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the stability, prosperity and security to which we and our constituents aspire, it will be crucial for Britain to play an active part in the process.I strongly welcome the words of my right hon. Friends the Prime Minister and the Foreign Secretary, that our position should be on the playing field, participating. We shall certainly take part in the two intergovernmental conferences. The first one is on the institutions--we must find a more constructive role for the European Parliament. Due to the constraints of time, I cannot elaborate on what its role may be, but at present that Parliament is not efficiently or sufficiently used.
I shall offer a few principles on European monetary union. We should all approach with an open mind what will undoubtedly be long and complex negotiations. Although our 12 countries have been working together and have geographical continuity, nevertheless we are still different economically, socially and in many other significant ways. Therefore, any form of moving together in close co-operation will take a long time, and we should recognise that. It may well be that the hard ecu could make a contribution as a common currency. I am not convinced of that--none of us can be sure-- but it is a strong possibility. In good time, it may turn out to be a stepping stone to a single currency. We should not shy away from what some people regard as a threat of a single currency.
The advantages of a single currency must be obvious. When, before 1914, our forefathers enjoyed with the gold standard what was, in effect, a single currency, no one was frightened about the threat to sovereignty. Our predecessors did not believe that the sovereignty of Parliament or the nation was threatened because we enjoyed the single currency of the gold standard. Moving towards a single currency will be hugely difficult, but the difficulties will not be so much for this country as between whatever colossus Germany develops into and Greece at the other extreme--we are somewhere in between. I believe that we can live with that.
I suspect that some hon. Members who are frightened of a single currency do not believe in the economic capacity and potential of our country. I do not share that pessimism. I believe that we can look our European partners in the face and live with it. A great help towards moving to a common currency would be the introduction of an independent central bank. It is significant that almost the first act of the Attlee Government after 1945 was the nationalisation of the Bank of England. We have privatised everything else, but we have not yet privatised that. I commend my right hon. Friend the Member for Blaby (Mr. Lawson) for his views on this matter.
I do not feel that I am losing my Englishness or Britishness as we move towards closer union, whatever that may be. The French are not losing their Frenchness, and I have no fear that we shall lose our Britishness.
7.20 pm
Mr. Denzil Davies (Llanelli) : To those of us who were around in this House in 1972--a dwindling band, unfortunately--and who voted during the debates when the United Kingdom first acceded to the treaty of Rome, these further debates on the EC begin to have a familiar ring. One of the characteristics of those earlier debates was a certain lack of candour and clarity on the part of the pro-marketeers and of the Government of the day. There
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were echoes of that in today's speech by the Foreign Secretary, particularly when he came to deal with economic and monetary union and with political union.In 1972, there a was a failure to recognise that accession to the treaty of Rome was the first step leading to an act of union. The second step is economic and monetary union, and the third, intertwined with it, is political union. The EC is all about moving eventually towards political union--a European Parliament with full powers and a European Government of some sort. The exact form that that Government would take has not yet been thought through. Since we signed the treaty, more powers have been transferred from Westminster and Whitehall to Brussels. I shall not talk about sovereignty--it is a dirty word these days, and a peculiarly British concept, we are told, relating to the House of Commons ; and the Europeans do not understand it--so let us talk about political power. That power has gradually been transferred over the past 18 years--by 1992, it will be 20 years--from here to Brussels, largely to unelected, undemocratic bodies.
No British Government could now reimpose exchange controls, for instance. Our ability to control our trade policy is extremely limited, as the GATT negotiations have shown. Our ability to control agricultural policy is also extremely limited, as is our ability to restructure our industry without the--increasingly grudging--consent of Brussels.
When my hon. Friend the Member for Dunfermline, East (Mr. Brown) becomes Secretary of State for Trade and Industry, he will find that one of his hands is already tied behind his back, and in a few years' time, if these proposals go through, the other hand will be similarly tied.
In the past two weeks, the City, having clamoured to join the European monetary system, has begun to clamour for interest rate cuts--when the pound is bumping along at the bottom of its EMS band and the Government dare not reduce interest rates. That restriction, although incomplete, is nevertheless a restriction on our control of monetary policy.
Substantial powers are still left : powers over taxation, over the Budget, over borrowing and over public expenditure. But if these plans for economic and monetary union go ahead, those powers will go too, transferred to institutions in the EC.
The single European currency is not about whose head, or how many heads, should be on the coinage. It signifies a single monetary policy, a single economic policy and eventually a single Parliament and Government. If that comes about, my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) will be bound hand and foot at the Treasury, trying to run British economic policy. Whatever the technical merits of the ecu, and it has some--it is quite a clever dodge--it is a dead duck, not because of technicalities or economics but because the whole movement towards a single currency does not want 13 currencies : it wants one. That is why there is no chance, whatever the economic arguments favouring the ecu, of it succeeding. The single currency is not only about economics, as my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) said ; it is mainly about politics and political union. The central bank will be a European Bundesbank, governed by the same sort of statutes as govern the real Bundesbank. Were it anything else, the Germans would
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not agree to it. It is no good pretending that there will be control by Ministers. One of Delors's reports mentionsaccountability. The new governor of the central bank would have to go along to the European Parliament twice a year to give a report, but the idea advanced by some that the Council of Ministers or a Committee thereof could control monetary policy of the central bank shows that those who hold the idea are living in cloud-cuckoo-land. In this country, the Chancellor or the Prime Minister calls in the Governor to No. 10 or No. 11 ; interest rate policy is discussed ; and the Government make the decision. In France, the governor is not even consulted--he may be now, but he certainly was not before. The Ministry of Finance decides. Even in Germany, when the political pressures were on, Herr Po"hl, who likes to see himself as the great custodian of monetary discipline, agreed to offer one west mark for one east mark--a purely political act. But when we have a European central bank, the 12 Finance Ministers will not be able to apply that sort of pressure. The bank will be even more independent than the Bundesbank.
With monetary union, there will have to be economic convergence. That will be disastrous for the weaker areas of Britain--of Wales, of Scotland and of the north of England--and for countries such as Spain, Greece and Portugal. A massive transfer of funds will be needed to try to restore the balance. Where will the money come from? The MacDougal report in 1977, issued before the enlargement of the Community, estimated that, in a federal Europe, about 25 per cent. of the EC's gross national product would have to go into its budget. The figure now is 1 per cent.
Who on earth will contribute these vast funds to facilitate economic and monetary union without its damaging the weaker regions? Will the German taxpayer pay? I doubt it, given all the problems of east Germany, eastern Europe and the Soviet Union. Will French taxpayers pay? Perhaps the plan is to impose a Euro income tax--the final erosion of our ability to raise the income tax that we want to raise.
The final stage will be political union, but by then that will come easily. Once all these other elements have fallen into place, political union will be bound to come. Once economic control has been taken away from nation states, there will be political union. If this momentum continues, we may be in that position by the year 2000. The Foreign Secretary was reported in The Guardian as having said that he would not agree to turning Westminster into a body resembling Oxfordshire county council. Perhaps that analogy goes too far. A better analogy is provided by the German Lander. If all these plans go through, British control over economic policy will be no greater than the control exercised by a German Lander or a regional assembly anywhere else. Those who favour these movements, and the Government, have a duty to be frank and to tell the British people what is happening so that they can make up their own minds. This matter must never again be swept under the carpet because that is extremely dangerous. It is not a technical or an economic matter, but is at the heart of political control. From my experience of debates, and of events in 1972, I am not optimistic that we will get the candour and clarity that we deserve.
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7.30 pmMr. Michael Lord (Suffolk, Central) : I am grateful for this opportunity to take part in a debate that seeks to understand where we are going in Europe. The right hon. Member for Llanelli (Mr. Davies) said that we should try to tell the British people where we are going. That is enormously difficult in view of the plethora of organisations that we have to discuss and the initials that must be understood.
Originally, the British people talked about the Common Market and sort of understood what it meant. Now the EEC has become the EC and we talk about single and common currencies, the ecu, the hard ecu, EMU, GATT, EFTA, NATO, the North Atlantic Assembly, the Council of Europe and the WEU. That makes it extremely difficult for anybody, except those with detailed knowledge, to understand what all those organisations are about and how they fit together. The Euro jargon would also be hilarious if it were not so serious.
I was amazed at some of the speeches that I heard in the assizes that I attended in Rome last week, along with several other people. Even allowing for difficulties in translation, my constituents would be hard pressed to understand exhortations such as :
"We must pool our legitimacies and co-ordinate our competences in order to embrace co-decision and subsidiarity."
Perhaps when 12 try to speak as one it is inevitable that it should become unintelligible to everybody. Perhaps we should say, "Come back Esperanto, all is forgiven." I joke to make a serious point. Plainly, definitions of all those issues are vital not just to hon. Members but in plain language to the British people before any more firm and binding decisions are taken. Europe is in such a state of flux that it is difficult for anyone clearly to understand all the components and how they can best be put and kept together. Could the framework of Europe be wider and looser in the form of the framework provided by the Council of Europe on which I serve? The Council contains representatives from every European democracy and has already allowed into its organisation the states of eastern and central Europe. Should the framework be narrower and tighter in the form of the framework offered by the Community? That may be good for nations within the organisation, but it is much harder and takes longer to enter, and sometimes creates friction with other nations and blocs.
As the Warsaw pact disappears, perhaps we should pause and ask ourselves whether large blocs of any kind are still such a good idea. I do not intend to enter the complex debate about economic and monetary union and an independent European central bank because time does not permit. However, I find it quite frightening, bearing in mind that all these proposed measures are of such huge proportions and have never been tried before, that so many people who are for or against, and especially those who are in favour, can be so sure of the outcome. No one can be certain, and for that reason we should move forward with great care.
The conference in Rome last week was an organisa-tional pantomime and an object lesson in Euro manipulation. We went there as a national delegation and were immediately put in political groups. We went with a framework for discussion but were told that a framework did not exist and that there would be a free-for-all debate. The draft declaration which was to appear at the end of the
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conference was being produced as we arrived and the conclusion at the end of the conference was incidental. I greatly disagreed with the final declaration and I was one of the 13 who voted against it. The one thing that came out clearly and strongly was that the relationship between national Parliaments and the European Parliament must be a partnership, not a power struggle. I see the national Parliaments as the senior partner. For that partnership to work, we need to establish procedures in our national Parliaments that will allow much fuller scrutiny of all Euro legislation before it is enacted and not afterwards. Somehow, we need to fit together like cogs on two interlocking wheels the parliamentary calendar and the decision-making processes of the two partners.Although such a partnership may not immediately give more power to national Parliaments, it will certainly give them more responsibility and more confidence in what is happening. Only when the correct mechanism to link national Parliaments and the European Parliament is properly devised and in place will we be able to move forward in the right direction and at the right speed. Only then will the true and desirable balance of power and responsibility between all the parties involved become apparent. I urge the Government to undertake this organisational task with the greatest possible urgency.
7.34 pm
Miss Kate Hoey (Vauxhall) : We all know that Europe is living through a momentous period. The collapse of communism in the east, the unification of the two German states and the Gulf crisis create a new situation. At the same time, technological changes are speeding the globalisation of the economy and the environment. They are also reducing control of Governments over a future which in many ways, although hopeful, is more uncertain than ever.
I shall not use the word "assize" but will speak about the conference of European Parliaments in Rome which I attended last week. At that conference there was a great deal of discussion about what kind of Europe we wanted. Like many hon. Members, I had not spent much time thinking about Europe and discussing it, and at the conference I listened and learned a lot.
It is important for us to decide what kind of Europe we want and how it should be shaped. I want to see a Europe that is committed to reducing social inequality and underdevelopment. That means that it must set high social standards so that everyone benefits from the creation of the single market, which must have effective consumer protection. Such minimum social rights in every European country will prevent companies from competing unfairly through the lowering of employment and social conditions.
European economic developments must respect the environment. It has been said many times, but it is true and it needs to be repeated, that pollution knows no boundaries and does not respect nation states. Europe needs an environmental charter which sets out principles on which we can all co- operate and an environmental policy that will carry us forward into the next century. Europe must support its less prosperous regions. I think that there is a European term for that. At the conference I picked up all sorts of new European terminology. One of the things that came out of the conference was that we
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want to get ordinary people in Britain to think about Europe and understand it. We must stop using terms which mean nothing to most people. Many hon. Members use terms without really understanding them. I should like to see them try to explain those terms to their constituents.Our new Europe must actively co-operate with the emerging democracies and not shut the door of membership to the rest of Europe. It must also continue to develop co-operation and not forget the peoples of the third world. Above all, the Europe that we want must be democratic if it is to exercise such responsibility. It must also be democratically accountable and must promote the involvement of all its citizens in decisions affecting their lives. Central to that is the extension of majority voting on environmental and social issues so as to prevent progressive policies proceeding only at the pace allowed by the most backward. Unfortunately, in the past few years Britain has been backward on many social and environmental issues.
We must also consider how we scrutinise what is happening in Europe. Perhaps in that respect I am as much to blame as any hon. Member. However, most of the time we discuss European directives and legislation late at night. If we are seriously to examine that or any other legislation, we should not do so at such ridiculous hours. The national Parliaments and the European Parliament should complement each other's work so as to ensure proper democratic scrutiny. There is no need for any new institutions to bring the Parliaments together. We have enough institutions and bureaucracies already. How do we make people feel more European? How do we become more European? As I said at the conference, it does not happen overnight. People do not wake up one morning and say, "I feel European." To be honest, most people in this country do not feel European. We must bring together not just parliamentarians but people, throughout Europe. The success of the European ideal depends on the children and young people of Europe, and we have to find ways to bring them together. More and more, young people are travelling and working abroad, finding that countries have similarities, that they get on with people abroad--and that what is abroad is not just a foreign country.
Here I stress the importance of my interest in the language which transcends all other languages--the language of sport. Here is a simple example of how undemocratic the European Commission is and this is why we need to democratise it. Recently, it offered £6 million--to be divided among the countries of Europe--to bribe their Olympic athletes to wear a European symbol at the Olympic games in Barcelona. If that suggestion had been properly discussed in a democratic body, the money would be going not to elitist sport, but to the grass roots, to school sport and school exchanges. If we think that an Olympic athlete, from whatever country, wearing a European symbol will change the attitude of young people towards Europe, we are wrong. If the money went instead towards enabling children to compete against one another and towards the development of European sporting teams, such as the recent golf team, we should be doing better. We must ensure the free movement of football players in Europe. We should bring together the people of Europe, not just at parliamentary level, because that will change people's attitudes and make them feel European.
We have to make it clear that this Parliament and this country cannot accept the taking away of any more legislative power from our national Parliament unless and
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until the Community's decision--making procedure is far more democratic. It is wrong that control should be taken out of the hands of national Parliaments just so that Ministers can decide matters in secret meetings far from the public and from criticism by the Opposition.We cannot afford to stick our heads in the sand and say that if we do nothing Europe will go away and we can go back to how things were 10 years ago. Europe is there for us to be involved in and to work with. We must bring about the kind of Europe that we want for the future of our children and our children's children.
7.43 pm
Mr. William Cash (Stafford) : The hon. Member for Vauxhall (Miss Hoey) said that Europe is here. Of course it is--it has been here for thousands, if not millions, of years. However, the definition of Europe, and who will run it, is what is at stake in this argument. After some difficulty, I have just got hold of the statute for the proposed central bank. It was delivered to me late this afternoon, and contains some interesting material. At bottom, it means that the powers of the House will be taken and given to independent, unelected bankers so that they can run our affairs. That is the unvarnished truth, at the heart of which lies a bigger question. In the course of doing that, our democracy, our consent to and the control over the co-operation that we want in Europe will be taken as well. I acknowledge that the Governor of the Bank of England has put a reserve on the statute, but I hope and trust that my hon. Friend the Minister will tell us that the Government have every intention of vetoing it, because there is no gradual progression down the route of this detailed statute. The issue is not whether we can gradually move down that path--the situation is clear cut against the background of the Ashford castle meeting in Dublin earlier this year and of the Delors committee report, and there is no doubt about where we are being taken--but that we have reached the point of decision. Therefore, I look to the Government to make the position clear. I have asked on a number of occasions for a White Paper, as I did in the last business questions taken by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) as Leader of the House. I got pretty short shrift from him, as I have often done in the past when I raised the question of federalism, as long as five years ago. But these are fundamental questions not only about the position of the House but, more importantly, about the position of the ordinary man in the street and his consent to, and involvement in, the democratic government of the country. That is an even wider question, because it involves us as Members of Parliament and the trust that we hold on behalf of the people whom we represent. Therefore, we have no right to go down this path, as it would deny that trust. As Disraeli said, "Trust the people." We must do that in this context. There is a broader background against which I shall set my remarks. Without any disrespect to the German people, there is an inevitable consequence--I can claim that that will be the case--of the fact that this bank will effectively cut through all the paper. I have some small experience on constitutional matters, and I know that the paperwork will not withstand the realities of power. In 1980-81, before I was elected to the House, I was advising on the Canadian provincial case for the patriation
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proposals. The other day, I saw Mr. Delors at the assize. I said to him, "Please do not continue to allow us to be taken down this route, because we shall end up with 12 Quebecs."There are enormous internal tensions within the Community, which will be made worse if the binding rules are imposed with the package of procedures that is laid down. Already there is potential for a civil war in some of the southern Mediterranean countries. When they are faced with the reality of their consensus being taken over by these independent bankers, and the paymasters--Germany and ourselves--resisting the amount of money that will be paid down that route, the problems will become more serious.
As I said to Mr. Delors, all those problems are avoidable now if only we would back off from this ridiculous progression towards what some people would call a historical necessity.
Mr. Bob Cryer (Bradford, South) : What did he say?
Mr. Cash : He said that he would see me again on another occasion. Many questions arise from this draft statute, but there are even more questions for the Government to face. Everybody knows that I have been a completely loyal supporter of the Government since I came to the House. In addition, I have tabled motions, which have gained a great deal of support from Back Benchers, directed at this very question. I have no doubt that there is a similar feeling among Labour Members that we do not want to be sucked into a black hole. We want to make sure that we sustain democracy, not only in this country and our constituencies, but in Europe. As Bismark said, "Those who speak in grand terms about Europe are the ones whose motives I most suspect".
Without any disrespect to Germany, we must help it to understand how the enormous engine of power that it has at its disposal could be misused in the future. Only two nights ago, I had dinner with a most distinguished German journalist. He said, "For heaven's sake, make sure that this doesn't go through." He has written articles about this, and he knows that the reality is that, if Germany were to obtain the degree of control over Europe that would be the consequence of the proposed independent central bank, it would not be in the interests of Germany or Europe, and it would certainly not be in the interests of the United Kingdom.
I shall say no more about the farce of the European conference that I attended, where serious questions were raised about matters of consent. It had no legitimacy. I had hoped that we would have a serious discussion, but it was an opportunity lost--a tragedy. The other day I had the pleasure and honour to be at Ditchley park, talking to some of the people whose opinions the House would respect. As the conference progressed there was an increasing awareness that the notion of subsidiarity is not on. That is because it begs the central question. Once one has arrived at the point of assuming that the higher tier--of which the independent central bank is to be the highest tier in terms of economic and monetary policy--is to be conceded, there is no need for subsidiarity. It eats itself up like Monty Python.
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Subsidiarity would hand over democracy to a "judocracy". It would hand over to the courts intensely political decisions, and they do not want that. I cannot name some of the people to whom I have spoken on this subject. They are justices whose names I am not prepared to divulge at the moment. They have told me that they do not want subsidiarity incorporated in a treaty, because they could not cope with it. They would be asked political questions, and it is wrong for us to contemplate giving them that power.Therefore, we must proceed not only with caution but with the confidence that we are talking about democracy in the EC, in the House and in Britain. If we were to depart from our conviction that that is what the House is all about, I for my part would say that we have brought Britain to a sorry state.
7.52 pm
Mr. Ron Leighton (Newham, North-East) : We all want the maximum co- operation in Europe, both east and west and, after the GATT negotiations, in countries outside Europe as well. The issue is not whether we are in or out of the EC, still less whether the Queen's head is to be on notes or coins ; the real issue is whether we are to have new treaties, which will fundamentally transform our national life, our institutions and our relations with other countries, and on which British people have in no way been consulted. In fact, the opposite is true. The British people were promised precisely, and in specific terms, that that would not happen.
In preparation for the debate I looked up the manifesto issued by the Wilson Government at the time of the referendum in 1975. It said :
"There was a threat to employment in Britain from the movement in the Common Market towards an Economic and Monetary Union. This could have forced us to accept fixed exchange rates for the pound, restricting industrial growth and so putting jobs at risk. This threat has been removed."
It is precisely that threat which we were told had been removed which will be reimposed by the new treaties.
The manifesto went on to say :
"Fact No. 2. No important new policy can be decided in Brussels or anywhere else without the consent of a British Minister answerable to a British Government and British Parliament The Minister representing Britain can veto any proposal for a new law or a new tax if he considers it to be against British interests."
How can a British Minister veto anything if there is majority voting and political union? It seems that the voters were misled, if not lied to at that time.
If the powers of Parliament are to be given away, it is not just a matter for us. The powers of Parliament are the powers of the people, and how are they to be consulted? After all, we are just the temporary custodians of those powers. It is not for us to barter those powers away without consulting those who sent us here. There are to be two conferences. The first is on political union. What does that mean? Will someone explain that to us? Do we want it? What are the advantages? Would it be durable? The conference will deal with political integration, the division of powers between EC institutions, and the balance of power between the member states and the EC as a whole. Some people are demanding rather noisily that Community competence should be extended to foreign policy, defence policy and security policy. There are voices urging a single federal or unitary state, which would have one seat at the United Nations
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and in 100 other international bodies, a single embassy in foreign states and be endowed with single treaty-making powers.Is there any suggestion that that is what our electors want? I have not had a single letter from any of my constituents saying that that is what they want. One thing is for sure and that is that the more power is centralised, the greater the loss of democratic accountability. There is no democracy anywhere in the EC. It is a no-go area for democracy.
The EC's executive is the Commission. Who elects it? There are no elections to that body at all. All its members are appointed. The legislature is the Council. It meets, works and legislates in secret. Ministers are not held to account in national Parliaments. They hide behind collective decisions, and they will do that more so if there is majority voting.
The European Parliament is elected, but it is not a real Parliament. A real Parliament legislates. The European Parliament does not. Its standing and reputation are poor. Few people show any interest in it, vote for it or know who their European Member of Parliament is. It can never be the focus for people's hopes and aspirations. If an attempt were made to turn it into a real Parliament, to give it more powers, where would those powers come from? They could be taken only from national Parliaments. A real European Parliament would imply a European Government, a centralised European state.
People say that we need not worry about that because we have the lovely principle of subsidiarity--that the centre at Community level should perform only those tasks that cannot be performed more effectively at the national or local level. That is all very well, but who decides what comes under subsidiarity? Hon. Members may have heard Beatrice Webb's explanation for the success of her marriage to Sidney. She said that they came to an agreement that Sidney would deal with important matters such as who declares war on China and she would deal with unimportant matters such as where the children were educated, where to go on family holidays, and that she would decide what is important and what is not.
That is true of subsidiarity. Where is the line to be drawn? There is no mention of subsidiarity in the treaties. It is not justiciable, and even if it were, who wants to give power to that court? It is a completely subjective judgment with no safeguard of any description. I could suggest where we should have subsidiarity. We should all have our own agricultural policy. Why should we have the monstrous common agricultural policy?
The second intergovernmental conference is on economic and monetary union. Let us not beat about the bush. We all know what that is about. The aim is a single currency, is it not? Do we want it? What are its merits? I have not heard anyone explain its merits. What I have heard is people saying that others want it--not everybody, not the Portuguese, the Spanish or the Greeks--but some others. They are determined to go ahead ; we must not be left out. That was the intellectual argument of the Gadarene swine. Those who advocate a single currency must do better than that in explaining its merits. It is commonly agreed that a single currency cannot work without convergence and that the economies of the member states must all perform in a similar way, with the same rates of investment, productivity, growth, interest and inflation. Some have even argued that they should have the same living standards. How is that to be
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achieved? How will Greece, Portugal, and Spain attain convergence with Germany, and Britain as well, and when? What comes first--convergence or the single currency?I am indebted to Lord Hesketh for informing me that European inflation ranges from 3 per cent. to 22 per cent. ; short-term interest rates from 8.5 per cent. to 19 per cent. ; budget balances from a 1 per cent. surplus of gross domestic product to a 17 per cent. deficit ; and unemployment from 1 per cent. to 16 per cent. British inflation is more than 300 per cent. higher than that in Germany, where interest rates are 8.5 per cent. by comparison to 14 per cent. in this country.
What are we to do in those circumstances? Some argue that we should take our courage in our hands, take a leap into the dark, and have a sort of big bang into the single currency, and that somehow all the jigsaw pieces will fit. That is an unrealistic and irresponsible attitude.
Others argue that we must take that action for political rather than economic reasons. Monetary union would benefit the stronger economies. However, it would be disastrous for the weaker economies. Where countries have different rates of productivity, inflation and costs, adjustments are usually made by movements in the exchange rates. While separate currencies remain, any problems will manifest themselves as balance of trade deficits or surpluses, which will alert countries to what is happening. If there was only a single currency, that problem would initially be concealed, and the weaker and debtor economies would be progressively converted into depressed areas. Producers, finding their costs too high, would contract and then close their operations. People would be thrown on the dole, and populations, capital and wealth would be sucked away. Britain could become the Northern Ireland of Europe.
Karl Otto Po"hl last week cited an example in what he called a nutshell, and in what I call a laboratory experiment. I refer to the national economy of two countries with different rates of productivity, having a single currency introduced--the deutschmark in the German monetary union--and it led to the collapse of east German industry and mass unemployment--
Madam Deputy Speaker (Miss Betty Boothroyd) : Order. The hon. Gentleman has spoken for 10 minutes.
8.2 pm
Mr. Anthony Nelson (Chichester) : The House will be disappointed that the hon. Member for Newham, North-East (Mr. Leighton) was stopped in his tracks as he was just getting into his speech. I acknowledge his strength of feeling about the importance of safeguarding Britain's democratic institutions, but we part company at that point. I was amazed that in his closing remarks the hon. Gentleman could pray in aid Karl Otto Po"hl.
The hon. Member for Vauxhall (Miss Hoey) made an extremely good point about abandoning Euro-jargon. We should all endeavour to use language that our constituents can understand and not confuse the issues. Whatever happens, there should be an enhanced role for the British Parliament in considering European legislation and further economic and monetary union. In the atmosphere of fragile party unity that has broken out, I hope that my comments will be taken seriously by those of my right hon. and hon. Friends who do not share entirely my vision of the future Europe and Britain's part in it.
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We should devote at least one whole day a week to European legislation, and not deal with it late at night. It must be given the priority and emphasis that it deserves. Also, it is ridiculous that Select Committees, which since 1979 have done such an excellent job of scrutinising and mirroring departmental responsibilities, do not do more every year consistently to scrutinise European legislation. The Select Committee on Foreign Affairs--to which I pay tribute, and whose chairman spoke earlier--invites the Foreign Secretary to appear before it in advance of attending Council of Europe meetings of Ministers. That is an excellent step forward, but every Select Committee ought, as part of its remit, to consider legislation emanating from Europe and report to the House, and we should examine that legislation more properly every week.We should also grasp the nettle, however reluctant some of my right hon. and hon. Friends may be to do so, of establishing closer links with the European Parliament. It is ridiculous that one cannot easily telephone or visit it, or establish close connections there, given its role in legislation which directly affects the constituents whom we represent. Whether or not we agree with the grandiose plans for a new Europe, we should get the existing system, even with its limited remit, on a better footing.
I am a proponent of a single European currency. All our constituents want to be paid in a currency that is worth something, does not change in value from day to day, and does not cost them too much to borrow if they want to finance a house or business. Looking back over the past 10 years, recalling the volatility and gradual devaluation of our currency compared with the economic performance of continental currencies, which have enjoyed greater stability, lower inflation and higher standards of living, it is not hard to understand why my constituents would vote with their pockets. There is very real national self-interest in pursuing a single currency. If we deny ourselves the opportunity to link our currency with the great European economies, we shall be worse off for it. Going it alone is not an option. Much of the sloppy talk--for that is what it is--about retaining our democracy and independence belies the reality of the situation. What sovereignty or independence can there be if one's country is economically dominated by one's neighbour?
We shall not draw together right hon. and hon. Members from all parts of the House by promising implementation of the most grandiose visions of Europe, or by shutting the door on what some of us want to achieve in Europe. The way forward is a step by step, modular approach to economic and monetary union. I defy anyone to deny that that is not in our interests. We need to move forward on a step by step basis which is clearly in the interests of our constituents. For example, when we finally became full members of the exchange rate mechanism, there was a 1 per cent. fall in interest rates and mortgages. That was welcomed by all our constituents. If we moved on into the narrower band of the ERM and it brought a further 1 per cent. reduction in my constituents' mortgages, does anyone imagine that they would object? There can be no objection if such developments put money into their pockets, give them freedom of choice, and encourage a greater propensity to save than to spend. If from that we can develop statutes for an independent central bank and provide our currency with stability for
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the future, that would be another great step forward. The Bank of England already enjoys a high degree of independence, and the proposals for it to play a part within a European central banking mechanism would give it greater strength rather than less autonomy. If Britain emerged from the intergovernmental conference having either vetoed the reasonable proposals which have already been made, or with a form of twin-track approach to Europe which would put us in a siding rather than in the slow lane, that would not reflect the tide of events or the interests of our constituents. This is the time to take a step forward--I do not agree with the Opposition Member who said that it is a leap in the dark-- and take our people with us. One has only to consider what happened on that dramatic day when east and west Germany merged their currencies at a wholly artificial rate of one to one. Was the result turmoil in the international markets? Did the big bang result in massive depreciation of the value of the German people's savings? Nonsense. It did not. The currency remained stable and strong, and has done so ever since, which shows that if one has the political courage and determination, and if one shows a willing people that it is in their financial interests, they will vote with their pockets. Let us do the same by encouraging a more favourable attitude towards the intergovernmental conferences. 8.10 pmMr. John D. Taylor (Strangford) : If one looks at the Order Paper one will realise that, in theory, we are debating documents in preparation for two intergovernmental conferences this month. We are also supposed to be debating various decisions that have been taken in the Community during the past six months.
In practice, the debate is about something different. We are debating how power is creeping away from this Parliament, and from the people of the United Kingdom, to Europe. That is the real issue before the House this evening. Secondly, we are discussing the European Community and not Europe. Europe is a much larger subject than the European Community. Many hon. Members feel strongly about being Europeans. We identify with historical, political, cultural and religious developments that have taken place throughout the wider Europe over the centuries. It is an insult to some of us that some hon. Members have implied that one is only pro-European if one supports the European Community.
In his opening remarks, the Foreign Secretary confirmed that Government policy towards the European Community remains unchanged--only the style had changed ; the content was the same. I am afraid that the Foreign Secretary fudged over several aspects of European Community policy, as did the right hon. Member for Manchester, Gorton (Mr. Kaufman). One new fact which emerged this evening was the dramatic news that it is now the official Opposition's policy to support a federal Europe--albeit with reservations. It has been revealed for the first time that the Labour party is now voting for a federal Europe.
One Conservative Member said that there were divisions within various parties in the House about Europe. That does not apply to the Ulster Unionist parliamentary party. We are united, with one voice, in our attitude to Europe and to the European Community. We
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are the only party which has resisted this nation's membership of the exchange rate mechanism right to the end.What have we seen today? Yesterday, the Chancellor of the Exchequer confirmed before one of the Committees of the House that this nation is now in an economic recession. As business men--be it small, medium or large businesses--we want interest rates to be reduced as a response to that creeping recession. But the Government are no longer free to do so. They are trapped in the trap that they created by joining the exchange rate mechanism. Sterling is in the lower part of the band, and we are getting dangerously near to a situation in which no reduction can be made in our interest rates without breaking through the bottom of the band. That danger besets the Government's economic policy and could help the recession to increase its momentum in the United Kingdom.
The two intergovernmental conferences in Rome are about European monetary and political union. As regards monetary union, we oppose the single currency. Why? Because the creation of a single currency--we are not talking about a common currency--to replace the 12 national currencies will certainly mean that there will be controls on the elected Parliament of this country deciding its own level of public expenditure. There is no sense in electing Labour, Conservative or Unionist Members of Parliament once we have a single currency, because the public borrowing requirement affects the value of the currency whatever the colour of the Government who decide it. Therefore, the Government will have to be instructed by whomever controls the single currency in Europe as to the level of expenditure in the United Kingdom.
Political union raises the question of what kind of Europe we want. Do we want two different Europes? Do we want the Twelve within the European Community becoming more and more closely integrated, transferring more powers to Brussels and becoming more of a federal state? That is what the British Labour party voted for in Rome earlier this month--with reservations. Apparently a fax was sent by the Leader of the Opposition telling Labour Members to vote for a federal Europe as long as there were reservations.
Alternatively, do we want a wider Europe in which, instead of dismissing new democracies in the east as associated states--as the Foreign Secretary said--we shall involve them in a wider Europe, and give them a greater opportunity to advance their economies and democratic institutions ? I believe that we should be integrating with the wider Europe, rather than establishing two degrees of Europe--first class within the European Community, with the poorer countries kept outside at a distance and treated as second-class citizens.
The Foreign Secretary referred to security and defence. He went out of his way to make it clear that they are now treated as two separate issues within the European Community, as we consider common policies on these matters. He specifically mentioned that considerable progress has been made towards a common security policy, and that only one country was withholding its support--the Republic of Ireland. As I represent Northern Ireland, hon. Members will understand that that comes as no surprise to me. In the final minutes of my speech, I shall mention certain specific matters that pertain to my part of the United Kingdom.
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Terrorism is now an issue in various parts of Europe : in the Basque country, Italy, Germany and, because of the IRA, in Belgium and the Netherlands, as well as in the United Kingdom, both in Britain and in Northern Ireland.We strongly believe in co-operation on security throughout Europe, and we want to see progress on that issue being made throughout the European Community. We already have limited co-operation on security with the Republic of Ireland, brought about by the introduction of the Anglo-Irish Agreement. It is interesting that the Republic of Ireland is not prepared to involve itself in a higher level of security co-operation within Europe. I suggest that one of the ways that we could get rid of the Anglo-Irish Agreement is to suggest to the Republic of Ireland that it should apply European standards of co-operation and security so that there will be no need to operate at a lower level of security than exists within the Anglo- Irish Agreement.
Three subjects affect us in the United Kingdom, in our relationship with the Republic of Ireland, which do not refer to the Secretary of State for Northern Ireland, but are the direct responsibilities of the Secretary of State for Transport, the Chancellor of the Exchequer and the Secretary of State for Trade and Industry. I would like the Government to pursue them further.
The first is the European Court decision that the Dublin Government acted improperly by imposing a 48-hour rule upon persons travelling from the Republic of Ireland to the United Kingdom to make purchases. The court ruled about six months ago that that was illegal. The Dublin Government have completely ignored the ruling of the European Court, and that embargo still applies on the border between Northern Ireland and the Republic in the Christmas shopping period. If there were freedom of movement across our border, as there is elsewhere in Europe, towns on the border such as Londonderry, Enniskillen and Newry would benefit from cross-border trade. The Dublin Government, however, ignore the ruling of the court, and, as far as I can see, our Government have failed to ensure that the Community and the Commission will bring pressure to bear on Dublin to abide by that decision.
The European Community is involved, through regional policy, in the question of road and rail communications between Northern Ireland and the Republic. I asked the Government to try to ensure that Dublin takes up the opportunity to accept £50 million from the Community to modernise the Belfast-Dublin rail link. Finally, I ask them also to ensure that the present unfair competition in the Irish sea between the Republic's shipping fleets and those of Northern Ireland is ended. The Dublin Government must be asked to stop financing the Irish lights for Irish boats when these costs must be borne by boats in Northern Ireland. That is unfair competition.
8.20 pm
Mr. Tim Devlin (Stockton, South) : I was somewhat disheartened by some of the earlier speeches. I believe that many of our younger citizens have a much more positive attitude to the European Community than some hon. Members : the generation now growing up in Britain is much more accustomed to travelling abroad, eats a much wider variety of foods from different countries and has a
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