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much greater vision of the world outside, thanks to television and other media, which bring the world to their doorsteps and into their living rooms every day.I do not think that those young people believe, like the Foreign Secretary, that there are "ogres out there"; I think that they believe that Europe has many opportunities to offer, and involves none of the threatening, overweening bureaucracy that hon. Members often describe. They also understand that we already have a European Parliament, which they themselves elect. In my part of the country, we are well accustomed to the appearance of signs on our roads and railways telling us that funding for certain projects has come from the Community.
I think that it is entirely possible for us to separate fiscal and monetary policy, and that European monetary union--which, in my view, is now almost certain--will not necessarily lead us remorselessly to a united states of Europe. I do not know whether our younger people want a united states of Europe yet, but they certainly want peace and security, an end to customs duties, easier mobility between countries and the preservation of not only national but local differences. At present, the EC has no role in peace and security ; yet political union clearly implies the adoption of a common foreign policy, and the need to co-ordinate the defence policies of Community member states. Let me briefly set the matter in its wider context, as this is a sphere in which I feel that major progress is needed. Before the intergovernmental conferences, we should try to prepare ourselves by placing the European question in a much broader perspective. In 1946, Churchill called for a united states of Europe, but at that stage he wanted to keep Great Britain out of it. It can, I think, be said that at the end of the second world war the small powers of Europe were driven together by the threat of the USSR and the overwhelming strength of the United States economy.
Europe, which had been the birthplace of a civilisation that now dominates the world, was a wrecked and weakened collection of former states that had been destroyed by the second German attempt at European hegemony. The Council of Europe was formed to prevent its fall to communism or, alternatively, its sell-out to American capitalism. France has been acutely aware of the cultural and economic threats that those two alternatives have posed throughout the cold war period ; whereas Britain, unconquered this century and with its identity tempered by the crisis of 1940, still looked out, in 1946, into a world in which it still had an empire, a place and a role to play.
My hon. Friend the Member for Suffolk, Central (Mr. Lord) pointed out that the world has changed very much. That is true : the Soviet Union has now collapsed, and the United States--that former economic giant--depends on the Japanese and the Germans for the financing of its deficits. The states of eastern Europe are now free, and are lining up to join the European Community. What, then, is the role and the purpose of the Community in today's world? Perhaps we should go back to the vision of its founders, which is, in every way, as relevant today as it was in those very different circumstances. In terms of global power, the world is now very much less safe than it was during the cold war. Then, every
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conflict was regulated, suppressed or settled by the intervention of two enemies of overwhelming might. With the collapse of one super-power and the relative decline of the other, as measured against medium-sized adversaries, the potential for conflict has been heightened. Into the vacuum created by the change has stepped the clash of regional and religious identities, Islam and the Pacific rim trading nations being prime examples.In 1951, when the European Coal and Steel Community treaty was signed in Paris, there was little that Belgium, France, Germany, Italy, Luxembourg and the Netherlands could do to safeguard world peace through creative efforts commensurate with the dangers that then threatened it ; yet that appears as the first commitment in the preamble. Indeed, there was little hope that any of the other aims highlighted in the preamble could be achieved--except in the last, the resolve
"to substitute for age-old rivalries the merging of their essential interest ; to create, by establishing an economic community, the basis for a broader and deeper community among peoples long divided by bloody conflicts ; and to lay the foundations for institutions which will give direction to a destiny henceforward shared". How much more relevant, however, is that preamble today, 40 years on ? Others have spoken today of the reality of a German-dominated Community ; surely, though, the greater size of the organisation--as it expands to take in new members from eastern and central Europe--makes that even less likely. If Britain really wants to play its traditional role of preserving the balance of world power, it should take stock of its present position and make its dispositions realistically, according to what it perceives.
Three aspects of international policy are currently uppermost in our minds. First, there is the need for military capability outside the NATO area. Secondly, there is the need for a credible response to changing developments in the Soviet Union, especially now that the high-tech arms race is over. Thirdly, there is the need to resolve matters connected with international trade. In my view, European co-operation offers us the best possible solution to all three. First, in the treaty of Rome, we have
"Resolved by thus pooling our resources to preserve and strengthen peace and liberty."
In the long term, we cannot continue to rely on the Americans to keep us safe. The United States today has roughly the same massive array of military obligations across the globe as it had in 1945, but at that time its share of the world gross national product, manufacturing production, military spending and armed forces personnel was very much larger than now.
Meanwhile, in power terms, the European Community has overtaken that so- called super-power. The combined regular army of the four leading members of the Community alone contains more than 1 million men, with 1.7 million in reserve. That is a larger force than the United States army and its reserves. Even at its present strength, once combined, the forces of the Community are very much larger than any other force in the world, except that of the Soviet Union. If the Community spent as much of its GNP as the Americans on its military might--that is, 7 per cent.--it would have the largest force in the world.
The European Community--which through the treaty of Rome and the Single European Act is committed to ever closer political union--has found its real power and effectiveness in defence and foreign policy stymied by the
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neutrality of the Irish and the independence of the French. We are now being asked to consider the future of the Austrians within the Community, which will only do more to reinforce the neutral outlook that it might have to adopt.The European Community's response to events in the Soviet Union leaves much potential unexploited. In simple terms, the disarmament that follows from the damping down of tensions can afford even greater savings to us all if the European Community can agree to standardise its weapons and purchase them in Europe. The French and the Irish may press us on the development of a common European currency, but we can press them for greater unity in foreign policy and military matters.
I agree with my right hon. Friend the Foreign Secretary that we should nudge the Community forward on security issues. In fact, I believe that we should go further than my right hon. Friend is prepared to go. We could and should build up a European pillar of NATO and build ourselves up an independent out-of-area force. Some will undoubtedly say that that will mean a further loss of sovereignty. However, I must draw their attention to the difference between legal, effective and positive sovereignty and point out that we have already lost sovereignty over our military forces through our membership of NATO.
8.30 pm
Mr. Giles Radice (Durham, North) : I shall not follow the line taken by the hon. Member for Stockton, South (Mr. Devlin), although he made an interesting speech.
This is the last debate before the two intergovernmental conferences and I am surprised that the Foreign Secretary devoted so little of his speech to them. The conferences are vital for the future of our country. On that matter I agree with my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore), although I did not agree with much else in his speech. We both accept that, whether or not we decide to be part of economic and monetary union or of moves towards greater political union, there is little doubt that what comes out of the conferences will profoundly affect our country. Given the high stakes, it is all the more essential that the United Kingdom plays a constructive and positive role at the conferences. With the demise of the right hon. Member for Finchley (Mrs. Thatcher) as Prime Minister, many of us are looking for changes in the Government's policy on the EEC. One has only to listen to the new Prime Minister, the Foreign Secretary when he is not trying to put us to sleep and the Chancellor to notice that the tone has changed. With respect to the Chancellor, his style before the Select Committee was different from the strident, anti-European speech that he made to the Bruges group when he was seeking votes for the right hon. Member for Finchley in the leadership contest--different times, different styles. But if the style has changed, the substance is very much the same. The Government seem determined to push on with the hard ecu plan as an alternative to single currency proposals-- the proposals accepted by the other 11 countries.
There has been considerable scepticism, not to say downright rejection, of those proposals by most of the countries, particularly the German authorities. It is true, and it will probably be quoted tonight, that the French Finance Minister said that the hard ecu could be of use. Ministers should note that he is saying that only as part of
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the second stage, not as an alternative to a single currency. For the Government's strategy at the intergovernmental conference on economic and monetary union to carry any weight, they will have to accept the objective of a single currency, not as something that will happen overnight, but as a long-term aim to be achieved perhaps at the end of the century. They will have to accept that a single currency is inevitable and that there are strong arguments for it. The drive towards a single currency draws its roots from the increasing integration of European economies. That point seemed to have been forgotten by my right hon. Friend the Member for Bethnal Green and Stepney. That is what has changed between 1973 and now. European economies are far closer than they have ever been. A single currency is solidly based on the undoubted success of the exchange rate mechanism in providing greater monetary co-ordination and stabilisation within the Community. Above all, it is backed by 11 countries, including the two most powerful--France and Germany. Some form of economic and monetary union is bound to go ahead with or without Britain.There are also strong, positive arguments why Britain should be part of economic and monetary union. My right hon. Friend the Member for Bethnal Green and Stepney has poured scorn on the argument that it would reduce the cost of doing business. He should not underestimate that. More important, it eliminates exchange rate instability and provides a stable environment for economic growth. One may say that that is done by joining the exchange rate mechanism, but it is done much more effectively if there is a single currency. We shall have to turn around the United Kingdom economy and that is far more likely to be achieved in an exchange rate mechanism that becomes gradually tighter and eventually, at the end of the century, in economic and monetary union. It is not as likely to be achieved outside, with our currency subject, as it has been throughout the 1980s, to all the whims of international speculation and currency markets. I am surprised to hear arguments for that sort of freedom from Opposition Members. They used to come from Conservative Members.
There is also an important tactical advantage to be gained if the Government accept a single currency as a long-term objective. It would give the Government the credibility and standing to argue about complementary policies such as regional policies and the ability to use fiscal policy, as I believe that we shall be able to do even within a single currency. It would also give them credibility to argue about the role and accountability of the European central bank. One cannot argue about those details unless one is signed up for the long-term objective. Above all, it would give the Government the standing necessary to argue about timing. We can all agree that, with all the differences in inflation and productivity levels, our economy would need a long period of adjustment before it could converge. If we accept the principle of a single currency, our voice is far more likely to be heard when we talk about its shape and timing. If we do not accept that principle, we shall not be listened to effectively. In conclusion, I want to remind hon. Members about the history of the argument that we have been having. In my political lifetime Britain has missed a number of boats. The most notable was the original creation of the Common Market. At that time, the leadership of Europe was on offer for Britain, but, because we thought that we were still a world power, we rejected the offer out of hand.
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Both parties can be blamed for that. Yet, a few years later, after the shape of the EEC had been decided to our disadvantage, we had to come along, cap in hand, asking to join. Do not let us forget that. It was the same story over the exchange rate mechanism. Instead of going in at the beginning, we went in 11 years too late, at the wrong time, for the wrong reasons, and at the wrong rate. It is vital for the country's future that we do not make the same mistake over economic and monetary union. We must be in there from the beginning, helping to shape the course of events.8.38 pm
Mr. Michael Knowles (Nottingham, East) : It is interesting that the earlier tone in the debate seemed to be a solid paean of hatred towards the Community and its institutions, yet the last few speeches have been precisely the opposite. That reflects the balance within the House. There is a great difference of opinion in the country, which cuts across the parties. That is why it is such a dangerous argument for both political parties. It is a deep emotional issue. Hon. Members who oppose the European Community ask, "Do you want a federal Europe?" Are they saying that we should withdraw from the European Community? Have they thought what the effect of that would be on our industry? Where would our place in the world be? They had their way from 1957 to 1972, and we did not join. We tried to form a counter-bloc in the European Free Trade Area, which did not work. We tried traditional methods, none of which worked. We joined because we had to do so, not because we wanted to. Brute necessity drove us to join, and we have suffered badly from not joining sooner ever since. Do they believe that one country--the United Kingdom--will be able to impose its will on the other 11 members? The original point of forming the Community was to move away from a Europe where one nation tried to impose its will on other nations. The Community will not accept that. A country can join the Community, but it cannot stop it. We might be able to slow matters or divert them, but a policy of hostility, if we have not learnt the lesson already, will get us nowhere.
For several years there will be a two-speed Europe. If Britain does not want to be on the inner track, it can be on the slower outside track and a member of an associated free trade area.
Mr. Teddy Taylor : Hear, hear.
Mr. Knowles : My hon. Friend says, "Hear, hear." Few people in this country will buy that argument.
My right hon. Friend the Member for Guildford (Mr. Howell) mentioned--this is one of the wonderful phrases that floats about the Community--a centralised, federalised system. Centralised and federal systems are exact opposites. Federalism is about the spreading of power. A country knows precisely where it is, and what are the powers of each function and level of government.
French politicians argue for a federal system to safeguard the position of France. If the Community follows the course that it has been following, there will be a centralised unitary state, which would not work. A case can be made for federalism, and in many ways we are already in that system. There are reserved areas at
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supranational level, and demarcation is decided by the European Court of Justice. The Government are considering taking a case to the court because they believe that article 100A is being used too much, and they are right. We are in an embryonic federal system and there is no point in kidding ourselves otherwise.The House, yet again, has missed the opportunity of setting up a Grand Committee on European Affairs, which would look forward at policy instead of our holding the odd one-day debate such as this. We, the elected Chamber, should follow the example of the House of Lords ; we have missed the opportunity, which we shall regret.
I object strongly to the way in which the institutions of the Community have developed. The Commission is top-heavy--17 people is nonsense. I should prefer a more open system of election, even a weighted system run by the Council. Most objectionable is the fact that the Council, as a legislative chamber, meets in secret. It is the only legislative chamber in the western world that does so. That is unacceptable, and it must be changed. I would have expected the Government to be leading that argument.
When we joined the Community, our partners said that they wanted us to join because of our experience in democracy. If we had that experience, we have added nothing to Community institutions except the importation of Question Time into the European Parliament. Apart from that, we have been happy to leave the system to roll along. The system suits national Executives, but it should not suit national Parliaments, or Parliaments of any kind.
Once the single market is in place, we shall have more of a single market than the United States. It will be more integrated and will have more common laws than the United States. The scale of the United States' economy and its single currency has probably been the biggest factor in building that industrial giant. I am not frightened by the prospect of the single market. I foresee it a long way ahead and many arguments along the way.
I believe that it is possible to separate fiscal from monetary sovereignty. Fiscal sovereignty should be retained because a country can thereby keep control of its taxation, but why is monetary sovereignty so vital? Until just after the first world war, everyone was on the gold standard and no Government had control. Are we saying that those Governments were not sovereign? The argument is nonsense. An independent monetary policy can act as a strong fiscal discipline--West German experience reinforces that point.
We get so worried about our dealings with European institutions that we will not let local government deal direct with Brussels. Funds which are desperately needed in Nottingham and which have been allocated by the Community are sitting in the bank, and we cannot lay our hands on them. I am arguing this as a Conservative Member and the council is Labour controlled. The fear is not only control of local government spending but the idea that extra funding direct from Brussels could somehow subvert national sovereignty. That argument is gibberish.
I shall conclude by mentioning two countries, one of which was mentioned by my right hon. Friend the Foreign Secretary, and which essentially are both third-world countries. The first is the Soviet Union, where we can see the collapse coming rapidly. The problem with the Soviet Government is that, although they can see that the command economy has collapsed, they are not prepared to move to a free-market economy. I am not sure whether pouring in aid will solve the problem. The key argument is
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the ownership of land. In the Russian republic, it is proposed to restore private ownership of land. That is the key, because on that a private economy can be built. Without it, little can be done to help the Soviet Union.The second country is South Africa. Ironically, South Africa and the Soviet Union contain all the raw materials that the world needs, but both are in deep trouble. Sooner or later, the Community will have to consider dropping sanctions. I heard today that it is projected that, next year, the mining industry in South Africa will lay off 10,000 miners in the coal industry and 40,000 in the gold industry. As dependants run at 10 or 12 to one, 500,000 people will have no source of income, because there is no welfare state in Africa. We must reconsider that problem.
I plead with my hon. Friend the Minister to agree that we must seize the initiative in the Community by arguing for the democratic legitimacy of the institutions and for more open government. If one visits--
Madam Deputy Speaker : Order. I must call on the hon. Gentleman to terminate his speech.
8.48 pm
Mr. Robert N. Wareing (Liverpool, West Derby) : During the 1975 referendum on the Common Market, I stood on an anti-Common Market platform and made the point that there were no panaceas for this country inside or outside the Common Market. I stand by that today. However, I also believe that an appalling disaster would befall many of those we represent if we found ourselves alone outside the other countries of Europe.
Hon. Members from all parties have argued today that we should come out of the Common Market. They have not said that in so many words, but that is what they mean. Yet at this very time, Sweden, Austria, Cyprus and Norway are thinking of coming into the European Community. My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) said that Europe is very different today from what it was in 1973 when we joined the European Community, and he was right to say so. There is a demand from other countries to join the European Community. The cold war has ended and it may now be possible to expand the Community to include the countries of eastern Europe. The emphasis in the Community has changed considerably. There is now the prospect of a European Community that can be converted into something rather different. I know that Conservative Members will disagree, but I believe that there is a great opportunity for the development of democratic socialism in the European Community.
Mr. Wareing : I am glad that the hon. Member for Southend, East (Mr. Taylor) agrees with me. That confirms my positive approach to the European Community. In future, the economy in Europe will be neither the Stalinist dictatorship economy nor the extreme Thatcherite market economy.
When the Foreign Secretary tells us that the Soviet empire is breaking up, I am worried that many hon. Members, especially Conservative Members such as the right hon. Member for Finchley (Mrs. Thatcher), have not yet discovered that the British empire has broken up. From her speech at Bruges and from her speeches in Parliament in recent weeks, it is clear that the right hon.
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Lady still harks back to the old imperialist slogans, and that she has forgotten that the world has moved on. She has not caught up with history.Some hon. Members, including some of my hon. Friends, have told me that we shall lose sovereignty. What did we lose when we signed the Bretton Woods agreements? What did we lose when we signed the treaty of Havana and joined the general agreement on tariffs and trade? Many of our problems now stem from the fact that we cannot reach an agreement at the Uruguay round. We are internationally committed to being a member of GATT. When we joined NATO, we lost sovereignty. I ask my hon. Friends to consider this. If we remain outside an expanded Europe which contains within it a central bank and a single currency, what sovereignty shall we have? What chance shall we have to save the jobs of those who sent us to the House? How shall I be able to fight for the jobs of people in Liverpool if I have no access to funds? What shall we do if investors refuse to invest in Britain because it is the only country in Europe that does not have the single currency?
The hard ecu does not answer the problem. One of the assets of a single currency is that one cuts out currency speculation. If we had the hard ecu but there were still individual currencies within the system, there would still be speculation of one currency against another. If some countries in Europe accepted the hard ecu, but also said that they would no longer use the deutschmark or the franc, there would be speculation against the British pound. That would occur because of some false idea of sovereignty which has long been extinguished.
There are problems of convergence. Some of my hon. Friends would say that there is a problem because Spain, Portugal and Greece have areas that are even poorer than Merseyside, parts of Wales and Scotland. That is right, but that is the challenge. Our areas will be even poorer if we are not involved with our friends in the European Community. There must be a regional policy in that convergence. Instead of British Foreign Secretaries and Ministers going to Councils in Europe and attempting to show how much muscle they have compared with the rest of the Community, they should fight for a positive regional policy. We might then get somewhere and we should prove--if the new Prime Minister wants to prove it--that we mean business by collaborating with our partners in the European Community.
Sovereignty and the old ideas of imperialism have ended. What sovereignty would there be for Britain outside the European Community when there was a central bank, acting as the Bundesbank acts now, within a powerful economy, and changing the rates of interest? Do hon. Members really believe that Britain could stand against those pressures? Of course it could not. It would be even more difficult then than it is now to stand against the Bundesbank.
There are problems in regional policy and I hope the Government will address themselves to one particular aspect of it--that of additionality. Funds are already made available by the Community for our regions. The problem is that the European Community provides funds for our deprived areas, but those areas do not receive them because they are used as funds to help the national Exchequer. That practice must end. If our people are to feel that they belong to the Community, they must have access to funds and not see them frittered away as
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subsidies to the national Exchequer which, under this Government, is more concerned with giving tax relief to the very wealthy. My hon. Friends talk about the absence of democracy in the institutions, but they do not say that we should do something about that by giving the European Parliament more powers, and by ensuring that it has control over the Commission and over the Council. If we are really internationalists--I appeal especially to socialists--we should work for a democratic, socialist Europe. That would mean a European Parliament that had such powers. All right, it means that some of our powers are diminished --so what? We were sent here to fight for the betterment of people's conditions. If that can be done only on an international scale, that is the way in which it must be done in future.I should like briefly to address two problems that I hope the Minister will examine. Assistance is desperately needed in the Soviet Union. In Berlin, Soviet army men and women are already selling their uniforms. There is already the dribble of a migration problem that will become more and more severe next year when the Supreme Soviet passes a law allowing freedom of mobility for Soviet citizens. The situation is desperate. The problem will not end in Germany ; it will find its way here.
I hope that the intergovernmental conference will discuss the problem of Yugoslavia and the possible break-up there. It is a severe problem, and it may create all sorts of problems for Yugoslavia's neighbours and will not simply stop in Austria or Hungary--it may cause severe problems for us as well.
8.58 pm
Mr. Patrick Ground (Feltham and Heston) : Like the hon. Member for Liverpool, West Derby (Mr. Wareing), I propose to concentrate my remarks on the negotiations for the common or single currency. I was interested to hear of the evolution of the hon. Gentleman's thoughts on this matter. I share several of his conclusions, although I have come to them by a different process of reasoning.
I should declare that I have an interest in a small business which deals in currencies, although it seems completely belittled by the scope of this discussion.
I welcome the fact that we have joined the exchange rate mechanism and that we did so with a 6 per cent. margin rather than with a 2.25 per cent. margin. On the Rome summit, we would have been better off deciding what was to go into stage 2 before deciding how long it would last. The procedural objection taken by the Government is likely to prove to have been correct.
On the behaviour of the Italian president of the conference and the impression of the discussions which took place at the summit and some of the remarks that have been made concerning the hard ecu proposals, I would say that in terms of political maturity and currency stability the record of this country in the past 300 years bears comparison with that of any other member country concerned. I hope that members will be willing to listen to our views at the coming conferences.
Treasury proposals for a hard ecu have several positive attractions. As a common currency, the hard ecu is likely to be harder than any single currency that can be devised at present. By ensuring that it could never be devalued
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against other Community countries, its stable anti-inflationary character would be ensured. After the record of the past few years, it is easy to assume that a system based upon the deutschmark would be bound to be stable, but that was certainly not always the case in Germany, and nor is it bound to be in future. Less than 70 years ago, in the early days of the Weimar republic, inflation in Germany was worse than it has ever been in this country. For the future, the reunification of East and West Germany has been agreed on such an extraordinary monetary basis that it is likely to increase the budget deficit of Germany and inflation to a degree that is not easy to foresee at present.It is also salutary perhaps to remind ourselves that it is less than 10 years since Italy and France had to pay 34 per cent. or 35 per cent. for short money. Therefore, if one is looking for a European common currency, there is considerable attraction in settling upon a currency which cannot be devalued against other Community currencies. If there proves to be an overwhelming demand for a single currency--like many right hon. and hon. Members, I believe that that could be the case--the hard ecu could prove to be a more attractive route to a single currency because it would be based upon choice rather than upon compulsion. Any fear of individual countries concerning matters of sovereignty would be lessened by the circumstance that each country could retain its freedom to issue its existing currency. I hope, therefore, that my right hon. Friend the Chancellor will attract much support for his proposals from member Governments attending the intergovernmental conference and from business and industry in this country. I hope that at least some of the ingredients of the proposals will be adopted.
The proposals would be an effective way of moving towards a single currency if several countries were prepared to adopt them and, in effect, to turn over in substance to a hard ecu common currency at a relatively early date. It must be recognised that unless that happened, and unless a substantial part of business and industry in individual member countries operating the system was prepared to turn over to the system, at least for large transactions, the system would be unsuccessful because of the transaction costs. Going into and out of a common currency would be so expensive and so beneficial to the banks that in the end it would be unattractive. The only way that it could succeed would be if there was a substantial measure of support from the countries concerned and from those carrying on a substantial part of their activities.
In approaching the issue of a single currency, we should be careful to avoid sentimentality and euphoria. It is important to avoid the sentimentality of thinking that, because the pound has served us well in the past, it should necessarily be retained for ever. The pound has served us well because it has generally kept its value and been widely acceptable to people and countries throughout the world. The same could be equally true of a common or single currency. Similarly, I agree with the hon. Member for Newham, North-East (Mr. Leighton) that there is a danger of euphoria in thinking that we should immediately accept that a single market must necessarily involve a single currency within a short time, regardless of the great differences between the member countries. We have differences in inflation from 2.5 to 22 per cent., in short-term interest rates from 8 to 18 per cent., and in
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public sector accounts from a surplus of 3 per cent. of GDP to a deficit of more than 17 per cent. Faced with those differences, there is nothing which inevitably leads from a single market to a single currency.I cannot believe that with a common or single currency things would be anything like my hon. Friend the Member for Stafford (Mr. Cash) envisages or as is envisaged by hon. Members who paint bogey pictures of life under a central bank. I do not believe that the European proposals would lead to anything like that. There is no such thing as a truly independent central bank. The Bundesbank was shown not to be entirely independent when faced with the prospect of the reunification of Germany. Faced with reunification, the gentlemen in charge of the Bundesbank had to change their ideas quickly, and even under the system to which my hon. Friend the Member for Stafford referred, central bankers would still be subject to appointment by national Governments. There would still be national banks acting on behalf of the central bank. There is no great difference in kind between the governor of a central bank which has a relatively independent character and a collection of independent governors appointed by national Governments. There may be a difference, but it is not completely different in character from the position in the United States and western Germany. The landscape would not be completely changed ; it would still be recognisable.
The House has already made a number of important decisions, giving the European Community and courts power to regulate European trade. The House took those decisions because it believed that, on balance, they were beneficial to this country. If the House thought that it would benefit the industry, the people and the economy of this country to have a single currency, that decision would not be any different in character from or any more irrevocable than those already taken in relation to the single market and the European Community.
Just as the House ultimately has power to say that if we go into the European Community we can also come out of it, it would have a similar power in relation to a single or common currency. The Bank of England would be there, albeit as an agent of the central bank, and it would not require a great step in legislative terms to put that bank back into its previous position. It would be an immense administrative nightmare, but it would be within the powers of the House and the sovereignty of this country.
I accept that decisions about a single currency are by no means easy, but I detect that, even since our entry into the exchange rate mechanism, there has been noticeably more interest on the part of industry and individuals in this country to the idea of a common or single currency, and that interest will grow. Although such a step would involve difficult decisions, just as decisions taken by the House about the European Community were difficult, it is within the proper discharge of the duties of the House to make such a future decision for the benefit of the people in this country. If it were decided that entry into a single or common currency would benefit the country, that would be a good decision and one which the House would be entitled to make.
I agree that before we can reach such a decision we need a much more careful analysis of the benefits of such a course and exact calculations of the benefit to trade, the savings of transaction costs and advantages to the
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administration of affairs in this country and the Community. Such a decision could be arrived at only after an objective analysis of the benefits involved.9.13 pm
Mr. Teddy Taylor (Southend, East) : I have only a few minutes, but I hope that the Secretary of State and the Minister will bear in mind one or two points. The Secretary of State probably thought that he was reassuring some of us when he said that the Government's attitudes were unchanged after the change in Prime Minister, but he should be aware that some of us believe that we were in cloud-cuckoo-land before and that we seem to be in the same position now as a result of the Government's attitude on several matters. I hope that the Government will consider the dangers of going forward towards some new bright vision--we have had plenty of those-- without remembering how many of the visions of the past have turned out to be disasters.
There will be a huge impact on jobs and factories in all our constituencies if the GATT talks break down--and if they do break down, the responsibility will lie almost exclusively with the EC's protectionist policies. We have presented the GATT conference with a paper on our 30 per cent. reductions. Even the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), who follows these matters closely, will be aware that the alleged 30 per cent. cut is no cut at all. It represents nothing. Nothing could be more insulting to our friends in GATT than to present a paper which includes no cut in agricultural spending. We claim that half the 30 per cent. cut has already been made and we say that the other 15 per cent. will be made up in additional subsidies. That is insulting and wrong.
Of course I appreciate that it is difficult to resolve this matter, but I appeal to the Government and to hon. Members to be cautious about taking another giant leap which may be well intended without realising that all the leaps of the past have turned out disastrously.
I hope that even my hon. Friends who are bankers will appreciate my second point--that we should not disregard the fact that many of the reform plans brought in to try to sort out grievances have resulted in making matters worse. I mention only expenditure on the common agricultural policy. Only this week we were told that, despite all the assurances about cuts in spending on that policy, it would increase to £23 billion in 1991, and that is almost certain to be an underestimate. In 1974 the policy cost £1.6 billion, so there has been a 1,400 per cent. increase. Since the Conservative Government came to power, there has been a 300 per cent. increase. That cash could be used to provide jobs in Lanarkshire, Southend, Nottingham and Liverpool. How can we possibly justify a policy which becomes continually more expensive?
Thirdly, I hope that the Government will bear in mind the terrible problem created by protectionism in the EC. We kid ourselves if we pretend that it is a free trade organisation. In almost all its activities, from industrial policy to dumping, far from being an open trading organisation, the EC is becoming more and more protectionist.
Fourthly, I hope that the Government will not just say that they are opposed to federalism, because even that would be a step forward in some ways. Under federalism, Parliament deals with some issues and some are dealt with
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elsewhere ; but now, apart from defence, there is no area of policy in which the Commission or the Council of Ministers cannot interfere by majority vote.Fifthly, it is rather a waste of time to talk about the extension of majority voting--or its diminution--because the issue appears not to be in the Council's control. The Minister will know from the firearms control regulations that we discussed earlier this week and from a host of other such measures--and Mr. Speaker's Counsel has drawn attention to this--that the EC Commission has the power to decree that a directive is the subject of majority voting under article 100A, so there is nothing that we can do about it, however ridiculous the issue, unless we can persuade every member state to object to majority voting on First Reading. We are therefore powerless. We cannot say when majority voting should apply and when it should not. That stems from the Single European Act, which was rushed through this House in an all-night sitting. Meanwhile, the Commission is extending its power almost ceaselessly.
I hope that Ministers, particularly the Foreign Secretary, will bear in mind in the GATT discussions that Britain happens to be almost the largest exporter of goods in the world. We are always saying that the continent is a grand place and rubbishing Britain, and that argument is often used by the Opposition as a reason in favour of going further with the EC. According to the Library's information today, we export $5,700 worth of goods per head of population, compared with the Japanese figure of $3,400, the United States' $2,400, and France's $4,900. The only one of the big countries to exceed us is Germany, which is slightly ahead at $6,800.
If there is disruption of world trade, we shall suffer more than any country on the continent, with the possible exception of Germany. We are creating this problem by putting forward a bogus and meaningless proposal, saying that we are cutting spending on agriculture but at the same time increasing expenditure more and more every year.
My final point is extremely important. As some hon. Members have said, a single currency and central bank control may turn out to be splendid--but it may also be a great disaster. Hon. Members with Liverpool constituencies know about the problems of unemployment. What would they advise British people to do if by chance the transfer of economic and monetary power to a central bank created mass unemployment here? That is no scare story--some of us believe that it might be brought about by a single currency. If that happened, what could our people do? The answer is that they would be powerless, and they could not put out the Government or the Opposition. There is a great democratic issue involved here.
9.20 pm
Mr. George Robertson (Hamilton) : This is an interesting and important debate and it takes place on the eve of the
intergovernmental conference that is of major importance to Britain and the whole of Europe. We have heard interesting speeches and a wide range of views. It is invidious to single out speeches, but I should like to mention a few. My hon. Friends the Members for Liverpool, West Derby (Mr. Wareing) and for Vauxhall (Miss Hoey) made refreshing, new speeches. Those of us
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who have sat through European debates for more years than we deserve welcome my two hon. Friends to them. They had much to say. Even though it may be embarrassing for him, I should like to single out the interesting and brave speech by the hon. Member for Wycombe (Mr. Whitney). I have no doubt that that compliment will further blight his career. The hon. Member for Worcestershire, South (Mr. Spicer) also made an interesting speech and mentioned that he had returned to the Back Benches. I understand from the public prints that he resigned from the Government in order to write books. Look at what that has done for the Foreign Secretary. Perhaps such actitivies will again raise the hon. Member for Worcestershire, South up the greasy pole.My hon. Friend the Member for Durham, North (Mr. Radice) and my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) made speeches of some distinction. I agreed with practically everything in the speech by my hon. Friend the Member for Durham, North. My right hon. Friend the Member for Bethnal Green and Stepney and I shared the task of challenging the Government over their guillotine on the Single European Act, but we have taken different paths since then. Although we disagree on this issue, we agree on many others.
If there was one issue above all that brought the former Prime Minister to grief it was her attitude to Europe and on how Britain should play its role. She was fatally wrong on a series of issues such as the poll tax, interest rates and education vouchers if we are to judge by the pronouncement of those who abandoned her so quickly one and a half weeks ago. However, it was on Europe that she made her final and fatal mistake and she was judged, dispatched and displaced in two weeks. That was the lady who only eight weeks ago was cheered at the Conservative party conference with a chorus of, "Ten more years". It can all be put down to her attitude to Europe. Just 15 days before the right hon. and learned Member for Surrey, East (Sir G. Howe) made his memorable speech, he defended the former Prime Minister on the Walden programme. It was an implausible effort, but it was still memorable because at almost the precise moment when the Prime Minister and the Foreign Secretary were at a press conference in Rome belabouring our European partners, the former deputy Prime Minister told Brian Walden :
"We've had occasions like this before. I've attended a number of summit meetings with the Prime Minister in which at this particular stage we have found ourselves expressing a sharply different view--an apparently sharply different view. You may remember that before we achieved the so-called Single European Act, that's the last major treaty between us, we had a summit meeting six months before where we appeared to be completely at odds with most, if not quite all, of our European partners. But at the end of the day, when we came to a Single European Act by hard negotiations we achieved a result which Parliament endorsed quite readily."
Leaving aside the fact that it was the right hon. Member for Shropshire, North (Mr. Biffen), that great European, who got the measure through by use of the guillotine, that is what the then Deputy Prime Minister said, although we now know that it was not what he was thinking. Let the House again savour what the right hon. and learned Member for Surrey, East said, for these words are the ball-bearings on which the right hon. Member for Finchley (Mrs. Thatcher) rolled down into oblivion. He said :
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"We must at all costs avoid presenting ourselves yet again with an over-simplified choice, a false antithesis, a bogus dilemma, between one alternative, starkly labelled co-operation between independent sovereign states' and a second, equally crudely labelled alternative, centralised, federal super-state', as if there were no middle way in between."He went on, referring specifically to economic and monetary union, to say :
"We must be positively and centrally involved in this debate and not fearfully and negatively detached. The costs of disengagement here could be very serious indeed."
No one who heard that speech or read it will ever forget it. In his peroration he said :
"If we detach ourselves completely, as a party or a nation, from the middle ground of Europe, the effects will be incalculable and very hard ever to correct."
I quote those words not simply to extract the last juices from the convulsions that have swept away the iron lady, nor to dance on the grave of the false unity that only three weeks ago marked the public face of Tory party policy on Europe. I quote them because the House wants to know, and the country needs to know, where the new team, which is nothing more than the old team minus the manager, stands on what the right hon. and learned Member for Surrey, East rightly called "this desperately serious situation".
If the right hon. and learned Gentleman found that his task as Foreign Secretary and deputy Prime Minister had become
"futile, trying to stretch the meaning of words beyond what was credible, and trying to pretend that there was a common policy when every step forward risked being subverted by some casual comment or impulsive answer",
where stands the Foreign Office today? Is there a new policy or is the same pretence going on?
When the new Prime Minister was Chancellor, he was party to that pretence. Has he now seen the light? The Foreign Secretary was party to what the right hon. and learned Gentleman called a pretence of a common policy, so where does he stand now? The Minister who will reply to the debate, whose role in the downfall and replacement of his erstwhile mistress was significant--the St. Catherine's place plot--must have been party to the pretence. Will he recant and confess to us what the truth is and where Britain's real interest lies? I ask those questions not lightly or frivolously, even when there is great fun to be had in doing so, but because, in its first week in office, the new team, liberated as it is from the risk of subversion "by some casual comment or impulsive answer"-- [Official Report, 13 November 1990 ; Vol 180, c.463-65.]
still seems mightly confused about where it stands.
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