European Affairs

– in the House of Commons at 12:30 pm on 15th June 2000.

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[Relevant documents: Seventeenth Report from the European Scrutiny Committee, on The 2000 Inter-Governmental Conference, HC23-xvii;

No. COM (00) 34, European Commission's Opinion on adapting the institutions to make a success of enlargement;

No. COM (00) 109, Additional Commission contribution to the Inter-Governmental Conference on institutional reform: reform of the Community Courts;

No. COM (00) 114, Supplementary contribution of the Commission to the Inter-Governmental Conference on institutional reform: qualified majority voting for single market aspects in the taxation and social security fields;

Developments in the European Union, July-December 1999 (Cm. 4762);

Minutes of Evidence taken before the Foreign Affairs Committee on 7th June, HC 68-ii; and

Eighth Report from the Defence Committee, on European Security and Defence, HC 264.]

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

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

I have had to limit Back-Bench speeches to 15 minutes.

Photo of Robin Cook Robin Cook Foreign Secretary 1:24 pm, 15th June 2000

Thank you, Madam Speaker.

When the Government took office, we gave a commitment that we would make Britain a leading player in Europe. In the three years since then, we have taken Britain off the sidelines of Europe and made it one of the leading players in the team.

The British Government no longer go to European Councils in the undignified position to which the previous Government were reduced—being the back-seat driver complaining about the direction in which those in charge were going, but never determining it. Britain is now in the driver's seat on the big issues before the European Council. [Interruption.] Hon. Members simply do not want to confront the reality of Europe. At Helsinki, we were in the driving seat on enlargement. We were in the driving seat, at Lisbon, on economic reform. We will again be in the driving seat, at Feira, on European security.

European security is a British initiative. The British Prime Minister launched it at the Pörtschach summit, and we took it forward in alliance with France and with Germany. Two years later, we can look back with satisfaction on how well that initiative has prospered and at the consensus within Europe that we have built around what was a British idea.

The European Union has helped to make possible half a century of unprecedented peace between its members—(Interruption.] The right hon. Member for Bromley and Chislehurst (Mr. Forth) sighs. Most of the rest of Europe is grateful for half a century of unprecedented peace.

Integration between our economies has made unthinkable war between our countries.

Photo of Robin Cook Robin Cook Foreign Secretary

I shall in a second.

A common commitment to democracy and to the rule of law has promoted stability and placed a barrier in the way of extremism.

Photo of Desmond Swayne Desmond Swayne Conservative, New Forest West

Is it not the reality that the Government have conjured up the security agenda because of their lack of progress on leadership on economic matters in Europe, and is not that agenda itself very damaging to NATO—which is precisely the guarantor of the peace in Europe that he has described?

Photo of Robin Cook Robin Cook Foreign Secretary

There is no conflict between Europe and NATO. Indeed, at Feira, we shall be approving the agreement with NATO.

Photo of Robin Cook Robin Cook Foreign Secretary

If the hon. Gentleman does not even know where he can find Feira in Europe, I am not sure how he hopes to shape the debate at the European Council at Feira.

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

I thought that pharaohs were in Egypt.

Photo of Robin Cook Robin Cook Foreign Secretary

We know that Conservative Members seem to think that Norway is a member of the European Union, but it is a new one that they think that Egypt is a member.

At Feira, we shall be agreeing to detailed arrangements for co-operation between Europe and NATO. Particularly, we shall approve the basis for participation in European crisis management of the six members of NATO who are European countries but not European Union members. They will have the right to be consulted before the European Union initiates any crisis operation. They will have the right to participate in it, and they will have the same rights in its management as any other participants. [Interruption.]

The right hon. Member for Horsham (Mr. Maude) seems to be unconvinced about whether that is satisfactory. I met all those six countries, at Florence, at the NATO meeting, and they recognise that it is an excellent outcome for them. They also recognise that they would not have achieved that outcome if it had not been for the leading role that Britain played in the security mission.

I know that Conservative Members fret that European security and defence policy might result in conflict with NATO, and the hon. Member for New Forest, West (Mr. Swayne) has just helpfully pointed us to that anxiety. Conservative Members have done their very best to create that conflict with NATO. Their defence spokesman, the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), toured Washington trying to stir up conflict with NATO. That has, however, always been a misplaced concern. Territorial defence will remain a job only for NATO, and the European Union will launch an intervention only when NATO as a whole is not engaged.

Now that the European Union and NATO have reached a partnership on that, Opposition Members can relax. They can perhaps even—although I recognise that this may be a hope too far—welcome the results of our efforts to achieve stronger European security.

Last Thursday, I saw that the right hon. Member for Horsham claimed that European security and defence policy was inspired—I think that I have his words right—by "a chilling anti-Americanism." [HON. MEMBERS: "Hear, hear."] I see that he carries some of his hon. Friends with him.

Unfortunately for the right hon. Gentleman, in the same week, in the same country, President Clinton said: it is a very good thing. There is no contradiction between a strong Europe and a strong transatlantic partnership. I put it to Conservative Members that there is really no need for them to be more pro-American than the President of America.

Photo of Bill Cash Bill Cash Conservative, Stone

Will the right hon. Gentleman give way?

Photo of Robin Cook Robin Cook Foreign Secretary

Yes—the hon. Gentleman may well wish to try to be so.

Photo of Bill Cash Bill Cash Conservative, Stone

Will the right hon. Gentleman acknowledge that, only yesterday, in conjunction with the European Scrutiny Committee, the Defence Committee presented a report in which it dealt with the matter of the relationship between the North American and European wings of the North Atlantic alliance, saying: This is not a new problem, but the new arrangements will create their own new set of tensions. There must be absolute transparency between the EU military element and NATO at all times and in all circumstances. There must be no secrets between them, but each must be able absolutely to rely on the other …? Will the right hon. Gentleman give us that assurance?

Photo of Robin Cook Robin Cook Foreign Secretary

I am happy to assure the hon. Gentleman and the House that I absolutely share the call for full transparency between the European security policy and NATO. I am sure that the hon. Gentleman will be relieved to hear that that is why we will agree at Feira to four separate working groups with NATO structures to ensure that full transparency and co-operation.

Photo of Mr Donald Anderson Mr Donald Anderson Chair, Foreign Affairs Committee, Chair, Foreign Affairs Committee

Is not it a little patronising of the Opposition, who are trying to be more papist than the Pope, to purport to know the interests of Turkey and Norway better than the Governments of those countries? The Opposition also purport to know the interests of the United States better than the US Government. That is part of a pattern of flitting from frightener to frightener in the European debate generally.

Photo of Robin Cook Robin Cook Foreign Secretary

My hon. Friend makes his point, and I suspect that we will find during the debate that the fears have moved on, now that those particular fears are not shared by any of the other members of NATO.

Photo of Robin Cook Robin Cook Foreign Secretary

I have been generous in giving way so far. I am sure that the hon. Gentleman will try to intervene later and I shall give him priority if he allows me to continue now.

Our higher standing in Europe has not only enabled us to take forward proposals that are in Britain's interests, but it has enabled us to see off proposals that could be damaging to Britain's interests. Last year, we were under pressure to agree to a withholding tax across Europe—one of the other fears that the Opposition have brought up. This year, we have won the argument. There is not going to be a European withholding tax. Britain has secured majority support for our view that the better way forward is through increased transparency and exchange of information. Now it is the few member states who still resist greater transparency who are under pressure to agree to our proposals. My right hon. Friend the Chancellor deserves credit for having turned round the argument and ensured continuing success for Britain's financial industries.

Photo of John Redwood John Redwood Conservative, Wokingham

Is the Foreign Secretary arguing that he has decided to veto draft clause 93 in the treaty of Nice, which would allow the withholding tax—and many other tax proposals—through under a qualified majority vote which we had lost? If he is saying that, how can he say that the Government are at the heart of Europe and in full agreement with our partners? If he will not veto it, will not we end up with the withholding tax even though we do not like it?

Photo of Robin Cook Robin Cook Foreign Secretary

I have repeatedly told the House—and since the right hon. Gentleman asks, I shall repeat again—that unanimity on taxation is one of our bottom lines for the IGC. We share that bottom line with several other countries. At present, there is unanimity about the introduction of qualified majority voting at the IGC on only three or four issues. Opposition Members should try to lose the fear they have that the IGC will produce a raft of agreement to QMV. I can tell the right hon. Gentleman—and he can take it as whatever relief and assurance he wishes—that we cannot hope to match his record in Government, when they approved 42 different articles for QMV.

The European Council will also confirm Greece as a member of the eurozone.

Photo of Robin Cook Robin Cook Foreign Secretary

I assure the hon. Gentleman that Greece has met the conditions for membership of the eurozone and will be confirmed as a member. That will reduce to three the member states outside the euro. Denmark will hold a referendum in September on whether it should join and Sweden may take the same decision in 2002. The enlarging membership of the eurozone is the background against which we should judge the designation of last Saturday by the Opposition as save the pound day. If the Opposition really want people to have a choice on the euro, they would join Labour in offering the public a real referendum, not a postcard on which to give their names and addresses to the Tory Party.

In truth, the Opposition are not committing themselves to saving the pound for all time. It would have been much more honest if they had declared last Saturday "Save the Pound for One Parliament" day.

Even the Opposition's leader-in-waiting, the shadow Chancellor, no longer describes himself as a never man when it comes to replacing the pound. The Opposition owe it to the public to come clean about where they stand on the issue of principle. At the moment, they are pretending that they are against the euro in principle, while reserving the right to change that principle after four years.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

Will my right hon. Friend make it totally clear that any decision to enter the euro would be carefully spelled out to the British people in a referendum? Will he then make clear the connection between common currency, common taxation and the right of decision making in a parliamentary democracy?

Photo of Robin Cook Robin Cook Foreign Secretary

I can assure my hon. Friend that there will be a clear commitment, as there has been for the past three years, that the British public will decide the matter in a referendum. Indeed, Labour is the only one of the two major parties that is giving that commitment. In that referendum my hon. Friend will be free to express all the views and arguments in which she believes. With respect, those of us who take a contrary view will be free to express those views as well.

Photo of Robin Cook Robin Cook Foreign Secretary

No, I must make progress.

Plainly, Britain can join the euro only if the economic conditions are right, but we will be ready for that event only if we prepare now and if, when the time comes, we decide on the basis of the economic tests. As my right hon. Friend the Chancellor said in his statement to the House: The potential benefits for Britain of a successful single currency are obvious in terms of trade, transparency of costs and currency stability.—[Official Report, 27 October 1997; Vol. 299. c. 583.] The benefits are obvious because the eurozone is the market for the greater part of our exports, and our access to Europe is by far the largest incentive for inward investment to Britain. If the hon. Member for Ludlow (Mr. Gill) wishes to challenge the laws of arithmetic, I am happy to let him intervene.

Photo of Mr Christopher Gill Mr Christopher Gill Conservative, Ludlow

Is the Foreign Secretary aware that our trade with Europe in fact represents less that 12 per cent. of gross domestic product? The single currency might arguably benefit that 12 per cent., but there would be absolutely no benefit to the other 88 per cent. of our GDP, which will have to suffer the inordinate cost of conversion.

Photo of Robin Cook Robin Cook Foreign Secretary

I am astonished that the hon. Gentleman can found his argument on the basis that only 12 per cent. of GDP would benefit. That 12 per cent. represents the jobs of more than 3 million people in Britain, and it accounts for 58 per cent. of our total exports.

Photo of Robin Cook Robin Cook Foreign Secretary

It is not rubbish: it is the true analysis of our exports of goods and services. If the Opposition can wave aside as an inadequate consideration 58 per cent. of our exports of goods and services, the public will not listen to them when they come to make their choice.

Photo of Robin Cook Robin Cook Foreign Secretary

I will give way to the hon. Gentleman, but the figure that I gave is perfectly correct.

Photo of Mr Richard Body Mr Richard Body Conservative, Boston and Skegness

Does the right hon. Gentleman realise that the percentage export figure that he gave includes exports going to Rotterdam that are immediately re-exported to other parts of the world?

Photo of Robin Cook Robin Cook Foreign Secretary

The hon. Gentleman is correct that Rotterdam is in Europe, and that our exports to Rotterdam count as exports to Europe. However, many of those re-exports go to countries of far less significance than the rest of the European Union. It is a matter of record that we export more to Denmark than we do to the whole of China.

Opposition Members want to talk about the United States, and I am aware that many of them would be happier if Britain were to join the North American Free Trade Agreement and leave the European Union, but they should reflect on the fact that we export to the United States only one third of the volume that we export to the other members of the European Union.

Our bottom line will be whether membership of the euro will assist in meeting our goal of full employment—a goal that we are on target to achieve in a way that the previous Government never did, through the creation of a million new jobs since this Government took office.

I have just returned from Damascus. I have come back to discover that the shadow Chancellor must also have been on the road to Damascus. He has experienced a dramatic conversion. He now tells us that he is committed to full employment. It is a pity that he did not discover that commitment when he was Secretary of State for Employment and that he did not do something about it then instead of busily plotting the demise of the Department for Employment.

Photo of Robin Cook Robin Cook Foreign Secretary

I shall tell the hon. Lady. If the Conservative party is serious about putting jobs first, it will need to drop its hostility to the European Union, membership of which is vital to the security of millions of British jobs.

Photo of Robin Cook Robin Cook Foreign Secretary

No, I will continue my speech. I am sure that the hon. Gentleman will have the opportunity to entertain us with his own speech.

My hon. Friend the Member for Swansea, East (Mr. Anderson) pointed to the frighteners that are held out to us. Of course, in the past three weeks the Opposition have discovered a new frightener—the declaration of fundamental rights, about which we shall hear a report at the European Council. The report will be given by Roman Herzog, the chair of the convention preparing the charter. His comments last week in Die Welt provide a refreshing dose of realism to the excitable comments of some Opposition Members. He said that the charter would create no new powers for the EU over its member states, that it would apply only to EU institutions without imposing new rights on member states and that the charter was not the kernel of a future European constitution.

Nevertheless, last week the right hon. Member for Horsham denounced the charter of fundamental rights as "steel handcuffs". It is a curious mindset that equates human rights with handcuffs.

There is absolutely no reason why Britain, of all nations, should run scared of discussion on fundamental rights. Britain is, after all, one of the cradles of European values of freedom and liberty.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

Will the Secretary of State tell the House what human rights are being conferred by the declaration—which everyone else refers to as the charter—which have not already been conferred on British people by this Parliament?

Photo of Robin Cook Robin Cook Foreign Secretary

The position of the Government is exactly in line with the rights conferred by this Parliament because what we argued for in the convention and in the Council and what we will argue for in Portugal next week is that the declaration should consolidate and bring together in one place those existing human rights. I do not think that Britain should in any way be afraid of that. After all, Britain took the lead in drafting the European convention on human rights and the universal declaration of human rights. We should not be afraid of seeing those represented in a European Union declaration.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

Will the Secretary of State now answer the question? What rights are being conferred by the charter which have not already been conferred on the British people by the British Parliament?

Photo of Robin Cook Robin Cook Foreign Secretary

I have already answered the right hon. Gentleman. We do not intend there to be any additional rights as a result of this process. We have said from the start that it is a consolidation of existing human rights.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

If this charter confers no additional rights beyond what has already been conferred by this Parliament, what is the point of it?

Photo of Robin Cook Robin Cook Foreign Secretary

At present, the existing European institutions are not signatories to the European convention on human rights. The Commission is not bound by any code of human rights. Technically, although the Council brings together member states, it is not a signatory or a party to the European convention on human rights. I see nothing to be afraid of in, and something to be gained by, a clear declaration that the European institutions are bound by those declarations. In other circumstances, I would expect the Conservatives to complain that the European Commission has no limitations in respect of an obligation to respect human rights.

Photo of Robin Cook Robin Cook Foreign Secretary

It cannot be the same as the three points that the hon. Gentleman has tried to intervene on already, but I will give way.

Photo of John Bercow John Bercow Shadow Minister (Education)

I am grateful to the right hon. Gentleman for his uncharacteristic generosity. How does he square his complacency on the charter with the verdict of the House of Lords European Union Committee report in May this year, at paragraph 123, that the charter could indeed be enshrined in the treaties and made legally binding on member states; and how does he square it with the fact that the Minister of State for Europe has not ruled out such a prospect?

Photo of Robin Cook Robin Cook Foreign Secretary

My hon. Friend the Minister of State has ruled it out, my right hon. Friend the Prime Minister has ruled it out and if the hon. Gentleman is in any doubt, I am happy to rule it out. Europe already has in the European convention on human rights a legally binding code for member states. We want to make sure that it remains the sole legal guarantee. A separate legal text could provide an undermining, not a strengthening, of that system of human rights. That view is shared by a number of other member states—Britain is not alone on this issue. That is why, at the European Council, we will together be making it clear that there is no consensus for the charter becoming a legally binding text. I hope that the hon. Gentleman is sufficiently relieved to be able to carry himself in silence throughout the rest of this speech.

At Feira, we will also take stock of progress on enlargement. The Portuguese presidency has maintained steady progress on enlargement. Negotiations have been launched with six more candidates, and the original six candidates are advanced in the negotiation on almost all chapters of the European legislation.

For central and eastern Europe, enlargement will provide assurance of political security and economic opportunity. For the European Union, it will provide a membership of 500 million people—a market twice the size of the United States and four times the size of Japan. It will give Europe, and Britain, extra leverage in international trade negotiations.

Photo of Robin Cook Robin Cook Foreign Secretary

No, I will not.

It is a rich prize, but if we are to grasp it, we must reform the European Union to make it ready for enlargement. That is why it is important that at the forthcoming European Council we maintain the momentum of the intergovernmental conference on enlargement and keep it on schedule for completion by the end of the year.

I see that the Conservative party is now committed to a referendum on the treaty that will result from the enlargement IGC. That certainly appears to unite the forces opposite. However, it is real cheek for Conservative Members to pose now as the champions of referendums. In their long years in office, they never once had a referendum on anything. They took Britain into Europe without even a by-your-leave of the public.

The right hon. Member for Huntingdon (Mr. Major) signed the Maastricht treaty on behalf of Britain. That was a dramatic treaty—his signature launched sweeping changes on Europe. He built two whole new pillars of the European Union. He laid the foundation for the single currency. He signed away 30 further articles to be decided by majority voting. Curiously, while the right hon. Gentleman was agreeing to those bold changes, it never occurred to him to put them to the British people in a referendum. Indeed, the current Leader of the Opposition actually voted in the House to prevent a referendum on the Maastricht treaty.

With a record like that, it seems curious that the right hon. Member for Horsham (Mr. Maude) should now have done a cartwheel. Of course, we know why—it was to get the millions of Mr. Paul Sykes out of the Referendum party and into the Conservative party. [Interruption.] The hon. Member for Chesham and Amersham (Mrs. Gillan) says, "Cheap". I rather suspect that it is anything but cheap when it comes to Mr. Sykes and his millions.

Paul Sykes makes no bones about where he stands on Europe. He does not just want a referendum on the next treaty—he wants a referendum to get Britain out of Europe. It is a measure of how far the Conservative party has lurched to the right that an extremist like Mr. Sykes can feel at home in it. He even claimed to the "Today" programme that the vast majority of Conservative Members agree with him and judging by the noise that they have been making during this speech, he is absolutely right.

As I understand it, that is not the position of the right hon. Gentleman. If he does reject the view that we should be edging out of Europe, I hope that he will take the opportunity this afternoon to put it right. I am sure that he would not want to receive Mr. Sykes's millions under false pretences. We will listen with attention for a clear passage in his speech that tells us that Mr. Sykes has misunderstood the position of the Conservative party, and tells Mr. Sykes to keep his millions out of the Tory party bank account. I do hope that he will not disappoint us when he comes to speak.

Photo of Robin Cook Robin Cook Foreign Secretary

The hon. Gentleman has already expressed a view, and I am happy to let him do it again.

Photo of Ian Taylor Ian Taylor Conservative, Esher and Walton

I am grateful to the Foreign Secretary for giving way. He is quite right—we want nothing to do with Paul Sykes and all the nonsense about a referendum and our position in Europe because that is not the position of the Conservative party.

On an earlier point, is the right hon. Gentleman saying that at Feira a timetable will be laid down as to when enlargement will be achieved? There have been worrying signs that the European Commission and the member states have been backing off from providing such a timetable.

Photo of Robin Cook Robin Cook Foreign Secretary

I can assure the hon. Gentleman that at Feira we will be approving a timetable for the IGC.

Yesterday we received a report that the Portuguese presidency intends to put to the European Council on the progress in the IGC. That report will call on us to agree a timetable to complete the IGC by the end of this year.

Photo of Robin Cook Robin Cook Foreign Secretary

The matter is of course about enlargement; it is the part that the EU can play in preparing for enlargement.

We shall also take forward negotiations with the applicant countries. The speed with which that can be done must depend on the speed of those countries in reforming themselves.

Photo of Ben Bradshaw Ben Bradshaw Labour, Exeter

Will my right hon. Friend confirm that the policy of vetoing any treaty change would stop enlargement? Does he know of any mainstream political party in the whole EU—including the neo-fascists in Austria—that has such an extreme policy on Europe as does the British Conservative party?

Photo of Robin Cook Robin Cook Foreign Secretary

I agree with my hon. Friend that it is important to take forward the IGC so as to secure enlargement; it is also important because the reforms that we want in the IGC are in Britain's interest. Our key objective is to achieve a re-weighting of votes in the Council of Ministers so as to give Britain a bigger vote. We want—

Photo of Mr Michael Trend Mr Michael Trend Conservative, Windsor

Will the right hon. Gentleman give way?

Photo of Robin Cook Robin Cook Foreign Secretary

No, I shall come back to enlargement, if the hon. Gentleman wants to intervene.

We want to keep a fixed ceiling on the European Parliament so that it does not balloon with enlargement. We want to control the size of the Commission so that it does not become a mass meeting rather than a functioning college. We shall agree to majority voting only where it would remove obstacles to reforms that Britain wants.

So there will not be anything in the treaty of Nice that represents a threat to Britain or to the British way of life. It is not even a threat to the Tory party, unless its members feel that their prejudices are challenged by the prospect of a reformed and more effective European Union.

Much in the treaty of Nice will be of immense value to the candidate countries. They know that enlargement will be agreed only if those reforms are agreed first. If the right hon. Member for Horsham does not agree with that, he should listen to the views of the candidate countries, if he will not listen to mine. They all want the treaty completed on time.

Photo of Bill Cash Bill Cash Conservative, Stone

The right hon. Gentleman is getting very close—I use the word with respect—to misunderstanding the position, or misleading the House. In recent months, I have visited some of the candidate countries; they are deeply concerned about the blackmail to which they are being subjected by having to accept the acquis communautaire without reservations in order to acquire the benefits—as they see them—of getting into the European Union. They are deeply concerned about the defence implications.

Photo of Robin Cook Robin Cook Foreign Secretary

I have met the Governments of those—

Photo of Robin Cook Robin Cook Foreign Secretary

I shall inquire gently of my Foreign Minister colleagues what they made of the hon. Gentleman. I assure the House that every Foreign Minister of the applicant countries—especially those in NATO—is keen to play a part in the European security policy. All six were at Florence and they all agreed to our proposals there.

Candidate countries understand that, if we do not reach agreement at Nice on the IGC, enlargement will be deferred. It will not give them an opportunity to pick and choose, as the hon. Gentleman wants; it will mean that they will not have the opportunity of membership.

The right hon. Member for Horsham has promised "to campaign strongly" against the treaty of Nice. Nothing could do more to lose Britain friends from the Baltic to the Balkans. The right hon. Gentleman is in danger of making his party as unpopular among the dozen applicant members as it already is among the existing members.

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

The Foreign Secretary wrote that speech before the latest opinion polls.

Photo of Robin Cook Robin Cook Foreign Secretary

It is true that I have made that observation before. It is even more true on this occasion, after the speech made recently by the right hon. Member for Horsham. All those applicant countries want to be full members of the EU; they want to be accepted as equal members—not second-class members of the type suggested by the hon. Member for Stone (Mr. Cash). That is why there was unease among them at the recent speech made by Joschka Fischer with its implication of a vanguard of member states providing an inner core of the EU.

I realise that some Opposition Members pounced on Mr. Fischer's speech as evidence that their fantasies are realities, and that a federal superstate is just around the corner. What I thought was revealing about the aftermath to Mr. Fischer's speech was the degree of resistance to it across Europe. I would not go as far as the Foreign Minister of Finland who described it as Leninist, but I share the fears expressed by the Swedish Foreign Minister about any federal structure that has the effect of dividing the EU into a core of nations and other countries with lesser status. Even in France, the reaction has been, to put it politely, reserved. Hubert Vedrine set out last Friday a series of searching and intelligent questions about the problems of attempting to define an inner and an outer core and the difficulties of a federation co-existing with strong nation states.

The reality now is that the broader consensus does not seek a federal superstate but a union of free and democratic member states. As Chancellor Schröder has said: the nation state will be the centre of people's hopes and needs. Or as President Chirac has put it: Europe's future is not a United States of Europe but a United Europe of States. Last week, the right hon. Member for Horsham went to Germany to respond to Joschka Fischer's vision of a federal Europe with the distinctive Conservative vision for a disunited Europe—one that resembles a pick-and-mix counter. It is a curiously lop-sided vision that assumes that we can take the benefits of membership without accepting the obligations of membership.

Photo of Robin Cook Robin Cook Foreign Secretary

The problem, I say to my hon. Friend, is that that approach might be shared by others. Conservatives assume that other member states will continue to observe their obligations to us while we stop observing our obligations to them.

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

I tried to intervene earlier and the Foreign Secretary has talked about enlargement, which most of us would welcome. He also said that there must be a restructuring of the European Union, and many of us would welcome that, too. However, a report from the Institute of Directors says that, taking into account all the benefits of the European Union, our membership costs the United Kingdom between $75 million and $100 each year.

The Foreign Secretary clearly has not read the report, but I advise him to do so. However, will his restructuring of the European Union and renegotiation result in a reduction in the amount of money that we pay net into the EU, taking into account all the benefits that we receive? That money could otherwise go into pensions, hospitals and schools.

Photo of Robin Cook Robin Cook Foreign Secretary

I am alarmed at the degree of agreement that the hon. Gentleman has found in my speech. I shall try to ensure that that does not happen again before I conclude. I welcome the fact that he supports enlargement. However, if that is the case, he cannot campaign strongly against the intergovernmental conference that will make enlargement possible.

On the net payment, the outcome of the Berlin settlement should reduce the cost to the common agricultural policy, will reduce the cost to the structural funds and will reduce the extent to which Britain's contribution is in any way different from the contribution of many of the other larger states. We continue, as a result of Berlin, to preserve the rebate to make sure that we get back 70 per cent. of the funds that we pay in net.

In his speech last week, the right hon. Member for Horsham said that the Conservative party would reclaim the supremacy of national Parliaments over the European Court of Justice. That is flatly contrary to Britain's interests as a trading nation. As a trading nation, it is in our interests that the single market has rules that are enforced by an authoritative European Court of Justice. There are far more cases outstanding against most other member states than against Britain. France has more than two and a half times as many cases outstanding; Italy has twice as many; and Germany, Belgium, and Greece each has half as many again as Britain. It is in our interests to make the European Court of Justice stronger, not weaker.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

The Foreign Secretary must know that he is deliberately misrepresenting my proposal. I propose that we should give Parliament supremacy over EU law where EU law is imposed by virtue of an extensive interpretation of the treaty by the European Court of Justice. That would give us precisely the same protection that the German and French have under their written constitutions. Is he opposed to that?

Photo of Robin Cook Robin Cook Foreign Secretary

The right hon. Gentleman advances a proposition that is attractive so long as he can interpret the basis on which national supremacy is asserted. Other countries will take their own view of when the national parliament should be supreme. For example, we do not want France to decide that its national parliament will be supreme on food safety when we win in the European Court of Justice against its ban on British beef. We want to have a European Court of Justice that cannot be challenged by the unilateral decision of a national parliament, thereby undermining gains for our exporters and our economy.

In the spirit of trying to find as much common ground as possible, I accept that the right hon. Gentleman made a thoughtful speech in that he wrestled with the central problem. He wanted to sound positive about Europe, but he could not name one thing that Europe has done over the past dozen years of which the Conservative party approves.

Photo of Robin Cook Robin Cook Foreign Secretary

I have that echoed. It underlines the right hon. Gentleman's dilemma that a Conservative Back Bencher says that I am "quite right" on that point.

Far from sounding positive about Europe, most Conservative Back Benchers perfectly fit the description of the previous Prime Minister, who said last week that people think that the European Union is a group of wicked foreigners out to do us down. They cannot give a lead in Europe because the only place to which most Conservative Members want to be led is the exit door.

By contrast, we have been able to get reform in Europe. That is because our partners believe that we want reforms that will make Europe work better. That is why we made the running on economic reform at Lisbon. That is why we secured a programme to put Europe in front in the communications revolution. We are setting targets for the reform of the Commission. We have been so successful in setting the benchmarks for reform of the Commission that in Brussels there are complaints that it is being compelled to accept an Anglo-Saxon model.

We can go to Portugal, knowing that issues such as European security are top of the agenda because Britain put them there. We can be confident that we can get a good deal out of the intergovernmental conference because we have allies and partners. That is good for Britain, for the 3 million households whose income depends on our exports to Europe and for Britain's wider standing throughout the world. It is a good demonstration that the British people are best served by Britain being not semi-detached from Europe but a full and wholehearted member of a successful European Union.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs) 2:02 pm, 15th June 2000

The debate is both timely and somewhat overdue. It is timely because of the upcoming summit and overdue because it is a pity that there has not been a debate specifically on the intergovernmental conference White Paper, which was published as long ago as February. That is regrettable, especially during the critical time when the IGC agenda is firming up. There is a huge opportunity and a necessity for Britain to lead the debate on that conference, and to fill what The Economist recently described as the "void in Europe".

The Government are sadly failing that test of leadership. Apparently, they are trailing timidly and sadly behind the Franco-German agenda for further and deeper political union. Where is the British vision for the sort of European Union that genuinely embraces the entire family of European nations? That is a European Union that can genuinely become flexible in how it develops. It is good that we are debating these issues because the public have a hunger for exploring them.

On the great divide in the Cabinet about whether to make the case publicly and wholeheartedly for scrapping the pound, we side with the Foreign Secretary and the Secretaries of State for Northern Ireland and for Trade and Industry in their desire to make the case publicly so that there can be a proper debate. We profoundly disagree with them on the substance, but it is an entirely honourable position for politicians to want to scrap the pound and join the euro at the earliest opportunity. There is certainly a case to be made for doing that. It is not a case that I accept, but the argument should take place openly and honestly. It is dishonourable and dishonest to pretend that there is no debate.

Our advice to the Foreign Secretary is that he should stoutly resist the Chancellor of the Exchequer's bullying in trying to suppress the issue and turning Britain into a do-not-mention-the-euro zone. We think that he should be encouraging an increasingly weak and vacillating Prime Minister to make the case in which Labour so passionately believes. The public expect and deserve to be treated as intelligent adults who can make up their minds on the issues and arguments.

I commend the Foreign Secretary for addressing some of those matters today. He spoke about the issues surrounding the euro and scrapping the pound, and I congratulate him on doing so. We disagree, but that is fine—airing disagreements is what Parliament is for. I only wish that we could see the Chancellor of the Exchequer at the Dispatch Box, ready to debate the issues in the forthright and open way demonstrated by the Foreign Secretary today. People expect to be treated seriously. As the right hon. Member for Birkenhead (Mr. Field) said recently: We should never underestimate the intelligence of the electorate. They don't need pagers to know what to think. The public deserve a debate—they should not be pandered to with an insulting pap of spin, evasion, half-truths and simple lies.

The Foreign Secretary spoke about the Feira summit, to be held early next week. I am sure he recognises the degree of public cynicism about such events. In March, Heads of Government, the Foreign Secretary, and several plane-loads of their spin doctors and flunkies proceeded to Lisbon, to tell the world how Europe had changed. Lisbon was to be Europe's break point—the moment the old-fashioned and overweight continental model was unceremoniously traded in, swapped for a go-getting, can-do approach that would prize enterprise, attract investment and signal a welcome change of heart. The spin was that there would be a sea change. The Prime Minister asserted that Europe had shifted to a new direction—away from heavy-handed intervention and regulation, towards a new approach based on enterprise, innovation and competition.—[Official Report, 27 March 2000; Vol. 347, c. 21.] That turned out to be nothing more than a tidal wave of waffle.

The Government talk about the big picture—the need to make both Britain and Europe competitive and to meet the challenge of electronic commerce; but everything they agree to runs counter to such aims. Now, even the Prime Minister admits that the working time directive, which the Government so enthusiastically implemented, was over the top, and he may now regret having taken advantage of the parental leave directive. Part-time workers are the most flexible section of our work force, but the directives to regulate such workers might make them less flexible in future.

We are conscious that all the directives, in theory, sound like universal motherhood; but in practice, they bring headaches to thousands of small firms throughout Britain. We are told that next week's summit will result in a charter for small firms. Unless that charter is essentially about rolling back some of the legislation that has been heaped on to small businesses, those who run the businesses will treat it with derision and contempt, as empty words and no action.

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

My right hon. Friend will recall that the Foreign Secretary said that the Government were in the driving seat in Europe. Is he aware that one of the Labour Government's first actions was to give way in respect of directions on building regulations, which resulted in not a small firm, but a large one—Armitage Shanks—having to be sold. [Interruption.] The Minister for Europe laughs—it is amazing that a Minister can laugh at the loss of 700 jobs. Those jobs were lost as a direct consequence of the Government's first caving in to European directives, yet they have continued to do so ever since.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

My hon. Friend provides a vivid example of how giving in on such matters damages Britain's economy.

I challenge the Foreign Secretary to answer the following question: where are the changes—the actual changes, as opposed to changes in language and words—that emerged from the Lisbon summit? Where is the can-do, enterprise Europe that we were promised? Can he list three measures that have made the running of a small business simpler and eased the burdens on real entrepreneurs? That is what the language of Lisbon was all about, but where is the delivery? What has been done?

Does the Foreign Secretary believe that the directives on sex discrimination and racial discrimination, which reverse the burden of proof and make the employer entirely responsible, contribute toward the can-do Europe that he and the Prime Minister talked about? We ask that because the Minister of State for Europe made it clear before those directives were agreed that the Government would not accept them. Presumably, he was concerned that the reversal of the burden of proof would mean an open season for all sorts of pressure groups to take action against law-abiding businesses. However, less than a fortnight later, the Government had signed up to the directive.

A web of reassuring verbiage is spun in Britain, but there is abject surrender when Ministers go to Brussels to negotiate directives. The Government have a veto—for the time being, at any rate. If they did not approve of the directive, as the Minister for Europe was forthright enough to say, why did they not use the veto? Is it because, behind the spinning and the tough words, there is no appetite among Ministers for standing up for British interests in Brussels?

So much could be done at the forthcoming summit, if only the Government had the will and the vision to attempt it. There are so many things that could make the European Union better for businesses and better for the people who live and work in it—reform of the budget, cleaning up fraud and mismanagement, and sorting out the way in which development aid, for example, is spent.

On development aid, one critic said recently: Anyone who knows anything about development knows that the EU is the worst agency in the world, the most inefficient, the least poverty-focused, the slowest, flinging money around for political gestures rather than promoting real development. We agree with that. I am not sure whether the Foreign Secretary does—it was the Secretary of State for International Development who said that. Strong words, but she is right.

Where is the new broom that is coming in to sweep away the culture of back-handers and sweeteners that has corroded so much of what the Commission has done? Where is the evidence that Commissioner Kinnock's proposals for reform have done any good? The proposals contain many impressive-sounding words—"activity based management", the introduction of "a top level progress chaser", a "strategic planning and programming cycle" and, best of all, there is to be an "integrated resource management system". That will really make a difference.

What good has any of that done, other than boosting the sales of lexicons of third-rate management drivel?

Photo of Owen Paterson Owen Paterson Opposition Whip (Commons)

Commissioner Kinnock attended the Select Committee on European Scrutiny not long ago. I asked him whether he had fired one person, and he said that he had not.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

There was one person who lost his job. That was Mr. van Buitenen, the brave Commission official who blew the whistle on what was going on. He lost his job, all right. He was moved out, but no one else—no one who was found guilty of bad practices, fraud and mismanagement. It was the whistleblower who lost his job.

That is carrying on. The National Audit Office recently investigated the state of the European Union's financial controls, in a report that received much less coverage than it deserved. The NAO concluded that it is a matter of serious concern that the high level of "substantive" errors found by the Court meant that it was unable to provide positive assurance on the transactions underlying payments for the fifth year in succession. It went on to recommend that the Commission needs to design and simplify schemes to minimise the risk of fraud and irregularity. The Foreign Secretary should listen to that. It is advice that the NAO is giving to the Government about what they can do to improve matters. It went on to urge the United Kingdom Government to press the Commission to make rapid progress in this regard. Perhaps the Foreign Secretary will tell us what steps the Government have taken to press the Commission, as the National Audit Office recommended.

I fully accept that the Government cannot be blamed for all the problems, some of which are of long standing, although many have only recently come to light. However, I blame the Government for failing to take seriously a catalogue of error and abuse, responding with words when action is needed.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Opposition Whip (Commons)

I am grateful to my right hon. Friend for giving way. I was part of the Committee that went over to interview Mr. van Buitenen. We found a culture in which one Commissioner stood up for all the Commissioners and one civil servant stood up for another, whether or not they were guilty of mismanagement. It was not possible to get rid of individual Commissioners or members of staff because they had a contract for life. Is not such a culture of protectionism a disgrace, and should not Commissioner Kinnock have done something about it by now?

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

Commissioner Kinnock would have the wholehearted support of all Opposition Members and, I hope, the entire House if he set about making the changes that we know are needed and about which he spoke, albeit in language with which most of us would not be comfortable. We regret that the Government seem to be failing to respond even to the National Audit Office's recommendations to help the Commission to get matters right and to apply pressure. That is not happening.

Photo of Robin Cook Robin Cook Foreign Secretary

May I assure the right hon. Gentleman and his hon. Friend that the ability to dismiss an individual Commissioner rather than the entire Commission is one of the key changes to the treaty that is likely to come out of the treaty of Nice at the end of the IGC? Is the right hon. Gentleman still proposing to campaign strongly against that as well?

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

The right hon. Gentleman has clearly read my speech of last week extremely carefully, as he has quoted from it. I am delighted that he has done so; he will have found much food for thought there. Having read my speech, he will know that I said that we would campaign strongly against an integrationist treaty of Nice that transfers further powers from Westminster to Brussels. I make no apology for that. We will do that.

Photo of Robin Cook Robin Cook Foreign Secretary

The right hon. Gentleman makes an interesting elision with what he said in Germany. So that Mr. Paul Sykes does not put his money in under false pretences, is the right hon. Gentleman saying that he now reserves the position to see the outcome of the treaty of Nice before the Conservatives commit themselves to holding a referendum? That is not what he is understood to have said.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

It is clear that the Foreign Secretary's officials put my speech into his Red Box, but he did not read it to the end. There is no change in my position. If the right hon. Gentleman had done his homework, as he claimed that he had, he would know that I said last week that we would campaign against a treaty of Nice and would demand a referendum on an integrationist treaty, which gave away powers—[Interruption.] That is precisely what I said. Let him check it. It may require a greater degree of diligence than that to which he is accustomed, but I commend it to him.

Photo of Robin Cook Robin Cook Foreign Secretary

Let me get this entirely clear on the record: the right hon. Gentleman's party is not committed to a referendum on the treaty of Nice.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

We are committed to a referendum—I say exactly what I said in my speech last week. We will campaign vigorously against a treaty of Nice that is integrationist, which gives powers from Westminster to Brussels. I set out exactly what we fear will be in that treaty. That was the position set out in my speech, which I commend to the right hon. Gentleman. There is a great deal more in it which he will find instructive if he reads it carefully.

The IGC is an opportunity to start to create a European Union that works and embraces the whole family of European nations. We should not just say the words, as though that is enough. It is a scandal that, more than 10 years after the fall of the Berlin wall, the countries of eastern and central Europe are still being told that they must wait in line.

The way in which the Foreign Secretary spoke about that was interesting. He spoke as though enlargement was a benefit for the present members of the European Union. It is more than that. It is our moral duty to embrace the countries of eastern and central Europe into the European family of nations. It is even more of a scandal that they are being told that they must accept every last sub-clause of every piece of over-regulation that the EU has produced in the past 40 years.

Worse still, the candidate countries are being told privately—this bears out the point that my hon. Friend the Member for Stone (Mr. Cash) made earlier—that if they make any fuss about such onerous requirements, they will be unceremoniously booted to the back of the queue. The IGC is meant to be all about enlargement.

Photo of Mr Giles Radice Mr Giles Radice Chair, Treasury Committee, Chair, Treasury Committee

I am glad to hear that the right hon. Gentleman considers it important to have the new countries of central and eastern Europe in the European Union. If that is so important, why is he advocating a veto on the treaty of Nice?

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

They are not new countries; they are ancient countries of Europe. They belong to the family of European nations, and we should generously and unstintingly embrace them into the European Union. The right hon. Gentleman asks why we shall veto the treaty. The treaty is only minimally about enlargement. In previous enlargements, matters such as the re-weighting of member states' votes and the number of commissioners and seats in the Parliament were decided after the completion of accession negotiations. It is not necessary to deal with them beforehand. If the IGC is all about enlargement, why are proposals on the European security and defence identity, the charter of fundamental rights and qualified majority voting all part of it?

There is an overwhelming roadblock on the path to enlargement, but it is not those narrow institutional issues to which the Foreign Secretary devoted so much attention; it is agriculture. It is clear that the common agricultural policy, in anything like its current form, cannot work in an enlarged European Union. It barely works with 15 members. How could it possibly do so with 20, 25 or 30 members? A centralised policy designed in the 1960s for a Common Market of six countries is simply inappropriate for a union of nearly 30 countries.

When the Prime Minister became leader of the Labour party, he promised that he would solve what he described as this "scandal of a food policy". Today's CAP is economic madness; it is an ecological folly, socially and environmentally disastrous, and morally indefensible. On top of that, it now prevents the enlargement of the EU, which is its moral duty and should be its historic destiny. Is not it clear that the right route is towards member states having greater power to decide the precise nature of agricultural support that is appropriate for each of them? Is not that the direction in which the Commission was beginning to go in Agenda 2000? Does not the IGC provide the ideal opportunity to introduce real reform? Why are not the Government demanding that?

If the Government are serious about enlargement, why are not they demanding reform of precisely the policy that is the roadblock to enlargement? Instead, they are busily engaged in an extensive spinning exercise that is designed to lull the public into a false sense of security. The Foreign Secretary was at it again today, in his most reassuring manner. We hear that the IGC will tidy up some loose ends—a bit of wrangling over how many commissioners each country has, the size of the European Parliament and the re-weighting of votes. However, the Government say nothing about the major developments on which decisions could be taken or the treaty changes that would end the veto by extending qualified majority voting in many areas. He has ruled out some of those—[Interruption.] Well, it is precisely because so much of the veto was given away in the past—

Photo of Keith Vaz Keith Vaz Minister of State (Foreign and Commonwealth Office)

The right hon. Gentleman did that—he signed Maastricht.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

That is precisely why I am personally acutely conscious of the need to go no further. [Interruption.] The Minister for Europe is getting wildly excited about that notion. He has been touring the country in a coach—rather oddly described as Eunice—trying to make the case for membership of the European Union to the British public. Will he tell the House how many people he found who support giving up the legislative veto on further matters? Did he find any? I shall happily give way to him if he can tell us that a single person on his tour supported giving up the veto on any further matter. He is unusually reticent; he normally springs to the Dispatch Box with restless ease. If he will not respond, perhaps the hon. Member for Swansea, East (Mr. Anderson) will.

Photo of Mr Donald Anderson Mr Donald Anderson Chair, Foreign Affairs Committee, Chair, Foreign Affairs Committee

During what the right hon. Gentleman, in his wilder moments, might think of as the near-treasonable years under Mrs. Thatcher when so much power was taken away from our country and given to those wicked Europeans, what was he doing to oppose it? Did he suggest that there should be a referendum then?

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

The hon. Gentleman refers to whether there should have been a referendum, but there were few precedents for holding referendums in this country at the time. In the past three years, referendums have been held on everything. For heaven's sake, we had a referendum on whether to elect a mayor of London. Given that we had a referendum on that, is it not reasonable to hold one on whether we should become a province of a single European superstate?

Photo of Bill Cash Bill Cash Conservative, Stone

I hope that my intervention is thought moderately helpful. Does my right hon. Friend accept that the Single European Act referred particularly to competition, commercial matters and trade? The question of democratic consent at the highest level became paramount only when we moved into the area of government. Therefore, there should have been referendums on the Maastricht and Amsterdam treaties, and there should be one on the Nice treaty. Perhaps I live in hope that we will have a referendum on the treaty on European union.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

My hon. Friend does indeed make a moderately helpful point, and I am grateful to him.

Photo of John Bercow John Bercow Shadow Minister (Education)

My right hon. Friend will have heard, as I did, the Foreign Secretary assure the House that the charter of fundamental rights would not be incorporated in the treaties. Does my right hon. Friend agree that that assurance sits uneasily with the position of the Minister for Europe, who said, as recently as 5 April, that it would be premature to decide whether the charter should be so incorporated? Is not it time that the Foreign Secretary and the Minister for Europe talked to each other?

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

I was about to deal with precisely that point. The Foreign Secretary talked at length about the European security and defence identity, which is likely to feature in the IGC later this year. It is designed to sideline NATO. Again, for all the reassuring words that he speaks and the verbiage that he produces, the reality is that the driving motivation behind many such proposals is a desire to sideline NATO and reduce American influence. It runs the risk of reducing, not improving, the effectiveness and security of our defences.

I make no bones about the fact that we support greater European co-operation on defence. That is not the issue. We support a stronger European commitment to NATO. That has nothing to do with the defence identity, which is about politics and duplicating structures that already exist. It is designed by people whose primary consideration is ticking off yet another of the trappings of statehood, who say, "Flag? We have got that. Anthem? Yes, we have that. Currency? Got one of those. Government? Working on it day by day. Army? Well, we are getting there." Mr. Prodi says that the Commission is turning into more of a European Government. Mr. Prodi's ramblings about a European army were not needed to give the game away. In a speech last month, Mr. Jospin, the French Prime Minister, spoke of a "single European defence structure" and of the "pooling" of Europe's armies. He said that, if that were done, the EU would have crossed a milestone towards the creation of a united political Europe. That is the truth about the defence identity.

It is time to think again about the project in simple terms of efficiency and effectiveness. The EU is the wrong body to be entrusted with European defence. There is already a structure devoted to European defence, which is composed of active members and committed by treaty to mutual co-operation. It is called NATO, and we believe in it. It should be built upon, not undermined.

The charter of fundamental rights, which in the Foreign Secretary's mouth has turned into a declaration of fundamental rights, runs the risk of turning British law upside down. It would be a licence to meddle for the European court and, if included, its social provisions would be a serious blow to precisely the economic and social reforms that the Prime Minister appeared to support not only in what he said in Lisbon, but in the Financial Times on Tuesday. In few areas is the gulf between what the Government here in Britain say and the statements of other European leaders so wide.

We should be clear about the fact that another piece in the integrationist jigsaw is being developed. The Government blithely assure the public that they do not need to worry as there will be, as the Foreign Secretary said again today, only a harmless restatement of existing principles and rights—nothing at all to be concerned about, and anyone who says otherwise is merely scaremongering or, as the Minister for Europe has said, paranoid. Well, a lot of people—not in Britain—are apparently paranoid. Let me refer to one or two of those who believe that the charter is another engine of political integration and union, and part of the motor of the single European superstate.

Commissioner Vitorino, who is in charge of the justice and home affairs portfolio, said: The drawing-up of the Charter is an extremely important issue for the European Union, because, if it is brought off successfully, it will mark a definitive change in the Community, which will move away from the essentially economic raison d'etre of its origins to become a full political Union … The German Foreign Minister, Joschka Fischer, said that the charter is a stimulus, not only for human rights, but above all for the identity and legitimacy of the EU as the essential basis for the process of further integration … Gunter Verheugen, as a German Minister, said that its function was as the foundation stone of a European constitution According to the Minister for Europe, all those people are paranoid and scaremongering. It is odd that they have said what they have—there is a higher degree of honesty in the Governments of other European member states than in our own Government.

We are not the only ones to highlight the way in which the charter could eventually be used as a Christmas tree on which to hang all manner of so-called social and economic rights that would destroy jobs. To quote someone else who is clearly paranoid, the French Minister for European affairs said that the aim is to engrave in stone not only the political, but also the social rights which form the matrix of our political project. Little wonder that the Confederation of British Industry is "deeply concerned" by calls to extend the list of existing fundamental rights and to make it binding, describing it as a "Trojan Horse". An interesting, straightforward comment in the French newspaper Libération gave the game away on the agenda of many in that country: Any charter of this sort would be welcome in France because most European regulation is anyway less stringent than the French law, and anything that pushes up the regulation in other European countries is seen as a good thing here. Not even Eurosceptics in France would oppose this because they know that it would diminish the competitive edge of France's European partners. We look for two guarantees on the charter from the Government. First, they must ensure that a new set of wide-ranging rights will not be created at European level. Secondly, they must guarantee that any charter of rights will not be incorporated in the European treaties, even as an annex—[Interruption.] Even as an annex, which is the plan. Nor must it be made in any way legally enforceable.

Four months ago, the Minister for Europe, who is burbling away on the Front Bench, seemed to agree with us on that point in a written answer. Someone else did the drafting and all he had to do was write his name on it—[Interruption.]

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

I am happy to give way to the Minister for Europe if he wants to engage in the debate. I quote back to him what he said in a written answer carefully drafted by Foreign Office officials. All he had to do was sign his name to it. Here it is: We do not therefore favour the Charter's incorporation into the Treaties.—[Official Report, 1 February 2000: Vol. 343, c. 541W.] On the point made by my hon. Friend the Member for Buckingham (Mr. Bercow), when questioned on the same issue by the House of Lords European Union Committee on 5 April, he said: I think it would be premature to decide now whether or not it should go into the Treaties … What happened in those two months? Why did he have that change of mind, having been adamant in February that the charter was not to be incorporated in the treaties? To use the Foreign Secretary's phrase, why the sudden conversion on the road to Damascus? Why does he now think that it is appropriate to contemplate the charter being incorporated in the treaties?

Photo of Keith Vaz Keith Vaz Minister of State (Foreign and Commonwealth Office)

We have always made it clear that the charter will not be legally binding. The Prime Minister, the Foreign Secretary and I have repeated that in everything that we have said. Everything that the right hon.

Gentleman has said about the charter of rights being a declaration of existing rights is what we have said from the start.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

Perhaps the Minister for Europe can be tempted to his feet again to explain to the House what he meant when, in early April, he said to the House of Lords Committee: I think it would be premature to decide now whether or not it— in case there is any misunderstanding, that means the charter of fundamental rights— should go into the Treaties … What did he mean by that? Will he get to his feet?

Photo of Keith Vaz Keith Vaz Minister of State (Foreign and Commonwealth Office)

I have given the right hon. Gentleman the answer to his question. He knows a lot about signing pieces of paper, as he was one of the Ministers who signed the Maastricht treaty. I am sure that that was drafted for him as well and he just signed it. We have made it clear: the charter is a non-legally binding declaration or proclamation of existing rights. That is what we have always said.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

The Minister claims that he answered my question. He did not. I specifically asked him what the words meant. He voluntarily said to the House of Lords Committee: I think it would he premature to decide now whether or not it— the charter— should go into the Treaties … I am happy to give way again because I am genuinely curious to know what was going through his mind. If he is so adamant that, at every stage, all Ministers have been clear that it should not be incorporated in the treaties, what was going through his mind two months ago when he uttered the words that suggest that the Government are still deciding whether the charter should go into the Treaties …? I am afraid that that will have to remain one of the great unsolved mysteries on which the House will ponder.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

I will not, if my hon. Friend will forgive me. I am keen to make progress.

Even if the charter does not start as a legally binding text, experience shows that that is how it may end up. Social laws started off as a social charter—a statement of general principles—and developed into a social chapter, complete with costly, binding regulations. Before the Minister for Europe gets excited about my having signed the Maastricht treaty—[Interruption.] I am aware of that; I remember it. That is not a staggering revelation, though the Minister will recollect that, as a result of our negotiations, the social chapter did not apply to Britain. That was the beginning of a model for a more flexible Europe, which he would do well to study.

Precisely because I know what tends to happen—the integration process goes ahead inch by inch, step by step—we are particularly concerned about the charter. There is a real danger that it will turn into a charter for interference in national law and for job-destroying regulation that could turn centuries of common law in this country on its head. This country's legal system is different from those of other countries and we must not allow that to be overset.

If the IGC contains elements that would transfer powers from Westminster to Brussels, which the loss of the legislative veto, the institution of the ESDI in anything like its current form and the charter of fundamental rights would clearly all do, the public should have the right to vote on them in a referendum before they are enacted. I would expect the Foreign Secretary to be a strong supporter of that because, like us, he wants the public to be brought into the argument. He favours talking to them like grown ups on these matters, as he wants to do on the single currency, though he is frustrated by the Chancellor.

Last Monday, it was decided that reinforced co-operation will be on the IGC agenda. Does the Foreign Secretary agree with the view of some formidable pro-Europeans on the continent that that should be taken seriously? He may remember that Giscard d'Estaing and Helmut Schmidt said: It is obvious that full integration is not a realistic goal for thirty countries that are very different in their political traditions, culture and economic development. To attempt integration with that many countries can only lead to complete failure. Does he agree with the compelling analysis in an editorial in The Economist a few weeks ago entitled "The Void in Europe", which said: the EU's main modus operandi—that all should move together or not at all—looks unworkable. Different countries have different aims, and for perfectly good reasons, not the least of which is that their electorates feel differently about the whole process of European integration … A multi-system Europe, in which groups of countries proceeded to integrate and co-operate in different ways according to their different choices, would offer a more stable and viable way to run a large, liberal community of 30 or more countries … ? The right hon. Gentleman said nothing about that issue which, we now know, will be on the table at the IGC later this year, and he did not say what the Government's view was. Does he agree that, while Britain should certainly seek to retain the veto, we should not, in principle, exclude others from proceeding with schemes of closer integration which we would not wish to join ourselves. Is that not the right way to draw the poison from the relationship, which, in reality, is the enemy of public support for Britain's continuing membership of the union?

The IGC comes at a crucial time. As I said, there is a fork in the road for the European Union and a choice has to be made. Only if there is the right vision will the right choice be made. One route at the fork leads to an open, flexible Europe that celebrates diversity and does not seek to suppress it. That could be a network Europe, made up of nation states co-operating closely—perhaps more closely than now. The British public so clearly want that that I wonder that Ministers should even try to contest it.

At the fork is another route, of uniformity and uniform integration, in which national vetoes are all but abolished. That is being proposed by the European Commission and is supported by some Governments. The European Union, with eyes bigger than its stomach, would start tasks but not complete them and a tangle of subsidies and protective practices would still be in place. There would be an unreformed budget and agricultural and fisheries policies from a bygone era. It would be an EU with its own Government, taxes, foreign policy, criminal justice system, constitution, citizenship and currency. We are being dragged further into that bloc Europe or single European superstate because of a pathetic failure of vision and will on the part of the Foreign Secretary and Prime Minister. It is time that they stood up for Britain.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Before I call the next speaker, I remind the House that Madam Speaker has limited all Back-Bench speeches to 15 minutes, which will apply from now on.

Photo of Mr Terry Davis Mr Terry Davis Labour, Birmingham, Hodge Hill 2:42 pm, 15th June 2000

As leader of the delegation to the Council of Europe Assembly and the Western European Union Assembly, I should like to raise three issues, all of which affect the European Union and either the Council of Europe or the WEU. I believe that I probably have the support of members of all parties in the delegation for doing that and for the views that I shall express.

One issue is the charter of rights or, as we are now being encouraged to call it, the charter of fundamental rights. I give the Government my complete support for their insistence that the charter must not be legally enforceable. If it were, it is inevitable that there would be conflict between it and the European convention on human rights. I remind hon. Members that the long-established European Court of Human Rights enforces the ECHR which, as my right hon. Friend the Foreign Secretary said, was the result of a major initiative by the British Government many years ago. It should not be replaced or superseded by some document produced by the European Union.

I have no objection to a declaration or charter, but, like other members of the Council of Europe Assembly delegation, I object to anything which is legally enforceable and leads to wasteful competition and duplication between the Council of Europe and the EU. However, it is not only a question of duplication resulting from the charter being legally enforceable. I remind hon. Members that all such activities involve expenditure and we cannot afford to spend European taxpayers' money on providing something that already exists.

Photo of Mr Robert Maclennan Mr Robert Maclennan Liberal Democrat, Caithness, Sutherland and Easter Ross

Does the right hon. Gentleman agree that there is a lacuna in the jurisdiction of the European Court of Human Rights and the ECHR, and that there is a need for EU institutions to be subject to those rules?

Photo of Mr Terry Davis Mr Terry Davis Labour, Birmingham, Hodge Hill

The answer is that we should make it possible for the EU to subscribe to the ECHR. I would support that as would all members of the delegation, I believe. However, that does not mean that we should have a separate convention and charter, each of which is separately legally enforceable. I regret that some Members of the European Parliament are pressing for that precise provision.

Photo of Mr Terry Davis Mr Terry Davis Labour, Birmingham, Hodge Hill

No, I shall not, as there is a limit on Back-Bench speeches and I have two more issues to raise.

I generally support the Government's insistence that the new European security initiative should not involve the creation of a European army. It is accepted throughout Europe that, although some people in other European countries have the ambition of having a European army, all that is being discussed as a result of the initiative taken by my right hon. Friend the Prime Minister is a transfer of some important Western European Union responsibilities to the European Union, which leaves the whole subject of collective defence outside the European Union. I and my colleagues in the delegation support the Government in their insistence that collective defence is a proper subject for NATO.

The transfer of some responsibilities from the WEU to the EU is not to be opposed. The Petersberg tasks can be undertaken by the European Union, but there are some important, detailed points on which I hope that the Government will take a robust line.

What will happen to people who are currently employed by the WEU to deal with those responsibilities? I believe that hon. Members all thought that when those responsibilities were transferred, the staff who dealt with them would be transferred with the work. Would it not be sensible to transfer people with years of experience and expertise from the WEU in Brussels to the EU in Brussels?

My colleagues and I were surprised to learn that that is not the intention. Apparently, it is intended that about 100 people working for the WEU will be dismissed and new people will be recruited, trained and employed by the EU to undertake exactly the same responsibilities. That is an incredible decision. It is extraordinary that Governments in the EU should want to behave in that way and waste experience and expertise in such matters. That is what they will lose when they start again from the beginning. Presumably, if the EU decided to use wheels, it would insist on inventing them again.

However, things are worse than that. Is it not extraordinary that the Governments of the EU should wish to spend taxpayers' money on redundancy compensation for employees of the WEU and then spend more taxpayers' money on training other people to undertake that work? That is the intention, although I find it hard to believe. Mr. Solana, the Secretary General of the WEU and Mr. Common Foreign and Security Policy, admitted it last week in the WEU Assembly. When my colleagues and I raised the matter, Mr. Solana made a slip and said that he intended to obtain the most generous compensation that he could. That was a dead giveaway, as there would be no compensation if people moved with their work. However, Mr. Solana encouraged us to raise the matter in our national Parliament when we returned to Westminster this week and encouraged our colleagues in other countries to take similar action.

It follows that the EU is going to waste experience and expertise, damage European security, waste money on redundancy compensation, destroy people's careers and spend more money training other people. That would be extraordinary in itself, but what example does it set in industrial relations? What would the European Commission, the European Parliament and the governmental bodies within the EU say if private sector employers behaved like that? If one company took over another, sacked all the staff—if it was that foolish—and recruited more people to do the work, would not a Labour Government protest? Of course they would. Would not the European Union protest? Of course it would. I ask only that the European Union practise what it preaches. If a member Government behaved in that way, I would expect criticism to come from the EU. I find it extraordinary that we should go along with the decision.

I am most disappointed with the correspondence that I have received because it indicates that the Government accept the decision. I simply ask why. The Foreign Secretary has told me that it is not possible to transfer the staff with the work. I hope that when the Minister replies to the debate, he will explain why it is not possible.

Another detailed point in the development of the European security initiative is the role of Parliaments. I support the Government in their insistence that national Parliaments are pre-eminent and that this is not a subject to be discussed by the European Parliament, but there is another issue. At present, we have the WEU Assembly. I do not pretend that it is perfect; it could be improved in many ways. However, it is proposed that when the transfer is made, there will be no scrutiny, except that by national Parliaments, of the responsibilities that are at present scrutinised by the Assembly.

I insist that the Government are accountable to Parliament, but there is a need for another body to co-ordinate and liaise between national Parliaments, to exchange information between Members of national Parliaments and to provide parliamentary scrutiny of common responsibilities and institutions. Apparently, however, a vacuum is to be created and there is to be an increase in the democratic deficit. I hope that our Government will think again on that issue and insist that it is wrong to scrap the Assembly and lose parliamentary, democratic scrutiny. NATO, after all, eventually found it necessary to establish the North Atlantic Assembly. Will we not have such an institution for Europe, as we should?

We should also ensure that such an Assembly includes representatives of national Parliaments outside the European Union. It is all right for my hon. Friends to say that the Governments of Iceland, Norway, Turkey and other associate partners, members and observers throughout Europe—a total of 13 at present—who participate in the WEU have accepted that they will be consulted in future. I hope that the Minister will tell us not only that there will be consultation, but that those countries that are involved in WEU discussions at present—month in, month out—will continue to enjoy exactly the same rights of consultation and involvement in future. It is believed that they will have fewer rights than they do at present.

I must tell my hon. Friends that if countries such as Iceland, Norway and Turkey have less involvement and participation and fewer rights, Members on both sides of the House will regret it very much. It is not enough to say that the Governments concerned accept that situation, because there is widespread concern among Members of Parliament from all parties in those countries about what is happening and what their future involvement will be.

I turn now to one of the most important issues in European affairs—the situation in Russia with particular reference to Chechnya. This has caused a great deal of discussion among the public, the media and the politicians of Europe. It is not surprising that the matter has been discussed several times in the Parliamentary Assembly of the Council of Europe.

I remind all hon. Members that Russia asked to join the Council of Europe and was admitted in 1996 on the basis of commitments that must be honoured. Russia agreed not only to join the Council of Europe and to be involved but strictly to respect the provisions of international humanitarian law, including in cases of armed conflict on its territory, and to settle internal and international disputes by peaceful means.

I do not need to detain the House by describing what has happened in Chechnya recently. I speak as someone who would defend the territorial integrity of the Russian Federation, and as someone who condemns terrorism and the appalling human rights abuses committed by Chechens in Chechnya. I do not defend what the Chechens have done. However, we are talking about the Government of a member state of the Council of Europe, and the hard truth is that their means of dealing with this most difficult problem have not been proportionate. That is the almost unanimous view of Members of Parliament from the 41 member states of the Council of Europe or, perhaps I should say, 40 member states because, not surprisingly, most Russian Members do not agree with us.

In January, the Assembly condemned what was happening in Chechnya as totally unacceptable. It condemned the conduct of military operations there, the indiscriminate and disproportionate use of force and its effect on innocent civilians, and the violations of fundamental human rights, especially the rights to life, to liberty and to security. The Assembly overwhelmingly adopted a recommendation that called for an immediate and complete ceasefire, an end to disproportionate military action and an immediate start to political dialogue, with a view to achieving a comprehensive political solution. It called also for the fundamental human rights of the civilian population to be respected.

I must tell my hon. Friends that, unfortunately and deplorably, there has been little progress on those important points since January. When the Assembly returned to the matter in April, as we had promised to do, we came to the conclusion, not surprisingly, that there had been very little response. We then called on the Governments of the 40 countries to recognise the situation, and, if there was not substantial, accelerated and demonstrable progress immediately, to face the inevitable and to suspend Russia from the Council of Europe.

I am deeply disappointed by our own Government's response to those recommendations, including the recommendation that they should bring an interstate action against Russia under article 33 of the European convention on human rights, as they are entitled to do. The Government have apparently co-ordinated their response with the other 14 members of the European Union. We are therefore told that the 15 members of the EU will not respond to the recommendations from the parliamentarians of some 40 countries in Europe. Instead, the British Government will. unfortunately, continue to rely on pressure.

I have always been a strong supporter of dialogue between us and the Russian people, parliamentarians and authorities, but after the months that have passed without any sign of progress on these important requests by the Assembly of the Council of Europe, I am deeply disappointed that the Government's only response is, "Continue talking." Many of us regret and deplore that weak and feeble response. That is not what we would call an ethical foreign policy, and I have to say to my right hon. and hon. Friends that they make the Council of Europe's Committee of Ministers look all bark and no bite.

Photo of Menzies Campbell Menzies Campbell Shadow Spokesperson (Defence) 2:57 pm, 15th June 2000

The final remarks of the right hon. Member for Birmingham, Hodge Hill (Mr. Davis) were extremely powerful and found sympathy in many corners of the House, not least with me because I was one of those who had reservations about the alacrity with which Mr. Putin was received in No. 10 Downing street and taken to see Her Majesty the Queen.

This debate has the avowed purpose of focusing on the Feira Council, but it has become clear that in all debates about Europe, right up to and including the general election, there will inevitably be some focus on the single currency. I was trying to characterise the difference in view on the single currency here in the House, and it seems to me that it has some of the characteristics of the dispute over transubstantiation. That is to say that those who firmly believe in its virtues are unlikely to be persuaded of any vice, and those who are firmly of the view that it is something with which the United Kingdom should not be associated are unlikely, in this debate or any other in the House, to change that view.

Let me make it clear that my view and that of my right hon. and hon. Friends is that membership of the single currency would bring great benefit to the United Kingdom economy, protect existing employment and help to create new jobs. However, we have consistently said that we should join the single currency if, and only if, the conditions are right. My right hon. Friend the Member for Yeovil (Mr. Ashdown) was the first to say that this was a decision of such importance that it should carry the endorsement of the people of the United Kingdom before there was any entry into the currency. It would be folly indeed to join the currency regardless of economic circumstances, and it would be folly to join the currency if the convergence arrangements had not been properly fulfilled.

My complaint is that a Government who have agreed in principle to join the single currency, as the Prime Minister repeated only yesterday afternoon, should now be actively pursuing policies which have as their purpose the achievement of convergence between British and continental economic cycles. Simply waiting for convergence to happen will not do. The Government should have a published strategy to achieve the conditions for entry, including a competitive exchange rate.

Photo of John Redwood John Redwood Conservative, Wokingham

What might that competitive exchange rate be? I am sure that the right hon. and learned Gentleman will concede that, if one believes in that policy, getting the entry rate right would be important. What is the right hon. and learned Gentleman's preferred rate, how would he get there, and how would he persuade our partners to allow us to go in at that competitive exchange rate?

Photo of Menzies Campbell Menzies Campbell Shadow Spokesperson (Defence)

The right hon. Gentleman made an interesting point in his last comment, which is that the longer we delay, the more those who are part of the single currency may have reservations or anxieties about the extent that they will willingly admit us. It would be foolish for anyone to speculate on the level at which we should enter. Conservative Members in government had some experience of levels of entry, which in the end proved extremely, shall we say, exhilarating. Few of us can forget that day in September 1992.

Photo of Menzies Campbell Menzies Campbell Shadow Spokesperson (Defence)

We did not support the rate.

Few of us can forget that day in September 1992 and the scenes outside the Treasury with the Prime Minister, whom all those Conservative Members who are now cheering supported with such enthusiasm and respect, as I remember, through the long watches of the 1992–97 Parliament.

Photo of Menzies Campbell Menzies Campbell Shadow Spokesperson (Defence)

If the hon. Gentleman will forgive me, I shall not give way.

In the end, this is an issue that will have to be decided by the votes of the British people. That is right and proper, because it is an issue that goes beyond simple economic management, and it is more than an economic project. If one thought that it was simply a question of economic management, there would be little justification for a referendum. If one goes back to the period immediately after the last general election, the independence of the Bank of England became a matter of economic management—with profound consequences, it must be said—but I do not remember any great pressure at that stage from those who form the official Opposition for a referendum on that topic. The fact that it is now agreed—I think on both sides of the House—that there should be a referendum is an acknowledgement that entry into the currency has constitutional implications.

The sensible timing of that entry will depend on economic convergence, and I have already pointed out what I think about that. It also depends upon the Government's five tests. Anyone who has read the five tests recently will see that they are astonishingly subjective. Indeed, they are so subjective that they clearly lie within the absolute discretion of the Chancellor of the Exchequer, and that was, no doubt, by design.

However, I do not believe it is possible for Her Majesty's Government to put the issue into the deep freeze. Timidity now will certainly not carry the day in the next Parliament. There is an argument to be won, not least because the position of those opposed to the currency was somewhat shifting in nature to begin with. They said that it would never happen, but in fact it has. Now they say that it will for ever destroy our nationhood. I see little sign in the way in which the French or German Governments conduct themselves that France has abdicated from nationhood or that Germany has abandoned the robust defence of its interests. But the message for the Government has to be that, in an adversarial political system, the argument can be won only if one has the courage to put it.

The speech made by the right hon. Member for Horsham (Mr. Maude) in Germany recently has been the subject of what might even be described as textual exegesis. It was certainly a good speech which is worth reading. I hope that Conservative Members have read it and have understood its implications. The right hon. Gentleman said in terms that there should not be any lurch in the Conservative party's policy. That was a responsible and sensible thing to say. He also said that there should be no further extension of qualified majority voting on European legislation at all. That raises the interesting question of whether that is a pledge for ever, or simply a pledge for the next Parliament.

However, there must have been something of a lurch to persuade Mr. Sykes to throw his lot, and his loot, in with official Conservative policy. I wonder what kind of greeting he will get from those Conservative Members whom he tried to have deselected just a few months ago. The referendum that he now apparently seeks, as evidenced from this morning's newspapers, is a referendum not on going into, or staying out of, the single currency, but a referendum on whether Britain should remain within the EU at all. That is a fundamentalist position which, on any view, if it were to be adopted would represent a considerable lurch.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

I am happy to make it clear that we have no intention of making such a commitment.

Photo of Menzies Campbell Menzies Campbell Shadow Spokesperson (Defence)

There is the old principle of caveat emptor. I hope that Mr. Sykes was aware of that when he announced, with such enthusiasm, his reconversion to the Conservative and Unionist cause.

Photo of Menzies Campbell Menzies Campbell Shadow Spokesperson (Defence)

The right hon. Gentleman will forgive me if I do not give way.

In The Times on 5 October 1998, the right hon. Member for Horsham also said of the single currency that staying out was not a matter of religious principle— again, one might think, an entirely sensible, moderate and reasonable approach. But if that is his approach, fanaticism appears to have crept in elsewhere, because some of the published opinions of prospective Conservative Members of Parliament appear to go rather further in that regard than he obviously would have thought prudent.

What is fascinating is that we now have the principle of save the pound, but it is a principle for only the four or five years of the next Parliament. It introduces a new political construct—the shelf-life principle. It is a principle which, even it if were demonstrably in the United Kingdom's interest to join the currency, would not be departed from. One must examine the logical basis of such a principle with some care before one can accept it as valid.

One of the problems about the debate on the EU, which those of us who are enthusiastic about the EU find difficult to deal with, is the rather curious lack of self-confidence which many of those who are opposed to it appear to have about Britain's capacity to continue to exist within the EU. I find myself forced to ask whether our institutions are so fragile and our way of life so impermanent that we are at risk. To go back to domestic experience, Scotland has been a member of an economic union since 1707. It would be difficult to argue that the characteristics of Scotland and its differences have been eroded in that period of 300 years. That makes me believe that, where countries embark upon an exercise of shared sovereignty, their characteristics are not likely to be lost or in any way damaged.

If the EU and its institutions are so defective, why do so many countries want to join? Anyone listening to the Foreign Secretary's speech and the interventions would see that there is a strong view on the Opposition Benches that the institutions of the EU are defective. It is said that such countries are under some form of blackmail. I am not so sure about that. If one takes the common agricultural policy, I do not think that Poland feels blackmailed. It is not that it is being asked to take part in the reform of the CAP which it regards as blackmail; it is desperate to become a member of the existing CAP. As the right hon. Member for Horsham explained comprehensively, the CAP cannot be sustained. One of the disappointments of the current and the previous intergovernmental conference is the lack of effort to reform a CAP that occupies approximately 50 per cent. of the European Union's budget.

Photo of Menzies Campbell Menzies Campbell Shadow Spokesperson (Defence)

I give way to the hon. Member for Stone (Mr. Cash).

Photo of Bill Cash Bill Cash Conservative, Stone

I am grateful, as ever, for the right hon. and learned Gentleman's courtesy. I mentioned blackmail because I had heard people in the candidate countries referring to it. I refer the right hon. and learned Gentleman to the recent speech of Mr. Geremek in Poland. He makes a good case for not wanting to be taken into the sort of European Union that is being proposed.

Photo of Menzies Campbell Menzies Campbell Shadow Spokesperson (Defence)

I visited Poland not long ago. Politicians of any party to whom I spoke were at pains to tell me that the United Kingdom had to ensure the success of the intergovernmental conference that dealt with enlargement, and that Poland's entry into the European Union was not delayed. Consideration of its candidacy comes hard upon its entry to NATO. Poland, like the Czech Republic and Hungary, views the twin track of NATO and the European Union as fundamental to underpinning the democratic process on which they have embarked after the years of the cold war.

It is essential for the meeting to lay a proper basis for the treaty of Nice, which will follow. That requires re-weighting votes in the Council of Ministers. Such a measure will protect the interests of larger states, including the United Kingdom. We need a formula to prevent the size of the Commission from increasing unreasonably. Again, that is in the interests of the United Kingdom. When qualified majority voting suits United Kingdom interests, for example on liberalising transport, we should be willing to consider an extension of QMV on a case-by-case, merit-by-merit basis. Many people would believe that forgoing that opportunity would deny the interests of the United Kingdom.

Photo of Mr Paul Tyler Mr Paul Tyler Liberal Democrat, North Cornwall

Does my right hon. and learned Friend accept that QMV would be critical in reforming the CAP, to which hon. Members have referred?

Photo of Menzies Campbell Menzies Campbell Shadow Spokesperson (Defence)

How, without a system of qualified majority voting, shall we reform the CAP, which takes 50 per cent. of the European Union's budget? However, let us be clear: there can be no question of moving towards QMV on defence, taxation, resources, social security, borders and treaty change. Those are of such peculiar and distinct interest to the people of the United Kingdom that the veto must be retained. I suspect that the those on the three Front Benches are united on that, if on nothing else.

Re-weighting votes, considering the size of the Commission, and the case-by-case extension of QMV cannot prejudice the interests of the United Kingdom. There is also another check and balance: any treaty of Nice will have to be ratified by the House. Some of us are survivors of the Maastricht debates. We stayed up quite late at night; we were sometimes sent home at 10 o'clock because the Government of the day could not guarantee carrying the 10 o'clock motion. However, no one could argue that the Maastricht treaty was not subject to line-by-line examination and that the anxieties felt by hon. Members—mainly Conservative Members—were not properly canvassed and taken into account. If there is a ratification process, there will be every opportunity to consider the interests of the United Kingdom, about which hon. Members are rightly concerned.

There is something to be said for the almost lyrical view of enlargement that the right hon. Member for Horsham espoused. Any delay or blocking of enlargement will prejudice the interests of those who have applied for entry: it will certainly dash their hopes. Most important, it will inhibit their progress towards fully fledged, free-market democracy, which is in their interests and those of the rest of us.

The right hon. Member for Richmond, Yorks (Mr. Hague) has a proposal for referendums; it is not only one referendum that he has in mind. We should examine the proposal with some care, lest it prove a recipe for paralysis. It may turn out to be a recipe for a constant referendum campaign. As has already been said, there was no referendum on the Single European Act 1986 or on the Maastricht treaty. If there is to be a referendum on, for example, agreeing to QMV on transport, I suspect that the United Kingdom electorate would quickly suffer referendum fatigue.

There is a constant argument about clarity in the European Union. It is argued that there is a need for clear specification of the rights and the responsibilities of nation states, a clear description of the rights and responsibilities of European Union institutions and a clear acknowledgement of the rights of individual citizens. There is also a constant and justified clamour for ensuring constitutional recognition of the principle of subsidiarity. That is why I do not shrink from the notion that we need a constitution for Europe. Such a constitution should embody the principles that I outlined. Perhaps it should provide for freedom of information so that transparency can be more easily achieved. It could provide that the Council's legislative deliberations should be held in public.

Anxiety has been expressed about a charter of fundamental rights. It was clear from the exchange between my right hon. Friend the Member for Caithness, Sutherland and Easter Ross (Mr. Maclennan) and the right hon. Member for Hodge Hill, who leads the Council of Europe delegation. that there is a problem because the European Union treaties contain no code of human rights and the European Court of Human Rights has no jurisdiction when any EU institution breaches the convention of human rights. It cannot give redress to any individual who has been the subject of behaviour or conduct that might otherwise lead to a right of redress.

The House of Lords report, which was published on 24 May, has already been mentioned. It stated: The purpose of the charter should be to protect individuals against infringement of their fundamental rights by the institutions of the E. U. or by member states applying Community or E. U. legislation. It continues with the following judgment: To this extent the charter could be regarded as restricting the competencies of the E. U. Considered in that way, there is a great deal to be said for a charter.

The incorporation of the European convention on human rights in domestic law has already occurred in Scotland, and will happen in England and Wales later this year. The Scottish experience would persuade anyone that incorporation is not without implications or some surprising consequences. I accept that the judicial system north and south of the border must have time to adjust to the incorporation of the European convention on human rights in domestic law.

To incorporate a new charter at this stage would significantly increase the burden on the legal system. I therefore support the proposal that the European Union should accede to the convention. That would create a right of jurisdiction in the European Court of Human Rights in the circumstances that I outlined.

Photo of John Bercow John Bercow Shadow Minister (Education)

Will the right hon. and learned Gentleman give way?

Photo of Menzies Campbell Menzies Campbell Shadow Spokesperson (Defence)

If the hon. Gentleman will forgive me, I want to make a little more progress. I do not wish to blunt his anxiety.

The correct place for such a charter, if it is to be justiciable, is at the heart of a constitution for Europe. I agree with the right hon. Member for Horsham about that. I believe that a constitution is desirable for the reasons that I have already outlined, but we cannot expect such a development for some time. I would expect and hope all hon. Members to wish to subscribe to a charter that establishes the fundamental rights of individuals, guarantees them from abuse of power and affirms their personal liberty.

Photo of John Bercow John Bercow Shadow Minister (Education)

I am grateful to the right hon. and learned Gentleman for giving way. Would he concede that it is improbable, to put it mildly, that the centralising majority of states in the European union would agree to a decentralising constitution? Would he agree that one does not have to look into a crystal ball when one can read the book? Does he recall that neither under article 3b of the Maastricht treaty, on subsidiarity, nor under the protocol on subsidiarity and proportionality of the Amsterdam treaty has a single directive or regulation adversely affecting this country been repealed?

Photo of Menzies Campbell Menzies Campbell Shadow Spokesperson (Defence)

I am a devolver by nature. I have supported home rule for the United Kingdom all my political life. If a model constitution appeared that did not contain in sufficient form the principle of subsidiarity, to which I have already referred, I would not subscribe to it. If we are to have a constitution, the principle of subsidiarity must he a fundamental part of the approach that it enshrines.

Let me deal with the European security and defence policy—the ESDP as we must learn to call it now, rather than ESDI. I am sorry that the right hon. Member for Kensington and Chelsea (Mr. Portillo) is not present, because he might have detected a hint of nostalgia in what I am about to say. No one is proposing Brussels cap badges; no one is proposing a European army. There is no replacement of NATO, and no bar to individual states taking military action in their own interests, as in Sierra Leone or the Falklands. It is a capability-driven exercise designed to allow Europe to take a far greater share of responsibility for its own security.

The way to enshrine the primacy of NATO is to ensure that it has a formal right of first refusal, and that no action by the European Union members of NATO can be taken until NATO has considered whether it is an operation in which it wants to become involved. That would deal with the anxieties of people in the United States, and certainly with those of members of NATO that are not members of the European Union.

The decision to commit forces should remain with domestic Parliaments in all circumstances. Indeed, I would go a little further than that. The right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) recently made a compelling point about the need to ensure that when British forces have been committed, they enjoy the support of the House of Commons in a resolution. We deploy troops under Executive privilege—as part of the royal prerogative. Some constitutional change in that area would he highly desirable.

It is unquestionably true that a weak European security and defence policy will damage NATO. A strong policy would sustain it, and would rebalance an Atlantic partnership that I do not believe can be sustained in its present form. The Clinton Administration have shown an understandable—from their point of view—reluctance to engage on the ground in Europe. We should ask ourselves whether we think that a Gore or Bush Administration would be any less reluctant. To put it a little more colloquially, are we willing to bet that for the foreseeable future the United States Administration would, in all circumstances, be willing to come to the aid of a Europe whose collective securities is not at risk, and for which an article 5 situation did not arise, but which was unable to deal with instability on its own borders? The answer to that question has to be that we cannot afford to make that bet. That is perhaps the most compelling of all arguments for the creation of a European security and defence policy.

In the forthcoming general election. whenever it is held, there may be vigorous debate on the European Union. However, I suspect that the public find these matters rather less compelling than the House does on occasions such as this. In that debate, Liberal Democrats will be happy to defend our policies, not least because our record in these matters has shown that our judgment has consistently proved to be well founded.

Photo of Mr Denzil Davies Mr Denzil Davies Labour, Llanelli 3:25 pm, 15th June 2000

A mere glance at the list on the Order Paper of the documents that are before the House for this debate shows that, once again, the integrationist wagons of the European Union are on the move. Those documents deal with defence, legal reform, removal or possible removal of the veto over taxation matters, and developments on the euro.

I was interested to hear my right hon. Friend the Foreign Secretary's speech. He is clearly now one of the drivers of those integrationist wagons. He chided—probably correctly—the right hon. Member for Kensington and Chelsea (Mr. Portillo) for going to Damascus. My right hon. Friend has been to Damascus quite a few times in his political career. Saul became a greater man after going to Damascus. I do not know whether my right hon. Friend could be said to be a greater man: that is a matter for history to decide.

Step by step, the sovereignty and the democratic powers of the Governments and Parliaments of the old nation states of Europe are being dismantled, and they are being vested in a centralised European state that largely comprises bureaucratic institutions, perhaps tempered by a thin veneer of democratic legitimacy and accountability.

That erosion is taking place in all the nation states—not just in Britain. I suspect that the consequences for Britain will be more far-reaching than for most of the other member states. I understand that a Scottish sheriff has this week decided that Scotland is not a nation but a department of Britain. I shall leave that to one side, but my feeling is that Britain is more of a state than a nation. It comprises three nations, and to meld the three nations into the British state, which has been done quite successfully, it has been necessary to have central institutions of some power and authority with the Crown in Parliament at their apex. I have been in the House for 30 years—perhaps too long—and I believe that Parliament and the institutions of Britain are under a greater challenge than they have ever been in that period.

My right hon. Friend the Prime Minister recognises that because, in his speech to the national conference of the Women's Institute—[Laughter] It is no good Conservatives Members laughing. The Prime Minister made an important point and sought to reassure his audience—whether he succeeded is another matter—of his commitment to Britain and to Britishness. The reality is that the Government's policies on devolution and the whole modernisation ethos that they have fostered, together with the drip, drip, drip of continuous erosion of power to Brussels, have led many people to question the Government's commitment to Britain, notwithstanding the Prime Minister's attempts at reassurance.

We have heard much about defence, so I shall not spend long over it. My right hon. Friend the Foreign Secretary and I participated in arguments on defence during the 1980s before the wall came down, when defence was perhaps a more fraught subject than it is now. Attempts to create a European defence, security or strategic force—call it what you like—have in the main come from France, but, for obvious reasons, successive British Governments have resisted them, until my right hon. Friend the Prime Minister at the Cologne or Berlin summit, I cannot remember which, finally succumbed because the French were very persistent.

Perphaps we have not yet been enlisted in a European army, but I expect the consequences of developments involving the European defence system to be important for Britain. We have heard all this before. We have been told, "Of course this will not happen. It is just to help the Americans." Well, we can help the Americans through NATO, if we want to. It is not about that; it is about the fact that France, in particular, wants to stand up to the Americans, and have something different.

If a state is to be centralised, it will need a currency. It will need its own defence forces, and a uniform legal system. Work has been done in that last regard. At Feira or Nice, not much may be heard of something grandly called corpus juris. That is an elitist title if there ever was one.

Photo of Menzies Campbell Menzies Campbell Shadow Spokesperson (Defence)

It is a Roman title. That does not make it elitist.

Photo of Mr Denzil Davies Mr Denzil Davies Labour, Llanelli

I was being slightly ironic. In fact, it is a Latin title. Those of us who attended not just provincial universities but elitist universities know that Justinian's jurists—Byzantine jurists, in fact—thought it up.

These guys were clever. They did not choose the words "corpus juris" for some eccentric reason; they were sending a message. They were saying, "We need this again. We need a uniform legal system for this centralised European state." Justinian said the same, and, in the end, the Romans got it.

There is also the question of the charter of fundamental rights. My right hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) rightly expressed surprise and frustration about the fact that the European Union did not simply subscribe to the one that we have. Of course it will not. Nowadays, every state must have a charter of human rights, and they want the European Union charter rather than any other charter.

Both the Prime Minister and I went to elitist universities. We have the advantage over most Members who are present today, in that we read—rather than studying—a subject called jurisprudence. We read a lot about rights, so I know a lot about rights. What I cannot understand—being, at the end of the day, a simple common lawyer—is how it is possible to have rights that are not legally enforceable.

I know that some "jurisprude" went to an early grave when he talked about abstract rights. I understand that the Prime Minister has appointed Lord Goldsmith—a distinguished commercial lawyer—to negotiate on such rights. I am worried about that, because I believe that Lord Goldsmith comes from the same stable as Lord Irvine and Lord Falconer. I ask my right hon. Friend—rhetoricallyhow it is possible to have rights that are not legally enforceable. Perhaps brilliant commercial lawyers and Lord Chancellors can explain, but simple common lawyers do not quite understand.

I think that we are in the realm of metaphysics when we start talking about rights not being legally enforceable. Of course they will be. Sets of chambers are sprouting in the Temple every week. The aim is to milk this human rights business, probably even more intensely than Welsh farmers milk their Holsteins and their Friesians. The matter will go to the courts, and, as we know from the speech of the right hon. Member for Horsham (Mr. Maude), it will be part of the constitution that a single European state needs.

Then there is the euro. My right hon. Friends the euro-enthusiasts—the Foreign Secretary and the Secretaries of State for Northern Ireland and for Trade and Industry—are obviously panicking, as are their friends in business and the trade unions. I understand why they are panicking. They fear that, the longer the debate goes on, or does not go on, or the longer the time before a referendum comes along, the more difficult it will be to win.

One reason for that is the fact that the integrationist wagon is moving even on the euro. No doubt, by the time the referendum comes, we shall have seen more integration. The French are already calling for it, and what the French call for the French get, because they are cleverer than everyone else. The current Finance Minister, Mr. Fabius, is as clever as the last, and probably more of a euro-fanatic. The French have spotted what is happening, and they want an economic government.

When the strength of the euro descended from $1.17 to 85 cents in a fairly short time, the European elite was clearly rattled. I understand that, with a bit of help from its friends, the euro has now risen by a dime, but it can go down again. There are many reasons for the fall. I think one is the fundamental problem of the euro: it is a currency without a country, or a currency without a government.

Let us consider the days before Italy, for instance, joined the euro. If there were problems with Italy's budget, the financial markets—the teenage scribblers, as Lord Lawson once called them—would sell the lira. If there were problems in Greece, which I am told will join the euro, they would sell the drachma. Once the euro comes along, however, if there are economic problems in Italy, the Goldman Sachs of this world will sell the euro. It is necessary not only to co-ordinate, but to ensure that member states have very little discretion in their economic policies, because such discretion could affect the euro and other countries. Economic government is necessary.

The French will get their way. We have already seen the removal of discretion in monetary policy, which has gone to the Bank of England. The same applies, in part, to fiscal policy: we have the stability pact, which has removed much of the control that member states had over public expenditure. We need to go further, however. We need to deal with taxation. It is not possible to isolate taxation from monetary policy and, ultimately, from fiscal policy. Whether it is done by removing the veto, through co-ordination or by means of the guidelines that everyone likes to use nowadays, what needs to be done will be done in some way. I predict that, by the time the referendum comes, if it ever comes, the British public will be asked to buy not just the euro but a common system—or something close to it—of direct tax, income and corporation.

I understand why euro-fanatics like those in the Cabinet are worried. Time is running out, and they are not in control of events. Defence, the legal system, the currency, public expenditure and taxation are all going to Brussels, Frankfurt or the court in Luxembourg. There is not much left for the British Government and Parliament to do, and not much for a British electorate to vote for. Who knows? Perhaps there is not much left of Britain.

Photo of John Redwood John Redwood Conservative, Wokingham 3:39 pm, 15th June 2000

I hope that the Foreign Secretary listened carefully to the magnificent speech of the right hon. Member for Llanelli (Mr. Davies). I gathered from the Foreign Secretary's remarks that he had not understood or appreciated the force and common sense of the speech of my right hon. Friend the Member for Horsham (Mr. Maude), but I hope he will take seriously the strongly worded pleas of his right hon. Friend.

The right hon. Gentleman speaks for many people in this country who want to co-operate with our European partners, want to be friends with them, want to trade with them, want good relationships with them and want to encourage peace and prosperity across the continent, but do not believe that the right way of doing that is to surrender more powers of independent self-government to the Brussels bureaucracy.

Members on the Government and Liberal Democrat Benches have said that some dirty deal has been done between the Conservative party and Mr. Paul Sykes, so I should like to put the record straight. I phoned him, having heard the remarks of the Leader of the Opposition and read the excellent speech by the shadow Foreign Secretary setting out the Conservative party's new policy, confronted as we are with a possible fait accompli from the Government at the time of the signing of the treaty of Nice in a few months.

I explained the policy to Mr. Sykes. I am pleased to tell the House that, this morning, he phoned me back. He told me that he had reflected on what I had said and on the speech, which he had read; that he thought that the referendum guarantee now offered by the Conservative party in the form of words used by my right hon. Friends was fine by him; and that, on that basis, he was seeking to rejoin the Conservative party.

There was no deal as far as I am aware. There was certainly no request for money. That is the decision of an independent man who has taken a great interest in the issue, who did not like the Conservative party's policy under its previous leader, the previous Prime Minister, and who now backs the leader of the Conservative party in his latest policy.

The Government are so worried and desperate about it that it was, I understand, one of the big issues, if not the most important issue, on the agenda of the political Cabinet today. Can Members believe it? With the health service in crisis, with schools not responding in the way in which we would like, with stealth taxes everywhere and with a massive meltdown in Government popularity, Ministers spend Cabinet time debating Mr. Paul Sykes and his relationship with the Conservative party.

I suspect that the reason why Ministers did that is their fear that hundreds of thousands of people who either stayed at home or supported the Referendum party in 1997 are now persuaded by the leader of the Conservative party that they can trust him with their vote at the next election. That is what they are worried about. That is why they are now trying to make those entirely false allegations about the relationship between the party arid a potential new recruit, and the basis on which that friendship has been rebuilt.

Photo of Ian Taylor Ian Taylor Conservative, Esher and Walton

My right hon. Friend has clarified wisely that no deal was done. Like many other people, Mr. Paul Sykes is free to apply for membership of the Conservative party. Given his record, I strongly hope that we will not accept that application. Given the views that he has expressed both in the Democracy Movement and before the last general election, I hope that the Conservative party—including Conservative Front Benchers—will wisely distance itself from him.

Photo of John Redwood John Redwood Conservative, Wokingham

I think that that is a point for the chairman of the Conservative party rather than for me, but all I can tell my hon. Friend is that Mr. Sykes told me clearly today that he supported the Conservative party's policy on that sensitive and important issue. That is good enough for me. We will see what follows.

The big issue that is at stake is: are we going to have an honest and open debate about these mighty matters? They include our relationship with our partners in Europe, whether we wish to abolish the pound and whether we are moving on from that to common taxation with our partners, to a common army and to all the other trappings that are debated on the continent, but denied here by the British Government.

The one thing that I disagreed with in the speech of my right hon. Friend the Member for Horsham (Mr. Maude), the Opposition spokesman, was his kind remarks to both the Secretary of State for Northern Ireland and the Foreign Secretary. He said that the Secretary of State for Northern Ireland for once had done the right thing, come out and said that he wanted an open debate on the euro.

I, too, read those newspaper comments, but I should like my right hon. Friend to know that I immediately wrote to the Secretary of State for Northern Ireland saying that I was delighted by his conversion on the road to Damascus to the need for open debate on that crucial issue and that I would be happy to debate the matter with him any time, any place, on any radio show or any television show—whatever he liked to name. If my right hon. Friend wishes to volunteer some other senior Conservative who takes a particular interest in these matters, I am sure that that person will be willing to take up the challenge, but I regret to tell the House that, so far, I have had no reply. I have the nagging doubt that the Secretary of State for Northern Ireland has no serious interest in debating the matter whatever.

Over the past five years, when I have taken an interest in the abolition of the pound, I have offered to debate the matter with Labour spokesmen when they were in opposition and with Ministers in the past three years that they have been in government. I regret to tell the House that no single official spokesman for the Labour party, either when in opposition or in government, has been prepared to come forward and to debate it with me.

I have managed to debate with some very pleasant Labour Back Benchers. We have had good debates about whether we should go for the euro, but none of those Labour Back Benchers ever supported the official line of the Opposition or Government whom they purported to represent. They usually wanted to go a lot further and a lot faster than the official Opposition before the election, or the Government now. It is obvious, as we will see from today's debate, that the Labour party is split every which way on those crucial issues and that the Cabinet is scared stiff about coming out and debating them.

The Secretary of State for Northern Ireland would be better dubbed the grim briefer. He seems to be the man who wishes to scythe his way through half the Government—through half his colleagues—because they do not happen to agree with him on the issue. He clearly wants to scythe the pound down and go into the euro as soon as possible, but I have a word of advice for the Foreign Secretary. He might feel that he is on the side of the grim briefer today and is not being briefed against by him, but, come reshuffle time, we may find out the real plot: the grim briefer is not happy enough in Northern Ireland and wants to be Chancellor of the Exchequer and Foreign Secretary at the same time. I suspect that he will regard the Foreign Secretary as the more vulnerable of the two. We might see a bit of grim briefing against the Foreign Secretary from the Secretary of State for Northern Ireland when we get nearer the time of the Prime Minister making decisions about shuffling his rather stale, under-performing team.

I was not entirely happy with the support that was offered to the Foreign Secretary. My right hon. Friend the Member for Horsham was very generous. He said that he thought that the Foreign Secretary had attempted to make out a case for the euro. It was a small and slender case. One had to be very careful in listening to hear it.

As I understood it, three points were made. First, the Foreign Secretary said that we had to join the euro to trade with Europe. What complete nonsense. As he himself said elsewhere in his speech and on many other occasions, we trade a lot with our continental partners already. There is no danger of that trade disappearing whether we join the euro or not. It will take place. It has taken place for many years when we have not shared the same currency. There is no suggestion that our massive trade, particularly in invisibles and investment, with the United States is at risk because we are not seeking to apply to the Federal Reserve bank to abolish the pound in favour of the dollar. There is no rule that says that we must share a currency with people to trade with them.

Secondly, the Foreign Secretary said that the great advantage of joining the euro would be that we had greater transparency; we would know which things were dearer in Britain, to put it in more sensible language, and which things were cheaper. It is already crystal clear. Let us take a case in point. It is obvious to all observers that, for a long time, cars have been a lot dearer in Britain than in many continental markets. We do not need to change currencies to discover that. Which magazine, newspapers and television do it regularly. Customers know it. Some go to Belgium to buy a car because they have worked it out for themselves. We do not need to change currencies to have greater price transparency.

What we do know is that the Government, who lecture us on rip-off Britain and who say that it is all the fault of the private sector, are the biggest rip-off artists of the lot. What we have is not so much rip-off Britain by the private sector as a rip-off Government sticking our petrol prices up through the roof, so that they are much more expensive than those on the continent. That is just one example of the damage that they do.

Therefore, the Foreign Secretary should be careful. Perhaps he wanted to land the Chancellor in it by referring to price differentials, but, clearly, the biggest price differential is caused by the Chancellor. We can see that without changing currencies. We would like a Chancellor who cut tax, not one who abolished the pound, just so that it was even more obvious to the Foreign Secretary—if not to the rest of us—that things were dearer here than over there.

Thirdly, the Foreign Secretary said that joining the euro would reduce transaction costs. He should ask for a briefing on what has happened so far to banking charges within the eurozone, because, as he will find, it makes rather disappointing reading. Banking charges are rather high in the eurozone. The abolition of the foreign exchange element of the transaction still leaves banks wishing to charge for moving money around the eurozone, and those charges are rather uncompetitive. That is part of the reason why, to date, so few businesses on the continent have chosen to undertake transactions in euros. Businesses are mainly waiting until they have to undertake them when the final changeover occurs.

Therefore, we have a Government who—with the exception of those three pathetic arguments produced by the Foreign Secretary—will not engage on the issue, or appear on radio or television to engage on it. They are trying to destroy the pound by stealth, but will not come out and argue their case.

I imagine that, if Ministers ever get round to coming out with the case, they would say, for example, that abolishing the pound will increase currency stability. I ask the Foreign Secretary and the Chancellor to consider the experience of the euro against the dollar compared with the experience of the pound against the dollar. They will see that, had we been in the euro or linked to it so far, far from having more currency stability against the dollar bloc and the yen bloc—which are two huge trading blocs for us—we would have had more currency volatility. They must do an analysis of all the transactions undertaken by British business if they wish to come to a bottom line on the stability point.

The second really big point that the Government will probably produce—I have heard it made by some Labour Back Benchers who are less shy than Ministers—is that, if we join the euro, it would mean cheaper mortgages. They seem to have ignored the point that long-term interest rates in Britain are lower than long-term interest rates in countries such as Germany, and to have ignored the bitter experience that we had in the late 1980s and early 1990s, when all the major parties recommended linking to the deutschmark, and when, far from having cheaper mortgages, we had punitively expensive mortgages.

The Government should also remember that rates in the eurozone can go down as well as up. They are currently going up, and may eventually overtake rates in the United Kingdom, because the economies have not yet come together.

The biggest set of errors in the Government's approach to this debate has of course come over the draft treaty of Nice. We are always treated to the same nonsense from the Government whenever they are negotiating a treaty. First, they say that there is not a negotiation or a treaty. When it becomes quite obvious that there is one and we receive drafts of the treaty and hear the speeches of continental politicians—who, in good faith, are driving ahead to create a political union or state on the continent—the Government say, "You do not want to believe what you read in the drafts. The Commission does not usually get its way. The Foreign Minister of Germany does not know what he is talking about, and the Prime Minister of France must be ignored. You must not believe anything that those people say." That really is not good enough, and it is an insult to our partners.

I think that we owe it to our partners for Britain to set out clearly—now, in this debate, or in a piece of professional spin by the Secretary of State for Northern Ireland if that is the only way in which the Government can operate—where we stand on these crucial issues in the current draft Nice treaty.

Has the Foreign Secretary read draft clause 93, which clearly states that, in a large number of areas, the Commission and, I think, France and Germany wish to move rapidly towards common taxation? Is he aware that, on the continent, they believe that having common taxation imposed from Brussels is a necessary part of completing the single currency and the single market project?

On the continent, they really do believe that we need a savings or withholding tax to be fair across the whole integrated monetary area. They really do believe that that should be the first truly European tax, imposed on more things than it is imposed on in Britain and at a standard high rate. They also believe that it should be collected by the European Union and granted back to countries according to a formula settled by the European Union.

On the continent, they really do believe that the tax breaks offered to business in countries such as the Republic of Ireland and the United Kingdom are unfair competitive practices, and that they should be eliminated, preferably by agreement, but perhaps eventually by treaty change and against our will.

On the continent, they really do believe that we need extra taxation on energy, on top of the massive taxation that our Chancellor has already imposed on things such as petrol. They really do believe that the Union needs to collect much more tax, because the Union needs to distribute more money around the area of the Union to compensate for the single interest rate and the single exchange rate that one gets with the euro.

Photo of John Redwood John Redwood Conservative, Wokingham

We really must have replies to those points.

Photo of Mr Donald Anderson Mr Donald Anderson Chair, Foreign Affairs Committee, Chair, Foreign Affairs Committee 3:55 pm, 15th June 2000

The right hon. Member for Wokingham (Mr. Redwood) began with an explanation of why Mr. Sykes, the right-wing gentleman with bagfuls of money, has transferred his affections back to the Conservative party. I do not think that anyone seriously suggests that there was a type of binding contract between the two parties, with express terms and protocols—but there are certainly some implied terms.

The right hon. Gentleman may have noticed the editorial in yesterday's The Daily Telegraph—which is currently the Conservative party's house magazine—describing Mr. Sykes's Democracy Movement as the natural lateral successor to Sir James Goldsmith's Referendum party, which, in 1997, fought in most if not all constituencies against the Conservative party. That fact gives some idea of just how far the Conservative party has moved on the issue in the period since the general election.

The right hon. Gentleman said that Mr. Sykes is happy to return because the Leader of the Opposition has promised a referendum on any change in the powers held by Brussels and the European Union. As the right hon. and learned Member for North-East Fife (Mr. Campbell) pointed out very well, some of those changes would be very much in the United Kingdom's interests. Will there be referendums on those changes?

Will there be a referendum on changes to the European Court of Justice, where justice is very slow? As the House will know, justice delayed is justice denied. Will the attempt to remove some of those impediments be defined as an accretion of power to Brussels? Will there be a referendum on changes to powers in transport matters that also would be very much in our interests?

The broad promise on referendums—which was enough to bring back on board Mr. Sykes, the right-winger—suggests that there would be a series of referendums, even on matters that clearly are in our national interest or are seemingly relatively minor. However, that is clearly a matter tin accommodation between Mr. Sykes and the new right-wing Conservative party. It may also be that, if the promise is not delivered, Mr. Sykes will ask for his money back and there will be a certain embarrassment.

Photo of Robin Cook Robin Cook Foreign Secretary

Perhaps it will not be refunded.

Photo of Mr Donald Anderson Mr Donald Anderson Chair, Foreign Affairs Committee, Chair, Foreign Affairs Committee

Perhaps not.

One of the documents listed on today's Order Paper is the minutes of evidence from the Foreign Affairs Committee's session, last week, with the Foreign Secretary. I like to think that one of the key aspects of the Committee's work is our policy always to meet the Foreign Secretary before every European Council. Happily, he has always accepted our invitation. In our view, our reports are always a useful platform for debates such as this one. I hope that colleagues will agree that we have successfully prepared for today's debate by addressing some of the key issues that will arise at the Feira Council.

No Council is an entirely new start—there is no tabula rasa—but each six-monthly Council is significant in itself. Each Council is essentially work in progress. At Feira, the work in progress is the intergovernmental conference, in preparation for the Nice treaty, which in itself is an essential prerequisite for enlargement. Those who seek to scupper the institutional changes arising from the intergovernmental conference are effectively—whatever their professions of support for enlargement, to include the Luxembourg six and the Helsinki six—putting obstacles in the way of enlargement.

We know that there will be a presidential progress report on the IGC at Feira. We also know that a maximalist position has been set out, for example in the report by the three wise men—Dehaene, von Weizsäcker and Simon. The Foreign Affairs Committee heard that position expressed when we interviewed Commissioner Barnier, who had the absurd suggestion that there should be elections to the European Parliament on an all-Europe basis. I understand that that suggestion has met with very little, if any, favour among national Governments.

However much the maximalist position frightens the Tories, and however much they try to use it to frighten others, it will not happen, partly for time reasons—a fair part of the French presidency will be during the holiday season in Europe—and because no consensus exists, as my right hon. Friend the Foreign Secretary pointed out. The minimalist position, which the Government have espoused, is most likely to be accepted, for practical and other reasons. It will include the so-called leftovers from Amsterdam, for example, and the question of the commissioners—whether we have 20 commissioners with rotation, or one from each member state. In spite of the idea that commissioners should represent Europe as a whole, rather than national Governments, it is likely that the new member states will want their own commissioners, if only for honour's sake. We will have to balance that with the weighting of votes at the Council, including double majority and so on.

We will need to move forward on QMV in some areas. The right hon. and learned Member for North-East Fife stressed the point of subsidiarity, and we share the view that although we are an evolving and dynamic Europe, we have certain criticisms of that Europe. The great absurdity of the Opposition is that they can find no good in Europe. The hon. Member for West Suffolk (Mr. Spring) grimaces, but if he can point to anything positive in the litany of criticism of the European Union that we heard from the right hon. Member for Horsham (Mr. Maude), I would be very surprised. There must be something positive he could have said, even in a footnote or in passing.

In addition to the leftovers, the IGC may also deal with the question of the incorporation, or otherwise, of the charter of fundamental rights. It is somewhat naive to claim that that would not be justiciable, because the charter—although it brings together existing rights in individual countries—will almost certainly be used by the European Court of Justice in its judgments. I recognise that and I am prepared to be open and objective about it, in a way that the Opposition have not demonstrated. Some of the instructions to Lord Goldsmith, who leads the UK team, have been somewhat negative and we should take a more positive approach, for example, to social and economic rights.

We know from the meeting of Foreign Ministers earlier this week that the issue of enhanced co-operation has been put unanimously on the agenda of the Council, and it would be helpful to have the implications of that spelled out. We know that the issue of security and defence will be discussed in relation to crisis management and peacekeeping. One good reason why little case has been made so far for transferring even more responsibility for that to Brussels is that the whole culture is against the preservation of secrets and intelligence. It is a leaky organisation, with the interpreters having their own union rights, and walls with ears. Unless and until Brussels does something serious about the security of its documents, it will be difficult to make progress in that direction.

I admired the contribution by my right hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis), who posed three key questions that arose from his experience in the Council of Europe, including issues of parliamentary accountability. My right hon. Friend the Foreign Secretary said that national Governments, with Mr. Solana as a sort of national security adviser to the European Council of Ministers, will have the key responsibility; hence it is the national Parliaments—and the co-ordination of those Parliaments through institutions such as the Western European Union—which will have the final responsibility.

Although Opposition Members have talked about debate, it is sadly difficult to have a rational debate on Europe when everything they say is wholly negative. That negativity will no doubt increase as we approach the general election. I still believe in subsidiarity, but it does not end in London. Therefore, I support its extension to the Scottish Parliament and the Welsh Assembly, and—if there is a demand for it—to the English regions as well. It is subsidiarity to move decisions as close to the people as possible. There should be no block in London, and that is where the argument for subsidiarity from the Opposition stops in its tracks.

However, old habits die hard in the Commission, and attempts are still being made to meddle in areas that it should leave alone. I had brought to my attention yesterday the proposal for a Council directive that would establish a general framework for equal treatment in employment and education. That sounds good, but the effect could be very serious for religious organisations. Professor Leigh of Durham, who specialises in the issue, has said: This directive has all the potential to seriously undermine freedom of association for religious people. It places the modern concept of "equality" over and above religious liberty. By requiring religious organisations to radically alter their recruitment practices, it will make it difficult, or impossible, for them to maintain a distinctive religious ethos. Professor Paul Beaumont, the co-author of "EU Law", has said: This is a kind of liberal fundamentalism which makes it difficult or impossible for a Christian medical practice to only hire Christian doctors, for a Jewish hospice to only hire Jews, for a Muslim society to only appoint male heterosexuals to office. I cannot believe that it is right that Brussels should seek to override religious liberties in member countries. That is wrong and meddlesome, but unfortunately the proposal has had little publicity in this country. The proposed directive went to the House of Lords European Union Committee, which said that it did not have enough evidence to pronounce on the document. It is still being considered by our European Scrutiny Committee, which is chaired by my hon. Friend the Member for Clydesdale (Mr. Hood). The directive will come before the Council of Ministers in September, but so far there has been no debate. The issue is an example of the criticisms that I am open enough to make of Brussels, where necessary. I hope that my right hon. Friend the Foreign Secretary will consider the implications of the directive, and various legal opinions that I shall put to him, and seek to counter the liberal fundamentalism that threatens to override deeply held rights in this country.

I hope that we will be able to have a serious debate, although I fear that it will be difficult to have such a debate. I fear also that the treaty of Nice will come before the House at a highly inopportune moment, because we shall be in the frenzied atmosphere of a pre-election or an election campaign. It will be difficult for colleagues to look pragmatically and objectively at what is put before us. I hope that at least some of us will make the effort.

Photo of David Curry David Curry Conservative, Skipton and Ripon 4:09 pm, 15th June 2000

There is a version of Bangui's ghost at this feast, in the form of Mr. Paul Sykes, so perhaps I should declare an interest. Mr. Sykes is one of my constituents, and I have perfectly cordial personal relations with him. However, if he signs up to the Conservative party and pays his £15, I hope that I will be notified, in case he joins my association. If he did, I would be anxious to reinforce the point made by Conservative Front-Bench Members, who have made it clear that our party policy is to rule out the single currency for this Parliament and the next. However, the implication of that is that the policy admits of the possibility that a Conservative Government might wish to join the single currency thereafter.

I would not want Mr. Sykes to be under any misapprehension about Conservative party policy. Meanwhile, I am glad that I have taken out the insurance policy of being reselected on the basis of the views on Europe that I have consistently held.

It needs to be said—perhaps especially by Conservative Members—that the European Union is a colossal and immense achievement. I belong to an organisation call the British Association for Central and Eastern Europe, which seeks to help create civic and civil society in countries of the former Soviet Union. That involves working towards the creation of an honest police force and an impartial civil service, and towards putting in place the building blocks of a proper functioning democracy.

The hatreds exposed in those societies are based on history. In the Baltic states, for example, the Russian minorities are oppressed, but they used be dominant. Again, Croatia is the most successful of the Balkan countries and is struggling towards a sustainable form of democracy, but the world knows about the problems and hatreds that it has experienced. The fact that western Europe suffered the same problems a generation ago demonstrates how effective the European Union has been in putting an end to them

There is a foolish absolutism about the European debate. The EU has not created peace, and of course NATO has had a role to play. However, it has created structures that enable people to live together in a form of civic society that might not have been possible if it had not been created.

I speak with some personal emotion on this matter. Emotion is at the heart of the origins of the European Union, as well as materialism, and there is nothing wrong with that. My father-in-law was a French clergyman and he was shot for resistance activity in a concentration camp in the final year of the second world war. People who analyse Europe purely in terms of its materialistic and political construction forget that there is a powerful charge of emotion behind it.

For the continental countries, Europe was the means by which they regained their sovereignty and re-established their nationality. It enabled them to resume their nationhood. That is an important matter and must not be overlooked.

Britain, in contrast, was the only European country to win the war, and it took us a generation to realise that we were in the same position as those who had lost it. For us, the act of signing up to Europe became an act of abandonment, or surrender, of sovereignty. It was the end of the search for alternative ways to continue to play the major role in the post-war world. It is important to understand the psychology that underpins the EU, and to acknowledge that it exists.

The countries of central and eastern Europe are queueing up to join the European Union. They want to be members of the World Trade Organisation, and some of them want to be members of NATO, but above all they want to be members of the European Union. One of the problems with Europe is the cumbersomeness of its response. That is evident not only in the formal enlargement talks, but in its ability to help countries that need help here and now, before enlargement.

Croatia again offers an example of what I mean. It has made significant changes and advances in foreign policy, but is desperate for help with economic reform. The European machine is poor at responding to situations that require immediate assistance.

However, the European Union's greatest vocation—and I use a French word without apology—is that it stands for the creation of a liberal, civil society. Its greatest task lies in guaranteeing the spread of that society across the expanses of Europe. I would not want anything to obstruct that goal, and I hope that the treaty already mentioned in the debate will clear the way. It may sound piddling to talks about numbers of seats in the European Parliament and numbers of commissioners, but they are important elements in the pebble-dash wall that must be put in place before enlargement can proceed. That should have been done at Amsterdam, and it needs to be done at Nice.

I regret the way in which European affairs are described in Britain as a sort of permanent world cup, in which we either win or lose and occasionally complain about the referee. The Foreign Secretary is not immune, as he talked about being in the driving seat. In Britain, we are always talking about being in the back seat or the driving seat, but the EU is not the sort of institution that lends itself to sporting description. That may be a pity, as it would be more convenient for politicians if it did.

The trouble is that there are too many simplistic distortions about the European Union. They often take the form of that most convenient political shorthand—the fundamental choice.

I have been in politics long enough to know that, most of the time, politicians do not face fundamental choices. Life is not so easy or simple. It is much more complicated, and one's range of choice is much more restricted.

One allegedly fundamental choice, for example, is between the superstate or the nation state. I do not believe that, to be honest. However convenient, it is an intellectually shoddy formulation. The European Union pursues policies that are sometimes contradictory and often erratic—but so do Governments of nation states. That is the nature of the political animal. The idea that there is some fixed, unchanging, driving purpose is wrong. The fact that its history means that the European Union tends to have to describe itself in those rather grandiloquent terms should not be taken as indicative of some biblical fundamentalism that is universally promulgated. I think that that approach is silly, and I am as much against it as anyone.

However, Mr. Fischler's plea for more union has attracted a very French riposte from Mr. Vedrine, who has been pretty categoric in his dismissal of the idea as a load of nonsense. That dialectic between the visionary and the practical is at the heart of the European debate, and always will be.

Equally, we are always redefining the nation state, and there has been devolution in the United Kingdom. Is the idea of the nation state British, English, or Welsh? Is the Spanish nation state, with all its nationalities, the same as the Danish? Is the Dutch nation state the same as the French?

The answer to all those questions is no, of course not. The nation state is not some final construction in history, and there is nothing especially final about the condition that we have arrived at. It has evolved, as has every other form of political organisation. I decline to believe that, with the nation state as it exists today, we have reached some political apotheosis that cannot be surpassed. That is simply not the experience historically.

The European debate is also described in terms of liberalism versus dirigisme. That is not true either, although it contains elements of truth. This Government are right to say, as did their predecessor, that Europe's economic mechanisms should move towards greater liberalism. However, the German reform to the rules governing holding companies and their disposal of assets in other enterprises is a radical change. The French have implemented their own privatisation programme, and have hesitated over pensions reform. The policy clearly is liberal, with some dirigiste instincts at the same time.

Politics is about that dialectic. Our national politics is about a similar argument, so why should Europe be different? The virtues of the Netherlands deserve to be sung more frequently, as that country has succeeded in combining liberal market reforms with the maintenance of a strong social safety net. It is perhaps one of the most successful countries in the European Union.

The European Commission should be seen as a force for liberalism, with its drives for the single market and to liberalise postal services, telecommunications and electricity supply. Conservative Members believe in that approach, as do an increasing number of Labour Members. The Commission is the instrument for delivering the policies that we want in that regard.

It is true that dirigiste policies still exist: the common agricultural policy resembles one of the last command economies, but even that is changing more than many hon. Members recognise, and the new rural development programmes show that the policy is finally addressing the issues of the countryside, rather than the specific issues of agriculture.

I firmly believe that the euro is an instrument of liberalisation. However, it is like an animal that has been let loose and I do not think that many continental Governments have come to terms with how imperative the drive towards liberalisation will be under the impetus of the euro. I described it previously as an instrument for the Thatcherisation of Europe, and I do not resile from that. But there will not be steady progress. The trend is that it will be an erratic process, like everything else.

There is also the question of the veto as opposed to majority voting. I ask hon. Members to reflect on how real the power of veto is. The veto is becoming almost unusable because the Council's practice is to build consensus and to reach a position that everyone can live with. So we should not take too categorical or too biblical a view and defend the veto as if it were a fundamental symbol of the virility of nationhood.

Nor should we make choices between Europe and America as if they were Orwellian powerblocks. I rather regret the tendency towards the consolidation of the defence industries into a European block and an American matrix. The consumer and the Government would be much better served if we had competing blocks that spanned the Atlantic so that the imperative to buy from one side or the other would be less powerful.

Finally, I turn to the Government's attitude. They appear to be locked into a rigid theology. The five economic tests are spelt out as if there were a fruit machine, and one day we would get five lemons in a row and everyone would say, "That is fine. We knew that it was right in principle and now it is all right in practice, so here we go chaps." The tests are subjective and there will never be a clear verdict. Anyone who thinks that, economically, we will be delivered a categorical judgment on one side or the other is living in a fool's paradise. Those who, like myself, believe that the United Kingdom probably ought to join the single currency, are unlikely to be convinced by arguments that we are drifting towards the United States or that it will not work because we are structurally different.

I fully accept that my right hon. and hon. Friends who take a different view will not be convinced by the argument that once the Chancellor's tests have been met, we can go ahead. At the end of the day it is about politics. We avoid the fact that Europe is a political institution, but as a politician I am in favour of political decisions. I was elected to make such decisions. It is my vocation. Ultimately, the decision will be about how we see the United Kingdom, our view of its role in the world and its influence—that curious word that we cannot escape as it is at the heart of modern politics. It is about power and pretension and the evolution of political events such as the development of the euro 11 and the instruments of political decision making in Europe, not just economic factors.

The Government have got the means to make the weather. If they cannot make the weather with a majority of 169, they will never do it. It is no good standing up with a little finger wetted with spit waiting to see which way the wind blows or eternally watching the weather vane. Governments can influence events. When the countries that subscribe to the single currency set their exchange rates nine months before the single currency came into effect, people said, "The markets will blow that away." But the markets did not do that because they felt that it had credibility, so there is a role for political decision making in setting the tone and the environment for economic decision making. I wish that the Government would influence events by clear statements of intention that carry credibility. If we wait for events while arguing about that, we shall simply get the worst recipe.

I appreciate and understand that the Conservative party wishes to take a sceptical attitude towards Europe. I have no problem with that. It is not religion; it is politics. Silly things happen in Europe as they happen here and some jolly good things happen in Europe as they happen here, but I do not feel that I need to define my entire existence by a description of whether I am for or against. I believe that we have a vocation to be in the European Union and that we will be greater by doing so. We will better fulfil our idea of ourselves by doing that, but of course we should keep a weather eye on what happens and try to make sure that we end up with a system with which we feel comfortable and that we consider to be most apt for the larger Europe which is still the greatest vocation that my generation has to achieve.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon 4:24 pm, 15th June 2000

I speak on my own behalf as a member of the European Scrutiny Committee and also on behalf of my hon. Friend the Member for Clydesdale (Mr. Hood), the Chairman of the European Scrutiny Committee, who is unavoidably absent on parliamentary business.

The European Scrutiny Committee recently conducted a detailed investigation into the intergovernmental conference. Indeed, our published report has been attached to the debate.

Before I turn to the work of the Select Committee, I would like to make a few introductory comments. I congratulate the Government on their constructive role in the European Union—something that we have been able to track in the Select Committee report.

The Government are rightly concerned that in future British citizens should enjoy the same benefits as accrue to all other citizens in the European Union, and want Europe to be shaped by Britain and the British Government. Those comments should be almost superfluous in a debate prior to a European Council meeting, but unfortunately speeches from some Conservative Members—I except the right hon. Member for Skipton and Ripon (Mr. Curry) and others who have taken a more positive stance—show that the contrast between their attitude and that of the Government could not be greater.

There has been a recent shift in Opposition policies towards Europe from a position of scepticism and of saying, "Let us wait and see. Let us be cautious. Perhaps there is something good about the European Union, but we want to be sure what it is before we take the next step." They are now more overtly against the European Union, and many of the core ideas and values on which it is based.

When the right hon. Member for Horsham (Mr. Maude) asked, "What is the point of a charter of rights for the European Union?", "What is the point of reforming the European Union prior to enlargement?" and "What is the point of trying to reach consensus within the European Union?" he was really asking, "What is the point of the European Union at all?" I shall not detain the House with a long and detailed response to that question, but suffice it to say that the purpose of the European Union is to preserve and safeguard the very diversity that is so celebrated by the right hon. Gentleman. We are not attempting to build a superstate, the spectre of which he tried to raise once again today, but rather to continue what is a unique historical experiment which is vital to the future prosperity and well-being of European citizens. In that respect, it is vital that the European Union succeed.

As the Select Committee has acknowledged, the European Union is in urgent need of reform in order to work better and be seen to work better. It is also in need of reform so that people can more clearly understand what it does, its purpose and the benefits that it delivers, and so that it can be brought closer to the people of Europe. Such considerations certainly need to drive our approach to EU reform. Crucially at this stage of its development, the European Union is in need of reform in order to prepare for enlargement.

Our Committee also has an answer to the question raised by the right hon. Member for Horsham, who leads for the Opposition on foreign affairs: is it necessary to reform the institutions before enlargement can take place? Our report concludes that institutional reform is necessary to prepare for an enlarged European Union which may, in a few years' time, have 28 or even 30 members. Let us hope that it does. Institutional reform is essential if the European Union is to function in future and to continue to produce benefits for European citizens. That is the central conclusion of the Select Committee report. Furthermore, as that institutional reform is so important in order to prepare for enlargement, the intergovernmental conference should focus on the Amsterdam triangle and not try to reach agreement at Nice on many of the other issues that are being taken up through the intergovernmental process.

We took evidence from Commissioner Kinnock and others, and scrutinised many documents, and it was interesting to see not only how the agenda for the intergovernmental conference had developed, but how the process of preparing the negotiations had taken shape. We have had some debate in the Committee on whether to use the term "horse trading" to describe the late-night battles that will undoubtedly take place to ensure that each country ensures for itself the best possible deal. I have no doubt that our Government will not let us down in that regard.

We decided to refer not to horse trading, but to tough political negotiations—and the negotiations will indeed be tough. However, it is also important that the mood music is right. We will need allies at a bilateral and multilateral level who agree with our point of view if we are to make it prevail. The contrast with the disengaged and negative approach of the Conservative party on this could not be greater. To get results from this important negotiation, we must have allies and we will have to bargain in a tough way, but ultimately we will have to make compromises and reach consensus.

The Committee considered three key issues of institutional reform—they have already been referred to as the Amsterdam triangle, or the leftovers from Amsterdam. They are: the size of the Commission, qualified majority voting and its extension, and the weighting of votes in the Council of Ministers. These issues are linked, and they will be linked in the negotiations as they proceed.

The Government will be careful not to reveal their whole negotiating strategy in advance, but we of course accept the need for the size of the Commission to be modified. We welcome the fact that the Government see no objection in principle to reducing the number of Commissioners for Britain and other countries from two to one. That seems absolutely necessary. However, the Government are also suggesting not automatically having one Commissioner per state, while Britain nevertheless would continue to have its own permanent Commissioner. It will be interesting to hear from the Minister whether he believes that that that will ultimately be a sustainable negotiating position. Clearly, change will be needed in terms of the number of Commissioners that each country has in an enlarged European Union—the Committee accepts that. However, we have serious questions about how this will work in practice.

The Committee concluded that it expected a minimal extension of qualified majority voting. Some 73 articles of the treaty of Amsterdam are still subject to unanimity. In many areas, there is no justification for that, but in others, it is essential that we retain unanimity, and we have no doubt that that will continue to be the case. There is an area in between in which the negotiation about QMV and its extension will take place, and the Committee would like to see clearer criteria—rather than a decision being made on an ad hoc basis about each article—for how qualified majority voting should be extended and which articles will remain subject to unanimity. We should like to know the Government's views on that in advance.

On the re-weighting of votes, if we lose a Commissioner, larger countries will want a greater say in the Council of Ministers. Despite the talk about a European superstate, the Council of Ministers and the intergovernmental side of the European Union seem to be getting increasingly strong and will be further reinforced through this intergovernmental conference. In strengthening the intergovernmental side of the EU and in giving a greater say to the Governments of the EU in its future development, larger states, such as Britain, will also want a greater share of the votes.

The Committee was not in favour of the German Government's proposal for a dual majority, with states needing a majority of votes as well as a voting system that reflects the different populations of the states. We believed that that would introduce a further element of complexity into the necessarily complex institutional architecture of the European Union, taking it further away from the citizen. However, we recognise the need—especially, perhaps, as a trade-off or compromise on the size of the Commission and QMV—for larger states such as Britain to have a larger weight in the votes.

I do not have time to mention all the other issues considered by the Committee which are being taken up by the IGC, but colleagues on the Committee who are present might elaborate on them later. The issues include the need for reform of the European courts. Given the enormous amount of business that the European Court of Justice has to deal with, there will need to be, now or in the future, changes to its mode of operation to enable it to work effectively.

Secondly, we had reservations about the European charter of fundamental rights. We understand what is being proposed and the importance of codifying the rights that people have as citizens. We need to make people understand that the European Union is not just about money and materialistic things, but about strengthening and underpinning their rights. However, we had particular concerns about the development of two parallel charters—the European convention on human rights and the proposed charter of fundamental rights. The charter will operate within the European Union, but we want to do nothing to undermine the convention, which would have a wider scope, particularly with regard to applicant countries and beyond. For that reason, the Committee would not like the charter to be binding and, in that respect, we support the Government's view.

In conclusion, there is a strong need for reform of the European Union if it is to do its job better in the future. We have the unique historic opportunity of enlarging the European Union to the east. We are on the threshold of a new century in which the European Union can be seen as one of the most important legacies of the previous century and, for the foreseeable future, as a cornerstone of peace and stability in Europe.

There has been some discussion of the arcane and difficult nature of these negotiations in the intergovernmental conference. They may be difficult; they may be complex. However, the IGC is the doorway through which we must pass in order to enlarge the European Union. By doing so, we will lock in respect for the values of democracy, tolerance and justice, without which co-operation within the European Union in the future will no longer be possible and on which European co-operation up to now has been based.

There were different views in the Committee about how the Amsterdam triangle of issues may be resolved, but we agreed that resolution of the key institutional issues is absolutely necessary for enlargement. That is why we must inject a new sense of urgency into the intergovernmental process. It is why we wish our Government and Governments of other member states to focus the IGC on the Amsterdam triangle in order to resolve these issues and so make way for an enlarged European Union, rich with possibilities for the future.

Photo of John Maples John Maples Conservative, Stratford-on-Avon 4:38 pm, 15th June 2000

The hon. Member for Wimbledon (Mr. Casale) is right that some extremely important issues left over from Amsterdam have to be settled at the IGC. However, I do not intend to follow him too far down that road other than to say that I think that we should go for a radical reduction in the size of the Commission, freeze the size of the European Parliament and go for a dual qualified majority hurdle in the Council of Ministers.

I want to look at what kind of a European Union is being created. I have spent most of the past year getting to know European politicians and the institutions of the European Union a lot better. I started the journey as a mild Euro-sceptic, and I am afraid that I ended it as a rather less mild Euro-sceptic. I defy anybody to spend a lot of time with the European Parliament or the Commission and to love it any more after the experience than they did before.

What concerns me is that a great many European politicians, from the Commission and from the European Parliament, advocate an agenda for far greater integration. That was outlined by the right hon. Member for Llanelli (Mr. Davies). When I held the position now occupied by my right hon. Friend the Member for Horsham (Mr. Maude), I set out the alternative of a flexible Europe, where everyone was not bound by the same rules.

There are two ways of dealing with the problem of enlargement. It is right that a European Union of 30 member states cannot subsist according to the present model and with the present rules. We could either go for increased integration—lots more qualified majority voting, where the majority wins and everybody complies with the rules—or we could have a much more flexible attitude as to which rules everybody must comply with. We should then have a multi-speed Europe or a Europe of variable geometry—depending on the phrase one wants to use. Those are the alternatives.

Unlike my right hon. Friend the Member for Skipton and Ripon (Mr. Curry), I do not believe that there is a third way. One of the fallacies is when people kid themselves—the Foreign Secretary is one of them—that they can finesse their way through this jungle. One has to make up one's mind about which model one wants.

We must face what further integration means. It may not happen at this intergovernmental conference—it may not happen during the next two or three years—but the direction and the destination are becoming clear. Further integration means more power to the Commission; more decisions taken by qualified majority voting; home affairs and foreign affairs coming under the first pillar of the treaty; and one legal area. The euro is already leading to pressure for a single fiscal policy. Mr. Solana has called for the EU to have a seat on the Security Council of the United Nations. There is talk of a constitution. The charter of fundamental rights sounds very much like the United States Bill of Rights—we all know about the extensive federal law that has been built up by the Supreme Court on the basis of that document.

If the EU has all that—a currency, a foreign policy, a Bill of Rights and a court—it will be like a state. That has not happened yet, but it is the direction the integrationists want to take. I should be very unhappy about that. It could work as a way of dealing with an enlarged community of 30-plus member states, but it would result in a massive loss of sovereignty for all the countries of Europe. I am especially concerned about the United Kingdom, but the matter is important for the many countries of Europe that have proud histories as nation states. Furthermore, it would bring more and more costly regulation on business flooding towards us. I shall say more about that later.

I understand those who argue for a federal European superstate model of increased integration. I can see why some people feel that that is a great internationalist ideal. Obviously, I can understand my own point of view—that that is wrong and that a flexible Europe would be better. However, the real danger is to pretend that one can finesse one's way through and that the dangers do not exist. We have been hearing for too long that, for example, the social charter was just a series of aspirations and would amount to nothing. Within five years, it was the social chapter. It now produces law, which is binding on us. If we want measures such as the working time directive—I realise that that does not come under the social chapter—we should pass them in the House so that if, in a few years' time, we have a new Government who want to change them, or if different circumstances prevail, we can change them. However, we cannot change measures that come in the form of a European directive.

To those who say that the European superstate is a bogey, that further integration is a lot of nonsense and that we do not have to worry about it—that we are paranoid, in the words of the Minister for Europe—I reply that they should read what is being said. They should read what was in the Finnish presidency programme. Six months ago, it referred to qualified majority voting on tax to prevent harmful tax competition. The Helsinki conclusions stated that the IGC will examine the extension of qualified majority voting. The European Parliament's submission to the IGC was perhaps the most federalist. It talks about creating a European Foreign Office. It also talks about a massive extension of QMV—on indirect tax, on the common judicial area and on social, fiscal and cultural policy. The wise men's report emphasises the need for QMV. Mr. Prodi, in his speech to the European Parliament at the end of last year, reiterated those suggestions.

The Commission's proposals in November last year, under Mr. Prodi, and in January this year state that QMV should be the rule and that, on taxation and social security, there should be QMV in so far as it relates to the single market. I do not know what the single market excludes when it comes to deciding whether differences in tax and social security can have "harmful competitive effects", but I know who that proposal is aimed at: it is aimed at us. We have the most benign tax and social security arrangements.

Those proposals—like the costly regulation on business—are to do with countries that have uncompetitive tax regimes and costly business regulation. Instead of tackling those problems domestically, as we did in the 1980s, they want to put the same ball and chain around the feet of all the other people in the EU. We should resist that. The Portuguese presidency's note stated that tax rates and bases might need to be harmonised and suggested QMV.

Those are the people who will hold the presidency at the Feira Council—fixing minimum rates; taxing company profits; imposing environmental taxes and other forms of direct taxation. The Commission reiterated the point in its communication in March. It stated that QMV on tax would be necessary to allow the proper functioning of the internal market. Anyone who thinks that that view is held only by the European Parliament and the Commission, and that it is not shared by Ministers of the Governments who will be making the agreement, should read Joschka Fischer's speech. Germany is the driving force of the EU. The speech has been dismissed as paranoid ramblings, but it is not. The German Government believe those views. Their published submission to the IGC states: Germany favours the broadest possible extension of qualified majority voting. At the Mainz summit last week, France said that Germany and France were in agreement on the extension of QMV. It is not only those two countries. That significant extension of QMV is also supported by, among others, Finland, Denmark, the Netherlands, Belgium, Luxembourg, Italy, Greece and Portugal.

It may be that the Foreign Secretary and the Prime Minister will go to Nice and say no—although I doubt that from the Foreign Secretary's previous voting record. However, they would have to do that to stop the process. At some point, someone will have to say no. It is a relentless tide. The process is being pursued openly, honestly and, I believe, honourably by many of our partner Governments.

My exposure to the views of European politicians during the past year—which has been extensive, on both the left and the right—has shown me that most people share that view. That is where they want to go. They have a different view of what the nation state is about. For us, it is a proud and successful institution. For most of them—as my right hon. Friend the Member for Skipton and Ripon said—the second world war was a disaster for their nation state; they are happy to create something else.

Some of them have serious regional problems that make national government difficult—for example, Belgium, Italy and, to some extent, Spain. Others receive large cheques. I dare say that, if our cheque were as large as the one received by Ireland, our view of the EU would be rather different. The amount would be £1 billion a week if it were 7 per cent. of our gross domestic product, as it is in Ireland.

One of the reasons we need flexibility is not merely to avoid the superstate route of integration, but the raft of costly regulation that is being imposed on European business. It all adds costs. It is estimated that the working time directive has added costs of £2 billion to British business. The bureaucracy for works councils will also be costly.

The EU is turning its attention to e-commerce. That is the most internationally mobile business, but Brussels thinks that it can regulate it and impose VAT on it. That will lead to uncompetitiveness. The costs imposed on European businesses will be far higher than those imposed on our competitors. Unemployment in the EU is about 11 per cent., whereas in the United States it is 4 per cent. The US created more jobs in one month last year than France and Germany together created in the whole of the 1990s.

It would be all right to put balls and chains round everyone's feet if we were operating in a vacuum. However, the Americans do not follow that approach in south-east Asia; they try to make businesses more competitive and to reduce the costs that Governments impose on them. If we persist down this route, the danger is that we shall be uncompetitive and lose jobs. In addition, the protectionist instincts that are in the forefront of the minds of some politicians and countries in Europe—particularly France, which killed off the transatlantic marketplace that Leon Brittan tried to develop with the Americans—will be followed. If we finds ourselves becoming uncompetitive, the answer will not be a bonfire of regulations and taxes, but the reintroduction of protectionism. There is a good practical reason to choose a flexible arrangement and to resist more integration.

I share the view of many Conservative and Labour Members that the European Union has been of enormous benefit to us and to Europe. Its promotion of competition and free markets when that was unfashionable was very valuable. The free trade agenda, uncompleted as it is, is important. The EU has helped to tackle the problem of state aids; it has given us help in attracting the lion's share of the EU's inward investment, which is what we get; it has entered into trade negotiations with the United States and Japan; it provided European cohesion and vision in the face of Russian hostility during the cold war; and it brought France and Germany back together so that it seems inconceivable that they will fight each other again as they did three times in 80 years. Those are all huge benefits.

However, there is a massive uncompleted agenda. The visionaries are toying with a superstate, integration and a charter of fundamental rights, but let me suggest a few things that should be on politicians' practical agenda and that would benefit the citizens and businesses of Europe. They include agricultural reform, tackling fraud and waste and completing the free trade agenda. There are 15,000 separate external tariffs for imports into the EU. We talk about rip-off Britain, but—my God—it is rip-off Europe. Why should European consumers pay a 10 per cent. tax on imported biscuits or chocolate, or 9 per cent. on ski boots for some bizarre reason? The average tariff may be 4 per cent., but many tariffs are 10 per cent. or more.

State aid is another issue. Enormous state aids are paid to Alitalia, Air France and the German banks, which receive subsidies from their Lander. The completion of a single market in services is far from being achieved and the transatlantic marketplace is another objective that we should achieve. On enlargement, it is a scandal that countries have waited 10, 11 or 12 years from the end of the cold war to become members. The European Union has a huge role to play in regenerating the countries of central and eastern Europe and their economies, in creating a constructive relationship with Russia and in helping to manage its relationship with Europe and, I hope, in bringing peace and stability to the Balkans.

The European Union has a huge unfinished agenda of practical measures that it could carry out. In many cases, they have been started on, but politicians seem to have given up on them because they are too difficult to achieve. Therefore, they go for integration and a charter of fundamental rights so that they can talk philosophy. It is like a business man giving up on earning his first £1 million because that is too difficult, and starting to try to earn his second. We should return to the agenda for which the European Union exists—the things that it can deliver. We should forget or leave to the far distant future all the philosophy about a single state and integration. The agenda of practical measures that still need to be achieved does not require qualified majority voting or a Bill of rights; it can be done without them. That is the right approach for Britain to take.

I want to say something about the European security and defence identity, because I think that the Government are making a mistake on that. The proposal is part of trying to create a state, and it is a dangerous way to proceed.

People say that it is impossible to achieve the strategy that I have outlined, but I do not think that it is. We were told that it was impossible to achieve an opt-out on the single currency and the social chapter, and Margaret Thatcher was told that it was impossible to obtain a rebate. However, all that was achieved. My aim would not be possible through the Government's supine style of negotiating. They give way on the social chapter and the European security and defence identity without receiving anything in return. However, if we negotiated hard, we could do the things that I have described. We would then achieve my vision of Europe and the vision of the vast majority of Conservative Members and people in the country. We would create an open, outward- looking, free enterprise and free trade Europe—a flexible Europe of nation states. It is time to stop being carried along on a tide of unnecessary integration and damaging regulation.

Of course, we are fundamentally part of Europe, but we are part of the world as well. We have a long history as a proud, independent and successful nation state.

Photo of Dr Alan Williams Dr Alan Williams Labour, Carmarthen East and Dinefwr 4:53 pm, 15th June 2000

I want to speak about the single currency. I am a strong European and I am glad that the speech of the hon. Member for Stratford-on-Avon (Mr. Maples) contained a measured acknowledgement of the positive results that we have obtained through our membership of the European Union.

The single currency has been launched and I take the view that my right hon. Friend the Deputy Prime Minister expressed a few years ago. There is no sense in being part of the single market without being part of the single currency now that it has been launched. It would be of enormous help to manufacturing, agriculture and tourism.

Most British people spend their holidays in Spain, Greece or in continental Europe. It has struck me over the decades that whenever we travel abroad, we lose money when we exchange currencies. Despite the comments of the right hon. Member for Wokingham (Mr. Redwood) about transparency, it would be much easier to compare prices when on holiday in Greece or elsewhere if there were a single currency. It would encourage much more tourism, too.

The problems with joining the new currency are public opinion and the fact that since the euro was launched in January last year it has gone through difficult times. I do not think that anyone would have predicted that the first year and a half would be so difficult or so stormy, and that such a substantial devaluation would take place, amounting to 20 or 25 per cent.

I have felt impatient during the past three or six months, feeling that something should be done about interest rates or that there should be intervention. I am pleased that over the past four or five, weeks things have changed. The euro has substantially strengthened in value. I put the change of opinion down partly to the comments of Economic Ministers on 8 May, including my right hon. Friend the Chancellor of the Exchequer. His remarks have been much quoted and they are prophetic. He said: The present sterling-euro exchange rate cannot be justified by any view of the long-term fundamentals. It was obviously our opinion, but it was the first time that my right hon. Friend expressed that view. Since then, over the past four weeks, the euro has appreciated in value by about 10 per cent. against the pound.

On the Government Benches, and certainly among some members of the Cabinet, there has been increased enthusiasm for making the case for joining the single currency. My right hon. Friends the Secretaries of State for Northern Ireland and for Trade and Industry, the former Chancellor of the Exchequer, the right hon. and learned Member for Rushcliffe (Mr. Clarke), and the former Prime Minister, the right hon. Member for Huntingdon (Mr. Major), have all made positive remarks about the euro.

The right hon. Member for Huntingdon made quite a strong speech earlier this month. He said that the euro is Britain's ultimate destiny. He added: The new currency is far bigger than the pound or the yen. It is big enough in time to rival the dollar. It has huge gold reserves to back it. It will end exchange risks in Europe. Given the events of the past 24 hours involving Mr. Paul Sykes, talk of a referendum and the lurch to the extreme right by the Conservative party on the single currency, I would be surprised if the right hon. Member for Huntingdon expressed a different view.

A week ago, the OECD referred to convergence criteria in its report and underlined the fact that we have met them extremely well. The public sector borrowing requirement is in surplus and inflation is well under control. The ratio of debt to gross domestic product is the lowest in Europe. However, two elements of convergence are not moving so quickly, and these are interest rates and exchange rates. Our interest rate is 6 per cent. and that of the European central bank is 4.25 per cent. There is considerable convergence, but there is a substantial step to take. If that happened quickly—for example, over six months or a year—there would be an unsustainable boom in the United Kingdom. We must phase ourselves towards convergence on interest rates.

As for the exchange rate, manufacturers and farmers are not happy even with the present rise in the euro. It needs to rise by at least another 10 per cent. I noticed that, in May, the Bundesbank estimated that the euro was 20 to 30 per cent. undervalued.

Currently, the exchange rate is about DM3.10 to the pound. Even though I am enthusiastic about joining the single currency, the exchange rate at which we do so must be competitive and sustainable. There should be a national debate on the correct rate; I should like it to be around DM2.60 or DM2.70 to the pound—almost a 20 per cent. devaluation from the current rate. Our problem is that we cannot recommend to the country that we join the single currency until the exchange rate is competitive. In principle, we support entry, but the economic tests set out by my right hon. Friend the Chancellor must be met.

If the pound falls and the euro strengthens, with the time lag taken into account the result will be higher inflation. Mervyn King of the Bank of England's Monetary Policy Committee estimates that a 25 per cent. change in the value of the pound against the euro would put an extra two or three percentage points on the inflation rate. If that happened within 12 months, we would have serious problems, but if it took place over two or three years, we could accommodate that within the Bank of England 2.5 per cent. inflation target.

We must give ourselves two or three more years to get into line with the European economies. I hope that interest rate movements, our economic performance and domestically generated inflation will be compatible with at least no increase in interest rates—preferably with a lowering of interest rates, so that we match that 4.25 per cent. average European rate—and that the exchange rate stays in line with that.

The Government's policy on the single currency is the only one practicable: prepare and decide. We are making preparations, and the decision on whether we meet the five tests will be taken soon after the next general election; then, it will be up to us to put our case to the country. The events of the past month to six weeks have helped and I am confident that we are moving closer to joining the single currency.

Photo of Sir Ray Whitney Sir Ray Whitney Conservative, Wycombe 5:05 pm, 15th June 2000

I believe that the hon. Member for East Carmarthen and Dinefwr (Mr. Williams) draws the right conclusions from what has happened to the euro since its launch. Many of those who were hostile to the euro predicted that it would never be launched, or that it would fail immediately after take off. Since then, they have seized on the changing dollar-euro exchange rate and, in my view, drawn the wrong conclusions. The great majority of those who live in euroland regard the single currency as a success; they are confident that it will consolidate that success in future, and I believe that they are right to be so.

This is an unhappy occasion—the latest in a series of unhappy occasions on which the House has debated European issues. We in this country used to be regarded as a mature and confident nation, stable and consistent, who believed in ourselves and in our values. That was especially true of the Conservative party, but I am sorry to say that it is not true of the national reaction to the European Union. Events in the Chamber reflect the mood of the country as a whole.

The chapter that starts with the launch of the Common Market, as it then was, is an unhappy one in Britain's history. Even though Churchill was in favour of joining in 1948, we held off from the launch; then we were rebuffed by de Gaulle; only later did we get in. As soon as we were in, we held a referendum in 1975, which, we were told, would end the debates; it failed to do so, as today's debate demonstrates. Here we are, 25 years or more since joining, still arguing.

Of course there are problems in the European Union, and of course we must have a detailed debate about what should be done in the IGC to make an enlarged Europe function effectively, but the tenor of so many people's argument is negative, destructive and unhelpful. People say that they believe in the European Union, but their approach is neither positive nor constructive. We must widen our horizons and understand that the European Union is working, and that it is in Britain's interest to be part of it and make it work even better.

The attitudes that are so prevalent in this country and that have been so well reflected in many of the contributions to the debate today are based on a resolute determination to ignore what has happened since the war. We are all proud of our great national history, our empire, the sterling area, the role that we played in two world wars, and our relationship with the United States. We find it difficult to understand how much the world has moved on and how much more rapid and fundamental that change will become in the years ahead.

That should not make us retreat into our shells and become little Englanders. We should recognise that we are a fortunate and well-endowed medium power, with many opportunities. One of the crucial opportunities is the European Union, which is an extraordinary construct. Even its critics should recognise that. We must be inside it to make it work in a sensible direction—in our direction.

I hope that I do not offend too many other countries when I say that the history of western Europe has always been the relationship of the three big countries—France, Germany and Britain. Even my Spanish and Italian friends would agree with that, I think. Within the troika, the balance moves one way or the other. Sometimes it is Blucher and Wellington against Napoleon, and sometimes it is the entente cordiale. Since the war, for all sorts of reasons, some of them better than others, there has been the Franco-German axis.

Far from being frightened of that, we should seize the opportunities offered. We have so many allies in the EU, but that is not apparent from the general tenor of the debate. We have songs to sing and products to sell in the EU. We need free trade and openness, and a constructive relationship with the United States, to make NATO work.

We know what we stand for, but it is no good being a shrinking little offshore island, not playing a positive part in the game. That way lies the marginalisation of Britain. It is no good thinking that we can somehow join the North American Free Trade Agreement and become the 53rd American state.

We must seize the opportunities offered to us. The opportunity available to us now, apart from making a success of the IGC, is the euro. It is extremely important that the debate be opened up. The silence and the pussy-footing on the part of the Government, particularly No. 10, have been lamentable, but I welcome the recent stirrings in the Cabinet ranks and the attempts to put the issues on the table. Let us have them out.

We are told that there are risks in going into the euro; there certainly are. However, we are not told much about the risks of not going in. They must be described between now and the election and between now and the referendum, which has to be held. Although the euro is an incredible subject on which to hold a referendum, that is now a given factor in the equation.

We must understand the damage that will be done if we stay out of the euro. We can already see it with the high pound and what has happened to Rover and Ford—about 200,000 jobs have been lost in the past two years. As the euro becomes more and more established, the poor old pound will be squeezed between it and the dollar. That squeeze will be greater when Greece and possibly the other two countries join, and we may be the only EU member outside. That will produce tremendous volatility. The volatility of our currency—not necessarily only a high pound—causes so much damage to our own manufacturers and discourages inward investment. We have rightly prided ourselves on how well we have done with inward investment over the past 10 to 15 years, but that will be under serious threat if staying out and playing fast and loose with the EU continues.

The transparency that a single currency provides must be of huge value to this country as well as to others. We already have access to a market of 300 million people and an element of having that access must be the single currency itself. We are losing influence in Europe and it cannot be that our interests are protected when the 11 Finance Ministers of euroland meet, leaving those of Britain and three other nations outside. We are absent, but we must be there. We can debate when, how and at what rate.

I have serious reservations about the adequacy of the five tests of which we always hear from the Chancellor and the Prime Minister. What happens to the exchange rate is crucial. I would not seek to diminish the problems of getting us lined up to go into the euro. However, as the Organisation for Economic Co-operation and Development recognised the other day, it is entirely feasible that they could be overcome within 18 months or two years. I hope that all the necessary bricks are put in place so that that can be achieved.

There will be other difficulties, but not nearly so many as we hear about. Famously, we hear that we will end up paying for German pensions. That happens to be specifically excluded by the treaty. I do not hear the French saying, "Whoopee! We will pay for German pensions." That is not a realistic issue. So many of the other scares, which are the constant diet of many Members from the two major parties, are misleading and do great harm to our nation.

For goodness' sake, let us recognise the modern realities of coming into the 21st century—we are not quite there yet. We have great opportunities that are represented by Britain being a full member of the EU. We cannot be a full member until we use the opportunity of European monetary union. That can be achieved with rearrangements of sovereignty issues, which will by no means damage our national identity. Have the French lost any national identity since the euro was launched? The answer is certainly not. Let us have more national self-confidence; then we can make a success of the euro for our benefit and that of the rest of western Europe.

Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby 5:14 pm, 15th June 2000

It is always a pleasure to follow the hon. Member for Wycombe (Sir R. Whitney) and his naive, Foreign Office-bred enthusiasm for Europe and all its works. Perhaps he should change the slogan, "My country, right or wrong," to "My Europe, right or wrong." I observe only that the hon. Gentleman is obviously still crazy after all these years; it is just that the nature of his asylum and the expressions on the faces of the warders around him have changed.

I have not spoken in a European debate for a long time. [HON. MEMBERS: "Hear, hear."] I knew that enormous regret would be expressed. I thought that at this stage in the life of the Government it was time for a futile gesture. I should like to declare that I have a past that I have been trying to live down. I adhered to the truth that now, at least in the Labour party, durst not speak its name: I was a Eurosceptic. In fact, I still am. I have kept quiet about it because I did not want to affect my promotion prospects, but time is slipping away.

When I observed the dewy-eyed, naive enthusiasm for Europe in the faces of all my young friends—we are a young party now, refreshed and enthusiastic—I could not bear to tell them the truth about Europe, just as I could not bear to tell my grandchildren that there is no Santa Claus. Besides, it is fun watching the learning process that all Governments go through. Even Mrs. Thatcher was enthusiastic about Europe when she came to power and said that we were going to make our mark in Europe. The right hon. Member for Huntingdon (Mr. Major) said that we would be at the heart of Europe. We have come to power saying much the same rhubarb, but within a short time, we have been driven back into a recalcitrant position because of the remorseless drive towards unity which steamrollers over anything that this country has to contribute.

We are now reaching yet another of the crunch points that we experience in Europe, and it is the biggest since Maastricht. There is pressure to build a European superstate with all its appurtenances. While Europe is applying that pressure, the British public are having an increasingly strong reaction against spin and truth doctoring. Frankly, they are fed up with it, and so they should be. However, spin and truth doctoring are the cement that holds Europe together. The people no longer believe the rhubarb, whether it comes from the Government or the world's biggest rhubarb manufacturer, the European Union.

It is time that Labour Members and the Government, whom I support so strongly and energetically, are clear about what is happening. We always over-egg the case for Europe. It has produced so few real gains that it has to be hyped up as having enormous benefits. The leader of the Liberal Democrats is constantly telling us about the enormous gains that we make by being in the single market. I query that. We are still contributing, and our net payment is to rise to £4.5 billion. That is equivalent to a tariff on the goods that we export to Europe which is higher than the 4 per cent. external tariff that the EU would impose on us if we were not a member.

We carry the burdens of the common agricultural policy, even though that does not suit this country, as a net food importer. We carry the burdens of the common fisheries policy. If the single market is so good for us, why did we have a £64 billion cumulative trade deficit in the five years after it was set up, whereas our real surplus with the rest of the world was £48 billion in the same period? The single market has not given us the benefit or economic advantage that was claimed for it, yet we keep hyping it up.

That is the process of deceit that says that the people must be told things that are not true. They do not—they can stick with the truth. They might decide that it is worth while being in Europe for political reasons, but that is their decision; we do not have to tell them tall tales about the enormous benefits that we get, when they are not benefits at all. It is wrong to negotiate from the position that we will be weak and deprived of an enormous benefit if we rock the boat or resist the pressures from Europe to go further.

It is wrong, too, to scaremonger. I am glad to see the Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Leicester, East (Mr. Vaz)—and he is a friend—on the Front Bench. He wrote to me and other hon. Members enclosing a copy of a speech in which he said: We know where the anti-Europeans are— "We know where you live brother." I hasten to add that he did not put that in handwriting at the end of the letter, as Lord Tebbit said. He said: we will be targeting more than 60 anti-Europeans. I was paranoid when the letter came. The speech continued: We are targeting these people because they are involved in the irresponsible anti-European campaigning that has fostered public support for British withdrawal from the EU. With the same letter he attached statistics showing that 8,893 jobs in Grimsby face the axe. People on the street corners were sobbing, saying "Protect us from this Keith Vaz, Austin. What are you going to do about it?" The letter said that 3.5 million jobs in the whole country face the axe. That just was not true. That was based on research by Professor Iain Begg, who should have had more concern for his academic integrity than to allow it to be published under the heading, "Jobs facing the axe", when, essentially, it was jobs which, in part or whole, were involved in trade with Europe. They did not face the axe. No one suggests that trade with Europe will stop. Even if we pulled out totally, it would not stop.

On the one hand there is the creation of fear, that if we do not go along with Europe we will all be unemployed, no investment will come to Britain and we shall be starving in the streets, and on the other hand there is the creation of a puff pastry picture of Europe with its infinite benefits. That reduces the whole process to a farce, which alienates the British people.

Now we face another crunch. My right hon. Friend the Member for Llanelli (Mr. Davies) said that the wagons are rolling. Well, the tanks are massing. This time there is a process of state building, because it covers defence, rights, law, currency—the central powers of the institution. That is always the case in Europe. When in doubt, drive the thing forward. The doubts were enormous in 1978, so the exchange rate mechanism was created to drive it forward. As a result, we had two decades of low growth and high unemployment.

There were doubts and hesitations again in the late 1980s, and the result was Maastricht. Now the whole thing is stalled. We have arguments between the Parliament and the Commission and between the Commission and the Council of Ministers. We have the argument over going wider and deeper. The whole thing is stalled. So, when in doubt drive forward, which is what is now being done.

President Chirac told us that the Franco-German drive motor is now running again—in the tank towards centralisation. The pressure is on. My right hon. Friend the Foreign Secretary says that we shall resist qualified majority voting. I am delighted to hear that, but there is a range of issues. There is qualified majority voting—the euro 11 of the Finance Ministers of the states in euroland. There is the argument about making VAT uniform. There is the CAP argument, because the CAP reform, which Britain wanted and for which our Agriculture Minister pressed strongly, was completely stalled by the torpedoing by the French of the Agenda 2000 proposals, and the withholding tax argument continues.

The problem is that we are fighting on so many fronts. Arguing and fighting in Europe is like wrestling with a blancmange—one is pushing at one point and engulfed at another. There is not a single front on which one can proclaim victory and come back saying, "Peace with honour," or "A piece of blancmange with honour." That is the engulfing process in which there is more horse trading than there is this week at Appleby horse fair. That is the system by which it lives.

We must have a clear position—thus far and no further. To come back and proclaim victory on e-commerce, or some other kind of magic formula that has suddenly converted Europe, is not good enough.

There are similar pressures over the euro. The enthusiasts for the euro as a currency are remorseless. For the European movement, it is a matter of religion. We heard that from the hon. Member for Wycombe. The enthusiasts want it because they believe that it builds unity, but they will not say that, so they conjure up economic benefits for the euro that do not exist. The consequences of joining the euro are disastrous for our democracy. The people know that. It means that we shall surrender the power to manage our economy, and run it for our purposes. That applies to our interest rates. I appreciate that we have surrendered power to the Bank of England, but we can take it back. If the power is surrendered to Europe, it is gone for ever. The accountability of a Government who fail economically and are thrown out is also gone for ever. What protest could people make against it? What influence could they have?

In the past couple of weeks, the Organisation for Economic Co-operation and Development report has given rise to the argument again. It simply stated that we were converging with euroland more than some countries in it. However, the real reason for the argument's re-emergence is the high pound. We are considering a sort of surrogacy; people who criticise the high pound view the euro as a way out. It is not. The pound is disastrously high, but it is impossible to turn to the euro to escape from the problems of the high pound.

The exchange rate translates our costs into their prices. It is therefore crucial. If we go in with a high pound, we are locked in at a level of uncompetitiveness, which will make it totally unprofitable to produce or manufacture in this country. We would be locked into that cost structure. Moreover, we must maintain the relative exchange rate for two years before entry.

I went to the Bank of England with a group of other Labour Members, and the Governor talked to us. We witnessed an amazing spectacle. We asked what we could do about the high exchange rate, which is hitting manufacturing. He advocated prayer. My mouth fell open and I began to mumble a few words of prayer. The position is disastrous, not only for exports, but for multinationals, which can no longer attract investment from parent companies because it is uncompetitive to produce in this country. Investment goes to markets with a more competitive exchange rate.

Next year, we will be in manufacturing recession. We are on the down escalator; next year, it will hit hard. It is hitting already—250,000 jobs have gone. If the Government cannot or will not get the pound down not only to protect, but to save manufacturing, it is inconceivable that they will get it down to enter the euro at a competitive rate. Yet they must get it down and hold it down for two years before we can lock into the euro at that exchange rate. All those who speak of the euro as an escape from our current severe problems are talking economic nonsense. It is wishful thinking. Early entry would mean starting the process of getting the pound, which is substantially overvalued, down to a competitive level now. That is the situation for the Government in their negotiations and the economy in relation to the pound.

This debate is reminiscent of 10 years ago. It is fascinating to revert to it. Our Front Benchers now adopt the position that Conservative Front Benchers took 10 years ago. Meanwhile, the Back Benchers are equally divided between euro-enthusiasts and eurosceptics. We are continuing with the same argument. The debate is like a piece of history; participating in it is a fascinating experience.

We must stop the arguments on the euro in the Cabinet. It is crazy to argue—that way lies the right hon. Member for Huntingdon (Mr. Major) and the fate of the Conservative party. We must stop pumping out myths about the extent to which we need Europe and the extent of our achievements there. We must maintain a firm and absolutely clear position in the negotiations. We must get Europe in perspective. European countries have had a competitive devaluation and their economies are roaring ahead. Our task is to get our economy roaring ahead to build up our strength. We can then make a decision on the basis of strength.

Several hon. Members:

rose

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. I appeal to hon. Members who are still seeking to catch my eye. There will be much disappointment if the remaining speeches each take up the full 15-minute allocation. I ask hon. Members to bear that in mind.

Photo of Mr Richard Body Mr Richard Body Conservative, Boston and Skegness 5:30 pm, 15th June 2000

I always try to be nice to the hon. Member for Great Grimsby (Mr. Mitchell), because every time he makes forays into my constituency people agree with him. I must say to his hon. Friends that members of the Labour party seem to regard him as a hero, and echo his sentiments. I do not think that the hon. Gentleman need despair about his party. I think that he is expressing the authentic voice of the rank and file of the Labour party. Some years ago, just a few people were trying to express the views of the rank and file of the Conservative party and eventually won the day, so I like to think that he, too, will win if he sticks at it—that is what he must do. He must keep at it and not worry about Boston and Skegness.

The Order Paper gives a list of documents that are relevant to the debate. It is disgraceful that so little time has been allocated to the debate, and therefore little has been said about those important documents, all of which have a bearing on the lives of the British people. I would like to touch on one of them, Cm 4762, which is the Government's half-yearly report on developments in the European Community in the latter part of last year. There is only one thing about it that cheers me up: I like looking at the photograph the Minister with responsibility for Europe, the hon. Member for Leicester, East (Mr. Vaz)—it shows his usual kindly nature. Apart from that, the report is pretty awful and rather frightening.

According to the report, 22 areas of Government policy have been transferred, either wholly or partly, to Brussels, every one of them as a result of legislation passed by the House. In addition, 62 judgments of the European Court of Justice have a bearing on how we must behave in this country. Not one of those judgments would have been possible a quarter of a century ago, yet every one of them was decided according to procedures and principles that had been alien to our system of law over almost a millennium.

The report also lists 15 treaties that have been entered into on behalf of this country within that six-month period. In the past, no treaty was binding on this country unless it was ratified by the House. None of those 15 treaties was ratified by the House. That statistically supports what the hon. Member for Great Grimsby said. Power is rapidly moving away, and we are nearing the end of the stepping stones that take us to a state far different from what we were a quarter of a century ago.

It is understandable that Governments—I regret to say successive Governments—like this procedure. It is only too easy for a Minister or his civil servants to slip across to Brussels with some pet notion of how the British people ought to be regulated, and to meet some official who would gladly extend his role. The proposal would go before a Council of Ministers or would be made in secret, with no member of the public entitled to overhear the discussion and no member of the media allowed to be present. We then find that it has been added to the law of this country.

We now have 80,000 pages of law that we must comply with, none of which has been passed by the House. That should shame those who have gone into the Lobbies to vote on matters about which they know hardly anything.

One can understand the Government's wish to act in such a way. It is irritating to have to come here and persuade the House, Committees and then the other place of the need for a change in the law. It is sometimes very frustrating. The procedures that we are discussing, however, are intended to work in the way I described just now.

Those of us who read law years ago may remember the words of a great English jurist, perhaps the greatest of all. Blackstone said—although he said it long ago, it is still true—that freedom lies hid in the interstices of procedure. When we streamline procedure as we have in this instance, by enabling legislation to be passed in Brussels rather than here, we should remember that we are talking about people's freedom.

Governments can do nothing unless they first take away our freedom or our money. They have two weapons: legislation and taxation. Both are powers of coercion which, in a democracy, can be justified only if they are approved by a majority of those who will be coerced. They must be approved directly, or approved by elected representatives in an assembly such as ours, answerable to those who will be coerced.

We are moving—have already moved, over the past quarter of a century—very far from that fundamental principle of democracy. If the hon. Member for Great Grimsby continues to say what he has been saying, his party will doubtless be forced by its rank and file to appreciate that what is being done was provided for by the Amsterdam, Maastricht and Rome treaties, and the Single European Act. All those measures were steps against democracy. The damage that has been done can never be rectified by any European Parliament, however it is elected.

Much of the debate has been about the enlargement of the Community. We speak as though the centre of Europe were Brussels or Strasbourg, although I believe that, geographically speaking, it is somewhere in Lithuania. This is the tragedy of what has happened in the past half century, or indeed the past decade. We had an opportunity to end a thousand years of history during which Europe has been divided. When I say "Europe", I do not mean just western Europe; I mean Europe truly. I mean the Europe of Tchaikovsky and Chekhov. That is Europe just as much as our part of Europe.

Any major war that has taken place in the past half century, or is likely to take place in the future of our continent, will have been, or will be, a war between eastern and western Europe. We should therefore lose no opportunity to unite all Europeans within an institutional framework of some sort. Obviously that cannot involve an acquis communautaire leading to every candidate's being required to sign up to everything that has already been agreed to; such a position would be intolerable. We must have a looser, more flexible arrangement, enabling us to co-operate in groups when it is in our interests to be in such groups. We need to co-operate on many issues that are now crossing the frontiers of the individual nation states of Europe.

The proposals that will be considered in Nice and thereafter in negotiations will not face up to the possibility that I have described. That is a tragedy. It is sad that many Labour Members, with some notable exceptions, fail to recognise what Europe really is and how important it is to bring some sensible unity to our continent, which it has lacked for too many centuries.

Photo of Ms Jenny Jones Ms Jenny Jones Labour, Wolverhampton South West 5:40 pm, 15th June 2000

I am grateful for the opportunity to contribute to the debate. May I pick up on the final words of the hon. Member for Boston and Skegness (Sir R. Body), who talked about the importance of uniting what I call the greater Europe? That is the issue that I want to address.

Great interest has been shown, in Parliament and outside, in the charter of fundamental rights. The relevant documents to the debate include the report by the Select Committee on European Scrutiny on the forthcoming intergovernmental conference. If Members read it, they will see that the Committee has done a lot of work in examining the need for the charter.

The House of Lords Select Committee on European Union has produced a report completely on the charter, and I understand that the other place will debate it soon. In February, we had an Adjournment debate in Westminster Hall on the topic. Naturally, the Council of Europe Parliamentary Assembly debated the charter in January and it will do so again at the end of the month.

I wish to make it clear from the outset that I am an enthusiastic supporter and advocate of human rights protections. I have the privilege to be part of the United Kingdom delegation to the Council of Europe Parliamentary Assembly. I am extremely happy with our Human Rights Act 1998 because it means that, at long last, we have incorporated the European convention on human rights in our legislation. I look forward with interest to its being implemented later in the year. It is because I am so keen on human rights that I am extremely wary and uncomfortable about the charter. It will present us with an awful lot of difficulties.

If the European Union wishes to demonstrate its commitment to human rights, I have no problem with that. Apparently, one of the reasons why it wanted to embark on the charter was to have something that demonstrated to the citizens of the EU that it was serious about human rights. If it wishes to do that, it can take the relatively easy step of acceding to the European convention on human rights, which it has considered doing several times. Before someone reminds me, I know that the 1996 European Court of Justice ruling put a bit of a dampener on that, but I gather that the EU is revisiting the possibility of acceding. The reports of both the European Scrutiny Committee and the European Union Committee recommend that. In January, the Council of Europe Parliamentary Assembly formally invited the EU to accede to its own convention on human rights.

The process of drafting the charter is well under way. As is the nature of these things, it will no doubt grind on inexorably towards a conclusion, but one of my fears is: what will we get when drafting is concluded? It seems rather odd to embark on drawing up a charter when we do not know whether it will be just a declaration, or legally binding.

My hon. Friend the Minister for Europe has made the Government's position clear: they just want a declaration. If that were the only option available, that would be fine, but he knows as well as I do that other EU members want a legally binding charter. They want it to be justiciable. He knows that representatives of those member states and our representatives sit on the drafting body. They have had some heated discussions centring around whether the charter will end up as a declaration or be legally binding. It is a little unfortunate to have embarked on the thing without resolving from the outset exactly what the EU wanted to achieve.

I have reservations about making the document only a declaration. If the declaration is meant to show European Union residents that the Union is serious about rights—be they human, fundamental or other rights—residents should reasonably expect the declaration to have some teeth. If they feel that the declaration does not ensure their just rights, they may expect to be able to do something about that. I think that, when they realise that they can do nothing about it, disillusionment will quickly set in.

I should, however, like to explain why a legally binding charter would be not only bad news, but dangerous for human rights protection in greater Europe. I assure the Minister that I am trying to assist him and to strengthen his arm in the wrestling match which I suspect will await him when the drafting body has finished writing the charter.

I am not a lawyer, and I have never had legal training. Although I have been to three universities, they were definitely very non-elitist. Nevertheless, it does not take a lawyer to work out very quickly what would happen if Europe had two systems of legal rights protection and two courts trying to judge on human rights matters—we would end up with a complete mess.

Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

And a lot of jobs for lawyers.

Photo of Ms Jenny Jones Ms Jenny Jones Labour, Wolverhampton South West

We will not go into that subject just now.

With two systems, we would end up with all the problems associated with conflicting jurisdictions. Therefore, almost everyone from whom the European Scrutiny Committee took evidence felt that a legally binding charter was an extremely bad idea. I remind the House that the Committee took evidence from, among other people, a judge from the European Court of Justice and one of the United Kingdom's leading human rights barristers.

My main concern is that a legally binding charter would result in a two-tier system of human rights protection in greater Europe. We could end up with a system in which the older and richer western democracies are within the charter's jurisdiction and use the Luxembourg court, whereas the Council of Europe's 26 other members are left out in the cold and remain within the jurisdiction of the European convention on human rights and the Strasbourg court.

One of the Council of Europe's greatest features is the work that it does for the younger democracies that join it. Usually, those states are leaving communism behind and rely greatly on the council to help them to establish the rule of law and various democratic procedures, including human rights protection. Every single one of the states seeking to join the European Union is a member of the Council of Europe. When they see the European Court of Human Rights hand down judgments against countries such as the United Kingdom, as occasionally happens, and when they see the United Kingdom Government agree to abide by those decisions, they receive an important message. The message is that the European convention on human rights is applied equally across all 41 member states, and that—regardless of whether a country is a founding member of the Council of Europe and has a centuries-old democracy, or is a newer member that embraced democracy in just the past one or two years—human rights protection applies evenly to everyone. The message is extremely important for younger democracies and newer members.

My biggest fear is that, if the charter becomes justiciable and we end up joining what might be considered to be the more exclusive or superior human rights protection club, we shall be sending the completely wrong signal to the Council of Europe's remaining members. We would be seen effectively to be turning our back on the other 26 members. By looking to the Luxembourg court, we shall inevitably be weakening the Strasbourg court and the European convention on human rights. I think that it would be dangerous to take that route on human rights protection in Europe.

I am disappointed that the European Union has decided to take that route, primarily because I think that it has much better things to do with its time. Enlargement of the EU is important—I completely agree with it—and much work needs to be done if it is to be successful. The UK Government have made their position clear: they want only a declaration. As we all know, the nature of the horse trading—I am aware of what I am saying when I use that phrase—that goes on in Europe, which sets the tone for the negotiations, will mean that immense pressure will be put on my hon. Friend the Minister of State to go along with a charter that is legally binding. That may not happen this year, but it will in a few years' time. If it happens, it will be a sad day for human rights protection in greater Europe.

Photo of Bill Cash Bill Cash Conservative, Stone 5:50 pm, 15th June 2000

The value of the report from the European Scrutiny Committee lies largely in the fact that, contrary to all the spin that we get about Europe from both sides of the argument, it describes what is really happening in the European Union. I strongly recommend that people read it for that reason, if for no other.

I also strongly support my party's position, including its general view on preventing political union and on the saving of the pound. The question that I wish to address, which is relevant to both sides of the House—there are differences of opinion on both sides and throughout the country—is not merely whether a problem exists, but what we are going to do about it. The remedy simply cannot be achieved without fundamental renegotiation of the treaties.

I was delighted to hear from my right hon. Friends on the Front Bench that we shall oppose the Nice treaty, although how far and to what extent has not been made explicit yet. Furthermore, we would subject any additional powers that might be granted under the Nice treaty to a referendum. However, the tree of European government has grown from the root of the Maastricht treaty, whereas the Single European Act and other previous treaties were not about European government, although they involved degrees of political co-operation.

The fundamental reason that we need a referendum on the Nice treaty—and on the Amsterdam and Maastricht treaties, and therefore the whole issue of European union—is that the issue is one of European government, as many right hon. and hon. Members who have spoken today have conceded. If the question is who governs Britain and how, and we are prepared to have a referendum on the treaty of Nice, it follows—as night follows day—that we must have a full and comprehensive referendum on the root of the problem, which is Maastricht itself and the treaty on the European Union.

The guiding principle on those questions, for both parties, must be the national interest, and not merely party unity. I urge my right hon. and hon. Friends, and—if I may presume to do so—Labour Members to bear that in mind. In respect of our great Conservative party, we have been through all this before on several occasions in the past 150 to 170 years. For example, we went through it with repeal of the corn laws, with tariff reform and home rule, and with appeasement in the 1930s. Although there were apparent splits in the Conservative party on those occasions, the matters involved were resolved in the national interest.

With the corn laws, for instance, Peel eventually had to resign, and the Conservative party adopted a policy of free trade. We progressed from that to democracy. A free market and a free political system run together—one is not possible without the other. The same process applied to the question of the future of Europe in the 1930s.

The national interest will prevail in the Conservative party. I am delighted at the direction adopted by the present leadership of the party. If I urge the party's leaders to go a little further than they would prefer, I do so because I want them to succeed. I believe that we will succeed if we have a policy that is clear enough for the British people to understand.

I also believe that if we do so we will close the 3 per cent. gap between the Conservative party and the Government. I pay tribute to my party's leadership for everything that has been done to narrow the gap. I congratulate the Government on what they have done to contribute to it as well—as the Prime Minister might have said to me on another occasion.

An interesting poll of Conservative Members has been held over the past year and a half. It was a confidential poll, prepared under the auspices of Nottingham university. I make no secret of its findings, which have appeared in the newspapers. Indeed, I wrote an article about them for The Daily Telegraph some time ago.

The poll found that 67 per cent. of Tory Members responded positively to the question whether they wanted to rule out the single currency for ever. It does not follow that people who repudiate monetary union and the single currency and want the treaties to be renegotiated must therefore want to withdraw from the European Union.

Photo of Mr Donald Anderson Mr Donald Anderson Chair, Foreign Affairs Committee, Chair, Foreign Affairs Committee

It is even more alarming that a similar poll of candidates selected to represent the Conservative party in safe seats found that they are as extreme as existing Conservative Members of Parliament.

Photo of Bill Cash Bill Cash Conservative, Stone

There is nothing extreme about wanting to preserve democracy. In this debate, hon. Members of all parties have refused to see the extent of the powers that would be conferred on a European central bank if Britain were to adopt the euro. In fact, the Red Book shows—and the Chancellor has admitted—that this country, as a result of the stability and growth pact and the Maastricht treaty, is already within the confines of European economic government. However, that is a separate but important question.

The arrangements for the central bank mean that the bankers from the member states would not be allowed to seek or take instructions from member states. That means that we risk having our democracy and accountability taken away. No Member of Parliament, Conservative or Labour, would be wrong to insist on ruling that out absolutely.

The extent of the central bank's proposed powers is the reason why some 70 per cent. of people would reject the single currency. Real people in this country—not the euro-fanatics or the theoreticians—know what is at stake. If we lose the right to govern ourselves, we will lose the right to family life and to existing within our nation and our society. It affects every aspect of our lives.

On the question of renegotiation meaning withdrawal, let me say that we cannot predict the outcome of negotiations. Every single negotiation—and the IGC is yet another—is conducted under the auspices of article 48 of the treaty. It is here in the European Scrutiny Committee report on the IGC and it has been reaffirmed time and again. It states quite clearly: Article 48 of the Treaty on the European Union (the TEU) prescribes the procedures for its own amendment and that of the Treaties founding the three European Communities. The process is begun by any Member State or the Commission submitting proposals for Treaty amendments; it does not say one way only.

There is an obligation on the Government to have regard to the wishes of the British people and—if the 70 per cent. figure that I have given is anything to go by—to table amendments in line with those wishes, and not to take the view that people's rights can be taken away and their democracy undermined by giving in to the kind of system that is now under way.

I now turn to other matters and begin with defence. At about midnight, a paper became available that should have been provided to the European Scrutiny Committee yesterday. It sets out "Principles for consultation with NATO on military issues and recommendations on developing modalities for EU/NATO relations". I alluded to it briefly in an intervention in the Foreign Secretary's speech. I wish that I could read it all out, but I shall not.

Yesterday, the European Scrutiny Committee considered papers in respect of the strengthening of the common European policy on security and defence. The explanatory memorandum that was signed by the Minister of State, Foreign and Commonwealth Office, the hon. Member for Leicester, East (Mr. Vaz), stated: These proposals are likely to be implemented in due course by amendment to the Treaty on European Union. These will be put forward in the context of the Inter-Governmental Conference which is due to begin early next year. The Government supports the proposal in the report for interim arrangements to be put in place within the EU before any permanent measures are ready for consideration in order to ensure a consistent and coherent approach to the development of military structures within the EU. I dare say that the Minister for Europe knows—certainly Defence Ministers will know—what the EU structure comprises. It involves, for example, references to our potential adversaries having access to nuclear weapons, so we are not talking about a minor issue. The Minister looks puzzled; perhaps his officials forgot to put that in his Red Box.

The permanent structure to which I have referred crops up yet again in the paper that was presented late. It states: While being mutually reinforcing in crisis management, the EU and NATO are organisations of a different nature. It also sets out the following principle: Development of consultation and co-operation between the EU and NATO must take place in full respect of the autonomy of EU decision-making. It could not be clearer that under these arrangements—buried in the middle of the night and not revealed, as they should have been, by the time of this debate, with the Government covering up so that we would not be able to debate them properly—there is a problem that is identified in the Defence Committee report, which was annexed yesterday, but which there was no opportunity to read in time. It says: This is not a new problem, but the new arrangements will create their own new set of tensions. There must be absolute transparency between the EU military element and NATO at all times and in all circumstances. There must be no secrets between them … Therefore, we have a great deal to consider in relation to this IGC.

We also know that there are proposals for the common foreign and security policy to be made an integral part of the treaty arrangements. I should be very interested to know whether the Minister for Europe is prepared not merely to waffle about it but to tell us explicitly, as he has not done with respect to the charter of fundamental rights, that we will not merely rule it out, in the words of the Foreign Secretary, but veto the proposals. These papers, which are for Feira, clearly show that these matters will be discussed at Feira and that they will do immense damage to the British people.

Finally, I do not agree with the notion of flexibility. The hard-core, two-tier Europe was run out by the Conservative party in the 1996 elections—

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North 6:06 pm, 15th June 2000

One of the great pleasures of entering the House was that it gave me the opportunity to listen to the speeches of my right hon. Friend the Member for Llanelli (Mr. Davies) and of my hon. Friend the Member for Great Grimsby (Mr. Mitchell). It is a special pleasure today, because I actually agree with them. Right hon. and hon. Members will not be surprised, therefore, when I say that I do not support economic and monetary union.

I was most interested by the contribution of the right hon. Member for Skipton and Ripon (Mr. Curry), who said that EMU and the single currency were about the Thatcherisation of the European economy. If by that he means supporting neo-liberalism, the free market and taking the Government out of the economy, I agree with him, because that is what the EMU project is about. Taking away from elected Governments the power to operate the levers of macro-economic policy, leaving the rest to the market and letting it do its worst is surely the Thatcherisation of an economy. That is what I think that the project is about, which is why I oppose it.

I believe that democracy is about having control of one's economy, even within a relatively "marketised" economy such as ours. It means having control of the macro-economic framework in which it operates and having a system of laws, taxes and fiscal policy that govern the way in which our lives are run. It gives us our living standards and a sense of equality, redistributes income, and so on. It is legitimate and necessary for democratic Governments to have some control in that respect. This project is about taking away that power, which is why I ant unhappy about it.

I was also interested in the right hon. Gentleman's reference to the contrasting views of how Europe should progress within the European Union as it stands—the dirigiste versus the neo-liberal. The right hon. Gentleman is right. Sadly, one or two genuine friends, such as John Monks, secretary general of the TUC and former colleague, think that they are signing up to the dirigiste version when they support the single currency, but I think that they are signing up to the free market version. This is where we have an interesting debate.

There is tension in Europe. When it becomes clear to people, particularly in the trade union movement for example, that we are moving towards a much more open free market and away from laws that protect working people and ordinary people, I think that they will start to think more seriously about it.

There is scepticism within the European Union even now. I have spoken at many meetings with colleagues from the continent. Indeed, some time ago, I asked Finnish newspaper editors what the view was in Finland where, in general, the population is opposed to the single currency. I asked. "What would you do if there were a referendum?" They answered, "We wouldn't have a referendum because people would vote the wrong way."

I am glad to say that our Government will be holding a referendum, and I hope that people will vote in what I think is the right way. I think that the majority view is against having the single currency in Britain.

Another interesting point is the emphasis on economic success in the European Union. In the 1960s, there was, in total, a growth rate of 5 per cent. in the European Union, which was higher than that of the United States of America, and there was relatively full employment. At present, the growth rate is about 2 per cent., with about 10 per cent. unemployment. Growth in the EU was ahead of the US, but it is now well behind. I do not suggest that we should adopt US policies; I am only demonstrating that the EU has not been successful in economic terms.

It is interesting that some EU countries are doing quite well. One is the UK. We have lower unemployment than the rest of the EU. Sweden is doing even better; it has a rapid growth rate, a healthy economy, high living standards, an expansive welfare state and lots of worker protection, as well as low inflation. It is significant that Sweden and Britain are outside the single currency.

Swedish newspaper editors and representatives of Swedish business organisations have told me, "Your views are the same as those of the Swedes." I am glad that the Swedes are so sensible—they, too, hold the view that co-operation in Europe is fine but that the single currency, EMU model is not.

It has been suggested that people who share my views are against Europe. I am a European, root and branch. In a few weeks, I shall be sojourning in Burgundy, sampling its pleasures. I love Europe; I go to the continent for my holidays every year. I try to speak other European languages—although not very well. I am a European in every sense, but I do not support the particular economic project—EMU—that is being proposed.

There are alternative ways to run Europe. We have heard some suggestions during the debate. On another occasion, my right hon. Friend the Member for Chesterfield (Mr. Benn) proposed a democratic commonwealth of nations in Europe—stretching from the Urals to the Irish sea. That would not exclude any nations; nor would it promote the dangers that have been referred to in the debate—for example, that there would be a hard division between those countries that were in Europe and those that were in the EU.

Photo of John Bercow John Bercow Shadow Minister (Education)

I hope that the hon. Gentleman will not pursue his economic reductionism too far—notwithstanding his views on the Thatcherisation of Europe. Does he agree that, when the President of the European Commission, the president of the European central bank and the Chancellor of Germany all agree that the European single currency project is about the creation of a European state, it is incumbent on the Foreign Secretary to explain why they are all wrong and he is right?

Photo of Kelvin Hopkins Kelvin Hopkins Labour, Luton North

My right hon. Friend can speak for himself, so I should not presume to answer that question. Hon. Members can probably guess my views.

During the past few years, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), a former Prime Minister, has spoken in the Chamber against enlargement. He realises that it would change the nature of the EU; it would loosen the bonds that have built up between a tightly knit group of western European nations. That is why he is against it. I am inclined to support enlargement for the same reasons—provided that it goes right across Europe. It will force us to think about a reasonable way forward for Europe rather than pursuing the EMU project. There are alternatives.

I speak in jest but I was reminded recently that, some years ago, there was a proposal for a socialist states of Europe. I am not a Trotskyist but apparently, in such circles, they talked of little else 30 or 40 years ago. Despite my democratic socialist views, I think that is unlikely, but it is an alternative possibility.

There are many approaches that Europe could adopt—including the big tent or the commonwealth of nations. I hope that the Government and the House will examine them objectively and fairly and that they will not plunge straight into EMU and the single currency—that would be a mistake.

Photo of Ian Taylor Ian Taylor Conservative, Esher and Walton 6:14 pm, 15th June 2000

We have heard a fascinating example of a fourth way for Europe—yet another version, among a highly eclectic collection, of Labour differences on the issue. Each rivals the other in its exotic nature.

I came across another example this week. Unlike my right hon. Friend the Member for Wokingham (Mr. Redwood), I had the great pleasure of finding a Labour personage prepared to debate with me. I had a debate with Lord Healey, who was in tremendous form. He disagreed with the current Chancellor of the Exchequer and also contradicted himself, which made the debate quite spicy. It was on Sky television, on which the hon. Member for Great Grimsby (Mr. Mitchell) has often exercised his influence.

Some rigging took place before this debate. I was approached and it was suggested to me that, if I did not speak in the debate, my hon. Friend the Member for Staffordshire could be prevailed upon not to speak.

Photo of Bill Cash Bill Cash Conservative, Stone

I represent Stone, actually.

Photo of Ian Taylor Ian Taylor Conservative, Esher and Walton

Stone is in Staffordshire, but I apologise to my hon. Friend the Member for Stone (Mr. Cash) for getting his constituency wrong. However, I chose not to exercise the voluntary restraint that was suggested, because I thought that the certainties of the European debate would be undermined if the two of us did not take part.

Photo of Ian Taylor Ian Taylor Conservative, Esher and Walton

I will not, because I am under time constraints. However, the hon. Gentleman may catch my eye later when I am fully into my swing.

I begin by agreeing with the speech that my right hon. Friend the Member for Horsham (Mr. Maude) made in Berlin. He said: On any audit of achievement, the European Union has much to be proud of. He then set out the benefits achieved and added: We should relish these benefits. So in this spirit, let me reaffirm: membership of the European Union is of real value to Britain. Like the right hon. Member for Llanelli (Mr. Davies), my right hon. Friend also made it clear that we are in a political union, and that is a point that I want to emphasise. It may underline some of the differences that I have with one or two colleagues.

We joined a political union in 1973 and there was no question about its being a political union. The question was how its politics and structures would develop. Once we joined, we had as much opportunity to influence those structures as any other member. Because we like to think highly of our debating skills, we had more ability to do that than might otherwise have been the case. There is much myth making about how we joined an economic community and that no one told us about the politics. That is balderdash. We left a free trade area to join a political and economic union with its institutions and infrastructure. The European Court of Justice already existed and was pre-eminent in the areas in which the treaties gave it power.

We joined a political structure and I was part of the campaign in the 1975 referendum to encourage the British people to remain in it. I have always taken the view that we should participate in the debate not only to influence the structures, but to make sure that they work. As a Conservative, I am, at heart, pragmatic. Sometimes we got it wrong. Sometimes our ideas were not forceful enough and we have made mistakes of judgment. The European Union itself has also made mistakes. There have been times when it has been over-interventionist and it has then reacted. After the cassis de Dijon ruling, it took a different route.

Sometimes the European Union has delved too deeply into the detail of matters that we have subsequently decided should be dealt with on the basis of subsidiarity. Many times British Governments, including the Government of whom I was a member, took a general regulation from the European Union and gold plated it to make it so intrusive into the affairs of small companies and other business that it went well beyond the intentions of the original discussions held at EU level.

Yes, the EU can make mistakes; it has not been a perfect entity. However, it would have been extraordinary if it had been perfect because it was created as we went along. There was no fixed game plan. If there were ever a game plan with which we were uncomfortable, that was largely because we had not influenced it, not because it was pre-ordained.

As a pragmatic Conservative, I want the EU to work. I want a single market and I want it to be effective, which means that I want a strong Commission and a strong European Court of Justice. They are vital ingredients in achieving what we want.

The four freedoms are the movement of goods, of services, of people and of capital. Once we established a single capital market—many of us thought that it would be almost impossible to achieve—Lord Howe, then Geoffrey Howe, astonished everybody when he abolished capital controls in 1979–80. Unbelievably, under our influence, the French did the same in about 1987. That happened against all expectations.

Having established a single capital market, we have to understand the implications of it. They are that money will flow round the single market area to find the best return and the best investment opportunity. That flow will not stay stickily in any one country because a Finance Minister or the Chancellor of the Exchequer wants it to do so. In those circumstances, it is essential, first, that countries within the European Union develop common policies that mean that capital efficiency within the EU can be as stable and effective as possible, because that is in the interests of the Union as a whole. Secondly, if for any reason countries differentiate themselves from what I shall call the norm, there will be consequences, both good and bad.

For example, if taxes increase to too high a level, people will move progressively to another country that has more attractive taxation. Thank goodness, taxation stays the preserve, in its broad and most important senses, of the nation state. It is a flexible lever. It is also part of the competition within the single market, and an essential part of the disciplines of that market.

We have a single market and I want it to be made effective by a single currency. I make no apology for saying that I think that a single currency is an inevitable part of a single market. We could stay out, but I believe that the political and economic costs of so doing will grow. Some people say that all the costs are on the side of the decision to join. I think that it will become self-evident within two or three years that the costs come from staying out. That means that the decision that the British people need to take will come at us sooner than the Conservative party's official policy would allow us to believe.

It does not make sense for us to say that for a finite time—let us say, the next Parliament—we will not join a single currency. The decision must be made now. By "now" I do not mean today. So that the decision can be made in two to three years, the debate must start now.

I hope that the Chancellor of the Exchequer will understand that tonight. I understand that he is to make a speech at the Mansion House later today, and I am sure that he will touch on the matter. I do not expect him suddenly to announce that his five tests have been abandoned. Nor would I expect him to say that those tests, magically, have suddenly been met. He can stick to his mantra, with one exception. It is about time that he said that Government policy is aimed to make it possible to join the European monetary union at the earliest possible moment, and not merely that it would be a good thing if the tests were met. He should make it clear that there is an active will to secure the opportunity for the British people to make a decision on the issue within two or three years, which plausibly is the period that it will take, whether we take OECD or Treasury figures about the way in which our economies are converging.

Staying out of the single currency will involve costs that I believe British industry will not find acceptable. I do not believe that the House would find them acceptable. We are already beginning to see the Euro 11 reinforcing their situation. I predicted some time ago that that would happen, and now it is. They will start to define the terms on which they will reinforce the decision making of the European central bank, and we shall be excluded from that process.

Having said that I want a single currency in a single capital market and that I want the EU to be efficient, I also want there to be the sort of reforms that will make Europe as a whole an economy capable of challenging the United States. We saw the opportunities to do that emerging out of the Lisbon summit. Measures with which I was closely involved when Minister for Science and Technology, such as telecommunications, have begun to have a huge impact on European economies.

In January, in Madrid, I spoke to the Conservative Spanish Industry Minister, who said that one of the contributions that I had been able to make during negotiations on those matters in 1996–97 was to explain why Spain should not take the three-year derogation to which it and Portugal were entitled under the treaties to enable them to liberalise their telecommunications three years after everyone else did. I explained that for Spain to do so would he commercially disastrous. In fact, Spain took only six months—an action forced upon the country because it had not acted quickly enough previously—and Spain is now one of the more interesting economies in that respect. Not only has there been an opening up, which continues, but BT and Vodafone are jointly discussing acquisitions in Spain.

The Lisbon summit objectives are vital for the EU. If we can achieve them, they will revitalise the European economy in ways that we now think are impossible. Sometimes, we do not even bother to look at changes that are staring us in the face. For example, there are currently significant developments unfolding slowly—too slowly—in Germany; the Government there are changing the way in which they tackle some of the problems affecting the German economy. In France, the socialist Government—believe it or not—have pushed through more privatisations than their right-wing predecessors, with remarkable implications for the competitive position of French industry, domestically and abroad.

We have witnessed the changes in Spain under a Conservative Government, although it is sad for British Conservatives that the Prime Ministers of Britain and Spain appear to be ad idem: one is new Labour, the other Conservative, but at least in the sense of influencing the debate in Europe and not leaving it to the more dirigiste members of the EU like France and Germany, what they are doing is a good thing. Such reforms are crucial to ensuring that the single currency zone is ultimately successful in a competitive world market.

I want EU enlargement to be successful. Enlargement is a political, social and economic necessity; it is not all about widening versus deepening. The EU requires institutional change to provide an effective structure that can cope with enlargement: that means changes in the Commission and changes in voting procedures—inevitably, there will have to be more qualified majority voting, albeit not in the key areas of defence and taxation. Such changes are an essential ingredient of enlargement.

I hope that the Minister for Europe will take into account a point I made in an intervention on the Foreign Secretary: I remain unsatisfied that the agenda for this weekend's summit properly addresses the timetable for the entry of at least the earliest applicant states. It needs to be made explicit, not only that there will be an intergovernmental conference to discuss the matter, but that there is a timetable that sets targets that both applicant states and existing member states have to meet.

If the EU is to be effective, it needs to tackle the issue of defence. That does not mean that NATO will inevitably be undermined. I take the view that a more active European involvement in defence policy is likely to vitalise the NATO alliance, not undermine it, and many observers in Washington and in this country, for example, Sir Charles Guthrie, agree. Of course, we must be careful and act in conjunction with NATO, but that is precisely what the discussions in Vienna, Cologne and elsewhere have been about.

In all the areas that I have mentioned, Europe has an opportunity to make itself more successful for all its citizens.

Photo of Richard Spring Richard Spring Conservative, West Suffolk 6:29 pm, 15th June 2000

In the past few hours of the debate, we have seen revealed a total muddle. We knew about the major splits among Government Front Benchers in respect of the euro, and we have seen it this afternoon under the headline "Cook dumps speech praising euro". The Foreign Secretary left out key passages from the speech that spin doctors handed out to the newspapers before the debate. Perhaps the right hon. Gentleman was blinded on the way back from Damascus, or perhaps he was nobbled by the Chancellor of the Exchequer on his way to the debate, especially as the Chancellor is to make an important speech this evening.

The Government's position is a shambles, and the Front Bench is split on a vital issue. The reaction in the Chamber and outside is a humiliation for the Foreign Secretary. There is no proper policy on the euro and no vision for Europe. This is not a brewery; it is the House of Commons.

We heard some excellent speeches this afternoon, expressing various points of view. In an impressive speech, the right hon. Member for Birmingham, Hodge Hill (Mr. Davis) spoke about European security considerations. He referred to problems in Russia, a point taken up by the right hon. and learned Member for North-East Fife (Mr. Campbell). At least on reform of the common agricultural policy, we can agree, although one can only smile wryly at the right hon. and learned Gentleman's suggestion that every Liberal Democrat Member of Parliament shares his enthusiasm for the single currency and his view of Europe.

The right hon. Member for Llanelli (Mr. Davies) made an excellent speech, in which he dealt with defence, NATO and burden sharing. All Governments in Europe are cutting defence expenditure, and the right hon. Gentleman spoke of the difficulties arising from that and about the implications of the single currency.

My right hon. Friend the Member for Wokingham (Mr. Redwood) spoke about the need for honesty in the debate about Europe. He pointed out the fundamental dishonesty of Ministers who will not face up to the challenges of an enlarged Europe.

The hon. Member for Swansea, East (Mr. Anderson) spoke about the effect of the extension of qualified majority voting on European legislation. We make no apology for our views, or for seeking referendums on major constitutional changes that may affect this country. I was a little disappointed that the hon. Gentleman spoke about the views expressed by my right hon. Friend the Member for Horsham (Mr. Maude) in a fine speech which, with respect, I do not think the hon. Gentleman had read fully.

I agree with my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) that the European Union has added greatly to peace and stability in post-war Europe. My right hon. Friend spoke movingly about that. Enlargement is, indeed, hugely important, and the Government seem to be losing sight of the central objective. There is no leadership from the Government in that regard.

The hon. Member for Wimbledon (Mr. Casale) spoke about the views of the European Scrutiny Committee on matters such as the weighting of votes. We all agree that the European Union must succeed, but we do not subscribe to the idea that there should be one size that fits all in an enlarged community.

In a fine speech, my hon. Friend the Member for Stratford-on-Avon (Mr. Maples) spoke about competing models, visions of Europe and the need for clarity. He is right about the process of euro-osmosis—the evolution of concepts such as the social chapter and its effect on our law. I applaud the fact that my hon. Friend was one of the originators of the concept of flexibility, which we have taken up and extended.

The hon. Member for East Carmarthen and Dinefwr (Mr. Williams) was honest about his position and specific about the relationship between the deutschmark and the pound. Such honesty is lacking from the views expressed from the Government Front Bench.

We heard a contribution from my distinguished hon. Friend the Member for Wycombe (Sir R. Whitney), who has been consistent in his view over the years. As always, he made a conscientious speech, expressed with genuine conviction.

The hon. Member for Great Grimsby (Mr. Mitchell), in characteristically effervescent form, pricked the balloon of the waffle and soundbites typical of those on his Front Bench.

My hon. Friend the Member for Boston and Skegness (Sir R. Body) spoke about the need for flexibility, and the difficulties of scrutinising European legislation.

The hon. Member for Wolverhampton, South-West (Ms Jones) dealt eloquently with the dangers of the charter of fundamental rights—a bean feast for lawyers—and what will happen if that becomes an annexe to the treaties.

I was glad to hear some support from my hon. Friend the Member for Stone (Mr. Cash) for the views set out by my right hon. Friend the Member for Horsham in a speech made in Berlin. He may not have found them ideal, but I am glad that he approves of much of what my right hon. Friend said. He alluded to the crucial nature of our North Atlantic Treaty Organisation relationship. Very bravely, in a party of control freaks, the hon. Member for Luton, North (Mr. Hopkins) spoke genuinely—[Interruption.] Control freaks on the Back Benches, not the Front Bench. My hon. Friend the Member for Esher and Walton (Mr. Taylor) talked about the single market and the need for deregulation. He has consistently taken a favourable view of the single currency, and called for clarity and for the Government to take an active role.

I am glad that the Foreign Secretary has arrived because we are interested to understand why key passages of his speech were left out. For example, he was to say, "The Feira Council will confirm Greece as a member of the Euro zone. At that point Britain could be the only member state outside the Euro zone." He was also to say that we should "now resolve in principle that we want to be a member." He must consult the Chancellor before talking in those terms. He was also to say, "It is not difficult to identify why there would be benefits for Britain joining in a successful single currency. This Government will not let Britain lose by staying out." Clearly he was nobbled on the way to the Chamber. Why were those passages left out? We look forward to an explanation.

Photo of Robin Cook Robin Cook Foreign Secretary

The hon. Gentleman was present for my speech. If he casts his mind back, he will remember that I took three interventions during that passage of text. If the House wants to have a debate—it is right that it should do so—it cannot complain if a Minister does not read his speech by rote. As to that particular sentence, it is one that I have used at least half a dozen times, and I will use it again.

Photo of Richard Spring Richard Spring Conservative, West Suffolk

All I can say is that the idea that those omissions arose out of confusion is pretty lame. The Foreign Secretary left a key issue out of a central part of his speech. Perhaps the Chancellor will be relieved that even greater embarrassment not will be heaped on him by that speech. However, by leaving passages out the Foreign Secretary has made things worse.

The debate has once more revealed the parallel universe that Ministers seem to inhabit for discussions in Europe. Almost alone in Europe, the Government repeat their mantra that current developments on the intergovernmental conference, the charter and Europe's future defence identity are likely to be only technical and of no political significance. In August 1998, the Foreign Secretary said: The concept of Europe as a superstate is one that is deeply unfashionable … The British people would certainly agree, but, more than that, they simply do not want it. Ministers seem oblivious to the fact that many in Europe are saying the opposite, and my right hon. Friend the Member for Horsham quoted many examples.

The Government claim that the charter of fundamental rights will be a harmless restatement of existing rights, but Commissioner Vitorino says that it will mark a definitive change in the Community, helping it to become "a full political Union". Let us remind ourselves that Gunter Verheugen called for the charter to fulfil its function as the foundation stone of a European constitution. The Government simply will not tell us explicitly whether they will veto in advance the proposition that the charter become part of any treaty annex. The German Foreign Minister has called for a European Parliament and a European Government to exercise real legislative and executive power in a federation.

How do Ministers explain such a total divergence between their statements and those of other EU leaders? Why is it that, almost alone in Europe, the Government appear to be in denial about what is likely to be pressed on them at Nice? They are acting in the way that they always act: they hope that their spin will triumph over substance, but other leaders refuse to be spun and have the annoying habit of telling the truth. For example, echoing Harold Wilson's words about the white heat of the technological revolution, the Prime Minister talked about a sea change in European economic thinking, benchmarking and a lot of techno-babble. A matter of days later, the French Prime Minister said that we do not intend to abandon the social model we have built over the last fifty years … completely rejecting all that the Prime Minister seemed to suggest.

The Government constantly refuse to acknowledge the path down which Europe is heading because they lack the inclination and the will to put the case for an alternative route and for the kind of Europe that the moderate, mainstream majority of the British people want.

The European Union, on the verge of enlargement, faces fundamental issues. In Berlin a month ago, Joschka Fischer posed important questions, and last week, also in Berlin, my right hon. Friend the shadow Foreign Secretary set out the alternative case for a reformed, more flexible, network Europe. Where is the Government's vision? Where do Government Members see Europe in 10 or 20 years? Why do the Government think that Europe will change? How will it change with enlargement?

Why do not the Government show the same clarity of vision for the future of Europe as other European leaders? Why do they refuse to acknowledge, let alone participate in, the debate raging elsewhere? Lack of leadership means that our influence is suffering by default. So much for being in the driving seat—that is total nonsense.

What is happening to the force of European policy? It was reported that a new unit co-ordinating the work of Government Departments on Europe and keeping ahead of the game will be incorporated at No. 10 Downing street. As everybody in the Foreign Office knows, Downing street is effectively controlling more and more of the elements of foreign policy. The Foreign Secretary's position is to be further diminished, and nowhere more so than in the eyes of his European counterparts.

It would be a tragedy if the case were not put, at Feira and at the IGC, for reforms that would enable the EU to respond to the requirements of a diverse, enlarged Europe and a modern world. Many of the Opposition's proposals for the IGC have been challenged by no one in the debate today. No one has leapt to the defence of the current common agricultural policy, which will damage and destroy the process of enlargement if it is not dealt with.

No one has leapt to the defence of the common fisheries policy, nor could they. Even the Minister for Europe has not been heard lauding its equity and its exemplary record on stock conservation. No one has leapt to the defence of the EU's record on international development. The problems, which will become infinitely worse after enlargement, are universally acknowledged. It is just that the Government do not possess the vision to do anything about it. Where is the leadership? It simply is not there.

One of the necessary institutional reforms is for greater flexibility in Europe. Of course there is a need for safeguards in endorsing enhanced co-operation procedures, but on principle, the idea that nations should have more room for manoeuvre is in line with the realities of the modern world. The Government are simply out of date on this issue. The world has moved on from all their talk about fast lanes, inner circles, benchmarking and hard cores.

Cannot the Government see that an enlarged Europe will be more diverse? Cannot they see the need for varying relationships to suit the different needs and wishes of Europe's peoples? Cannot they see that that is the best way to enhance democracy and the accountability of Governments to their electorate for the decisions that they make? Cannot they see that it is the best way to preserve the integrity of the EU and to ensure that all its members feel at ease? We should be working for a gradual development of a Europe of interlocking and overlapping groupings, and of nations coming together in different combinations for different purposes and to a varying extent.

Today we have heard the two alternatives now available as Europe, on the verge of enlargement, stands at the fork in the road. We can choose the old one-size-fits-all dogma of yesterday. Down that road lies discord and disharmony as national interests are overridden. The Government are no friends of Europe for choosing that route, whether by design or default, and for allowing the EU to move step by step towards a single European superstate.

If Europe is to succeed in the new century, it must choose the other route. It needs agility and adaptability. A democratic Europe needs flexibility and diversity. It needs freedom and choice. That is a common-sense, rounded vision for Europe which makes sense for the modern world.

The IGC gives us a tremendous opportunity to start to fashion just such a European Union, which can survive and prosper for all its members. Nothing today has reassured the House that, on any level, the Government are facing up either to the will of the British people or the ability of a European Union to survive and prosper in the years to come.

Photo of Keith Vaz Keith Vaz Minister of State (Foreign and Commonwealth Office) 6:45 pm, 15th June 2000

This has been a good debate, which has examined the agenda for the conference at Santa Maria da Feira next week. Some Opposition Members did not know where Feira was. I can assure them that it is in Portugal and Portugal is in the EU.

Like my right hon. Friend the Foreign Secretary, I pay tribute to the Portuguese presidency for its work during the past six months. The fact that we are following the successful conference at Lisbon with the upcoming Feira council shows the work that has been put in by the Portuguese, and we are grateful for what they have done.

We have had some excellent speeches, including those from my hon. Friend the Member for Swansea, East (Mr. Anderson), who is the Chairman of the Select Committee on Foreign Affairs, and my hon. Friends the Members for Wimbledon (Mr. Casale) and for East Carmarthen and Dinefwr (Mr. Williams). My right hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) rightly mentioned the problems faced in the Council of Europe and the Western European Union, and I pay tribute to him for his work in both organisations. It is good that Javier Solana suggested that he come to this debate to raise those points, because that emphasises the Government's firm commitment to ensuring that defence issues remain an issue for this Parliament. I promise to write to my right hon. Friend on the staffing issues that he raised. He will understand why I do not deal with them today.

My hon. Friend the Member for Wolverhampton, South-West (Ms Jones) raised the charter of rights, with which I shall deal. I also pay tribute to the right hon. and learned Member for North-East Fife (Mr. Campbell) for his usual eloquent and cogent contribution to debates such as this.

We had amusing, witty and whimsical contributions from my right hon. Friend the Member for Llanelli (Mr. Davies) and my hon. Friend the Member for Great Grimsby (Mr. Mitchell). I am so glad that my hon. Friend the Member for Great Grimsby took the opportunity, once and for all, to stamp on the suggestion made by Lord Tebbit that I had written to him and scribbled on the bottom in green ink that we were coming to get him. My hon. Friend has been waiting to make that public denunciation of Lord Tebbit for some time and I thank him for what he has said. My hon. Friend the Member for Luton, North (Mr. Hopkins) also made a good contribution on the single currency.

From the Opposition, we had a moving and eloquent contribution from the right hon. Member for Skipton and Ripon (Mr. Curry). I am sorry that I was not able to hear his entire contribution, but I was speaking elsewhere on a long-standing engagement with the right hon. and learned Member for Rushcliffe (Mr. Clarke) on European matters, but I know that it was extremely well received by the House and I thank him for what he said.

As usual, the hon. Member for Wycombe (Sir R. Whitney) made a good contribution. He rightly reminded us and his Front-Bench spokesmen that, if some Conservative Members followed the course of action that they wanted to follow on Europe—Mr. Sykes's road—Britain would be left a shrinking little island.

The hon. Member for Esher and Walton (Mr. Taylor) talked about a timetable. My right hon. Friend the Foreign Secretary rightly said that the timetable is the IGC. There is no point in setting timetables for the applicant states unless we get our act together. That is why we have set a strict timetable for the completion of the IGC by December 2000. Clearly, individual countries will have their own timetables. It would not be right to raise expectations, but each applicant wants to join the EU as quickly as possible, and we in the UK are doing everything that we possibly can to help, assist and ensure that that happens.

Photo of David Drew David Drew Labour/Co-operative, Stroud

Understandably, at least on the Government Benches, much of the debate has taken thoughtful account of the views of Mr. Paul Sykes. Would my hon. Friend care to comment on my predecessor, the former Member of Parliament for Stroud, who announced at the end of May that he could no longer stay within the Conservative party and joined the UK Independent party. because, he said, he could no longer accept "the bogus premise" behind the Tory argument, and he felt that the policies put forward by William Hague "do not mean anything"? Who does my hon. Friend think is the more principled individual?

Photo of Keith Vaz Keith Vaz Minister of State (Foreign and Commonwealth Office)

It is a difficult choice. Both Conservative Front-Bench spokesmen talked about forks in the road; perhaps they should have spoken about knives in the road.

The usual suspects also took part in the debate. Our good friend the hon. Member for Boston and Skegness (Sir R. Body) chided my hon. Friend the Member for Great Grimsby for entering his constituency without telling him. I assure the hon. Gentleman that Boston and Skegness remains in the European Union.

Photo of Mr Richard Body Mr Richard Body Conservative, Boston and Skegness

The hon. Member for Great Grimsby (Mr. Mitchell) is always most courteous. He has always notified me in advance and he is always welcome.

Photo of Keith Vaz Keith Vaz Minister of State (Foreign and Commonwealth Office)

I am sure that my hon. Friend will be pleased to hear that. It is good of the hon. Member for Boston and Skegness to extend that invitation.

The hon. Member for Stone (Mr. Cash) is cross with the right hon. Member for Horsham (Mr. Maude). He goes on about the Maastricht treaty, of which I have a copy. He should know who signed it: the right hon. Member for Horsham. It is no good the hon. Member for Stone complaining to the Government about the Maastricht treaty and the fact that there was no referendum on it. He should address his comments to St. Francis of Maastricht—the right hon. Gentleman who signed the treaty. He says that he is not in favour of flexibility. Again, he should address his remarks to St. Francis of Maastricht. The right hon. Member for Horsham is the biggest supporter of flexibility. There is no point in complaining to us about those policies. He should make an appointment to see the right hon. Member for Horsham.

My right hon. Friend the Foreign Secretary underlined the fact that Feira is an important way forward after the enormous success of Lisbon. Feira will build on the tremendous achievements of the Lisbon conference. It will re-emphasise the United Kingdom's important role in Europe: in the driving seat, leading Europe and being part of the most important decision-making processes.

Photo of Francis Maude Francis Maude Shadow Secretary of State (Foreign Affairs)

I am grateful to the Minister for bestowing a halo on me—I am sure that it is richly deserved. Earlier, I asked the Foreign Secretary whether, following the verbiage and persiflage of the Lisbon summit, he could give three examples of legislation that had been improved to help the lot of small businesses. There has been plenty of time in which to provide some examples. I mean genuine changes, such as matters that have been deregulated to help businesses.

Photo of Keith Vaz Keith Vaz Minister of State (Foreign and Commonwealth Office)

Before 10 o'clock tonight, I will give the right hon. Gentleman 25 examples. I will stick them in a letter and put them on the board. I am sure that he does not want me to repeat them now.

Let us consider the contribution of the right hon. Member for Horsham. What a disgrace, for a speech from the Front Bench. He spent 14 minutes expressing a negative attitude towards the European Union. I appreciate that Mr. Sykes is going to bankroll the save the pound campaign, but every comment of the right hon. Gentleman was negative and critical of membership of the European Union. He says that he will veto the treaty of Nice if it has an integrationist agenda. I assure him that the treaty of Nice will signify the work in preparation for the IGC.

The right hon. Gentleman wants the IGC to take place after enlargement. That is one of the silliest suggestions that I have ever heard. Let us imagine allowing 13 applicant countries into the European Union and subsequently changing the composition of the Council, the number of Commissioners and the re-weighting on the Council and considering qualified majority voting. That is ridiculous. However, it is interesting if that is Conservative policy.

I was pleased to hear, at last, a mea culpa from the right hon. Gentleman about his decision to sign the Maastricht treaty. He said that he was a reformed man. The sinner repents. He now believes that referendums should be held before such treaties are signed. He did not hold a referendum, but he believes that it should be done now. That is a substantial change of policy.

The right hon. Gentleman mentioned the visits that I have made throughout the United Kingdom. The Foreign Secretary and I believe that it is extremely important not just to go to Berlin to make a few speeches, but to go round the country and meet the citizens of the United Kingdom and to talk to them about the benefits of European Union membership. At least my means of transport do not break down, unlike the right hon. Gentleman's truck, which broke down when he went to France. That shows that the Tories cannot even get their transport policy in order, let alone their European policy.

Photo of Keith Vaz Keith Vaz Minister of State (Foreign and Commonwealth Office)

I am glad that the hon. Gentleman has got to his feet. He should learn to read to the ends of paragraphs before he starts quoting from Select Committee reports. He quoted a tiny bit of evidence. If he reads paragraphs 264, 265, 266, 267 and 268 of the evidence and the paragraph to which he referred, he will know that I have made it absolutely clear that this charter is to be a showcase of existing rights, that it is to be a showcase and not a launch pad, and that we consider that a declaration is better than any other course of action. We have said that from the very start. The Prime Minister has said it, the Foreign Secretary has said it, and I have said it. We have made it absolutely clear that this is to be a declaration.

My hon. Friend the Member for Wolverhampton, South-West does not agree with that, but we believe that it is the best course of action. We do not believe that the charter of rights should go beyond existing rights. It should be consistent with existing rights. It should be binding now if those rights are binding now, and there should be no extension. That view is shared by many member states in the convention and beyond, so there is no question of us having even to consider a veto. In the end, it will be a matter for the member states and not for the convention. I pay tribute to the work of Lord Goldsmith, Lord Bowness and my hon. Friend the Member for Bridgend (Mr. Griffiths).

On the euro, the hon. Member for West Suffolk (Mr. Spring) said that the Foreign Secretary had changed his speech. My right hon. Friend did nothing of the kind. Do Conservative Members want to hear this all the time? The hon. Member for Esher and Walton referred to it as a mantra. I shall repeat the mantra. Five economic tests were laid down by the Chancellor in 1997. Early in the next Parliament, we will assess those tests, and we will put the issue to the British people. In the end, there will be a referendum.

The decision will not be taken by Paul Sykes or by the shadow Cabinet. The Labour party believes in leaving such matters to the British people in a referendum—just the sort of thing that the right hon. Member for Horsham and the hon. Member for Stone were talking about. We believe that the British people should decide those issues, and only if they decide that we should do so will we enter the euro.

That view is shared by every member of the Cabinet. There are no camps in the Cabinet. There is one clear Government policy that we have repeated time and again. I am pleased to hear from the right hon. Member for Horsham that he found my right hon. Friend's performance reassuring. He is reassuring. When he comes to the Dispatch Box, he reassures the nation. When he goes abroad, he reassures Europe and the world. When the right hon. Member for Horsham goes abroad to Berlin, he causes havoc. That is why it is important that we restate our policy.

It is also important to make a final point about defence. There is no better supporter of our policy on defence than President Clinton. NATO remains the bedrock of our defence policy. The United States of America is relaxed about, and comfortable with, the important measures that we are taking to help the defence of Europe. Of course our NATO allies outside the European Union are being consulted: the dialogue is continuing all the time. We look forward to Feira. We believe that it is an opportunity yet again to state our central position in Europe.

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