House of Commons Hansard Debates for 7 Nov 1990

Mr. Jeremy Corbyn (Islington, North) : Much of the Queen's Speech is extremely predictable. There will be a little more privatisation and some more anti-social legislation, and Britain will descend further into a rather nasty, greedy, uncaring and grabbing society. That is what we have seen over the past 10 years. It is necessary only to step outside this place and to walk for about 10 minutes to see exactly the results of 10 years of Conservative Government. Young people are sleeping on the streets outside the Savoy hotel while inside there are people with money to burn. There are those who are paying £400 a night for bed and breakfast while on the streets people sleep in cardboard boxes. That is the epitome of the Government's achievements over the past 10 years.

Is the House aware of the many derelict, elderly men who try to get into Westminster hospital each night because they have nowhere to live? Is it aware also of the young people who queue outside Salvation Army hostels around London? Is there an awareness of the number of people who come to hon. Members' surgeries demanding their rights, including a roof over their heads, which we cannot provide for them? The borough in my constituency,

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like that of my hon. Friend the Member for Walsall, North (Mr. Winnick), is building hardly any houses because there is no money to enable it to do so. There is plenty of money, however, for other purposes.

The social injustices that the Government have created will cause them to lose the next general election. The people will express a wish for a return to the concept of a welfare state that provides a safety net for everyone, with a health service that is free for everyone at the point of use. These are important issues and they will come to the forefront at the next general election.

There are important world issues that the House seldom discusses. Poverty in Britain and throughout the world is of overwhelming importance, as is environmental destruction here and around the world. Linked with these matters is the pressing issue of world peace, which, again, is seldom discussed in the House.

In the previous Session, the Government introduced the Environmental Protection Bill, which completed all its stages. It was laudable in the sense that it was designed to ensure that people would drop less litter and it provided for more recycling of goods. I could not disagree with those aims, but, unfortunately, the boat was missed entirely. The Bill did not deal with the basic issues. It did not focus on what we on the planet are doing and the environmental destruction that is inevitable unless there is a change of course and a change in our attitude towards the world's natural resources. I shall quote from a Friends of the Earth document entitled "Feel the Heat". It was produced recently by Andrew Dilworth, Friends of the Earth's international officer. One passage reads :

"On current emission trends, the IPCC predicts a rate of temperature change of 0.3 C per decade. This is greater than that seen over the past 10,000 years'. Some greenhouse gases (carbon dioxide, nitrous oxide and CFCs) stay in the atmosphere for long periods. To hold concentrations of these gases at their current levels would require immediate reductions in emissions from human activities of over 60 ' Obviously emissions cannot be cut by 60 overnight, but the challenge for politicians around the world now is to reduce emissions sufficiently to limit the amount of warming and the speed at which this occurs."

The Prime Minister speaks at every international conference on global warming that takes place anywhere in the world. I think that the right hon. Lady is the first Prime Minister that Britain has ever had who is scientifically qualified and who understands the importance of the issue. She understands what is happening, but the Government hold back on agreements on reducing the emission of greenhouse gases.

Mr. Sayeed : The hon. Gentleman has spoken of the past 10,000 years. Vines are no longer grown in York, but when the Romans were in York they grew vines. They made good wine there, and they did not get there by motor car.

Mr. Corbyn : That is a clever and witty argument. What the hon. Gentleman says is correct. Vines were grown in York and wine was produced there in Roman times. Many remnants of old vineyards are to be found on the south downs, which at one time was a more fertile area than now. There was a time when Britain had a warmer climate. Over the past 2,000 years there has been a climatic shift throughout the world.

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Research has taken place in Antarctica and deep ice cores are able to produce an exact replica of what was in the world's atmosphere 1, 000 to 2,000 years ago. There is incontrovertible evidence that carbon dioxide emissions are increasing at an unprecedented rate. Unless we are able to reduce them, the consequences will be truly horrendous. The central states of the United States will become desert areas, and so will large parts of the Soviet Union. Many countries will be lost through rising sea levels. Climatic changes will have devastating effects throughout the world. Half of Bangladesh will disappear because of rising sea levels. These are extremely serious issues and they can be tackled only by international agreement and only if we are prepared to make necessary changes in the running of our economy instead of treating the earth as something from which we can always dig things without worrying about the consequences.

I hope that the Government will show that they are giving serious consideration to these issues when they produce their environmental protection Bill this Session. Instead of trying to undermine the Antarctic treaty system by bringing forward proposals to allow mineral exploration, which many of my right hon. and hon. Friends believe will lead to mineral exploitation, they could make a good start by saying, "Enough is enough and we shall go no further. We shall continue to undertake scientific exploration, but we shall seek to preserve the ecology of the continent. We shall try to preserve the living organisms around it as well as the southern ocean, which is an important originator of oxygen into the atmosphere." I should like to think that the Government will change their heart and say at the Santiago conference that Britain will support a wilderness park in the Antarctic rather than continuing the mineral exploration. The factors to which I have referred in the context of the world environment are crucial, but it must be recognised that the results of environmental destruction are different in different parts of the world. We complain, rightly, about the level of air pollution in London because of the amount of traffic and the lack of planning. The same complaints are made in other major cities. We complain also about toxic waste disposal and nuclear waste disposal. It is right that these complaints should be made.

It is true, unfortunately, that, in effect, we are exporting pollution to poorer parts of the world. That takes place in a dramatic form in the exporting of toxic waste to poor countries in west Africa. They accept it and process it because it is a way of obtaining foreign exchange. It is often processed badly, however, and that causes incalculable damage to those countries. Likewise, the drive to obtain foreign exchange has led to disaster in India, for example, in the form of the Bhopal accident some years ago. That sort of accident is repeated day after day throughout the poorest countries in the world. There is a clear link between poverty in the poorest countries in the world and environmental destruction, especially with the economic regime that the world is under at present.

The greatest single issue facing two thirds of the world's population is the debt that so many poor countries have to the banking system, primarily that of western Europe and the United States. Debt has grown enormously over the past 30 years and it is now over a trillion dollars. It has grown in part because commodity price increases have not taken place. In real terms, many farmers in poor countries are receiving less now than they were 30 years ago for tea, coffee, bananas and many minerals. At the same time,

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interest rates have increased to higher and higher levels. The only way in which a poor country can stay afloat is by borrowing money, and that increases its indebtedness.

The gross national product of Mauritania, a poor African country, is $440 per head, while external debt per head is $7,071. It is inconceivable that Mauritania can ever repay its debt. It is impossible for that to be done. The gross national product of Zambia is $250 per head, while debt per head is $889. The effect of such debt in many countries has been an enforced invitation to the International Monetary Fund and the World bank to come in and make recommendations on how the economy should be run, and they have always proposed similar solutions. These have been to increase export earnings and the inflow of foreign investment by selling state assets and cutting social expenditure to the extent that in Bolivia, for example, the problems of the people are becoming worse, not better. We should be aware that 16.7 per cent. of all babies born in Bolivia die within a few months of their birth. In Peru, 34 per cent. of 12 to 17-year-old students do not attend schools or colleges because they have been closed on the orders of the World bank and the IMF, with the aim of running a market economy mirroring what the IMF thinks is right.

In our debates on overseas aid, it is always assumed that, by some means or another, the northern industrial countries automatically transfer resources to the poorer, predominantly southern countries. That is not true. The average figure for the real money that flows each year from the poorest to the richest in the world is $50 billion. It is a gigantic world economy that drags the resources and the wealth out of the poorest people in the poorest countries and feeds them into the banking systems of Europe and north America. When the Prime Minister talks about changing the trade arrangements and ensuring that the Uruguay GATT round reaches a successful conclusion, she is really talking about a free world market in food, which would be devastating for the poorest people in the poorest countries. She is talking not about protecting the poorest people in the poorest countries, but about their destruction.

I believe that the indebtedness of the United States Government directly led to the deaths of thousands of children throughout the world. It exported its economic problems to the poorest people in the poorest countries. We need to understand that a world imbalance leads to poverty, malnutrition, infant mortality and environmental destruction. The destruction of the rain forests in the Amazon has not necessarily come about because everybody in Brazil is hellbent on diving into the rain forests with an axe, a chain saw or a big skidder device for cutting down trees. It has happened partly because it is a way of increasing export earnings and the indebtedness of that country. Exactly the same process happened in Malaysia and west Africa. The economic strategy that the IMF pushes on to the poorer countries of the world means that we are financing the destruction of the rain forests and those who live in them. It is time that we woke up to that fact.

Politics in this country are dominated by debates about our relationship with Europe and the Eurocentralism that goes with that. I am firmly an internationalist, so I am not necessarily opposed to Europe. However, I am opposed to a fortress Europe that basically creates wealth for itself at the expense of the world, creates an undemocratic control of government for the whole of Europe, and, in truth,

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works only for the good of multinational corporations and banking systems. It will cause further imbalances in world poverty and world trade arrangements. I view the free market of 1992 not as an opportunity, but as a disaster for very many people throughout the world. I believe that Europe will contribute to the economic problems of the world.

I do not agree with the sort of racist nonsense that has been published in the Sun and other newspapers during the past few weeks. It is a disgusting way to report matters. However, I believe that the drive towards a market economy in Europe will create poverty on the rims of Europe and an inner- colonialism in which western Europe will act as a sort of colonial master for eastern Europe and much of the rest of the world. It is about time that we began to take an international and global view rather than shut ourselves into a Europe that does not act in a socially just and reasonable manner. I hope that the debate will now begin to turn on those matters. The other issues that currently dominate our discussions are arms expenditure and the possibility of a Gulf war. This year, Britain will spend £20 billion on arms. I have never been a supporter of NATO. It was set up after the war partly because the United States wished to develop a much stronger economic interest in western Europe, which in turn largely led to the cold war. NATO was a product of the cold war. The Warsaw pact is at an end, so surely it is time to end NATO. Do we really need an alliance directed towards the supposed enemy of the Soviet Union when even the most virulent supporters of NATO agree that it is no longer any threat?

The cat came out of the bag during the debate on the defence estimates last Session, when speaker after speaker used the phrase "out of area activities by NATO"--in other words, beyond those agreed in the 1949 treaty. I am referring to the sort of activities currently taking place in the Gulf. In many ways, what has happened in the Gulf is disastrous. I have never been a supporter of or an apologist for Saddam Hussein. Indeed, I recall many lonely occasions in the House when I spoke against Saddam Hussein, his genocide against the Kurdish people and the way that the British Government were financing the re-arming of Iraq. Indeed, the chemical weapons being manufactured in Iraq largely comprise chemicals made in western Europe and north America. Some £1 billion was loaned to Saddam Hussein by British banks, with the agreement of the British Government. His power is largely the creation of western Europe and north America. I do not support him and I do not think that he was right to invade Kuwait.

I do not accept that either Kuwait or Saudi Arabia represents the zenith of democracy anywhere in the world. In Saudi Arabia women are denied the vote, while in Kuwait few people have the vote. There is a huge underclass of people from the third world doing the work and carrying out the economic activities. Those countries are feudal establishments. The only purpose of sending troops to the region is to defend and guarantee oil supplies. I find it difficult to accept that the United States is merely defending a small country against a larger country. If that were true, why were Grenada and Panama invaded? What was the Vietnam war about, other than a powerful United States wishing to extend its control and influence throughout the world?

There must be a negotiated settlement to the problems of the middle east. That means that the rights of the

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Palestinian and Kurdish peoples must be recognised. There can be no peace in the region until their rights are accepted. If it was good enough in 1918 for Woodrow Wilson to recognise the rights of the Kurdish people, why cannot those rights be recognised now? If the shooting starts and there is war in the Gulf, the retaking of Kuwait will not be a clean, clinical operation--it will be a filthy and long war with hundreds of thousands of dead, and at the end of that war there will still have to be negotiations on the future order and the future government of that area and those countries.

Before we begin shooting, before we let slip the dogs of war, we should pause and try every possible way to achieve a negotiated settlement that will bring peace to the region. Many people are wrapping themselves in the Union Jack and in khaki hoping that they will gain cheap support by pushing this country into war. I do not want a war. I do not want the working-class youth of Britain, the United States and Iraq killing each other in the deserts of Kuwait and Saudi Arabia.

We live in remarkable times. We have the technology and the ability to achieve so much, but at present we are using that technology and that ability to maintain two thirds of the world's population in some degree of poverty, and to allow an unprecedented rate of environmental destruction of our own planet. At the same time, the Government are pledging themselves to the idea that the only salvation for all the world's needs is provided by market forces and voodoo economics. Those ideas have brought the world to its present plight, and created the current environmental destruction. We need an understanding that there must be planned trade and planned production--production aimed at the needs of people rather than the wastefulness of the wealthy in western Europe and north America.

8.58 pm

Mr. Mark Wolfson (Sevenoaks) : I hope that the hon. Member for Islington, North (Mr. Corbyn) will understand if I do not pursue his arguments ; I wish to raise other matters. However, I must say that I profoundly disagreed with many of his remarks.

I wish to refer to two sentences in the Gracious Speech. The first states :

"My Government attach the highest priority to national security, and to the preservation of international peace with freedom and justice."

The second states :

"My Government will continue to uphold the purposes and principles of the United Nations."

In that context, I wish to raise a matter that is referred to relatively seldom in the House. It is the aspiration of the Baltic peoples--the populations of Estonia, Latvia and Lithuania--to independence and freedom from the Soviet Union. During the summer, I had the opportunity to visit those three Baltic countries on a parliamentary human rights delegation, together with the right hon. Member for Plymouth, Devonport (Dr. Owen) and the hon. Member for Newport, West (Mr. Flynn). It is appropriate that I should raise this matter in the House today, because Mr. Lennart Meri--the Foreign Minister of the Republic of Estonia--has spent this week in London. I am glad to say that he met my right hon. Friend the Foreign Secretary

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earlier in the week, and this evening he addressed an all-party human rights group meeting in the House of Commons.

It is difficult to overestimate the importance to the Baltic people of such a meeting. For some 50 years, there has been a group of remarkable people in Britain--members of the British Baltic Council--who, through 50 years of Soviet domination of their countries, have kept alive the hope of their nations for ultimate freedom and independence.

Let me remind hon. Members that the population of Estonia is 1.5 million ; 65 per cent. are Estonian, and the rest are mainly Russian. In Latvia, the population is 2.5 million : only 53 per cent. are native Latvians, the rest being Soviet citizens. In Lithuania the population is 3.4 million, 80 per cent. being Lithuanian. Those three countries are a totally different case from the other Soviet republics. They were occupied by the Soviet Union, and it is part of the second world war's unfinished business that they are still not independent.

This is a time of great change. We have just seen the post-war division of Germany come to an end. The Baltic people feel compelled to remind the rest of the world--and I wish to remind the House--that that reunification by no means spells the definitive end of world war two. Estonians, Latvians and Lithuanians are still victims of that war, and the Soviet-occupied Baltic states are still an unresolved consequence of the second world war. However, their Governments clearly state that they are bound to Europe--a wider Europe than just the Community--by common bonds of culture, heritage and history. Their aspiration is that they should be enabled to take their rightful place in a united Europe.

The Baltic states want equal rights for European security and co-operation ; they want to assume their own responsibilities as members of the commonwealth of free nations--as, indeed, they once did during their 18 years of full independence between 1920 and 1939. The specific request, to which they want a response now, is that they should be given observer status at the forthcoming Paris conference on security and co-operation in Europe. It is essential that the west gives what encouragement it can to the resolution of a matter which has to be settled between the Soviet Union and the Baltic republics. But it is equally important that, with all the other major issues in the world today, so many of which have been referred to during this debate, we do not allow the position of the Baltic states to be forgotten by the free world, or allow our wish for Mr. Gorbachev's success in the Soviet Union to override the importance of pressing the Soviets and reminding them that their occupation of the Baltic states is illegal and has been so recognised by all British Governments since the war.

The record of all British Governments is clear on that issue, but we need to turn that recognition into reality now that the opportunity for their independence exists. They must not be swamped by the wider issues of the break-up of the other Soviet socialist republics from the centre because, I emphasise again, their position is very different.

The Danish Foreign Minister has said that Denmark supports the efforts of the Baltic republics to give real content to their formal independence. He hopes that, before long, they will take responsibility as fully fledged participants in international co-operation.

The Icelandic Foreign Minister recently told the United Nations General Assembly that independence is the only

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solution to the dispute between Moscow and Estonia, Latvia and Lithuania. He said that those three republics, whose independent statehood has been recognised by the international community, should now become a reality.

We hon. Members who visited those republics this summer were enormously impressed by not only the realism of Ministers and others whom we met there, but by their dedication and commitment to achieving independence. It is their only real hope for building up a more vigorous and effective economy. If they remain part of the enormously complex Soviet economy, it will be even more difficult for them to raise their living standards and establish the trading and manufacturing links with the west that they so badly need. As small independent nations they had an effective record of economic development in the years between the wars. Their people have skills and abilities and they can feed themselves. The Scandinavian nations are clear examples of how small populations can achieve high living standards, running their economies in a western mould, and there is no reason why the Baltic states should not do the same.

Therefore, I appeal to my party in government to make every effort to give encouragement and support to the correct and proper aspirations of the Baltic people for independence.

9.8 pm

Mr. Austin Mitchell (Great Grimsby) : I do not propose to follow the hon. Member for Sevenoaks (Mr. Wolfson) all the way to Latvia, Estonia or even Lithuania. I shall stay within Europe or, as it is more popularly referred to in the context that I am talking about, the Common Market.

I found the Queen's Speech curiously disappointing. In some ways, the Queen would have done better to have recorded it on an 0896 number and let us all ring in to hear it. She could have stayed at home and not bothered to come through all the traffic. The speech was not up to the trappings. It was rather like Woolworth's used to be before the war with everything neatly laid out and nothing costing more than sixpence. It presented a series of measures dredged up from the Whips' cupboard which are of no great importance, and which will be easy to jettison in a cut-and-run general election. As a menu for the new Session, it will produce a very disappointing meal. The Session will be preoccupied with Europe and the Common Market, which are confusing and frustrating issues because both parties are split over them. Government Members are clearly split over Europe from top to bottom. If I am to be honest, I must admit that our party, too, is split--although it split more from bottom to bottom than from top to bottom, because the split exists at my level and is less important because it is the Government who must make the decisions. The Prime Minister's problem is that she understands the Common Market only retrospectively. She agrees to a measure such as the Single European Act and then regrets it at her leisure. In the constant process of inwardly, downwardly pulsating, in getting closer to Europe, there is never a line to stand on. The Prime Minister has no line, and nor have her supporters in the Conservative party--specifically the members of the Bruges group, who always say, "Thus far, and no further", until they receive the next nudge down the road, at which point they lunge forward and repeat, "Thus far, and no further".

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Many more measures and pulls have yet to come from the Common Market. I note that its tone towards us has changed from, "Come on ; be in ; share the decision-making and influence the decisions," to, "Come in, or you will be left behind and we shall go ahead without you." We shall be dragged willy-nilly, struggling and resisting, but always getting the worst of all worlds, into a deeper relationship. The Common Market will pull at us, and the Ministers in the white coats will take the Prime Minister by each arm and pull her with them in that remorseless process.

The Opposition, by their concurrence and actual advocacy of the exchange rate mechanism and European monetary union, will make matters easier for the Government, by giving them an opportunity to steal our clothes with every advance that they make into Europe. So it will go on, with the Prime Minister left bemused, and the public left confused.

We seek to repair the damage that has been caused by Britain's membership of the Common Market by achieving closer and deeper integration into that institution. Let there be no doubt that we have suffered massive industrial damage. A trade surplus in 1970 of about £4 billion at 1989 prices has turned into a deficit of £16 billion, and 98 per cent. of our world deficit is with the Common Market. That turnround of about £20 billion has been caused by exporting at least 1.5 million jobs to Europe. That is the cause of our industrial and unemployment difficulties.

In addition, we are forced to accept an agricultural protection system that increases food prices in Britain, cuts off our natural trade associations, and introduces distortion into our relationship with developing countries. We are compelled to pay for the damage thus sustained with a contribution that is now running at £2.3 billion net. All that for a country that has a massive foreign trade deficit.

It seems pointless to seek further strengthening of a relationship that has already caused so much harm. That harm has been done because we never had a clear idea of our interests. They are not sovereign but economic interests. Britain needs to rebuild, widen and expand the industrial base on which the paraphernalia of an advanced industrial society rests--services, the financial sector and jobs. That base creates not only employment but the surplus for growth and for public spending, and pays our way in a world in which our deficit is in tradeable goods.

We cannot continue to consume at this rate unless we produce to pay for consumption. Quite simply, our problem is that the industrial base, on which everything rests, has shrunk to the point where it is barely viable ; it can barely support the superstructure of an advanced society. It is a telling point that our industrial manufacturing rate is now about 20 per cent. as a proportion of gross domestic product, compared with 30 per cent. in West Germany and Japan. That difference is crucial, as it is the difference between success and failure.

Unless the industrial base is rebuilt it will be impossible for any Government to advance living standards, improve the lot of the people, improve public spending and so generate the standards, the well-being and the health and education services that are required by an advanced industrial society. We will be faced with the problem of cutting back-- cutting our coat to suit meaner cloth--unless we can expand and rebuild that base.

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The industrial base is effectively weakened by the wider unities. It is not the same for a weak economy entering into wider unities as it is for a strong economy. A strong economy, such as that of West Germany, can power through the burdens, difficulties and problems, but we succumb to them because our industrial base is weaker. Essentially, the Common Market is a forum for competition between national economies--a competition which we are losing. It is not a machinery for giving aegrotats or for lending support to failures, but a forum for intensified competition.

The market weakens its peripheries : the logical process is to attract development to the centres of population. As the market does that we face a choice. As a weakened peripheral country our interests lie in strengthening central institutions so that they can begin the work of redistribution. The problem is that the West German economy, powerful though it is, is looking east and will not be prepared to pay for the sort of redistribution network that would be necessary to give us benefits from stronger central institutions. If that is not available our only alternative is to act for ourselves, to pursue our own interests and build up a strong industrial base. Primarily, that means retaining essential powers to control our exchange rates, interest rates, budget policy, and money supply.

The exchange rate is absolutely crucial to the process of securing our competitiveness and to rebuilding the industrial base. We have entered an exchange rate mechanism which is in any case a folly, because it is pointless to gear economic policy to a fixed exchange rate. The exchange rate is simply a market clearing mechanism. To try to gear economic policy to that is as sensible as trying to control the weather by nailing the needle on the barometer--it is as daft as that. Yet, that is what we have undertaken to do by joining the exchange rate mechanism and especially by joining at an overvalued exchange rate.

The real exchange rate against the deutschmark is now about 22 or 23 per cent. up on the second half of 1986 and it is more than 50 per cent. higher against the dollar. Imagine the problem that that causes for industries competing in the German or American markets. Our industry has a 23 per cent. or a 50 per cent. hurdle to leap before it can even restore the competitive situation to what it was at the end of 1986. It is an impossible job and it cannot be done. Industry is being forced to break itself in an effort to do something which is impossible in the first place.

Overvaluation of the pound is the cause of our deficit. The pound must come down substantially if we are to compete and close such a deficit. Overvaluation is the cause of our failure to export sufficient goods. It also leads to too many imports. My hon. Friend the Member for Brent, East (Mr. Livingstone) gave statistics which showed that the decline in the proportion of gross domestic product in terms of exports between 1979 and 1990 is about 3.5 per cent. That has not happened in France. Its share of exports, in terms of GDP, has increased. It has not happened in Germany, either. That is the test of failure. Our exports fail because of overvaluation. Until we reduce that overvaluation and become competitive in terms of exchange rates, we shall be unable to survive.

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Industry is being asked to hold its wage costs, but industry is not responsible for inflation. The wages of workers in manufacturing industry have gone up less every year than the wages of those who work in every other sector of the economy. However, industry is told to cut its costs, squeeze labour and to jettison research, development and investment, although they are all necessary if industry is to survive. It has been told to make itself lean and trim in order to over-leap the 23 per cent. burden that was imposed by the Government's decision to go into the exchange rate mechanism at an overvalued exchange rate.

Industry cannot do it. It means, in effect, shelling our front-line troops. Our manufacturing industry is in close competition with the manufacturing sectors of other economies. However, it is to be clobbered by bankruptcies, increases in unemployment and by the squeeze and deflation that the Government have introduced and which they will strengthen as a result of the overvalued exchange rate. Just as happened between 1979 and 1981, there will be closures. Our lack of competitiveness now is the same as it was then. The exchange rate is as high in real terms as it was then. The terms of trade are as bad as they were then. Exactly the same process is taking place as happened in 1925 when Winston Churchill took sterling back to the gold standard at an overvalued rate. The consequences will be exactly the same as they were then because the advice that the Government are giving to management is exactly the same as it was then : cut your wage costs. It cannot be done. Businesses will go to the wall. Our front-line troops will be shelled in the struggle for industrial survival.

Winston Churchill said then that he wished that industry were more content and finance less proud. Entry into the exchange rate mechanism, particularly at that level of overvaluation, is the final triumph of the City and the financial sector. They have triumphed over industry. The City and finance want ERM because they want to become the financial centre for Europe. That is why they were so keen that this country should join the ERM. That, too, is why they are so keen on economic and monetary union. They want to be the manipulators of money for Europe.

By doing so under those conditions and at that rate the Government have imposed a ruinous burden on the manufacturing sector, which is vital to our economy. Industry will be further weakened. Deflation is the enemy of the improvement of everything. The City has won. It is impossible to expand the economy ; it has to be deflated if we are to get down to West German levels of inflation. We are entering into the same long-term deflation as France and Italy went through. The result will be the same rise in unemployment. Economic and monetary union would make it even worse. A balance of payments gap will be replaced by a standards gap and by the need to cut wages and costs even more in order to stay competitive.

The prospect is gloomy indeed. We are locked into a wind-down and we cannot break out of it. We are locked into the old lurching process of stop-go. This is the last stop ; there will be no more go. We cannot expand the economy. We cannot control or manage the exchange rate.

Market forces would help a country that had endured a period of overvaluation. As the oil resources ran out, as the underpinning was removed and as the balance of payments made its effects felt on the exchange rate, the pound would come down. Market forces would bring it down. They cannot now operate because the pound is

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pegged in the exchange rate mechanism. We shall be reduced to the same relationship to Europe as Northern Ireland has to the United Kingdom.

We shall have closures and bankruptcies. They are going on now. I do not think that the Government understand the damage that they are doing to the real economy and to the manufacturing base of this nation. It is a national disaster. The only consolation is that they will be thrown out of power as a result. They might be able to save themselves by an Australian solution. I am not referring to the merger of Sky and BSB, although the Australians have a shrewder gut instinct and a cruder grasp of issues than the English with all their mock gentility. I am referring to the solution adopted in extremis by Australasian political parties. It was adopted by the Liberals in Australia and the Labour party in New Zealand when they junked a failing leader and brought in a glamorous alternative. Fortunately for us, the Government will not do that because the failing leader is too tough, the party is too nerveless and the glamorous alternative lacks the guts. He is

"Willing to wound, and yet afraid to strike".

The Government are stuck with the Prime Minister and locked on the path of decline and electoral disaster. We will come to power but I am afraid that it will not be the sort of power I would have wanted. We have had a miserable 11 years in opposition seeing every balance shifted to meanness, wealth and selfishness--towards the better-off and away from the people and the causes that I represent and want to see prosper. I want to come to power with the ability to put that right and shift the balances back. I want to come to power with a Government who can begin to rebuild the industrial heart of the nation so that we can obtain the expansion that we need to improve the quality of life and the services that are important to the people. Altruism and a sense of community flourish in a wealthier society. We have to generate that wealth and that is the first responsibility of a Labour Government.

I do not want to come to power to endure again the miserable experience of 1964 to 1967 of jettisoning everything that the party believes in to maintain an untenable and indefensible exchange rate at the behest of somebody else.

9.27 pm

Mr. Alan Haselhurst (Saffron Walden) : In a slimline Queen's Speech, I am pleased to see that the question of compensation for the compulsory purchase of land will be addressed again. I am sure that it is right to examine whether we have got the balance between developer and dispossessed person as right and fair as it should be. I speak from some experience, as I have a major public works development--an airport--in my constituency. I have seen the effects of that. It could be said that the British Airports Authority was generous in its approach to land owners. Nevertheless, it was not able to go as far as ensuring that some of the gain coming from land taken for something such as an airport is shared by the person whose land it was. We have now to look at this again to ensure that we achieve a more equitable arrangement.

It will be more costly to achieve those developments, but I think that it may make it easier to carry them out if those whose land has to be taken in the national interest--as perceived by the Government of the day--are given

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at least some reasonable reward for the fact that they are losing something precious to them and which has perhaps been an important staple of their life.

We are also intending to introduce legislation to deal with teachers' pay and conditions. I welcome that. Clearly, it has been a source of discontent within the teaching profession that they have not had negotiating machinery. I was not convinced that negotiation was absolutely essential, provided that there was a system of salary determination in place which recognised the importance of teachers in society. I said to teachers who asked for the return of their negotiating rights, "What is wrong with a pay review body if it could deal with the problem?" The system, which will come before the House, restores an element of negotiation and I hope that it will be well supported by all parties, not just political parties, so that we can put sensible arrangements in place.

It would be remiss of me if I did not say to my right hon. Friends on the Front Bench that if we are to have a decent framework of negotiation for teachers' salaries we must also have sufficient resources to ensure that we extinguish those last feelings of discontent in the profession. Teachers still feel that they are undervalued, particularly in areas such as mine where living costs are extremely high. I hope that with this machinery we can find a flexible system which will enable us both to have all the qualified teachers that we need and to ensure that their morale is high and they have their rightful status.

I am pleased to see the commitment to continue to work for the regeneration of our cities. My interest in that stems from my chairmanship of the trustees of the Community Projects Foundation which is supported through the voluntary services unit of the Home Office. The Government do not make as much as they could of having such an organisation on their books. We have developed a body of skill and professionalism which could be used to greater effect in the regeneration of our inner cities. We already have some input, but it could be greater. The concern must be not just to refurbish buildings, streets and neighbourhoods, but to ensure that the living environment and the way in which the community works is effective, constructive and right for people, not just something pleasant to look at. Community development can go hand in glove with renovation and it should be a better fit than it may have been so far. I am sorry that, alongside the commitment to continue with the regeneration of our cities, there is not a similar commitment to the regeneration of our rural areas. That is in the forefront of the minds of my constituents. We have achieved a European Community position on agricultural subsidies, but, as the Prime Minister has admitted, the Community still goes into the GATT negotiations in a weak negotiating position. We may not be able to come out of those negotiations with the deal that we should like and that has serious implications not only for our farmers, but for the whole rural community.

If we are to make sense of agriculture, we must develop new means of managing the countryside. We must find a way of leading farmers away from simply being producers of food and towards being full-time custodians of the countryside. That seems to be the only attractive, practical way in which their skills, expertise and love of the countryside can be put to work.

The changes that may necessarily come about because of the changes in agricultural support and the outcome of the trade talks have great implications for the countryside.

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I hope that besides the measures mentioned in the Gracious Speech we shall recognise the need to support the changes in the countryside. We no more want a derelict countryside than we want derelict towns and cities.

I want to concentrate my remarks on that part of the Gracious Speech that refers to a constructive contribution to the intergovernmental conferences on economic and monetary union and the Community institutions. How we conduct our relations with Europe now has added political significance. I do not believe there is much doubt, however, that the argument about our membership of the EC was settled in 1983. The election that year was fought on the issue of continued membership of the Community and the result was decisive. Since then the Labour party has been easing itself back into the modern world, doubtless helped by its leader who now likes to believe that he has been constant in his support, nay enthusiasm, for the ideals of the EC.

Mr. Austin Mitchell : Just like the Prime Minister.

Mr. Haselhurst : We did not join a static entity. There might be plenty of scope for argument about how far and how fast development within the EC should take place, but it was always clear that the process promised ever-closer union of European peoples. Whether that union was arrived at by inching our way forward or by taking great strides was left to succeeding politicians and others to determine. If there was doubt about that commitment it was surely removed when we went into the negotiations that led to the Single European Act, which simply underlines what the Community is all about.

Two intergovernmental conferences are shortly to be held, which are another stage along the road towards closer union. I do not imagine for one moment that those conferences represent the final stages of that union--they are simply a means of considering further ways in which to move forward. Many years will elapse before any finality or perfection in our arrangements for the Community is likely to be achieved.

It is important to know the mood of the British people as the background to our approach to Community affairs. I believe that there is a general assent to our continued involvement in a developing Community. Perhaps not everyone understands the details and the implications, but there is a general assent to the fact that we are a member of the Community and that it is not a static body, but one which is evolving towards closer co- operation and perhaps even something called union. I do not believe that the people want the Government to cause the country to turn its back on those developments. There is a will to go on even if people are unsure exactly where we are going. The concept of Europe acting in a more united way attracts rather than repels our fellow countrymen. Admittedly, I do not represent a constituency such as Newham, South and I know that the hon. Member for Newham, South (Mr. Spearing) has different views from me on this subject. It may be that every second constituent he meets has a furrowed brow and asks questions about the composition and powers of the European central bank. Perhaps such questions influence his views on this subject. However, I know that I am not getting letters from constituents who are worried about economic and monetary union, the development of the Community

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institutions or even political union. I may get plenty of letters about the welfare of horses and ponies as a result of negotiations for the harmonisation of standards from the European Community, but on the more strategic issues there is hardly a letter. At constituency meetings, I am chided more about an apparent reluctance by the country to co-operate more closely with the European Community and a worry about Britain's possible isolation if such co-operation is not shown. I do not believe that a brake is being put on what the Government are trying to do. People in my constituency are worried about the country's reluctance to go forward, not about over-enthusiasm.

The general support that may be expressed for the Community is not a green light for everything to be done without qualification or a sign that the Government can sign up for anything. When people come to focus on details, it is possible that the mood will change. When we agreed to go into the European Community, I do not know whether people believed that we were going to be faced with the idea of a common currency, but I hardly think that it is a burning issue in the country. I have not received letters stating that we cannot contemplate that at any cost. As I go around the country I have not noticed that the bridges over our motorways are daubed with slogans, "Save Sterling--Save our Pound". If that is the test of the strength of public feeling, arguably there is still more interest in whether a certain Mr. G. Davis was innocent or guilty. As yet, there is no motorway built in the direction of Southend, but if there were, we might see such slogans--I do not know.

Far from there being any outbursts of anger, I detect a strong undercurrent of support for the idea that we might actually move towards a common currency and even perhaps beyond that in time, if our plans mature, towards a single currency. It is a matter of how the issue is expressed. When people look at the coins in their pockets or handbags, particularly the pound coin, I do not believe that they always reckon that they may be looking at five different versions of it. They put their hands in their pockets and produce a number of coins that look the same in general appearance and so they treat them the same, as does everyone to whom they give them. There are various ways to consider the idea of a common currency and eventually a single currency, because coins can look alike while having national characteristics emblazoned on them.

Support will be greater rather than lesser for the idea of a common currency and a single currency when people realise that to move in that direction is not necessarily to have the familiar pound sterling and its supporting currency swept away from them and something else imposed on them, but there are clearly different ways in which to approach the matter. We should not be frightened by the idea that something alien will be thrust upon us.

If the question of a common currency raises no difficulties, I should have thought that there was almost total indifference among the British public on the question of the European central bank. I do not believe that many people are going about their daily lives desperately worried about which type of bank, constituted in which particular way, will lay down the monetary rules to which we must work. It is too fanciful for words to imagine that this is a daily anxiety of the British people.

These are technical matters, and there is among the people a willingness to urge the Government to press on with their efforts to find the right formula for the next stage

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of economic and monetary union. The Government are not being pulled back by people desperately worried about a common or a single currency or about a central European bank. The people believe that it is right to carry on and that it would be wrong to give up. This view is probably more strongly held by young people than by the population at large, for understandable reasons. The opportunities that they have had in their education and to travel have given them a different perspective on Europe and on the importance of the European Community--many of them have grown up knowing nothing else. They are extremely enthusiastic about forging ever closer co-operation between the countries of the Community. I have little doubt that young people would take a generous view of other countries joining the Community in the fullness of time. It is a diversion to bring sovereignty into this argument ; it confuses the issue, which has to do more with technical, mechanistic discussions about whether we need a central European bank, how it should be controlled and what it would mean for the currency. To most people sovereignty probably means our having the power to take decisions for ourselves. If questioned in public opinion polls people exhibit a natural desire to want to retain the power to take decisions for themselves.

This happens at various levels. There are no greater defenders of their sovereignty than parish and town councils. I have heard uncharitable things said by members of parish councils about the next tier of government above them. It will be said in a village in my constituency that the district council is made up of people who do not understand the villagers, who know what is best for their village and who should take the decisions. But if sewage works, new roads, new houses or even airports are to be built, decisions on them cannot be taken at the parish level.

Just as the parish complains about the district, so the district complains about the county council, which in turn will complain about national Government. My hon. Friend the Member for Basildon (Mr. Amess) and I share a county council and have received representations from it about the iniquities of the Government, who do not understand, so the councillors say, the special needs of Essex. Of course it is our duty to try to represent those interests. However, the Government's responsibility is to view the national scene. It is understandable that hon. Members should be extremely suspicious about our powers being taken away, but what powers would we retain for the House? The plain fact is that power has shifted away from this country and away from all nation states. A trivial but topical example illustrates my point : the merger of Sky and BSB. There appear to be imperfect powers available to control that merger, because it is becoming physically impossible for single Governments to control some of the technical developments that have taken place. Major events beyond our shores can still have tumultuous effects on this country, and we on our own cannot control those events. The fact that we are a sovereign Parliament does not stop them happening. Increasingly we have seen our room for manoeuvre diminish. It is not very satisfying to be left with what might be termed no more than the power to wriggle. There is nothing dignified or edifying about such a situation. We have to come to terms with the modern world. We might also ask where sovereignty has got us over the years. If we

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look at the performance of British Governments and the Parliaments that have supported them over the past 45 years, can we say that our economic performance has outshone the performance of our neighbours in western Europe? That is manifestly not the case.

The Government have been chided by the Opposition for not being custodians of as great a progress as they should have been. With all the power that we think we have, we have not been able to demonstrate that we can do much better than other democracies in western Europe. So-called sovereignty and total power form a very imperfect balance. We cannot demonstrate that, by attempting to retain sovereignty, we have achieved more for our people than we might achieve if we sought new arrangements in which sovereignty was pooled by linking hands with other Governments, thus giving us more actual power. I get slightly suspicious when I hear Heads of Government extolling the virtues of Parliament. I hope that that will not be taken the wrong way by the Government. Through the ages Executives have found the legislature a bit of a nuisance. Parliament is an irritating obstacle to Governments who need to get their business through. There gathered are the representatives of the people who ask awkward questions and block progress and try to defeat what the Government in their wisdom are trying to do. When I am told that I am part of an essential process I scratch my head and wonder whether I am living in the real world. I wonder whether the words that I use now or that I may use in future will have the impact that I should like them to have on the Government and the development of their policy. I am not sure that we should be completely persuaded that we have magical powers in our hands in Parliament and that the Government are keen to see us use them and, for that reason, we should hesitate about entering any kind of pan- European arrangement.

The confusion has been made worse because, in discussing sovereignty, we have tied it up with national identity. My hon. Friend the Member for Staffordshire, Moorlands (Mr. Knox) referred to that when he alluded to his native Scotland. My hon. Friend is a good European, but no one could possibly mistake him for a Welsh man or an English man. He is distinctly a Scot and Scotland is a proud nation within our United Kingdom. The idea that our national identity will disappear or be submerged is mischievous nonsense.

Whatever arrangements we make, and I am not advocating any in particular, in moving closer towards our Community partners, the last thing that we shall lose is our national identity. We may, in a calculating way, give up some power, but we are not going to give up our identity or our culture. Therefore, we shall remain a distinct nation state, whatever the constitutional bonds with which we choose to tie ourselves to the Community.

Much of the difficulty over moving towards the next stages of economic and monetary union is caused by the fear that somehow even to inch in this direction is to be slipsliding towards federalism. I was greatly disappointed by the speech of the right hon. Member for Plymouth, Devonport (Dr. Owen). He is pitching his tent in a curious place, given his former views on this matter. He is now truly a political itinerant, and I am not sure whether his roots are anywhere in terms of his political affiliation or his philosophy. I was shocked by his denunciation of certain developments within the Community.

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