right hon. and learned Friend the Home Secretary has said, that we shall take whatever steps are necessary to protect our frontier controls. My hon. Friend the Member for Bexhill and Battle suggested a specific tactic: that 10 months before the opening of the intergovernmental conference, we should put that on the agenda. There are disadvantages and risks in that tactic, and we do not need to decide on it now. However, the undertaking given again today by my right hon. Friend the Prime Minister stands.

Several hon. Members referred to two themes that have run through the debate. The first of them is flexibility. The hon. Member for Ashfield (Mr. Hoon) spoke of that as if my right hon. Friend the Prime Minister had invented the idea in a fit of pique or of determination to be isolated. That is absolute nonsense. We have flexibility; there is flexibility in defence. I have just visited Austria, Sweden and Denmark, which are not full members of the Western European Union, whereas we are. In the debate my right hon. Friend the Prime Minister made specific proposals about defence and stated and showed that Britain was in the lead in that subject. Others are not, and others may not wish to be included. It is a perfect example of the flexibility about which the Prime Minister spoke, and so it is with frontiers. Britain and Ireland are island countries and we naturally have different ideas about frontier controls from those in countries with land frontiers. Why is that wrong? Why is that an aberration? It is part of the essential flexibility of Europe. Those who deny that flexibility are denying something that is not passing, not an aberration, but is an essential part of Europe. It is a natural feature of what we are trying to do. The United States of America is not the good model for the future of Europe.

The Leader of the Opposition seems quite astray on qualified majority voting. He seemed to suppose that there was not any and that we were blocking its introduction. Of course there is. Those who say that the common agricultural policy could not be reformed without QMV seem to ignore that QMV applies to the common agricultural policy. What the Prime Minister talked about is further extension of QMV, which we oppose.

The hon. Member for Livingston, with a jutting beard gesture of which we are getting rather fond, became extremely indignant because the Prime Minister suggested, modestly and quietly, that when the European socialist manifesto, co-authored by the right hon. Member for Copeland (Dr. Cunningham), said that QMV should be the rule, that must mean an undermining of the veto. The hon. Member for Livingston became very indignant and said,"No, no." He read again the domestic Labour party manifesto on the subject. All he proved by that indignation is that the Labour party speaks with two voices, both official. Labour is bound, as I understand it, by the European socialist manifesto, which is the nature of European socialism. The right hon. Member for Copeland was shadow Foreign Secretary when he put his signature on it. Those two completely contradictory voices entirely justify the criticism that my right hon. Friend the Prime Minister made.

The main point that I should like to dwell on is what I believe to be the heart of the matter.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

Will my right hon. Friend address the question that I put to the Prime Minister earlier, to which I do not believe he gave a clear answer? I asked whether the Government believe that monetary union will lead to political union or whether they believe, as Lord Lawson said the other day, that one cannot have one without the other? I believe that this is the issue of principle. It is two years since we began negotiations on the Maastricht treaty and that is an issue of principle, not of timing.

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Witney

My right hon. Friend is one of the greatest experts on the subject because, with my right hon. Friend the Prime Minister, he negotiated the opt-out. I have always admired the skill with which they both did that. I was sitting in admiration in another room at the time.

I think my right hon. Friend the Prime Minister answered clearly the point that my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) has just made. My right hon. Friend the Prime Minister said that he was absolutely clear that it was right to preserve for this country the freedom, that he and my right hon. Friend had together obtained for us, with some difficulty, at Maastricht. He went on to answer the specific question put by my right hon. Friend. [HON. MEMBERS: "Answer the question."] I simply repeat what the Prime Minister said. He answered the question clearly in his speech.

Photo of Robin Cook Robin Cook , Livingston

If the Foreign Secretary will not answer that question, will he, in the remaining 10 minutes of the debate, answer the question that has now been asked five times in the past five hours? Does he agree with the Chancellor of the Exchequer that a single currency would not threaten the nation state and, if so, can he explain why his Prime Minister cannot say so?

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Witney

The Prime Minister answered that question and I agreed with the answer given. The Prime Minister went on to make a point, which I think is overwhelming common sense: this choice of a single currency or not is not before the House. It will not be before the House for four or five years at least. Other countries are committed to accept, regardless of the circumstances at the time, but we are not because we have the freedom of the opt-out negotiated at Maastricht. If and when that choice comes to us, the Government will take that choice and recommend it to Parliament in the light of not just one set of facts but of all the facts which are valid at that time—the facts at the time, not the hunch at present.

Of course, there is a constitutional question; of course, there are economic questions, and the Prime Minister went into these in some detail. The only sensible course is not to pontificate about this now but to weigh up the choice when and if we need to take it as a nation.

Photo of Hon. Douglas Hurd Hon. Douglas Hurd , Witney

No, I am not going to give way to the hon. Gentleman again.

It seems to me an entirely sensible course to which the great majority of people in this country would adhere.

I now come to what I believe is the basic flaw in the critique of the Leader of the Opposition and the leader of the Liberal party. The Leader of the Opposition spoke as if there was only one model for Europe and the question was whether we moved forward in some direction which he regarded as inexorable or whether we retreated and turned our back on Europe. I entirely reject that choice; that is not what it is about. There is not just one model. There is a choice of directions, and we are among the people who make the choice. It is the essence of our policy that we should work with others to make the choice which has not already been engineered but which is a choice with which we can feel at ease.

This is a debate that we have had, with variations, several times before. I think that there is an opportunity now—the Labour party has given us that opportunity—to draw a line under divisions and discontents, which have been very real. There are rancours belonging to the past and they are certainly very real. They belong to the debate on Maastricht, but there is a danger in constantly fighting and refighting old battles. Obviously, there is a political danger here—there is no doubt about that—but there is another point which is perhaps not so familiar.

As I said, I have just returned from visiting Denmark, Sweden, Austria and Germany. I agree with the point made by my right hon. Friend the Member for Epsom and Ewell (Sir A. Hamilton). In all the countries that I visited—and this was not true before Maastricht—there is debate on the issues that have come forward in this country. Before Maastricht, we had the sensation—it was well founded—that ours was the only country in which there was a debate. Now there is a debate in all the countries that I visit and, in some, of them, there is a lively interest in the ideas that we propose.

However, I must tell my right hon. and hon. Friends and the House that interest in these ideas is weakened and is not going to be effective if it appears that they come out of domestic division here at home. This I find infinitely frustrating because I am quite sure that the ideas that we are working out and putting forward are the right ideas for Europe and I do not want to see that frustrated because they appear to arise from domestic controversy at home. [HON. MEMBERS: "Tell us one."] That is precisely what I am about to do, and I have seven minutes in which to do so.

What will be happening next year? Three things will be happening more or less at the same time. No doubt there will be a continuing discussion about a single currency. There will be preparations for the enlargement of the European Union. I disagree with my right hon. Friend the Member for Old Bexley and Sidcup on this point. I do not think that we should be grudging about enlargement. The countries of central and eastern Europe have to be able to comply with the treaty and meet the conditions about competition, about the single market. They will not, of course, find that easy and they will not be able to do it at once, but they are political democracies—they have free elections. Their problems arise from the free market. We should give them time, but we should encourage them and we should not say to them that they are not really European countries, that they are not really entitled to join the European Union because we are too busy sorting our own ideas. We should encourage them to join. That process will go ahead next year and the year after.

Alongside that process, as the Prime Minister said and as we said at Question Time today, must go changes—drastic changes—in the common agricultural policy and in the structural funds. One cannot possibly imagine extending, enlarging the European Union and maintaining in its present form a common agricultural policy covering the farmers of Poland, Hungary and Czechoslovakia. That will be the second thing going on next year.

Thirdly, there will be the intergovernmental conference which will consider the structures that were established at Maastricht. As the Prime Minister said, I am absolutely clear that there will be no attempt from anybody to overturn, to destroy those three pillars and say that we must start again. That is not the mood of the Union at all.

We have the Community itself—the first pillar—the single market, from which this country benefits, the single commercial policy and the gradual dying away of state aids and protectionist devices. Of course there are fierce rearguard actions from the protectionists, and we read of the battles. We do not read, so much, when the battles end in success. We read of the efforts by the French to keep out our lamb, of the Germans to keep out our beef, of the French to keep our aircraft out of Orly airport. We do not always read that, actually, we won all those arguments because there was a single market, because there were rules and because in the end, however grudgingly, those rules had to be obeyed. That is one pillar.

Alongside that pillar is the co-operation in foreign and security policy and in home and justice matters. I shall send my right hon. Friend the Member for Old Bexley and Sidcup the speech that I made in Berlin yesterday, which he had some difficulty in getting. I am in favour of co-operation in foreign policy, but I am not in favour of seeking to make that effective by majority vote. I contested that fiercely in the Maastricht negotiations—successfully—and would do so again. I do not believe that we would achieve a more effective European foreign policy if we introduced majority voting and started trying to vote people down.

We have two highly successful institutions in Europe—NATO and the European Union. We have a queue of countries wanting to join both. It is in the fundamental interests of this country that the success of those institutions should not unravel. There are two ways, it seems to me, in which the European Union could unravel. One is that we could go back into a dangerous muddle of old rivalries, rumours of war, commerce and investment constantly interrupted by rows over tariffs and conflicting trade arrangements. If we went back downhill in that direction, just when the North American Free Trade Agreement is forming, just when Asia and the Pacific are coming together as an entity, just when Latin America is coming together, we would be moving right against the grain of the world. One way in which Europe could unravel is through cynicism and neglect. It could unravel if we were tolerant of fraud. It could unravel if we were unable to practise subsidiarity successfully.

Another way in which Europe could unravel is that it could try to go forward in a purely theoretical and philosophical way. There could be some great centralising movement, some talk of a great leap forward, but, in fact, it could be a leap forward into a bog. That is why I believe that Prime Minister Balladur is right to say that there is no point in reviving the anachronistic debate on federalism. A Europe of nations is working together as never before, working with the grain of history, with popular feeling. It is not a question of advancing or retreating on a road which is already engineered by others. It is a question of choosing the right road, forgetting our defeatism on that road, and putting our energy and commitment into the matter that way. After a year or two at this task, I am quite sure that that can be done and that our ideas of a Europe of nations can succeed. It is possible, it is right, and I ask the House, by rejecting the motion, to help us to succeed.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 314, Noes 319.

Division No. 92][9.59 pm
AYES
Abbott, Ms DianeBenn, Rt Hon Tony
Adams, Mrs IreneBennett, Andrew F
Ainger, NickBenton, Joe
Ainsworth, Robert (Cov'try NE)Bermingham, Gerald
Allen, GrahamBerry, Roger
Alton, DavidBetts, Clive
Anderson, Donald (Swansea E)Blair, Rt Hon Tony
Anderson, Ms Janet (Ros'dale)Blunkett, David
Armstrong, HilaryBoateng, Paul
Ashdown, Rt Hon PaddyBoyes, Roland
Ashton, JoeBradley, Keith
Austin-Walker, JohnBray, Dr Jeremy
Banks, Tony (Newham NW)Brown, Gordon (Dunfermline E)
Barnes, HarryBrown, N (N'c'tle upon Tyne E)
Barron, KevinBruce, Malcolm (Gordon)
Battle, JohnBurden, Richard
Bayley, HughByers, Stephen
Beckett, Rt Hon MargaretCaborn, Richard
Beggs, RoyCallaghan, Jim
Beith, Rt Hon A JCampbell, Mrs Anne (C'bridge)
Bell, StuartCampbell, Menzies (Fife NE)
Campbell, Ronnie (Blyth V)Grocott, Bruce
Campbell-Savours, D NGunnell, John
Canavan, DennisHain, Peter
Cann, JamieHall, Mike
Carlile, Alexander (Montgomery)Hanson, David
Chidgey, DavidHardy, Peter
Chisholm, MalcolmHarman, Ms Harriet
Church, JudithHarvey, Nick
Clapham, MichaelHattersley, Rt Hon Roy
Clark, Dr David (South Shields)Henderson, Doug
Clarke, Eric (Midlothian)Hendron, Dr Joe
Clarke, Torn (Monklands W)Heppell, John
Clelland, DavidHill, Keith (Streatham)
Clwyd, Mrs AnnHinchliffe, David
Coffey, AnnHodge, Margaret
Cohen, HarryHoey, Kate
Connarty, MichaelHogg, Norman (Cumbernauld)
Cook, Frank (Stockton N)Home Robertson, John
Cook, Robin (Livingston)Hood, Jimmy
Corbett, RobinHoon, Geoffrey
Corbyn, JeremyHowarth, George (Knowsley North)
Corston, JeanHowells, Dr. Kim (Pontypridd)
Cousins, JimHoyle, Doug
Cox, TomHughes, Kevin (Doncaster N)
Cummings, JohnHughes, Robert (Aberdeen N)
Cunliffe, LawrenceHughes, Roy (Newport E)
Cunningham, Jim (Covy SE)Hughes, Simon (Southwark)
Cunningham, Rt Hon Dr JohnHutton, John
Dafis, CynogIllsley, Eric
Dalyell, TamIngram, Adam
Darling, AlistairJackson, Glenda (H'stead)
Davidson, IanJackson, Helen (Shef'ld, H)
Davies, Bryan (Oldham C'tral)Jamieson, David
Davies, Rt Hon Denzil (Llanetlli)Janner, Greville
Davies, Ron (Caerphilly)Johnston, Sir Russell
Davis, Terry (B'ham, H'dge H'I)Jones, Barry (Alyn and D'side)
Denham, JohnJones, Ieuan Wyn (Ynys Mon)
Dewar, DonaldJones, Jon Owen (Cardiff C)
Dixon, DonJones, Lynne (B'ham S O)
Dobson, FrankJones, Martyn (Clwyd, SW)
Donohoe, Brian HJones, Nigel (Cheltenham)
Dowd, JimJowell, Tessa
Dunnachie, JimmyKaufman, Rt Hon Gerald
Dunwoody, Mrs GwynethKeen, Alan
Eagle, Ms AngelaKennedy, Charles (Ross.C&S)
Eastham, KenKennedy, Jane (Lpool Brdgn)
Enright, DerekKhabra, Piara S
Etherington, BillKilfoyle, Peter
Evans, John (St Helens N)Kirkwood, Archy
Ewing, Mrs MargaretLamont, Rt Hon Norman
Fatchett, DerekLestor, Joan (Eccles)
Faulds, AndrewLewis, Terry
Field, Frank (Birkenhead)Liddell, Mrs Helen
Fisher, MarkLitherland, Robert
Flynn, PaulLivingstone, Ken
Forsythe, Clifford (S Antrim)Lloyd, Tony (Stretford)
Foster, Rt Hon DerekLlwyd, Elfyn
Foster, Don (Bath)Loyden, Eddie
Foulkes, GeorgeLynne, Ms Liz
Fraser, JohnMcAllion, John
Fyfe, MariaMcAvoy, Thomas
Galbraith, SamMcCartney, Ian
Galloway, GeorgeMcCrea, The Reverend William
Gapes, MikeMacdonald, Calum
Garrett, JohnMcFall, John
George, BruceMcGrady, Eddie
Gerrard, NeilMcKelvey, William
Gilbert, Rt Hon Dr JohnMackinlay, Andrew
Godman, Dr Norman AMcLeish, Henry
Godsiff, RogerMaclennan, Robert
Golding, Mrs LlinMcNamara, Kevin
Gordon, MildredMacShane, Denis
Graham, ThomasMcWilliam, John
Grant, Bernie (Tottenham)Madden, Max
Griffiths, Nigel (Edinburgh S)Maddock, Diana
Griffiths, Win (Bridgend)Maginnis, Ken
Mahon, AliceRoss, Ernie (Dundee W)
Mallon, SeamusRoss, William (E Londonderry)
Mandelson, PeterRowlands, Ted
Marek, Dr JohnRuddock, Joan
Marshall, David (Shettleston)Salmond, Alex
Marshall, Jim (Leicester, S)Sedgemore, Brian
Martin, Michael J (Springburn)Sheerman, Barry
Martlew, EricSheldon, Rt Hon Robert
Maxton, JohnShore, Rt Hon Peter
Meacher, MichaelShort, Clare
Meale, AlanSimpson, Alan
Michael, AlunSkinner, Dennis
Michie, Bill (Sheffield Heeley)Smith, Andrew (Oxford E)
Michie, Mrs Ray (Argyll & Bute)Smith, Chris (Isl'ton S & F'sbury)
Milburn, AlanSmith, Llew (Blaenau Gwent)
Miller, AndrewSmyth, The Reverend Martin
Mitchell, Austin (Gt Grimsby)Snape, Peter
Molyneaux, Rt Hon JamesSoley, Clive
Moonie, Dr LewisSpearing, Nigel
Morgan, RhodriSpellar, John
Morley, ElliotSquire, Rachel (Dunfermline W)
Morris, Rt Hon Alfred (Wy'nshawe,Steel, Rt Hon Sir David
Morris, Estelle (B'ham Yardley)Steinberg, Gerry
Morris, Rt Hon John (Aberavon)Stevenson, George
Mowlam, MarjorieStott, Roger
Mudie, GeorgeStrang, Dr. Gavin
Mullin, ChrisStraw, Jack
Murphy, PaulSutcliffe, Gerry
Oakes, Rt Hon GordonTaylor, Mrs Ann (Dewsbury)
O'Brien, Mike (N W'kshire)Taylor, Rt Hon John D (Strgfd)
O'Brien, William (Normanton)Taylor, Matthew (Truro)
O'Hara, EdwardThompson, Jack (Wansbeck)
Olner, BillTimms, Stephen
O'Neill, MartinTipping, Paddy
Orme, Rt Hon StanleyTouhig, Don
Paisley, The Reverend IanTrimble, David
Parry, RobertTurner, Dennis
Patchett, TerryTyler, Paul
Pearson, IanVaz, Keith
Pendry, TomWalker, A Cecil (Belfast N)
Pickthall, ColinWalker, Rt Hon Sir Harold
Pike, Peter LWallace, James
Pope, GregWalley, Joan
Prentice, Bridget (Lew'm E)Wardell, Gareth (Gower)
Prentice, Gordon (Pendle)Wareing, Robert N
Prescott, Rt Hon JohnWatson, Mike
Primarolo, DawnWelsh, Andrew
Purchase, KenWicks, Malcolm
Quin, Ms JoyceWigley, Dafydd
Radice, GilesWilliams, Rt Hon Alan (Sw'n W)
Randall, StuartWilliams, Alan W (Carmarthen)
Raynsford, NickWilson, Brian
Redmond, MartinWinnick, David
Reid, Dr JohnWise, Audrey
Rendel, DavidWorthington, Tony
Robertson, George (Hamilton)Wray, Jimmy
Robinson, Geoffrey (Co'try NW)Wright, Dr Tony
Robinson, Peter (Belfast E)Young, David (Bolton SE)
Roche, Mrs Barbara
Rogers, AllanTellers for the Ayes:
Rooker, JeffMr. Ray Powell and
Rooney, TerryMr. Gordon McMaster.
NOES
Ainsworth, Peter (East Surrey)Atkinson, David (Bour'mouth E)
Aitken, Rt Hon JonathanAtkinson, Peter (Hexham)
Alexander, RichardBaker, Rt Hon Kenneth (Mole V)
Alison, Rt Hon Michael (Selby)Baker, Nicholas (North Dorset)
Allason, Rupert (Torbay)Baldry, Tony
Amess, DavidBanks, Matthew (Southport)
Ancram, MichaelBanks, Robert (Harrogate)
Arbuthnot, JamesBates, Michael
Arnold, Jacques (Gravesham)Batiste, Spencer
Arnold, Sir Thomas (Hazel Grv)Bellingham, Henry
Ashby, DavidBeresford, Sir Paul
Atkins, RobertBiffen, Rt Hon John
Body, Sir RichardFowler, Rt Hon Sir Norman
Bonsor, Sir NicholasFox, Dr Liam (Woodspring)
Booth, HartleyFox, Sir Marcus (Shipley)
Boswell, TimFreeman, Rt Hon Roger
Bottomley, Peter (Eltham)French, Douglas
Bottomley, Rt Hon VirginiaFry, Sir Peter
Bowden, Sir AndrewGale, Roger
Bowis, JohnGallie, Phil
Boyson, Rt Hon Sir RhodesGardiner, Sir George
Brandreth, GylesGarel-Jones, Rt Hon Tristan
Brazier, JulianGarnier, Edward
Bright, Sir GrahamGillan, Cheryl
Brooke, Rt Hon PeterGoodlad, Rt Hon Alastair
Brown, M (Brigg & Cl'thorpes)Goodson-Wickes, Dr Charles
Browning, Mrs AngelaGorst, Sir John
Bruce, Ian (Dorset)Grant, Sir A (SW Cambs)
Budgen, NicholasGreenway, Harry (Ealing N)
Burns, SimonGreenway, John (Ryedale)
Burt, AlistairGriffiths, Peter (Portsmouth, N)
Butcher, JohnGrylls, Sir Michael
Butler, PeterGummer, Rt Hon John Selwyn
Butterfill, JohnHague, William
Carlisle, John (Luton North)Hamilton, Rt Hon Sir Archibald
Carlisle, Sir Kenneth (Lincoln)Hamilton, Neil (Tatton)
Carrington, MatthewHampson, Dr Keith
Carttiss, MichaelHanley, Rt Hon Jeremy
Channon, Rt Hon PaulHannam, Sir John
Churchill, MrHargreaves, Andrew
Clappison, JamesHarris, David
Clark, Dr Michael (Rochford)Haselhurst, Alan
Clarke, Rt Hon Kenneth (Ru'clif)Hawkins, Nick
Clifton-Brown, GeoffreyHawksley, Warren
Coe, SebastianHayes, Jerry
Colvin, MichaelHeald, Oliver
Congdon, DavidHeath, Rt Hon Sir Edward
Conway, DerekHeathcoat-Amory, David
Coombs, Anthony (Wyre For'st)Hendry, Charles
Coombs, Simon (Swindon)Heseltine, Rt Hon Michael
Cope, Rt Hon Sir JohnHicks, Robert
Cormack, Sir PatrickHiggins, Rt Hon Sir Terence
Couchman, JamesHill, James (Southampton Test)
Cran, JamesHogg, Rt Hon Douglas (G'tham)
Critchley, JulianHoram, John
Currie, Mrs Edwina (S D'by'ire)Hordern, Rt Hon Sir Peter
Curry, David (Skipton & Ripon)Howard, Rt Hon Michael
Davies, Quentin (Stamford)Howarth, Alan (Strat'rd-on-A)
Davis, David (Boothferry)Howell, Rt Hon David (G'dford)
Day, StephenHowell, Sir Ralph (N Norfolk)
Deva, Nirj JosephHughes, Robert G (Harrow W)
Devlin, TimHunt, Rt Hon David (Wirral W)
Dickens, GeoffreyHunt, Sir John (Ravensbourne)
Dicks, TerryHunter, Andrew
Dorrell, Rt Hon StephenHurd, Rt Hon Douglas
Douglas-Hamilton, Lord JamesJack, Michael
Dover, DenJackson, Robert (Wantage)
Duncan, AlanJenkin, Bernard
Duncan-Smith, IainJessel, Toby
Dunn, BobJohnson Smith, Sir Geoffrey
Durant, Sir AnthonyJones, Gwilym (Cardiff N)
Dykes, HughJones, Robert B (W Hertfdshr)
Eggar, Rt Hon TimJopling, Rt Hon Michael
Elletson, HaroldKellett-Bowman, Dame Elaine
Emery, Rt Hon Sir PeterKey, Robert
Evans, David (Welwyn Hatfield)Kilfedder, Sir James
Evans, Jonathan (Brecon)King, Rt Hon Tom
Evans, Nigel (Ribble Valley)Kirkhope, Timothy
Evans, Roger (Monmouth)Knapman, Roger
Evennett, DavidKnight, Mrs Angela (Erewash)
Faber, DavidKnight Greg (Derby N)
Fabricant, MichaelKnight, Dame Jill (Bir'm E'st'n)
Fenner, Dame PeggyKnox, Sir David
Field, Barry (Isle of Wight)Kynoch, George (Kincardine)
Fishburn, DudleyLait, Mrs Jacqui
Forman, NigelLang, Rt Hon Ian
Forsyth, Rt Hon Michael (Stirling)Lawrence, Sir Ivan
Forth, EricLegg, Barry
Leigh, EdwardScott, Rt Hon Sir Nicholas
Lennox-Boyd, Sir MarkShaw, David (Dover)
Lester, Jim (Broxtowe)Shaw, Sir Giles (Pudsey)
Lidington, DavidShephard, Rt Hon Gillian
Lilley, Rt Hon PeterShepherd, Colin (Hereford)
Lloyd, Rt Hon Sir Peter (Fareham)Shepherd, Richard (Aldridge)
Lord, MichaelShersby, Michael
Luff, PeterSims, Roger
Lyell, Rt Hon Sir NicholasSkeet, Sir Trevor
MacGregor, Rt Hon JohnSmith, Sir Dudley (Warwick)
MacKay, AndrewSmith, Tim (Beaconsfield)
Maclean, DavidSoames, Nicholas
McLoughlin, PatrickSpeed, Sir Keith
McNair-Wilson, Sir PatrickSpencer, Sir Derek
Madel, Sir DavidSpicer, Sir James (W Dorset)
Maitland, Lady OlgaSpicer, Michael (S Worcs)
Major, Rt Hon JohnSpink, Dr Robert
Malone, GeraldSpring, Richard
Mans, KeithSproat, Iain
Marland, PaulSquire, Robin (Hornchurch)
Marshall, John (Hendon S)Stanley, Rt Hon Sir John
Marshall, Sir Michael (Arundel)Steen, Anthony
Martin, David (Portsmouth S)Stephen, Michael
Mates, MichaelStern, Michael
Mawhinney, Rt Hon Dr BrianStewart, Allan
Mayhew, Rt Hon Sir PatrickStreeter, Gary
Mellor, Rt Hon DavidSumberg, David
Merchant, PiersSweeney, Walter
Mills, IainSykes, John
Mitchell, Andrew (Gedling)Tapsell, Sir Peter
Mitchell, Sir David (NW Hants)Taylor, Ian (Esher)
Moate, Sir RogerTaylor, John M (Solihull)
Monro, Sir HectorTemple-Morris, Peter
Montgomery, Sir FergusThomason, Roy
Moss, MalcolmThompson, Sir Donald (C'er V)
Needham, Rt Hon Richard
Nelson, AnthonyThompson, Patrick (Norwich N)
Neubert, Sir MichaelThornton, Sir Malcolm
Newton, Rt Hon TonyThurnham, Peter
Nicholls, PatrickTownend, John (Bridlington)
Nicholson, David (Taunton)Townsend, Cyril D (Bexl'yh'th)
Nicholson, Emma (Devon West)Tracey, Richard
Norris, SteveTredinnick, David
Onslow, Rt Hon Sir CranleyTrend, Michael
Oppenheim, PhillipTrotter, Neville
Ottaway, RichardTwinn, Dr Ian
Page, RichardVaughan, Sir Gerard
Paice, JamesViggers, Peter
Patnick, Sir IrvineWaldegrave, Rt Hon William
Patten, Rt Hon JohnWalden, George
Pattie, Rt Hon Sir GeoffreyWalker, Bill (N Tayside)
Pawsey, JamesWaller, Gary
Peacock, Mrs ElizabethWard, John
Pickles, EricWardle, Charles (Bexhill)
Porter, Barry (Wirral S)Waterson, Nigel
Porter, David (Waveney)Watts, John
Portillo, Rt Hon MichaelWells, Bowen
Powell, William (Corby)Wheeler, Rt Hon Sir John
Rathbone, TimWhitney, Ray
Redwood, Rt Hon JohnWhittingdale, John
Renton, Rt Hon TimWiddecombe, Ann
Richards, RodWiggin, Sir Jerry
Riddick, GrahamWilletts, David
Rifkind, Rt Hon MalcolmWilshire, David
Robathan, AndrewWinterton, Mrs Ann (Congleton)
Roberts, Rt Hon Sir WynWinterton, Nicholas (Macc'f'ld)
Robertson, Raymond (Ab'd'n S)Wolfson, Mark
Robinson, Mark (Somerton)Wood, Timothy
Roe, Mrs Marion (Broxbourne)Yeo, Tim
Rowe, Andrew (Mid Kent)Young, Rt Hon Sir George
Rumbold, Rt Hon Dame Angela
Ryder, Rt Hon RichardTellers for the Noes:
Sackville, TomMr. David Lightbown and
Sainsbury, Rt Hon Sir TimothyMr. Sydney Chapman.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments):—

The House divided: Ayes 326, Noes 313.

Division No. 93][10.18 pm
AYES
Ainsworth, Peter (East Surrey)Cope, Rt Hon Sir John
Aitken, Rt Hon JonathanCormack, Sir Patrick
Alexander, RichardCouchman, James
Alison, Rt Hon Michael (Selby)Cran, James
Allason, Rupert (Torbay)Critchley, Julian
Amess, DavidCurrie, Mrs Edwina (S D'by'ire)
Ancram, MichaelCurry, David (Skipton & Ripon)
Arbuthnot, JamesDavies, Quentin (Stamford)
Arnold, Jacques (Gravesham)Davis, David (Boothferry)
Arnold, Sir Thomas (Hazel Grv)Day, Stephen
Ashby, DavidDeva, Nirj Joseph
Atkins, RobertDevlin, Tim
Atkinson, David (Bour'mouth E)Dickens, Geoffrey
Atkinson, Peter (Hexham)Dicks, Terry
Baker, Rt Hon Kenneth (Mole V)
Baker, Nicholas (North Dorset)Dorrell, Rt Hon Stephen
Baldry, TonyDouglas-Hamilton, Lord James
Banks, Matthew (Southport)Dover, Den
Banks, Robert (Harrogate)Duncan, Alan
Bates, MichaelDuncan-Smith, Iain
Batiste, SpencerDunn, Bob
Bellingham, HenryDurant, Sir Anthony
Beresford, Sir PaulDykes, Hugh
Biffen, Rt Hon JohnEggar, Rt Hon Tim
Body, Sir RichardElletson, Harold
Bonsor, Sir NicholasEmery, Rt Hon Sir Peter
Booth, HartleyEvans, David (Welwyn Hatfield)
Boswell, TimEvans, Jonathan (Brecon)
Bottomley, Peter (Eltham)Evans, Nigel (Ribble Valley)
Bottomley, Rt Hon VirginiaEvans, Roger (Monmouth)
Bowden, Sir AndrewEvennett, David
Bowis, JohnFaber, David
Boyson, Rt Hon Sir RhodesFabricant, Michael
Brandreth, GylesFenner, Dame Peggy
Brazier, JulianField, Barry (Isle of Wight)
Bright, Sir GrahamFishburn, Dudley
Brooke, Rt Hon PeterForman, Nigel
Brown, M (Brigg & Cl'thorpes)Forsyth, Rt Hon Michael (Stirling)
Browning, Mrs AngelaForth, Eric
Bruce, Ian (Dorset)Fowler, Rt Hon Sir Norman
Budgen, NicholasFox, Dr Liam (Woodspring)
Burns, SimonFox, Sir Marcus (Shipley)
Burt, AlistairFreeman, Rt Hon Roger
Butcher, JohnFrench, Douglas
Butler, PeterFry, Sir Peter
Butterfill, JohnGale, Roger
Carlisle, John (Luton North)Gallie, Phil
Carlisle, Sir Kenneth (Lincoln)Gardiner, Sir George
Carrington, MatthewGarel-Jones, Rt Hon Tristan
Carttiss, Michael
Cash, WilliamGarnier, Edward
Channon, Rt Hon PaulGill, Christopher
Churchill, MrGillan, Cheryl
Clappison, JamesGoodlad, Rt Hon Alastair
Clark, Dr David (South Shields)Goodson-Wickes, Dr Charles
Clarke, Rt Hon Kenneth (Ru'clif)Gorman, Mrs Teresa
Clifton-Brown, GeoffreyGorst, Sir John
Coe, SebastianGrant, Sir A (SW Cambs)
Colvin, MichaelGreenway, Harry (Ealing N)
Congdon, DavidGreenway, John (Ryedale)
Conway, DerekGriffiths, Peter (Portsmouth North)
Coombs, Anthony (Wyre For'st)Grylls, Sir Michael
Coombs, Simon (Swindon)Gummer, Rt Hon John Selwyn
Hague, WilliamMarlow, Tony
Hamilton, Rt Hon Sir ArchibaldMarshall, John (Hendon S)
Hamilton, Neil (Tatton)Marshall, Sir Michael (Arundel)
Hampson, Dr KeithMartin, David (Portsmouth S)
Hanley, Rt Hon JeremyMates, Michael
Hannam, Sir JohnMawhinney, Rt Hon Dr Brian
Hargreaves, AndrewMayhew, Rt Hon Sir Patrick
Harris, DavidMellor, Rt Hon David
Haselhurst, AlanMerchant, Piers
Hawkins, NickMills, Iain
Hawksley, WarrenMitchell, Andrew (Gedling)
Hayes, JerryMitchell, Sir David (NW Hants)
Heald, OliverMoate, Sir Roger
Heath, Rt Hon Sir EdwardMonro, Sir Hector
Heathcoat-Amory, DavidMontgomery, Sir Fergus
Hendry, CharlesMoss, Malcolm
Heseltine, Rt Hon MichaelNeedham, Rt Hon Richard
Hicks, RobertNelson, Anthony
Higgins, Rt Hon Sir TerenceNeubert, Sir Michael
Hill, James (Southampton Test)Newton, Rt Hon Tony
Hogg, Rt Hon Douglas (G'tham)Nicholls, Patrick
Horam, JohnNicholson, David (Taunton)
Hordem, Rt Hon Sir PeterNicholson, Emma (Devon West)
Howard, Rt Hon MichaelNorris, Steve
Howarth, Alan (Strat'rd-on-A)Onslow, Rt Hon Sir Cranley
Howell, Rt Hon David (G'dford)Oppenheim, Phillip
Howell, Sir Ralph (N Norfolk)Ottaway, Richard
Hughes, Robert G (Harrow W)Page, Richard
Hunt, Rt Hon David (Wirral W)Paice, James
Hunt, Sir John (Ravensbourne)Patrick, Sir Irvine
Hunter, AndrewPatten, Rt Hon John
Hurd, Rt Hon DouglasPattie, Rt Hon Sir Geoffrey
Jack, MichaelPawsey, James
Jackson, Robert (Wantage)Peacock, Mrs Elizabeth
Jenkin, BernardPickles, Eric
Jessel, TobyPorter, Barry (Wirral S)
Johnson Smith, Sir GeoffreyPorter, David (Waveney)
Jones, Gwilym (Cardiff N)Portillo, Rt Hon Michael
Jones, Robert B (W Hertfdshr)Powell, William (Corby)
Jopling, Rt Hon MichaelRathbone, Tim
Kellett-Bowman, Dame ElaineRedwood, Rt Hon John
Key, RobertRenton, Rt Hon Tim
Kilfedder, Sir JamesRichards, Rod
King, Rt Hon TomRiddick, Graham
Kirkhope, TimothyRifkind, Rt Hon Malcolm
Knapman, RogerRobathan, Andrew
Knight, Mrs Angela (Erewash)Roberts, Rt Hon Sir Wyn
Knight, Greg (Derby N)Robertson, Raymond (Ab'd'n S)
Knight, Dame Jill (Bir'm E'st'n)Robinson, Mark (Somerton)
Knox, Sir DavidRoe, Mrs Marion (Broxbourne)
Kynoch, George (Kincardine)Rowe, Andrew (Mid Kent)
Lait, Mrs JacquiRumbold, Rt Hon Dame Angela
Lamont, Rt Hon NormanRyder, Rt Hon Richard
Lang, Rt Hon IanSackville, Tom
Lawrence, Sir IvanSainsbury, Rt Hon Sir Timothy
Legg, BarryScott, Rt Hon Sir Nicholas
Leigh, EdwardShaw, David (Dover)
Lennox-Boyd, Sir MarkShaw, Sir Giles (Pudsey)
Lester, Jim (Broxtowe)Shephard, Rt Hon Gillian
Lidington, DavidShepherd, Colin (Hereford)
Lilley, Rt Hon PeterShepherd, Richard (Aldridge)
Lloyd, Rt Hon Sir Peter (Fareham)Shersby, Michael
Lord, MichaelSims, Roger
Luff, PeterSkeet, Sir Trevor
Lyell, Rt Hon Sir NicholasSmith, Sir Dudley (Warwick)
MacGregor, Rt Hon JohnSmith, Tim (Beaconsfield)
MacKay, AndrewSoames, Nicholas
Maclean, DavidSpeed, Sir Keith
McLoughlin, PatrickSpencer, Sir Derek
McNair-Wilson, Sir PatrickSpicer, Sir James (W Dorset)
Madel, Sir DavidSpicer, Michael (S Worcs)
Maitland, Lady OlgaSpink Dr Robert
Major, Rt Hon JohnSpring, Richard
Malone, GeraldSproat, Iain
Mans, KeithSquire, Robin (Hornchurch)
Marland, PaulStanley, Rt Hon Sir John
Steen, AnthonyWaldegrave, Rt Hon William
Stephen, MichaelWalden, George
Stern, MichaelWalker, Bill (N Tayside)
Stewart, AllanWaller, Gary
Streeter, GaryWard, John
Sumberg, DavidWardle, Charles (Bexhill)
Sweeney, WalterWaterson, Nigel
Sykes, JohnWatts, John
Tapsell, Sir PeterWells, Bowen
Taylor, Ian (Esher)Wheeler, Rt Hon Sir John
Taylor, John M (Solihull)Whitney, Ray
Taylor, Sir Teddy (Southend, E)Whittingdale, John
Temple-Morris, PeterWiddecombe, Ann
Thomason, RoyWiggin, Sir Jerry
Wilkinson, John
Thompson, Sir Donald (C'er V)Willetts, David
Thompson, Patrick (Norwich N)Wilshire, David
Thornton, Sir MalcolmWinterton, Mrs Ann (Congleton)
Thurnham, PeterWinterton, Nicholas (Macc'f'ld)
Townend, John (Bridlington)Wolfson, Mark
Townsend, Cyril D (Bexl'yh'th)Wood, Timothy
Tracey, RichardYeo, Tim
Tredinnick, DavidYoung, Rt Hon Sir George
Trend, Michael
Trotter, NevilleTellers for the Ayes:
Twinn, Dr IanMr. David Lightbown and
Vaughan, Sir GerardMr. Sydney Chapman.
Viggers, Peter
NOES
Abbott, Ms DianeCarlile, Alexander (Montgomery)
Adams, Mrs IreneChidgey, David
Ainger, NickChisholm, Malcolm
Ainsworth, Robert (Cov'try NE)Church, Judith
Allen, GrahamClapham, Michael
Alton, DavidClark, Dr David (South Shields)
Anderson, Donald (Swansea E)Clarke, Eric (Midlothian)
Anderson, Ms Janet (Ros'dale)Clarke, Tom (Monklands W)
Armstrong, HilaryClelland, David
Ashdown, Rt Hon PaddyClwyd, Mrs Ann
Ashton, JoeCoffey, Ann
Austin-Walker, JohnCohen, Harry
Banks, Tony (Newham NW)Connarty, Michael
Barnes, HarryCook, Frank (Stockton N)
Barron, KevinCook, Robin (Livingston)
Battle, JohnCorbett, Robin
Bayley, HughCorbyn, Jeremy
Beckett, Rt Hon MargaretCorston, Jean
Beggs, RoyCousins, Jim
Beith, Rt Hon A JCox, Tom
Bell, StuartCummings, John
Benn, Rt Hon TonyCunliffe, Lawrence
Bennett, Andrew FCunningham, Jim (Covy SE)
Benton, JoeCunningham, Rt Hon Dr John
Bermingham, GeraldDafis, Cynog
Berry, RogerDalyell, Tam
Betts, CliveDarling, Alistair
Blair, Rt Hon TonyDavidson, Ian
Blunkett, DavidDavies, Bryan (Oldham C'tral)
Boateng, PaulDavies, Rt Hon Denzil (Llanelli)
Boyes, RolandDavies, Ron (Caerphilly)
Bradley, KeithDavis, Terry (B'ham, H'dge H'I)
Bray, Dr JeremyDenham.John
Brown, Gordon (Dunfermline E)Dewar, Donald
Brown, N (N'c'tle upon Tyne E)Dixon, Don
Bruce, Malcolm (Gordon)Dobson, Frank
Burden, RichardDonohoe, Brian H
Byers, StephenDowd, Jim
Caborn, RichardDunnachie, Jimmy
Callaghan, JimDunwoody, Mrs Gwyneth
Campbell, Mrs Anne (C'bridge)Eagle, Ms Angela
Campbell, Menzies (Fife NE)Eastham, Ken
Campbell, Ronnie (Blyth V)Enright, Derek
Campbell-Savours, D NEtherington, Bill
Canavan, DennisEvans, John (St Helens N)
Cann, JamieEwing, Mrs Margaret
Fatchett, DerekLewis, Terry
Faulds, AndrewLiddell, Mrs Helen
Field, Frank (Birkenhead)Litherland, Robert
Fisher, MarkLivingstone, Ken
Flynn, PaulLloyd, Tony (Stretford)
Forsythe, Clifford (S Antrim)Llwyd, Elfyn
Foster, Rt Hon DerekLoyden, Eddie
Foster, Don (Bath)Lynne, Ms Liz
Foulkes, GeorgeMcAllion, John
Fraser, JohnMcAvoy, Thomas
Fyfe, MariaMcCartney, Ian
Galbraith, SamMcCrea, The Reverend William
Galloway, GeorgeMacdonald, Calum
Gapes, MikeMcFall, John
Garrett, JohnMcGrady, Eddie
George, BruceMcKelvey, William
Gerrard, NeilMackinlay, Andrew
Gilbert, Rt Hon Dr JohnMcLeish, Henry
Godman, Dr Norman AMaclennan, Robert
Godsiff, RogerMcNamara, Kevin
Golding, Mrs LlinMacShane, Denis
Gordon, MildredMcWilliam, John
Graham, ThomasMadden, Max
Grant, Bernie (Tottenham)Maddock, Diana
Griffiths, Nigel (Edinburgh S)Maginnis, Ken
Griffiths, Win (Bridgend)Mahon, Alice
Grocott, BruceMallon, Seamus
Gunnell, JohnMandelson, Peter
Hain, PeterMarek, Dr John
Hall, MikeMarshall, David (Shettleston)
Hanson, DavidMarshall, Jim (Leicester, S)
Hardy, PeterMartin, Michael J (Springburn)
Harman, Ms HarrietMartlew, Eric
Harvey, NickMaxton, John
Hattersley, Rt Hon RoyMeacher, Michael
Henderson, DougMeale, Alan
Hendron, Dr JoeMichael, Alun
Heppell, JohnMichie, Bill (Sheffield Heeley)
Hill, Keith (Streatham)Michie, Mrs Ray (Argyll & Bute)
Hinchliffe, DavidMilburn, Alan
Hodge, MargaretMiller, Andrew
Hoey, KateMitchell, Austin (Gt Grimsby)
Hogg, Norman (Cumbernauld)Molyneaux, Rt Hon James
Home Robertson, JohnMoonie, Dr Lewis
Hood, JimmyMorgan, Rhodri
Hoon, GeoffreyMorley, Elliot
Howarth, George (Knowsley North)Morris, Rt Hon Alfred (Wy'nshawe)
Howells, Dr. Kim (Pontypridd)Morris, Estelle (B'ham Yardley)
Hoyle, DougMorris, Rt Hon John (Aberavon)
Hughes, Kevin (Doncaster N)Mowlam, Marjorie
Hughes, Robert (Aberdeen N)Mudie, George
Hughes, Roy (Newport E)Mullin, Chris
Hughes, Simon (Southwark)Murphy, Paul
Hutton, JohnOakes, Rt Hon Gordon
Illsley, EricO'Brien, Mike (N W'kshire)
Ingram, AdamO'Brien, William (Normanton)
Jackson, Glenda (H'stead)O'Hara, Edward
Jackson, Helen (Shef'ld, H)Olner, Bill
Jamieson, DavidO'Neill, Martin
Janner, GrevilleOrme, Rt Hon Stanley
Johnston, Sir RussellPaisley, The Reverend Ian
Jones, Barry (Alyn and D'side)Parry, Robert
Jones, Ieuan Wyn (Ynys Mon)Patchett, Terry
Jones, Jon Owen (Cardiff C)Pearson, Ian
Jones, Lynne (B'ham S O)Pendry, Tom
Jones, Martyn (Clwyd, SW)Pickthall, Colin
Jones, Nigel (Cheltenham)Pike, Peter L
Jowell, TessaPope, Greg
Kaufman, Rt Hon GeraldPrentice, Bridget (Lew'm E)
Keen, AlanPrentice, Gordon (Pendle)
Kennedy, Charles (Ross,C&S)Prescott, Rt Hon John
Kennedy, Jane (Lpool Brdgn)Primarolo, Dawn
Khabra, Piara SPurchase, Ken
Kilfoyle, PeterQuin, Ms Joyce
Kirkwood, ArchyRadice, Giles
Lestor, Joan (Eccles)Randall, Stuart
Raynsford, NickStrang, Dr. Gavin
Redmond, MartinStraw, Jack
Reid, Dr JohnSutcliffe, Gerry
Rendel, DavidTaylor, Mrs Ann (Dewsbury)
Robertson, George (Hamilton)Taylor, Rt Hon John D (Strgfd)
Robinson, Geoffrey (Co'try NW)Taylor, Matthew (Truro)
Robinson, Peter (Belfast E)Thompson, Jack (Wansbeck)
Roche, Mrs BarbaraTimms, Stephen
Rogers, AllanTipping, Paddy
Rooker, JeffTouhig, Don
Rooney, TerryTrimble, David
Ross, Ernie (Dundee W)Turner, Dennis
Ross, William (E Londonderry)Tyler, Paul
Rowlands, TedVaz, Keith
Ruddock, JoanWalker, A Cecil (Belfast N)
Salmond.AlexWalker, Rt Hon Sir Harold
Sedgemore, BrianWallace, James
Sheerman, BarryWalley, Joan
Sheldon, Rt Hon RobertWardell, Gareth (Gower)
Shore, Rt Hon PeterWareing, Robert N
Short, ClareWatson, Mike
Welsh, Andrew
Simpson, AlanWicks, Malcolm
Skinner, DennisWigley, Dafydd
Smith, Andrew (Oxford E)Williams, Rt Hon Alan (SW'n W)
Smith, Chris (Isl'ton S & F'sbury)Wiliams, Alan W (Carmarthen)
Smith, Llew (Blaenau Gwent)Wilson, Brian
Smyth, The Reverend MartinWinnick, David
Snape, PeterWise, Audrey
Soley, CliveWorthington, Tony
Spearing, NigelWray, Jimmy
Spellar, JohnWright Dr Tony
Squire, Rachel (Dunfermline W)Young, David (Bolton SE)
Steel, Rt Hon Sir David
Steinberg, GerryTellers for the Noes:
Stevenson, GeorgeMr. Ray Powell and
Stott, RogerMr. Gordon McMaster.

Question accordingly agreed to.

MADAM SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House rejects the policy of Her Majesty's Opposition towards Europe, which would destroy United Kingdom jobs, erode the United Kingdom's competitiveness in world markets, place new bureaucratic burdens on business and industry, destroy the veto and diminish the role of Europe's nation states and their national parliaments.