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At the next summit meeting, heads of state will be invited to agree to a solemn declaration. I do not know whether the Prime Minister will agree--she might. If they all agree to it, what legal effect will it have? None whatsoever.

The social charter mentions a minimum wage. I asked how much that wage was. There is no such thing. It would be different in each country and each region of a country. So much for that.

I heard Glyn Ford on the radio the other day saying that the workers at GCHQ would be able to join a trade union because they will have that right under the social charter. Not so : Mrs. Papandreou explained that each country's legislation would have precedence. Whereas for the single internal market there was a White Paper, a treaty that provided a legal base and majority voting, for the social charter there has been no White Paper, no treaty and no majority voting ; there must be unanimity. Even if it obtained a solemn declaration, the Commission would have to go away and draw up about a dozen draft directives, each with an uncertain fate. Unfortunately, the social charter simply will not happen.

8.58 pm

Mr. Alan Haselhurst (Saffron Walden) : I am never entirely sure from which angle Labour Front Benchers will choose to talk about the European Community. Generally they bring such a wealth of differing experience to the subject that they go twice around the same circuit--except the hon. Member for Newham, North-East (Mr. Leighton), who has shown a remarkable but depressing consistency over the years.

I see three kinds of objection to economic and monetary union. There are the technical objections, the fear about where it will all lead and, in some cases, even a questioning of Community membership. Some wish to use debates about the details of movement towards economic and monetary union as an opportunity to rehash the arguments about whether we should be in the Community at all. The British public, however, do not understand such doubts--they now believe, whether enthusiastically or pragmatically, that we are in the Community and should make the best of it and play our role to the full.

Anxiety is being induced by the way in which the path towards harmonisation, convergence and unity is being portrayed. Words such as "federalism" are being used, and we are being invited to worry about a potential loss of sovereignty. I do not have too much difficulty with those possibilities. I do not know when we might form democratic political organisations commensurate with economic and social events, but I do not wish to exclude them in advance--it will depend how we proceed. The idea, however, that there is a viable alternative in the form of full sovereignty in today's Parliament, constituting complete power over our affairs, is surely an illusion. Certain events could rock Britain, and could not be faced up to by Britain alone. Only by pooling or sharing sovereignty could we find the means to be equal to such events. We must then examine our democratic structures to ensure that they are capable of keeping us in charge--in a democratic way--of the institutions that we have joined and developed, to attain meaningful sovereignty in today's world.

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The technical objections are, of course, much more difficult. The history of the EMS and ERM reveals disagreement between economists about how beneficial they have been. If technical argument about what such systems have achieved in the past is a possibility, there is certainly scope for argument about the way in which they will go in the future. There are many questions to be answered, and it would be foolish to imagine that there is any certainty about the results of joining or not joining, or about the impact of sterling on the ERM. We cannot forecast all the consequences, although on balance I feel that we would be better off in the system--for all the arguments deployed so eloquently by many of my hon. Friends.

Above all, I believe that a positive attitude is needed, not a negative or grudging one. I hope that we shall breathe a full-hearted commitment into stage 1 of economic and monetary union--and that means going into the ERM at the earliest possible moment, if we believe that it is right. We must demonstrate a constructive approach to economic and monetary union. If we cannot even get to first base, there will be deep suspicion about Britain's attitude to what might happen later.

As my right hon. Friend the Member for Blaby (Mr. Lawson) said on Tuesday, we must also show that we have the political strength and will to participate. It is vital for us to show that we are committed, and are actively looking for the right way forward. I am certainly not prepared to endorse every last dot and comma in the Delors report, but we must be realistic and accept that the report is there on the table. It is one of the first documents to be there, and it is of great symbolic significance. Although my right hon. Friend the Chancellor has today produced a paper "An Evolutionary Approach to Economic and Monetary Union", we shall have to be extremely ingenious to persuade our partners that that is necessarily better than what is already on the table. However, as long as we are positive and forward-looking, I hope that our arguments will be accepted in good faith by our partners in the Community.

Although there are positive reasons for wanting to be as constructive as we can be, we must also accept the downside risk. If we are not prepared to go along with the spirit of moving closer towards economic and monetary union, there is a danger that our partners will go ahead without us. Too often in the history of our relationships with Europe, we have been behind and had to catch up. We have then faced with terms which are not necessarily the most advantageous to us. It would be better for us to be on a par with our partners right from the beginning, exercising the maximum influence. The other danger is that we must not ignore the momentous events occurring in central and eastern Europe. We desperately need to be in close partnership with our allies in the European Community so that we are in the best position to guard the future. We do not know exactly what will happen, but we cannot afford to be out of the influential council chambers of the European Community when these new opportunities of different relationships with the eastern European countries develop in the years ahead, as it now seems that they might.

While I understand that there will obviously be heart-searching among some of my hon. Friends about the fact that, however cautiously or boldly we move, we are willing a different role for this Parliament in relation to the institutions of the Community and the European

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Parliament, it will not serve the interests of our people best if we are faint-hearted. I hope that we shall go forward with a spirit of determination to gain success and a willingness to compromise in order to do so.

9.6 pm

Mr. Calum Macdonald (Western Isles) : In the brief time available to me, I shall forgo some of the more technical issues that have been raised in the debate and will try to give it a peculiarly Scottish perspective, which I hope will be useful.

Some of the speeches--I am thinking of those from hon. Members whom one can generally consider to be anti-European, to put it at its crudest--have been labouring under somewhat of an illusion. Indeed, that illusion could be found in the memorable speech by the right hon. Member for Blaby (Mr. Lawson) last Tuesday. He said that he had a desire or commitment to see a Europe of nation states. In using those words, he evoked the words of the Prime Minister at Bruges. Underlying that phraseology--"a Europe of nation states"--is what I would term an Anglocentric illusion. It is the illusion that the United Kingdom is a nation state. On the contrary, as the very names "Great Britain" and "United Kingdom" tell us, Great Britain is not a nation state. It is an amalgam. It is an economic, monetary and political union of four nations with different historical traditions. The United Kingdom is a union of nations. It is a supranational state.

Indeed, apart from its excessively centralist character, with which, I am sure, we would all disagree, the United Kingdom is a model of the kind of supranational European economic and monetary--and, I believe, eventually political--union that those who support the notion of a nation state wish to deplore. There is thus an underlying inconsistency and incoherence to those who falsely defend the notion of the United Kingdom as a nation state and who posit that against the notion of a European supranational state.

The importance of the balance of payments deficit has already been mentioned. From time to time some Conservative Members like to pretend that in today's global financial environment the national balance of payments no longer matters. Mr. Samuel Brittan, the financial columnist already referred to tonight, said in support of that point of view that, today, no one, for example, worries about the putative imbalance in the balance of trade or the balance or payments between Wales and the rest of the United Kingdom. That is fundamentally wrong. Of course there is no official accounting of the flow of trade and the balance of payments between different regions of the United Kingdom, but that does not mean that such imbalances do not occur. They occur and they matter. We are constantly concerned about the deep-seated regional imbalances which such figures, if available, would show within the United Kingdom. If we get down to economic basics, we should remember that the balance of payments is a form of accounting that merely highlights a more general economic phenomenon-- different geographical areas enjoy different rates of economic growth at different times. When those differences are merely temporary, there is no cause for alarm, but when they appear to be endemic and long-term, they are certainly a cause for concern, as the inevitable result is an ever- increasing gap in the average wealth and

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living standards of the people in those different regions. In the past 50 years we have seen that happen not only in the United Kingdom, but between the United Kingdom and its international competitors. Two responses can be made to the general phenomenon of different rates of growth. One is to make adjustments in exchange rates and the other is to smooth out the results of the divergence in growth by following a policy of fiscal transfer. That means that fiscal policies are used to transfer wealth from the faster growing areas to the slower growing areas. The first response is the usual one used when economic imbalances occur between different currency areas and the latter response is characteristic when imbalances occur within an individual currency area.

Some of my hon. Friends hold completely different views from mine, but I suspect that, when faced with choosing between the two means of tackling regional problems, which are inevitably caused by different patterns of economic growth, it is obvious that--certainly as Socialists--that we should prefer, as we do in practice, a strategy of fiscal transfer. That strategy is more direct, efficient and equitable than any adjustment to the exchange rates.

Surely the case for such a strategy is so strong that no hon. Member, no matter his opinion, would today propose that we should return to having a separate Scottish currency area to tackle the regional problems that are obviously caused by the different rate of economic growth between Scotland and the south-east of England. The Chancellor was extolling the virtues of competitive currencies, but I note that he did not think to import that marvellous device into the United Kingdom, although that has been suggested by some of his Front-Bench colleagues in various pamphlets.

Were it not already the status quo I do not believe that anyone would defend--in any case it would not be right to do so--the existence of separate currency areas within the European Community. I have already outlined the superiority of the fiscal transfer strategy as opposed to adjustments to exchange rates as a means of evening out or narrowing regional imbalances. Therefore, when economic and monetary union is achieved, it is important that there is also a powerful social dimension. I am not talking just about a social charter which advocates basic employment and welfare rights, but about a full range of policies and instruments of fiscal transfer available to other federal governments. Therefore, regional and industrial policy, the development of the social fund and even a properly targeted common agricultural policy could be used.

It also follows that economic and monetary union with a strong social dimension must mean a continuing and obvious increase in the Community budget. A further consequence of that increase would be a gradual but inexorable gathering of power at the political centre of the Community, in the institutions of the European Parliament and the Commission. Hon. Members may not like that, but that is the truth. We Scots have learnt to live with this since 1707 and, after 300 years, it is not that bad.

Despite the Government's foot dragging, we have set out on an historic road which will enventually lead to a supranational Europe which I welcome and hope will have the strong powers necessary to enable it to pursue on a Community level the regional policies which enlightened member states already pursue on an individual level.

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9.15 pm

Mr. Patrick Ground (Feltham and Heston) : I respect and understand the views of those hon. Members who accept that stability in exchange rates is desirable, but believe that it is undesirable if bought at the cost of expensive intervention or inflation caused by reducing interest rates to let down the value of the currency. If those criticisms of the exercising of such policies here are valid, they are invalid criticisms of the record of the exchange rate mechanism during its existence.

The outstanding achievement of the ERM in the past few years has been increased stability between the currency of members and a significant lessening of inflation. It is true that it has achieved this with exchange controls in two major countries, but it is a great improvement on what preceded it.

My right hon. Friend the Member for Shropshire, North (Mr. Biffen) referred to the horrors of intervention. It is quite difficult to obtain figures on what intervention has cost in th ERM. However, the signs are that only the Belgians and French have spent large amounts of money on intervention, as the philosophy of the Bundesbank--that intervention on any substantial scale is a waste of money--appears to have taken the field.

Despite what the hon. Member for Durham, North (Mr. Radice) said, there have been, and still are, large variations in interest rates between, for example, the mark and the lira. Despite what many hon. Members have said about the rigidity of the exchange rate mechanism, for many years there have been quite wide bands for some currencies, and those bands have been adjusted at least seven times during the mechanism's existence.

Therefore, I support those who say that we should enter the exchange rate mechanism and that the only question is that of timing. With the mark worth about 2.90 to the pound, and the franc about 9.90 to the pound, the time is right to enter the mechanism if we are right that inflation is on the way down. The crucial factor about entry is the market rate of the currency at the relevant time. That is much the most important factor to consider. I doubt whether we are right to resist joining until all the exchange control rules have been abandoned. It is better to join sooner rather than later. I have been a bit disappointed by the debate on stages 2 and 3 of the Delors proposals and by the debate on the Government's proposals for an evolutionary approach to economic and monetary union. There will be a demand by business for more usable currencies throughout the Community, and the Government are right to look for greater freedom in the use of currencies in commerce. We have not done justice in this debate to these proposals and they should be considered much more in the future.

I accept that there are great constitutional difficulties in proceeding further with the Delors proposals for stages 2 and 3, but I am attracted, as a move in the direction of a more unified currency, by the proposals for a freer role for the Bank of England. The Federal Reserve and the Bundesbank have certainly been more successful in currency matters than most central banks, and I would welcome a change in the Bank of England in the same direction.

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9.20 pm

Mr. George Robertson (Hamilton) : We have all agreed that this has been an excellent debate on an issue of crucial and fundamental importance to the future of this country. In what is usually described as a wide- ranging debate, we have heard from many people with an amazing variety of experience. I estimate that we heard four ex-Treasury Ministers and one former Foreign Office Minister--the changes seem to be rung as rapidly as figures on a cash register these days.

My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) made a relevant contribution to the raging debate on this issue, but the House may have found most interesting the words of another ex-Treasury Minister--the former Chief Secretary and right hon. Member for Shropshire, North (Mr. Biffen), who was an anti-marketeer before he became a Treasury Minister and subsequently Leader of the House. He then met an iceberg in the shape of the Single European Act, but it did not knock him off his perilous course-- he pushed it through the House with a guillotine, no less. Now that he is back on the Back Benches, however, the old scepticism re-emerged.

Mr. Biffen : They call it resurrection.

Mr. Robertson : There was no iceberg in the story of the resurrection, but anything can be reborn--including the hon. Member for Carshalton and Wallington (Mr. Forman) who made his maiden speech after having been parliamentary private secretary to the late lamented Chancellor. We welcome him back.

Three Select Committee Chairmen also made a wide-ranging set of contributions. I particularly welcome the fact that a Foreign Office Minister is to wind up the debate. As many hon. Members, including my right hon. Friend the Member for Chesterfield (Mr. Benn), have said, the issue that we are debating has enormous foreign policy implications, and it is right that it should not be seen merely as a Treasury matter--or even a Treasury-Downing street matter, as most things appear these days.

It is unfortunate that the new Foreign Secretary is not with us this evening. That is not to say anything against the Minister of State, against whom I have plenty of other things to say, but the Foreign Secretary will have the vote--if a vote is ever held--in the Cabinet on the great issues that we are debating this evening. Just as the Prime Minister expressed her sympathy for the 48 who voted against Britain at the Commonwealth conference, so we have considerable sympathy for the 22 ranged against her in the Cabinet day by day.

The debacle in the last seven days which has so appalled the British people has highlighted the real tragedy of the Government in this important area. The whole continent of Europe is changing faster and more fundamentally now than for at least two generations. Communism is collapsing in the eastern bloc states. [Interruption.] Communism, not Socialism, is collapsing and after 40 years democracy is coming alive in Poland and in Hungary and is even stirring in the German Democratic Republic. Even the Soviet Union, after 70 years of totalitarianism, has seen elections, an embryonic Parliament and real debate. All those things are bursting through the soil.

The cold war seems to have ended and the eastern bloc does not appear in any way monolithic. The frozen post-war structure which has endured for 40 years is

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rapidly blowing away. We are seeing a bonfire of the certainties that have survived since the war. The European Community is beginning to look at fundamental issues such as whether to go for full-blown political and economic integration or whether to stop for a moment to look at developments to the east to see whether there are new structures that could be developed to encompass the exciting possibilities ahead.

During all those developments, what has the Cabinet been doing? It is bogged down in an acrimonious, suicidal squabble about the invention of ever more ingenious conditions in order further to renege on the commitments regularly given by Conservative Ministers to join the exchange rate mechanism of the European monetary system. We are at a genuine crossroads in European history, but this constantly reshuffled bunch of Ministers are fighting like ferrets in a bag over who meant what in the last or the last but one commitment to the EMS.

While that is going on, other people and other nations have a vision and they are expressing it. For example, France, for its own reasons perhaps, wants to seize back some of the control that has been lost by its institutions to the German economic machine and has a vision about where Germany should be in the western nations. France is pursuing that objective but where in all that is the British vision? Where did we hear in the Chancellor's speech in the debate or in any of the speeches that we have heard recently about the vision which disagrees with that or a prospectus that would allow the British people to see where in the new reshaping of Europe we wish to be fitted in?

The debate on economic and monetary union goes to the heart of the matter. It is a matter of honour for Britain, but that honour has been betrayed by twists and turns of promises, declarations and commitments on European monetary union. They have been relentlessly rephrased, rejigged and ultimately reneged on. Crucially, it is a matter of the influence that Britain should have in the reshaping of the Community that will take place with us or without us. As hon. Members have said, it is a matter of keeping faith with the aspirations of the British people for a place in Europe's future and with the obligations that we have accepted as a nation in the Community of 12.

On the question of honour, how can the Government stand with any dignity among our European partners, having signed all the declarations itemised for us by the Chancellor? For example, the Stuttgart declaration of 22 June 1983 says in specific terms that the objective was :

"Strengthening of the European Monetary System, which is helping to consolidate an area of monetary stability in Europe and to create a more stable international economic environment, as a key element in progress towards Economic and Monetary Union and the creation of a European Monetary Fund."

There it was in Stuttgart, as it was in the Single European Act, and as it was in Hanover in the communique which established the Delors committee report.

The former Chancellor, when asked about this by the Select Committee, replied :

"This does not, in the opinion of the British Government, mean that the British Government is committed to monetary union."

Somebody read that afterwards. We do not know whether it was somebody in Downing street. Whether it was Sir Alan Walters we shall not know until he tells The Sunday Times . Somebody read it and went back, because it says at the bottom :

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"Note by witness. Further to this answer, the witness wishes to make it clear that the reference in the last sentence is to the monetary union set out in the Delors report.

The Delors report says :

"This report has been prepared in response to the mandate of the European Council to study and propose concrete stages leading towards economic and monetary union'."

We have come full circle. The Government say that they are in favour of concrete steps towards economic and monetary union and have signed the Stuttgart declaration and the Single European Act. They subscribed to the Hanover communique , but now we are reduced to the dodging, weaving, bending and twisting that are the hallmark of Government policy.

Mrs. Theresa Gorman (Billericay) : I agree that an enormous change is taking place in eastern Europe, and the communist bloc appears to be breaking up. As one of the basic concepts of the European Community was opposition to that bloc, is this not a good time to pause and have second thoughts about what we are doing in forming or going on with our own bloc?

Mr. Robertson : The Community has nothing to do with opposing the eastern bloc. The hon. Lady may be mixing it up with NATO, which was formed at roughly the same time but with a slightly different purpose. I subscribe to her conclusion, however, that this is the right time for the major debate on how to accommodate the aspirations of new democracies which may be developing in a part of the world that we had written off for democracy.

We have seen this situation developing, the deputy Prime Minister and Leader of the House has pointed out. He said :

"At Madrid we said yes, we want the existing EMS to be strengthened. Yes, Britain should join and will join the ERM. We committed ourselves to stage one of the Delors report."

The right hon. Member for Blaby (Mr. Lawson), in his resignation speech which transfixed the House on Tuesday, made exactly the same point. Instead of confirmation from the Prime Minister, however, the Walden programme saw the "higgledy-piggledy" insult thrown at the ERM which she had previously endorsed, while Sir Alan Walters disappears into the American jungles with "half-baked" as his description of it.

The Minister of State, Foreign and Commonwealth Office (Mr. Francis Maude) : This is all very interesting, but will the hon. Gentleman tell us whether he supports the objectives of economic and monetary union and, if so, in what form?

Mr. Robertson : We shall be interested to see what the Minister says about this. After all, he is in the Government. I wonder where he was when my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) was speaking earlier this afternoon. My right hon. and learned Friend dealt with the point specifically and told the House our views both on stage 1 of Delors and on stages 2 and 3. Although Conservative Members would like to ignore or neglect the problems and traumas of the past week--I am sure that even the beneficiaries would like to forget some of the agony--we have to live in a situation in which condition has been added to condition, to the extent that 1992 no longer seems to be a date but rather the number of new conditions invented as preconditions for joining the ERM. Each time the Prime Minister is questioned and asked for her view, the goalposts move. Indeed, they move

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even more quickly than the number of different Foreign Secretaries. It is small wonder that Mr. Andrew Marr of The Scotsman commented on Monday that, when Conservative Members had watched the Walden programme, many sighed with relief, but many more just sighed.

Mr. Biffen : It seems that the hon. Gentleman is concerned about a lack of specificity in the conditions laid down by my right hon. Friend the Prime Minister. Will he be specific and say at what level the exchange rate would have to be struck to make membership of the mechanism acceptable to the Opposition?

Mr. Robertson : It would be entirely inappropriate for me to say that. As a former Chief Secretary to the Treasury, the right hon. Gentleman knows very well that it would inevitably be a matter for negotiation. It would be interesting to know whether the right hon. Gentleman would make a specific pledge or whether anyone on the Treasury Bench would care to venture a suggestion.

Mr. Major : We do not have to do that.

Mr. Robertson : Perhaps the floating rates of Sir Alan Walters will determine the result. The right hon. Member for Shropshire, North (Mr. Biffen) described the Prime Minister's contribution to Mr. Walden's programme as excessive verbiage and in excess of the whittled down points which she put to the House after the Madrid summit. This week we have a new Foreign Secretary, after the debut of his predecessor at Question Time last Wednesday.

Mr. Cash : My right hon. Friend has experience.

Mr. Robertson : I thought that the hon. Gentleman was about to say something entirely different and rather more relevant.

What the new Foreign Secretary said in a "Panorama" programme was of considerable significance. When asked about the deputy Prime Minister's speech, which the Prime Minister had not seen in advance, he said :

"The Government have a policy ; let's stick to it."

That would be fine if there were a policy, but if there is indeed a policy, whose is it? There is the Prime Minister's policy as articulated on Saturday evening or there is her policy as broadcast at lunchtime on Sunday, and there may be a few more icebergs ready and willing to take holes out of the side of whatever new administration is running the ship in the next few weeks. More crucial to the future of the United Kingdom is influence. What sort of influence will Britain have in the Community that we have been discussing with such profundity today when a commitment made by the Government seems to mean so little? What sort of influence can we have on our partners when we stand isolated on so many issues in the Community? We stand alone on the social charter, which all our partners in the Community, Left-wing or Right-wing, believe to be a crucial and essential precondition for the balanced development of the single European market. We even stand alone on matters as trivial as cancer warnings on cigarette packets. Cabinet Ministers are sent to Brussels to express views which are then described by the Prime Minister as not worth making a song and dance about. We

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stand alone on the Lingua programme for language teaching in schools. We stand alone, too, on pensioners' bus passes and the Framework research programme. All the time we are marginalising and failing to let Britain's voice be heard.

Mr. Cash : Will the hon. Gentleman give way?

Mr. Robertson : I shall not give way to the hon. Gentleman. He wants regularly to have a dialogue with me, but time is limited. In the Daily Mail on 18 May, Sir David English came out with one of the great truths in an editorial which appeared side by side with the Prime Minister's famous interview. He wrote :

"In Europe's Council of Ministers, with its primitive form of proportional representation, shifting coalitions of member states are going to reign supreme. That is the power game in Europe. For our own sake and Britain's, it is one that she must learn and indeed master."

We are seeing in this debate on the ERM--and we shall see the same in the debate on what is to come under European monetary union--that that lesson has not been learnt from Sir David English and it is not likely to be learnt from any of the Prime Minister's Cabinet colleagues. The European elections, however, show that the British people know precisely which side of the argument they take. My right hon. and learned Friend the Member for Monklands, East outlined in some detail and with considerable eloquence the Labour party's view on the exchange rate mechanism and the specific nature of the conditions. We have made our conditions plain. They are unambiguous and attainable. We stand by them as a basis for stage 1 of the Delors report. As my right hon. and learned Friend has said, they have been publicly welcomed for the constructive contribution that they represent-- not to say the contrast that they provide with the contrary and fickle posturing of a Government who remain completely divided even at the highest level.

As the debate has shown, nobody pretends that going beyond stage 1 of the Delors report will be easy or uncomplicated. The many views that have emerged in the debate have illustrated that. The report was, after all, written by bankers and, in many ways, for bankers. There are essential principles which must underline the policy which takes us beyond the present debate. There are principles which must underlie the campaign and the negotiations which will take place. There are ground rules for any subsequent debate that must take place and they must be established before the intergovernmental conference is convened.

That is why the resolution of the European Parliament, passed last week with all the Labour party's conditions and policies contained within it and with the support and acclamation of Conservative Members of the European Parliament, is a good signpost to where the Government should be taking us in the future. If it is good enough for Conservative Members of the European Parliament, the residual few who manage to hold on to their seats- -it should be good enough for the Government.

The debate has shown that there is wide interest in this matter both in Parliament and in the country, and this belated debate has shown how important it is for our future. I doubt whether the Government have the conviction to go beyond the Prime Minister's prejudices, and I doubt whether they have the nous or the imagination to take on the challenges which face us today in the great

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European continent. The only way for the British people to have a future in the Community which will deliver what they want and demand is to elect a new Government at the earliest opportunity.

9.41 pm

The Minister of State, Foreign and Commonwealth Affairs (Mr. Francis Maude) : Some debates in the Chamber follow what seems to bea preordained course, but everyone who has spoken in the latter parts of this debate has paid tribute to the nature of the debate. It has been a rare and special occasion, one which the House of Commons has taken extremely seriously. There has been a degree of consensus among virtually everyone who has spoken which I had not foreseen at the outset, but which is a source of considerable pleasure to us. Views have been expressed from members of most parties in the House and from most parts of most parties. Those who have contributed to the debate have shown considerable breadth and depth of experience and expertise.

One would expect the House to take the matter seriously because it goes to the heart of the reasons for the existence of the House. What has shone through the debate is the fact that Mr. Delors' grand design, the blueprint for a stampede into effective federalism, has not a friend in the House.

It was remarkable that the Labour party was desperate to find ways of disagreeing with the Government. The right hon. Member for Plymouth, Devonport (Dr. Owen) made a speech which was remarkably close to what my right hon. Friend the Chancellor had already said and, listening to the right hon. and learned Member for Monklands, East (Mr. Smith), I thought at one stage that he had hijacked my right hon. Friend's speech.

I suppose that it was inevitable that much of the debate focused on the exchange rate mechanism. I have only this to say about that. Our commitment is one made in good faith. It reaffirms the commitment made in Madrid and we will stick to it. Many of the conditions have to be fulfilled by others. We hope that they will be fulfilled sooner rather than later.

My right hon. Friend the Chancellor said on Tuesday that the ERM was not a panacea, and nobody should expect it to be so. My hon. Friend the Member for Chicester (Mr. Nelson), who made a passionate and effective speech, came close to expressing the belief that it is a panacea. We should not fool ourselves that that is so. There could be nothing more disastrous than to take, for political reasons, what must be an economic decision. Above all, it would be absurd to take such a decision simply to demonstrate our commitment to the Community, a commitment which is amply demonstrated in any event. It is far too important an issue to be the subject of gesture politics. Remarkably few suggestions have been made that we are dragging our feet about Europe. The right hon. Member for Devonport, in his quite notable speech, made a slightly ritualistic complaint about us being isolated from time to time, but he tempered his strictures by accepting that there will be times when we are right to resist, even if we are alone, and the House would expect no less of us. A number of hon. Members spoke of the social charter. The right hon. Member for Devonport, in a fit of nostalgia, referred to it as the social contract. He rightly

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deplored the minimum wage provisions of the charter. We are not holding out ferociously against any social charter, but we insist that any charter we sign gives full weight to the unanimous conclusions of the Madrid council. There should be no EC action where national action will suffice. It should respect national traditions and voluntary practices, and it should give top priority to job creation. The present draft does not do so, and while it remains in that form we will not sign it. At present it is a document designed to make politicians feel better about themselves, not to bring benefits to our people.

On so many matters, far from being laggardly, Britain is ahead, driving the Community forward. We are not doing so alone. In alliance with the Commission and other member states, we want faster and better progress. For example, the single market is an aspiration that is 30 years old, but only now is it becoming a reality. Who has pressed for that?--the United Kingdom. It is only now, after years of urging by us, that it is beginning to take shape. Who is holding up progress? Whose foot is on the brake? The Germans are reluctant to expose their insurance companies to open competition. The French are trying to frustrate the Commission's drive to open up competition in telecommunications.

How can we have a single market when lorries are crossing frontiers empty because protectionist regulations prevent them from picking up return loads? Who is holding that up? It is France and Italy, while we support the Commission's proposals. Who are the keenest proponents of the people's Europe? Again, it is France and Italy. Which country is holding up progress on one of the measures that would benefit our citizens most directly, the liberalisation of air transport to make it easier and cheaper to travel to Europe? Yes, the French and Italians. These are not objectives that Britain is trying to foist on an unwilling Community. They have been agreed time and again unanimously by all 12 member states.

We do not claim to be alone in our virtue, but time and again we have started in the minority, with allies, and won over the majority. It is high time that more member states matched their deeds to their words.

Let us consider compliance with Community law and the implementation of measures that have already been agreed. On every count we are leading ; we do what we have all agreed to do. Stage 1 of the Delors report has been agreed by all 12 of the member states, but it is being pursued more enthusiastically by ourselves than by others. Others are at last catching up on abolishing exchange controls. We shall strongly support the Commission's action to strengthen competition policy to reduce the distortion that unequal state subsidies bring. How can there be European integration and progress to economic and monetary union when the Italians alone give state subsidies of £16 billion a year, eight times the amount that we give? We are all agreed in principle that that must stop. The Commission deserves the full support of all 12 member states in its renewed drive to turn principle into practice.

Those measures are all essential components of further integration. The form of integration has already been agreed by all of us, but it has been heavily promoted by us. Far from wanting to hold it back, we want more speed, not less. We have no difficulty with the further integration involved in progress towards economic and monetary union. The objectives which my right hon. Friend the Chancellor set out at the opening of the debate are ones

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with which we agree and which we support. But we have concerns about the route by which those objectives are obtained. It is the clear view of the House tonight that it is not unreasonable to raise concerns about what is proposed in stages 2 and 3 of the Delors report.

We do not accept the proposals for yet further increases in regional and structural aid. There is no reason to suppose that achieving economic and monetary union through the operation of the market would damage less prosperous areas. We argue strongly in our paper that only by allowing less prosperous areas to benefit from their cost advantages can disparities be eradicated. Again, we do not accept that binding Community rules on national budget deficits are needed. It is possible to have further integration in practice while allowing national Governments and Parliaments to retain control over national budget deficits. Any proposal to the contrary would be resoundingly rejected by the House.

We do not accept that economic and monetary union requires a single monetary policy, a single currency and a single central bank. All these are in conflict with the principle of subsidiarity--to which much lip-service is paid--that things should only be done at Community level when they cannot be done at national level. All those proposals would centralise powers that are critically important in a way that is unnecessary and undesirable.

Mr. Worthington : I thought that I heard the Minister say that the free market would eventually bring about an equalisation of living conditions in different regions. Does he agree that, over the past 10 years, there has been an espousal of free market principles under this Government and a widening of the gap between north and south? When may we see a reversal?

Mr. Maude : The hon. Gentleman could not be more wrong. I certainly did argue that. I believe that the facts sustain our argument. One need only look at the burgeoning of prosperity in the north-east and, indeed, in Glasgow, the hon. Gentleman's area. The free market has brought that about. The disparities were at their worst when subsidies were at their highest. I do not resile in any way from the proposition that the free market would bring about this eradication of disparities.

In any event, there could be no guarantee that a single, centrally run monetary policy would converge on the best anti-inflation record of member states, no matter what the treaty might say. It is more likely that inflation would tend to converge on the average inflation rate across the Community. Therefore, this centralist and regulatory presecription would be likely to have the reverse effect to that claimed for it. Inflation could well turn out higher than under our market-led, liberal proposals.

Although we are not alone in having these grave anxieties about those aspects of the Delors report, it would clearly be wrong for us simply to sit on the sidelines and snipe at it. As members of the Community, we have never done that, and we will not do it now. Our role in the Community has been central and hugely influential. We need only look at how some of the Community's problems are resolved. We can look at the vast budget imbalances--so skilfully negotiated by the last Labour Government--and the huge surpluses of the common agricultural policy. Both yielded only to the vigorous urging of my

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right hon. Friend the Prime Minister, arguing not from the sidelines or the margins but from our central position in the Community.

So it is with these proposals. We say that there is another route to economic and monetary union. It is one that works with the grain of the market, a solution that will, by evolution, build on what we already have. It is a solution that could easily be quicker than the prescriptive and centralist route of Delors. The precedent of the Werner report--with its timetable, blueprint and centralist and prescriptive approach--is not such as to give one confidence that the Delors approach will deliver quick results. A step-by-step approach is by no means a slow one. It could be a jog, it could be a sprint, but it will not be a leap in the dark.

We argue that our approach would deliver the objectives of economic and monetary union, on which we are all agreed. It could even deliver those objectives more quickly than the Delors report. Above all, and of great importance to this House, our approach would retain control of the fundamentals of economic policy with the British Government and the British Parliament.

Many of my hon. Friends have endorsed the approach we have offered in our paper published today. There has been some criticism, mainly from the Opposition, but most of it appears to have been based not on a reading of our paper, but on garbled reports of the Council meeting at Antibes. Some hon. Members referred to it as a scheme of competing currencies. It is not ; it is a scheme for competing monetary policies.

The right hon. and learned Member for Monklands, East was somewhat shy when asked about the views of the former economic adviser to the Labour party. I shall tell him what David Currie said :

"there is a serious case yet to be made in favour of the idea of competing currencies. This idea need not be in conflict with the objective of exchange rate stability, so that it is not incompatible with the EMS. Competition between currencies need not mean exchange rate instability. Rather it may mean competition over responsible monetary policies, encouraging their spread within Europe." The right hon. and learned Gentleman should listen to advice.

Mr. George Robertson : As the hon. Gentleman has quoted one piece of Professor Currie's article, would he care to complete it? There was a condition to his endorsement of the idea of competing currencies. He said :

"provided that it is recast within the EMS framework. Currencies can compete one with the other within the type of fixed parity system towards which the EMS is evolving."

Does the hon. Gentleman endorse that as well?

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