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signal that there will be consistent concentration on the introduction of more effective tactics and, if necessary, more changes in the law to assist the security forces in their gallant efforts to eradicate terrorists.

Necessary though all those measures are, they need to be underpinned by a constitutional offensive. There must be an end to the constitutional ambiguity of successive Governments--and especially the Government of the past 10 years--of which perhaps the most disastrous example was provided by the present Government when they put their hand to the Anglo-Irish Agreement in 1985. The Whitehall thinking behind that failed experiment was flawed from the start. The idea was to concede a half-way house to the Irish Government's objective of a united Ireland. The Dublin Ministers of the time were frank enough to tell us that that was their aim and they boasted that they had received joint control over a part of the United Kingdom. However, the objective of Irish unity is shared with the IRA so, unfortunately, a concession to Dublin in 1985 was also a concession to terrorism and it happens to be a concession for which the IRA claims all the credit. That fatal signal of 1985 must be cancelled out, as must the Government's statement of that day, when the Prime Minister said :

"We entered into this Agreement because we were not prepared to tolerate a situation of continuing violence."

The Government and all the citizens of the United Kingdom have had to tolerate even more violence over the intervening four years under the agreement. When one considers that the agreement has failed to achieve its other aims--peace, stability and reconciliation--Britain as a nation will have nothing to lose by its demise, which would be a small price to pay for an end to the slaughter of British citizens, service men and civilians. I beg the representatives of Her Majesty's Government on the Treasury Bench to recognise the urgent necessity of removing from the minds of terrorists the expectation that their objectives will be achieved in whole or in part.

6.14 pm

Sir Anthony Meyer (Clwyd, North-West) : Like the right hon. Member for Lagan Valley (Mr. Molyneaux), I also propose to deal with the problems of eastern Europe, although from a different perspective. I want first to pay tribute to the calm authority with which he spoke, which commanded the attention of all hon. Members, even those of us who do not fully agree with him.

It is a delight to see my hon. Friend the Under-Secretary of State for Wales sitting on the Front Bench. I have the pleasure of observing regularly how conscientious he is in carrying out his duties.

There are many items in the Gracious Speech that I await with glad expectation, although I await others, notably the arrangements for community care, with a great deal of anxiety. Although not much was said about it in the Gracious Speech, I am also bound to say that I am increasingly unhappy about the plight of elderly pensioners for whom the state retirement pension constitutes the major part of their income. However, important as those considerations are, events in eastern Europe dwarf our proper concerns about domestic issues. What is happening in East Germany, Poland, Hungary, Bulgaria, even at last in Czechoslovakia and above all in the Soviet Union itself is of greater significance than

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anything that has happened in Europe since 1945, or even since 1917. These events present us--us in the United Kingdom, us in the European Community and us in the West--with huge opportunities and huge dangers. How should we respond? Should we now move faster towards a closely integrated European Community, or should we slow up the process of integration?

The arguments for pressing on with integration are overwhelming, and on that I find myself in agreement with every Conservative Member of the European Parliament as expressed in their letter to The Times at the end of last week. First, the steadily integrating European Community has proved a magnet and an inspiration to the people of eastern Europe who are longing not only for freedom but for the higher standard of living in the West, which owes much to the existence of the European Community. The second consideration is more compelling and even less open to argument. With its enforceable rules, its proved arrangements for settling internal disputes between members and its voluntary acceptance of some limitations on national sovereignty, the EC offers an example and a home for the newly emancipated nations in eastern Europe and for the emerging nationalities in the Soviet Union itself.

There is a real danger of conflict between those newly liberated nations. We have only to look at Armenia and Azerbaijan to see what could happen elsewhere. Such conflicts can no longer reliably be contained by pressure from Moscow or Washington and could rapidly spread. The best safeguard against such dangerous developments is to draw the countries gradually towards an organisation such as the European Community in which rules of behaviour between countries are freely accepted and effectively enforced and in which no country insists on the right to push its national interests to the limit. That, too, must surely be the safest home for an eventually united Germany.

Of course, the Prime Minister is quite right to insist that at this juncture nothing should be done in western Europe that could make Mr. Gorbachev's task more difficult. I share the concern of Ministers that Europe should not be exclusively preoccupied with its internal affairs or build its prosperity regardless of the effect on eastern Europe or the Third world. I would not want to be a citizen of a united Europe that shrugged off its direct responsibility for poor people living in poor countries.

It is one thing to show some caution lest we go so fast and so far in western Europe that we damage the chances of freedom and prosperity in eastern Europe. It is quite another thing to use the revolution in eastern Europe as a pretext for blocking all progress in western Europe, particularly when that pretext is being used as cover for outright hostility to the European Community and all its works. The Prime Minister's distaste for everything that emanates from the European Community is little hidden. She is not to be fed on a diet of Brussels, as she made plain during the European election campaign, and nothing in the carefully restricted references to Europe in the Gracious Speech corrects that impression.

The Prime Minister can claim the support of a majority of the population for her aversion to Europe, as was shown in the poll published in The Independent on 18 February. That poll showed the British as having less regard for the European Community than other European peoples. Of course, it must be said that the Prime Minister

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herself has played a major part in alienating our people from the Community--of which, as she admits, we are, and we intend to remain, members.

The Prime Minister's policy of whipping up dislike of an organisation to which we have no choice but to belong may score well in the opinion polls-- although it did not do us much good in the European elections--but I cannot, for the life of me, believe that it makes any sense in practical terms. On the contrary, it is all of a piece with the preposterous notion of allowing the European currencies to have a free-for-all against one another, which the luckless Chancellor of the Exchequer and Foreign Secretary have been forced to table to block efforts to create a European monetary union.

If we object that a European monetary union means a surrender of sovereignty, what on earth are the implications of this plan? It can mean nothing else but unconditional surrender to the deutschmark. How on earth would that preserve British sovereignty? And if it be further objected that there is to be no proper democratic control over progress towards economic union, just how is the idea of democratic control assisted by leaving it to bankers to slug it out in a free-for-all? The whole idea is preposterous and it is hard to understand how Ministers as sensible and knowledgeable as the Foreign Secretary and the Chancellor of the Exchequer can have lent their names to it.

Mr. Anthony Nelson (Chichester) : For reasons that I understand, my hon. Friend is critical of the posture and views of our right hon. Friend the Prime Minister in her attitude to Europe. Did my hon. Friend note that today she prayed in aid the Granada lecture of Sir Leon Brittan in answer to a question about the social charter? Does my hon. Friend recall the contents of that speech, in which Sir Leon said :

"Britain should now concentrate on negotiating both the text and the status of the document with a view to making it acceptable"? Is it not encouraging that the Prime Minister prayed that document in aid? If that is Sir Leon's view and the Prime Minister's view, it is very good news for those of us who support progress towards monetary union, with a revised social charter as part of it, as implicit in the Single European Act.

Sir Anthony Meyer : I am extremely grateful to my hon. Friend for his intervention. I, too, was greatly encouraged by that reference, which I took to be a reference not merely to the lecture but, perhaps by inclusion, to what Sir Leon Brittan had to say at the CBI conference yesterday.

It is vital and urgent that the European Community should play its full part in shaping the events in eastern Europe that offer so much hope and so much danger. Is Britain going to stand on the sidelines throwing stones--if I may borrow a phrase from the Foreign Secretary--or are we going to get involved in the making of history? 6.25 pm

Mr. Geoffrey Lofthouse (Pontefract and Castleford) : I am pleased to follow the hon. Member for Clwyd, North-West (Sir A. Meyer), who I have heard referred to in recent weeks as a stalking horse. I feared for his safety when I saw the hon. Member for Tatton (Mr. Hamilton) and others sitting behind him, but he escaped without damage and if he continues to make such speeches, he may not only be the stalking horse ; he may be in with a chance.

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I wish to associate myself with the remarks made by my hon. Friend the Member for Newport, East (Mr. Hughes), who is unfortunately not present, before referring to the Bill to restructure the coal industry. It will come as no surprise that that is my chosen subject. I was surprised and somewhat concerned that, with the exception of the hon. Member for New Forest (Sir P. McNair-Wilson), who referred to the Bill to enable him to mention British Rail, no reference has been made to the proposal. If my calculations are correct, the Prime Minister referred to every one of the Bills except the British Coal Bill. That may have been an oversight or it may have been deliberate. Perhaps the right hon. Lady did not think that it was serious enough to merit a reference.

People in the mining community, including those in my constituency, regard the Bill as the first step towards privatisation. I should have welcomed the Prime Minister's comments on it. I attempted to intervene in her speech, but she was concluding her remarks and decided not to give way. We are scratching in the dark when it comes to discovering what the Bill will mean. We have our fears. There has been no secret about the privatisation programme with which the Government will continue if they win the next election, which is very unlikely, and it is fairly obvious that the coal industry is to continue to be rapidly run down. If the Bill is intended to enable the Government to continue with that policy, mining communities and miners who will lose their jobs will be seeking some real assurances.

We in the mining community fear that, although the Bill deals ostensibly with the financial reconstruction of the mining industry, its impact could go wider than that and that provisions in the Coal Mines Regulation Act 1908 will be amended to extend working hours in coal mines.

We fear that the licensing of private mines will be extended so that they can employ 150 people instead of 30. We are aware of the situation in those private mines ; their accident rate is three times that in British Coal mines. We also want to know whether the Government are considering wiping off British Coal's debt in the way that they wiped off British Steel's debt some years ago. The House will be aware that in the last financial year British Coal made a working profit of £5 million. Of course, it continues to operate at a heavy loss because of the massive debt around its neck.

We will want to know whether the coal Bill contains more financial provision for redundancy payments. A Cabinet document is floating around which suggests that, apart from the 20,000 plus job losses this year, there will be another 30,000 losses over the next three years or so. If that is so, in three to five years, British Coal will be providing only 60 million tonnes of coal to the electricity generating industry. If that is so, there will be an increase in imported coal of 50 million tonnes. That means that the coal mines in this country will be run down. We would be relying on imports of between 25 million and 30 million tonnes of coal a year.

The moment that this country cannot meet the demand to generate electricity from our own fossil fuels, we will be in the hands of our international competitors. I am certain that even primary schoolchildren will be aware that, once we cannot meet our demand, the people we rely on to provide that fuel will put up their prices. There will be no more cheap coal ; the Government must be aware of that. If we accept that the Government are aware of that, why are they going down that road? We can conclude only that

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they are doing it purely and simply because of political dogma. Although that may not apply to all Conservative Members, it is clear that there is political hatred of the miners and their leaders. The coal industry has been run down rapidly since 1984. It has lost more than 100,000 men. While that has been bad enough for mining communities, we now face something even worse. The average miner who was made redundant since 1985 was aged 50 or over. He received a reasonable redundancy payment. Apart from a lump sum payment, he was guaranteed nine tenths of his wages until he was 65. That is why there was not a great deal of trouble in the industry when those men were losing their jobs.

It is now a different ball game. The average worker in the mining industry is now aged 34. He has no financial protection in terms of a weekly payment. Many of those young miners have, in accordance with Government policy, taken out mortgages to buy their own houses. Indeed, many have bought local authority houses. These young miners are raising young families. They now face the prospect of losing their jobs, and they are afraid that they will not be able to meet their mortgage commitments arising from higher interest rates.

Mr. Michael J. Martin (Glasgow, Springburn) : The Government have not given enough thought to the severe effect of redundancies on communities and on the families of those made redundant. As my hon. Friend is aware, several thousand railway workers in my constituency were paid off. We have evidence of suicides, of severe depression and of men in tears asking their former employers to take them back. There has not been enough study of the effects of redundancy on communities.

Mr. Lofthouse : I appreciate my hon. Friend's point.

Over the next three to five years it will be ludicrous if we cannot meet our demand for coal while young miners are out of work and struggling to live. As Sir Robert Haslam told the Select Committee on Energy only a fortnight ago, we cannot put a pit in mothballs. Once it is closed, it is closed and there is no going back.

If we import 5 million tonnes of coal and close down5 million tonnes of capacity in this country, that is equivalent to sterilising 25 million to 30 million tonnes of coal. We are talking about sterilising 90 million tonnes of coal a year. That is criminal. It is disgraceful that anyone should sterilise energy in this country which will eventually be needed.

We will want to know whether the new Bill considers financial aid for people whose properties are suffering from subsidence. My hon. Friend the Member for Mansfield (Mr. Meale) has done much work on that subject recently and no doubt he will want to go into it in more detail later. We also want to know whether the Bill will refer to funding for research and development on clean coal burn such as the Grimethorpe project. If we are to play our part with respect to the greenhouse effect, it is essential that there is funding for research and development.

I want briefly to refer to the consequences of the rapid rundown of the industry in areas like my constituency. I accept that many mining communities are in the same position. My constituency forms part of the Wakefield metropolitan district council area, which is represented in

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this House by my hon. Friends the Members for Normanton (Mr. O'Brien), for Hemsworth (Mr. Buckley) and for Wakefield (Mr. Hinchliffe).

The district has a long history of coal mining dating back well over 100 years. My constituents and their families before them have for many years worked extremely hard on behalf of their country, often in atrocious conditions, to mine coal. Their reward has been a severely blighted environment, high unemployment rates and substandard living conditions.

In 1979 there were 20 pits, employing 17,000 people, in the Wakefield metropolitan district council area. By 1984 there were 16 pits with 15,000 miners. There now remain only four pits with 3,500 miners. More than 75 per cent. of our mining jobs have been lost over the past five years. In 1981, 15 per cent. of the Wakefield work force worked in the coal mining industry. It is now estimated that only 5 per cent. do so.

My constituency was once a proud mining area. In 1981, 28.45 per cent. of jobs in Castleford were coal-mining jobs. There are now no pits, only industrial scars and men out of work. Official unemployment in the travel- to-work area of Castleford and Pontefract is 9.4 per cent.--the September figure--which compares with a national average of 6.7 per cent. and an intermediate assisted area average of 8.6 per cent. within the Wakefield metropolitan area, and 11,764 people still officially unemployed. Unfortunately, the demise of the coal industry seems set to continue. Only recently we heard of the loss of 30,000 jobs, if the leaked document is correct. Ten Yorkshire pits have been identified as being at risk. There is the continual fiasco about the role of nuclear power and the cost- effectiveness of fossil fuels in the generation of electricity. I have already referred to that matter and I need add no more.

On top of that, the Government seem intent to encourage the importation of foreign coal. That is highlighted by recent efforts to introduce a private Member's Bill to extend ports at Immingham and elsewhere. There is a firm policy on behalf of the Government and British Coal. The contracts that are to be signed by British Coal and by the electricity supply industry will result in the production of 65 million tonnes of coal, reducing to 60 million in three years. They cannot do that immediately because there is no capacity in our ports for them to do so.

What are the Government doing to assist my constituents and others in the Wakefield district to overcome problems arising from the devastating decline in the coal industry? The area has no reasonable selective assistance. It is not an urban programme area and, as such, is not a priority area for city grant. For example, Ackton Hall colliery near Featherstone, the colliery at which I worked for most of my life, employed about 1,400 miners until it was closed in 1985. A planning application was made by British Coal and granted by the local authority for general industrial development covering 4.33 hectares--about 38,000 sq ft--of industrial floor space, albeit to minimum standards, all of which is occupied by more than 20 units creating about 100 new jobs.

So far so good. Demand has exceeded supply. The developers, who have since acquired the site from British Coal, want to add a further 150,000 sq ft of industrial floor space, but the project is not viable without city grant. Despite intensive lobbying by Wakefield metropolitan district council, it still appears most unlikely that city grant

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will be given. If the existing development can be used as a guideline, more jobs will not be created. How can an area suffering such massive job losses not be classed as a priority area and have preference for city grants? Since 1985, we have not received one penny in grant. We have not been able to persuade the Government to grant the area assistance area status to enable us to get grants from the Government and from Europe.

In September, the Wakefield council signed a memorandum of agreement with AMEC Regeneration Ltd. to record their intention to identify and implement a rolling programme of development projects for the economic and social regeneration of the Wakefield area--a true partnership approach involving the private sector. That is on top of the authority's continued efforts to advise the private sector and involve it in coal regeneration. The council is therefore following Government guidelines on involving the private sector, yet they have given no tangible recognition of that fact. When will my constituents and others in the Wakefield district benefit from regional assistance so that the area can become an urban programme area and receive priority for city grants?

It is true that the Wakefield metropolitan district council was recently successful in obtaining objective 2 designation under the European structural fund. I readily give the Government credit for assisting in that. We are now almost one third of the way through a three-year programme, and discussions are still taking place between the Government and the European Commission about the amount of additional money that will be available for regeneration purposes.

Mr. Alan Meale (Mansfield) : Is my hon. Friend aware that the local authorities which have reached category 2 are again having tremendous difficulties with the Government, who are refusing to relax the rules on European assistance? Local authorities are getting nowhere with regeneration because of the required additionality which is being blocked by the Government.

Mr. Lofthouse : I am aware of that. I am attempting to make that point.

The mid-Yorkshire operational programme, which covers the Wakefield metropolitan district, has been in the Government's hands for several weeks, but the programme has not been forwarded to Brussels. Why not? Other programmes have been forwarded to Brussels. I call on the Government to give a firm guarantee that areas such as Wakefield will benefit from reform of the structural fund. Although much is made of available funding, nothing has come forward, and one year of a three-year programme has elapsed. That is nothing short of a disgrace.

I represent an area whose work force has proudly been part of the country's hardest and dirtiest industries. Over a short period, the vast majority of the work force have been left jobless, with appalling conditions and a blighted environment. Worse still, the workers and those in related industries have been given little hope for the future. We have high unemployment rates that refuse to go away. However, our local council openly encourages joint initiatives with the private sector for local regeneration. It recently entered into a formal partnership with a major regeneration company. There is some hope that money from Europe will eventually materialise to enable regeneration projects to be

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implemented. But, to replace the 12,000 jobs that were lost in one industry alone over the past five years, we need more than hope. There is not much hope when we face a future in which the Bill that was referred to in the Gracious Speech will mean a further rapid rundown and loss of jobs in the mining industry. We need tangible evidence of central Government support for and availability of additional Government funding so that the local authority's partnership with the private sector can regenerate the local economy and provide work and self-respect for my constituents in the knowledge that they are playing a part in improving life for themselves and for future generations.

The Government once believed that they could replace coal by nuclear power, but that idea has now gone out of the window. If the mining industry is to be run down, the Government have an obligation, through the Department of Energy, the Department of Employment and the Department of Trade and Industry, to do something that they have not bothered to do hitherto, and that is to encourage alternative employment in mining communities that have already been savagely run down and can take no more job losses. The Government have an obligation to provide jobs to replace lost mining jobs and to provide for the youngsters in our area who face a bleak future.

6.50 pm

Mr. David Knox (Staffordshire, Moorlands) : Thank you, Mr. Deputy Speaker, for calling me at this early stage in the new Session of Parliament. I hope that the hon. Member for Pontefract and Castleford (Mr. Lofthouse) will not mind if I do not follow the points that he has just made. They are obviously important points for his constituency, but, as both he and the House will appreciate, I am not very knowledgeable about the details of his constituency. We are now almost certainly past the halfway point in the present Parliament. We have just completed the second of two heavy parliamentary Sessions during which a great deal of legislation reached the statute book. The country now needs a period in which to assimilate that legislation. I was hoping that there would be a lull in the legislative programme in the coming Session, but, judging from the Gracious Speech, that does not seem likely. I advise my right hon. and hon. Friends on the Front Bench that I for one--and, I suspect, many others --will not complain if one or two of the proposed Bills are discreetly dropped during the Session.

However, I welcome some of the measures that are being introduced. The Bill to reform the National Health Service will, I hope, result in an even better Health Service than we have at present. The Government showed their commitment to the National Health Service in the Autumn Statement last week with a further substantial increase in funding. The Bill that seeks to improve the efficiency of the NHS further underlines that commitment. The green Bill and the food Bill show that the Government are sensitive to public concern, and both will be widely welcomed.

In general, I welcome the fact that the Government are proceeding with the reform of the courts and the legal services. However, I am a little concerned about the proposals relating to conveyancing. I hope that the

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legislation will ensure that competition between legal practices and institutions is fair and that the interests of the clients of the institutions will be fully protected.

The Bill arising from the Warnock report will be of a rather different nature from the rest of the legislative programme because, although it will be highly controversial, that controversy will not be on a party political basis. I await the introduction of that Bill with some interest, and not a little trepidation.

The Gracious Speech referred to eastern Europe and to co-operation with our European Community partners. In the international sphere there is no doubt that Europe--both East and West--will be the dominant issue in the forthcoming Session and probably for some years to come. The dramatic events in eastern Europe, and especially in East Germany, bear witness to the wisdom of the policies of this country and our allies since the end of the war. Although the changes in eastern Europe are happening very much more quickly, unexpectedly and dramatically than anyone envisaged, most people in the West believed that eventually the Communist empire in eastern Europe would disintegrate. I hope that that is what is happening, but we cannot be absolutely certain, and that is why the Government are right to respond cautiously to events in eastern Europe.

However, if a cautious response to developments in eastern Europe is wise, it does not follow that a cautious approach to developments in the European Community is equally wise, especially if the response to those developments appears negative. No one knows what will happen in eastern Europe in the next few months, far less in the next few years. The tyranny of Communist bondage could be reimposed, although that seems unlikely. However, even if the process of liberalisation continues, the present extravagant hopes of many of the people of eastern Europe will not be fulfilled. Democracy should enable greater economic efficiency to take place, but that will take time and living standards are unlikely to rise significantly in the near future. Consequently, eastern Europe is facing a period of difficulty, uncertainty and turbulence in the short and medium terms. In such circumstances, Europe needs the strength and stability of the European Community more than ever before. Europe needs the European Community as an example to the countries of eastern Europe of a group of nations in which the petty nationalisms of the past have been submerged in the pursuit of wider interests. Europe needs the European Community, the members of which are integrating their economies and achieving the greater prosperity that will enable them to help the countries of eastern Europe to develop free economies, as Marshall aid did for the countries of western Europe in the years immediately after the last war. Europe needs the European Community as a political union that will attract and eventually incorporate all the countries of eastern Europe within its ranks. As the admirable letter from some Conservative Members of the European Parliament in last Friday's edition of The Times stated :

"The challenge for the Community is to grow strong enough, deep enough, and flexible enough to embrace, and provide a secure and stable framework for all the German people and the lands of East Central Europe by the turn of the century."

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If the European Community is to be able to fulfil that role, the process of integration must go ahead. I believe that this country should play a constructive and enthusiastic part in that process, of particular significance to which is economic and monetary union. I have long believed that Britain should join the exchange rate mechanism of the European monetary system, although ensuring that sterling is linked in at the right level and is neither undervalued nor overvalued. I take that view because I think that exchange rate stability is very much in the interests of our manufacturing industry and that as a consequence exports would be encouraged. I also think that membership would be anti- inflationary and that as long as we stay out of the exchange rate mechanism, our influence in the development of the European Community will not be maximised. I hope, therefore, that we will join the exchange rate mechanism within the next few months.

After that, we should join in serious negotiations with our Community partners about stages 2 and 3 of the Delors report. I know that some of my hon. Friends view that with horror, but the fact is that a European central bank will be established and a common monetary policy will be implemented. Community exchange rates will be irrevocably linked and the Community will have a single currency--and all that may well happen much sooner than some people think. I have no objection to those developments. Indeed, I believe that they are all desirable. A central bank, a common monetary policy and a single currency are all features of the British economy and if they are desirable within the United Kingdom, why are they not desirable within the wider European Community?

Some people claim that economic and monetary union will give us less control over domestic economic and monetary policy. If we are honest, we have to admit that we do not exercise much control over that policy now. Usually, we can react only to events elsewhere and that is becoming increasingly the case as the advantages from North sea oil decline. As full members of an economic and monetary union, we could exercise more influence in determining Community economic and monetary policy and this would mean that we would have more influence on the economic and monetary environment in which we operate than we do now. Far from losing sovereignty, by pooling it with others we should gain more sovereignty over our affairs that we have today. To those who express perfectly legitimate anxieties that economic and monetary union would not be subject to democratic control, I would say that that should be a matter for the negotiations. This is of course part of the broader question of democratic control within the European Community which worries many hon. Members who are strong supporters of the Community but do not regard the Council of Ministers as the last word in democratic institutions.

For this country, the question about economic and monetary union is simply whether we shall be involved in the negotiations or whether we shall stand aloof of them and eventually be forced to accept a fait accompli which is not altogether in our interests because we did not participate in its creation, but which we cannot afford not to join. Surely over the years we have learned the lessons of our reluctance and sometimes our failure to participate in negotiations within the Community. I hope that we shall participate fully and positively in the negotiations on economic and monetary union. It is in our interests, those of the Community and the wider Europe to do so.

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Important as the future of Europe is, the Government will be judged in the year ahead on the performance of the British economy. My right hon. Friend the Chancellor of the Exchequer has a heavy responsibility. Last week, he presented his Autumn Statement along with the economic forecasts required by the Industry Act 1975. The forecasts made gloomy reading, particularly those for the balance of payments and inflation. Of those two problems, the balance of payments is by far the more serious. In 1988-89 we had a deficit of £14.5 billion. In the current year, we shall probably have a deficit of £20 billion. The deficit forecast for next year is £15 billion. I have no idea whether that forecast is correct. Recent experience suggests that it will be an underestimate, but I hope that that will not be the case.

The important matter is not the accuracy of the forecast but the fact that for three successive years Britain will have had a deficit which is unsupportable in the medium term and may well be unsupportable in the short term. The effect of those massive deficits is to weaken our net capital position and so reduce Britain's fundamental economic strength. I hope that my right hon. Friend the Chancellor of the Exchequer does not intend to rely on his anti-inflation policy to correct the balance of payments deficit. I do not doubt that our present inflation problem has made the deficit worse, but its significance as a contributory factor should not be exaggerated. The deficit appeared before inflation started to rise, so the balance of payments deficit should be regarded as a serious problem in its own right and action to remedy it should be given priority. Specific action is required now.

Interest rates are too high and should be reduced. The chronic nature of the current account deficit, along with the long-standing deficit in trade in manufactured goods, suggests that sterling is overvalued. High interest rates keep sterling at an unnaturally high level. As a result, British exports are dearer in the world markets and so more difficult to sell, while imports into Britain are cheaper and so easier to sell. A fall in interest rates would mean that less hot money would be attracted into Britain and the pound would tend to float downwards. Exports would become cheaper and rise and imports would become dearer and fall, so the deficit would decline. At the same time, domestic consumer demand must be reduced to make room for an increase in exports and a reduction in the demand for imports. That would necessitate an increase in both direct and indirect taxation. I hope that my right hon. Friend will grasp the nettle and increase taxation in his spring Budget, no matter how politically unpopular that may be in the short term. I hope that he will refrain from further tax cuts until the balance of payments deficit has been eliminated. I do not like tax increases any more than anyone else, but I am convinced that tough action now is essential if the balance of payments deficit is to be eliminated and if we are to pay our way in the world again. I am sure that my right hon. Friend will not be found lacking in that respect in his next Budget.

7.7 pm

Mrs. Margaret Ewing (Moray) : It is always a pleasure to follow the hon. Member for Staffordshire, Moorlands (Mr. Knox) in these debates. I believe that we spoke in the same order last year. I always enjoy his speeches, not least because he is unafraid to criticise Treasury Ministers and

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never misses an opportunity to highlight his own anxieties. To Opposition Members he is the one exiled Scot representing an English seat who is welcome at Scottish questions. He sometimes asks more sensible questions than Conservative Members who represent Scottish seats.

I was particularly interested in the hon. Gentleman's remarks about the international context of the Gracious Speech. Earlier today, when members of my party were asked by the press to comment on the content of the Gracious Speech, we spoke about Scotland in Europe and the implications of the changes in eastern Europe. Some members of the press said, "Please talk about Scottish affairs." It is a strange attitude to expect a Scottish Nationalist to talk only about Scottish issues.

The implications of world events are particularly important. Like other hon. Members who have spoken, I believe that a new dimension of the European Community and a Europe of the peoples is the way towards peace, stability and economic prosperity. I accept that it is difficult to know how to proceed as we face upheaval in Europe. Some of the comments made by the Prime Minister and other Ministers in the Cabinet depressed me because they implied that they wanted to remain within the cosiness of NATO and the Warsaw Pact and that upheaval in attitudes in eastern Europe would destroy that cosiness. They must look at the young people of both western and eastern Europe. Recently, we have seen amazing pictures on television of youngsters from eastern Europe standing on the Berlin wall. Youngsters in Britain saw people just like them--denim-clad, with the same hair styles and the same hopes and aspirations. We owe a great deal to those young people when we consider future policy.

Mr. Nicholas Winterton (Macclesfield) : I am listening to the hon. Lady's remarks carefully. Will she consider what happened in Tiananmen square in the People's Republic of China where young people sadly and regrettably went one bridge too far and did not learn from the Poles who sought to work within a system? Will she reconsider what she said about the future of young people?

Mrs. Ewing : The hon. Gentleman makes an interesting point. If we were to follow all his arguments we would open up a huge debate. Those who rule older countries have a responsibility to take into account all these aspirations and not to deny democracy, as happened so horrifyingly in Tiananmen square.

We must be careful that we do not place undue boundaries at the start of our negotiations. When people say that German unity is not on the agenda, they place a boundary on our discussions. The Germans will decide through free, democratic elections whether Germany, east and west, is reunited. We have a long way to go before we can guarantee free democratic elections, but the boundaries of freedom will not be set by people who hang on to 19th century imperialist traditions. I hope that we shall move towards a Europe of the peoples. Britain often sounds as if she--I say she to represent both Britain and the Prime Minister who represents us in this way at international organisations--had not moved away from 19th century concepts of superiority and imperialism.

Domestic issues are important to us all. On a day like this it is tempting to speak about particular constituency issues or about the omissions from the Queen's Speech. We always hope to see items appear which, sad to say, do not.

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Whatever we may think of its content and of proposed legislation, a reference to the economic problems that we face has been omitted. Our economic position will underpin all our discussions this Session. High interest rates have an impact on young couples who struggle to pay their mortgage, on small businesses which try desperately to survive and, in my area, on the hard-hit fishing industry where the situation is so critical that many of our youngest and best skippers will be forced out of business. [Interruption.] I am glad that one of the Scottish Office Ministers has come to listen to the debate. The Government, particularly the hon. Member for Stirling (Mr. Forsyth), tell us that we in Scotland need more of the same medicine. That is a patronising, unsympathetic approach to our problems. The Scottish economy is not overheating. The medicine doled out is for the south-east which is overheating. We are not even having a spoonful of sugar to take away the bitterness of the medicine.

We are the only country that has discovered oil, yet ended up worse off. Many hon. Members have spoken about the importance of North sea oil revenues. I have never wavered from my belief that it is Scotland's oil and that that would be recognised in international law. Any Scottish Government with access to the revenues of the past decade would not have squandered them, as this Government and their predecessors have. We would have invested in infrastructure and created jobs to take us into the 21st century.

When Opposition Members tackle the Prime Minister about the homeless, the disabled, pensioners and ambulance men with their derisory 6.5 per cent. pay offer, she turns round and gives reams of statistics. She gives no sign of human sympathy for the problems that many of the poorest and weakest in society face as a direct result of her policies.

If the Prime Minister has difficulty understanding the political scene in Scotland, it is perhaps because she approaches the Scottish psyche in the wrong way. There is a different philosophical approach in Scotland. I should like to quote from William McIlvanney who is not a member of my party and from time to time is highly critical of it. In a speech in September 1987 he summed up the difference of the Scottish approach when he said :

"If we wish to remain Scottish, we will refuse to be coerced into measuring the worth of one another on the Dow Scale. If we wish to remain Scottish, we will have contempt for judging a man by how much money's in his wallet or a woman by the cheques she writes." He goes on to define the humane tradition of Scottish philosophy and says that if we want a new measurement of people,

"You will measure them by the extent of their understanding, by the width of their compassion, by the depth of their concern and by the size of their humanity."

That it why there has been a huge divergence in voting patterns north and south of the border. Thatcherism with its greed and lack of compassion is rejected by our people.

The references in the Queen's Speech to justice, freedom and peace gave me a glimmer of hope. I have already touched on the importance of international events for peace, but how can we talk about peace when we still believe that nuclear weapons are the way to guard it? I

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appeal to Labour Members : how could they give up unilateral disarmament at a time when it could have contributed so much to the debate for international peace?

It is not in Scotland's interests to have debates on whether there should be three or four Trident submarines on the Clyde. We do not want any. Scotland is already seen as a prime target in a nuclear war. We are the battleship for NATO, carrying the bulk of the warheads, and it is time that that stopped.

Dr. John Reed (Motherwell, North) : Given her commitment to Scottish independence, will the hon. Lady tell us whether in this dangerous nuclear world the Scottish people would be safer with three Trident submarines on the Thames than they are at present?

Mrs. Ewing : The hon. Gentleman is trying to be too smart for his own good. We know that we have the prospect of Trident on the Clyde because when it was suggested that Polaris should be on the Thames, there was an outcry and it was sent to the Clyde--next to Glasgow which is a major conurbation with all the problems that that brings. I wish there were no nuclear weapons in the United Kingdom or the world. Throughout the world people are starving to death and children cannot get a decent meal because all this money is being poured into weapons of destruction. It is a disgraceful abuse of money. In this House a great deal of lip service is paid to the concept of freedom, yet there is no freedom for the people of Scotland or Wales, although they have expressed through elections their desire for their own Parliaments. Only one in five Scots supports the Government, whereas four in five support parties which stand for the establishment of self-government. It is strange that Scotland--this ancient nation of ours--should be the only country to have two Parliament buildings but no Government.

I could spend a good deal of time talking about all the proposals relating to justice, but I shall mention a couple only. If there is to be justice and an opportunity for freedom of discussion I hope that, this year, Scottish legislation will not be treated with the contempt that it was during the previous Session. We still do not have a Select Committee on Scottish Affairs and the Scottish Office is the one Government Department which is not subject to the scrutiny of Back Benchers. Surely that Committee should be established this Session.

I hope that when we consider legislation on the National Health Service Ministers will bring forward legislation to deal specifically with the NHS in Scotland. The Government cannot have it both ways. They cannot argue that the Scottish Office has responsibility for health, but, at the same time, not bring forward legislation to retain that responsibility in the Scottish Office. I hope that such a Bill will be introduced and that Members representing Scotland will have an opportunity to discuss it. Scottish legislation should go to the Scottish Grand Committee for full scrutiny rather than be foisted upstairs to a Committee packed with acolytes who dutifully follow the Thatcher line to ensure that the democratic views of Members representing Scotland are voted down.

On student loans, no mention has been made by anyone of the fact that the Scottish degree system is based on the concept of a four-year honours course. If the top-up loan system is introduced there will be particular difficulties for students in Scotland, but, as well as that, the system will

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present problems--already referred to by the right hon. Member for Yeovil (Mr. Ashdown)--for women, the ethnic minorities and the disabled. Such are the implications behind those heinous proposals. The Government have admitted that those proposals will not save one penny piece this century.

It is ludicrous that we should force our young talented people away from university and higher education by asking them to take debts upon their shoulders. At the same time, however, the Government say that they want to encourage access to education. That is doublespeak. It is illogical for the Government to argue for access to education and, at the same time, make that access more difficult.

We still do not know what preferential treatment, if any, will be given to Gaelic broadcasting, which is an important minority language in Scotland. Despite the efforts of hon. Members representing all parties, we still have had no response from the Home Office about the details of those proposals.

I have already submitted a substantial document expressing my concern at the proposals in the White Paper relating to reform of the legal profession. I hope that the Minister of State, Scottish Office will ensure that his colleagues are aware of our concerns. I want to know from the Scottish Office whether the proposed Bill will deal with miscellaneous provisions or whether it will be a straightforward Bill dealing with the proposals outlined in "The Way Forward". An important point is at stake here and it would be a constitutional outrage if a whole series of other issues were tagged on to such major changes to the Scottish legal system. The Minister should know that the Law Society of Scotland, among others, would share my constitutional outrage at such a proposal.

There are many other points that I could raise, but I believe that I have touched upon the key ones. The economic aspect of our work here will be all -important. How we approach, jointly and individually, the issues confronting us in Europe and the way in which we deal with legislation here are equally important.

As a Nationalist, I do not believe that the arguments will be won for us in this Chamber or in the Committee Corridors. Our battle is to win the hearts and minds of the Scottish people and to make them party to the vision of an independent Scotland within the European Community and, through it, the international community. This place stultifies and denies democratic discussion and debate about the issues confronting Scotland. We cannot resolve our problems until we are back home in our Parliament and that Parliament has direct access to the international community.

7.23 pm

Dr. Alan Glyn (Windsor and Maidenhead) : I shall be as brief as I can, but when one has the privilege of speaking on the first day of the debate one has the opportunity to deal with the entire Queen's Speech.

I was especially grateful that the Gracious Speech made security almost the first and foremost issue. It places great priority on national and Western security. Recent changes in Europe are far greater than those experienced in 1917 and 1945. In 1956 I was in Hungary with the freedom fighters and then we had no idea that such changes were possible. Even up to a year ago that was still the prevalent feeling, and the complete change that has come about has

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