House of Commons Hansard Debates for 26 Jun 1991

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remarks and then raise five points that I hope my right hon. Friends will consider in their deliberations in Luxembourg? The issues that we are debating today are fundamental to the future role of this Parliament, and deserve to be treated seriously. They are fundamental to the kind of Europe in which our children will live and they are fundamental to our future relationship with the wider world, especially the eastern European states and the United States of America. The fact itself that we are debating these issues reminds us of the cardinal principle of our system of government--that Ministers are directly answerable to Parliament and that the buck stops here.

My right hon. Friend the Prime Minister has previously spoken eloquently of his wish to see Britain at the heart of Europe. He is right, and we have been. That is how we secured reform of the Community's finances. That is how we won reform of the common agricultural policy, although there is more to do, and that is how we started the creation of the single market. None of those things could have been achieved from the sidelines. We had to be in the midst of battle, and we were. We won many battles, and as we finished the battles, the position was far, far better for Britain than it was when we started. It is by staying in the centre that we can press the case for free trade through the general agreement on tariffs and trade and for reaching agreements with the countries of eastern Europe. My right hon. Friends have pursued those matters with vigour, and they are right to do so.

The summary of the documents for the forthcoming Luxembourg Council--I have not seen the full documents, because they came too late, and I share the views of those who protested that they were not available--reveals a quite different destiny for Europe from any that we were ever given to expect when we went in. They are proposals for a federal union. They call for a common foreign, security and, in due course, defence policy, in which majority voting would apply. They call for a great extension of Community powers and competence in energy, in health and over labour laws--again, often with majority voting.

We had some experience of the extension of majority voting in the Single European Act. I suggest that we are very careful before we consider extending majority voting any further. The fact is that majority voting means that we give the Community the right to impose on the British people laws with which the House--the elected representatives--may fundamentally disagree. That is a very, very serious step to take. The document also calls for a central bank to set monetary policy, leading to a single European currency. The Times has referred to all this as "supranationalism run riot". My right hon. Friend the Prime Minister declared in the House on 18 June :

"A European super-state would not be acceptable to me or to the House--and in my judgment it would not be acceptable to the country".--[ Official Report, 18 June 1991 ; Vol. 193, c. 142.] I wholeheartedly agree with both The Times and my right hon. Friend.

Few of us will forget what Mr. Delors told Members of the European Parliament in 1988. He said :

"In 10 years time, 80 per cent. of economic legislation and perhaps even fiscal and social legislation will be of Community origin." That is the road that he wants us to take, and it is the road that we must resist.

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I understand that my right hon. Friends cannot reveal their full negotiating hand, but I hope that, in their negotiations in Luxembourg, they will keep in mind the following five points. First, the present debate in Europe touches issues more profound than any since the Community's foundation. It is of an entirely different order of magnitude and importance from the debate on the Single European Act. That made some important changes in the concept of majority voting to make it more difficult for countries that do not believe in free trade to block the completion of the Common Market. It repeated earlier commitments to economic and monetary union, while attempting to define it as only economic and monetary co-operation. What is now being considered is a massive extension of the Community's powers and competence into almost every area of our national life and that of other member states. It would be the greatest abdication of national and parliamentary sovereignty in our history.

Some people argue that the changes envisaged in the draft treaties on the table in Luxembourg would not happen for many years, so there is no need to worry. That is a very dangerous approach, because, once those powers were given away, they would never be given back. All the evidence indicates that, while our people want Britain to be actively involved in Europe--and of course, I was the Prime Minister who enabled the channel tunnel to get going, so I do believe in having more to do with Europe--our people do not want to see a massive extension of the powers of Brussels into every corner of national life even if it is dressed up as a step-by-step approach--a kind of federal Europe achieved by stealth. I fully support the firm stand that my right hon. Friends have taken-- [Interruption.]

Mr. Speaker : Order.

Mrs. Thatcher : I fully support the firm stand that my right hon. Friend the Foreign Secretary and my right hon. Friend the Prime Minister have taken against any commitment to a federal Europe. I would hope that most people in the House were against a federal Europe ; otherwise, what is the point of people standing as candidates at the next election--to come back here and propose to hand over all their powers as representatives of constituents to another Parliament?

The second point--[ Hon. Members :-- "The second point."] Thank you very much. The second point is that we should not let those who support a federal Europe pretend that they are somehow more European than the rest of us. They are not ; they are just more federal. There is nothing specifically European about a federal structure--indeed, the opposite : it is the nation state which is European.

It has been the great achievement of the Community to bring about greater co-operation between those nation states--not to merge them. Instead of pouring distinctive nations into institutions and arrangements of the same mould, we should be encouraging different kinds and degrees of co-operation between European countries. My right hon. Friend the Foreign Secretary said as much in his speech on 31 May in Shropshire, and I heartily agree with him.

That sort of European co-operation is already developing--for example, in other European matters, France feels easiest with a different defence relationship with NATO than the rest of us, but in practice she

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contributes in important ways to the west's defence. No one says that France is isolated--they accept the difference.

The Schengen group of countries have been able to reduce their frontier controls because of their common borders. We recognise that that would not do for us in Britain, because considerations of security and immigration are quite different for an island nation. But that does not mean that they cannot reduce their borders because all their geography indicates that. These different relationships make sense for those who participate, but they are not a model for everyone. The true Europeans are those who base themselves on Europe's history and traditions rather than on constitutional blueprints.

Thirdly, we should not for one moment fall for attempts to argue that a federal Europe would mean a devolution of powers. If that were the case, why change what we have at present? Powers are devolved, in that they are held by national Parliaments and Governments, as they should be. For Mr. Delors to say that his proposals would mean devolving powers is ridiculous. They are not his or the Community's to devolve.

Mr. Dykes rose -- [Interruption.]

Mrs. Thatcher : Our sovereignty-- [Interruption.] I gave way- - [Interruption.]

Mr. Dykes rose--

Mr. Speaker : Order. I think that the right hon. Lady gave way, but the hon. Gentleman did not rise again.

Mr. Dykes rose--

Mrs. Thatcher : May I continue? I understand that quite a lot of Privy Councillors want to speak.

Mr. Jimmy Hood (Clydesdale) : On a point of order, Mr. Speaker. [Interruption.]

Mr. Speaker : Order. What is the point of order?

Mr. Hood : As I am sitting opposite the hon. Member for Harrow, East (Mr. Dykes), perhaps I may be of some help. The hon. Gentleman did stand up, but he was pulled down by a colleague sitting next to him.

Mr. Speaker : I do not know about things like that.

Mr. Dykes rose--

Mr. Speaker : It is up to the right hon. Lady.

Mrs. Thatcher : My hon. Friend the Member for Harrow, East (Mr. Dykes) might find it better to intervene when I have finished my next sentence.

Our sovereignty does not come from Brussels--it is ours by right and by heritage. We choose what we devolve to the Community--not the other way round.

Mr. Dykes : The hon. Member for Clydesdale (Mr. Hood) was correct--I was pulled down by one of my colleagues--

Hon. Members : Name him.

Mr. Speaker : The hon. Gentleman should be more robust.

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Mr. Dykes : I apologise, Mr. Speaker, if all this has delayed the House when there is pressure on time. I am most grateful to my right hon. Friend for giving way. On the definition of federalism that she has just enunciated, does she agree that it was the American Secretary of State, James Baker, who said that devolution with common integrated structures was the definition of federalism?

Mrs. Thatcher : That is precisely why I made my point clear. Our sovereignty does not come from Brussels, and I hope that my hon. Friend is not arguing that is does. It is ours by right and by heritage. We choose what we devolve to the Community--not the other way round.

The fourth consideration which I hope my right hon. Friends will have in mind is the danger of being drawn along by what start out as vague commitments but end up as highly specific and damaging proposals. There is a much greater willingness in some European countries than in Britain to sign up to great rhetorical statements and declarations, without worring too much about what they will mean in practice ; and it is welcome that, as some of the earlier declarations of intent have been committed to treaty language, a number of Governments--not just ours--have become more worried about the practical consequences. Such is the case with the social charter.

Moreover, some are now seeing that a single currency could not possibly work with the disparities between European economies as great as they are now--and that setting the goal of a single currency has no relevance to Europe's current economic problems. Moreover, to go to a single currency--

Mr. Robert Sheldon (Ashton-under-Lyne) rose--

Mrs. Thatcher : May I finish this section?

Moreover, to go to a single currency is not just a practical matter : it is a fundamental question of principle. It is not only a merger of currencies : it is to give up for all time the right of the Banks of England and of Scotland and our Treasury to issue our own currency, backed by our own economic policy, answerable to our own Parliament. That is why I do not believe in a single currency.

If, nevertheless, some other members of the European Community wish to agree to the idea of a single European currency--and not all of them belong to the exchange rate mechanism yet--they are entitled to go ahead and do so. Luxembourg is already linked to the Belgian franc, and the Dutch guilder is close to the deutschmark.

But unless legislation on a single currency were contained in a separate treaty, certain consequences could follow. I shall give three. First Britain, although not in a single currency herself, may be expected to contribute to the huge increases in structural funds required in order to allow the weaker member countries to participate in EMU.

Secondly, unforeseen consequences could arise as European Courts interpret the single currency provisions in the context of the full treaty of Rome.

Thirdly, there is no way in which the economies of the former communist states of eastern Europe could withstand the pressures placed on their fragile industries by a single currency--witness what has happened to eastern Germany.

We have to complete the transformation of the countries of eastern Europe into free enterprise

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democracies, and enable them to join the European Community as soon as possible. They need an anchor to the west.

I shall give way now to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), before I come to my final point.

Mr. Sheldon : I agree with quite a lot of what the right hon. Lady has said about European monetary union. However, like many hon. Members, I have seen a number of the reports of what she is supposed to have said as well as those things she has actually said. I find it difficult to understand why the right hon. Lady accepted the exchange rate mechanism when she has said so many harsh things about it.

Mrs. Thatcher : The right hon. Gentleman and I can go into this, but it will take a few moments. First, I am fully in agreement with an exchange rate mechanism that is anchored to the deutschmark, because it is, in a way, like anchoring to the gold standard, provided that that is done at the right value. That is what we have done, and we have done it with a latitude of 6 per cent. That should be perfectly enough to accommodate any swings in the exchange rate. It is if one moves to a single locked currency that one gets enormous difficulties, because there is no latitude to vary the currency. Therefore, any difficulties in the monetary or economic system have to go either to increased inflation or to increased recession and increased unemployment. The 6 per cent. swing gives us some latitude, but I believe that joining the exchange rate mechanism gave us all we needed for stiffening against inflation, and I do not believe that it is necessary or desirable to go any further into stages 2 or 3-- [Interruption.] The right hon. Gentleman asked me a straight question and, as always over the past 31 years, I have given him a straight answer.

Finally, looking beyond the borders of the European Community, we have to strengthen and develop Europe's trade with the United States and the rest of north America, Canada and Mexico, perhaps through moves to a transatlantic free trade area. Further, the European nations have to encourage the Soviet Union and its constituent republics as they struggle along the path of reform.

We shall not achieve any of that if we accept a centralised, inward-looking European community. In both Luxembourg and Maastricht, we must speak out and reach out to the wider world. In my right hon. Friend the Prime Minister we have a leader with the vision and sense of purpose to do just that. I wish my right hon. Friends well in their great task, and I give them my full support.

6 pm

Sir Russell Johnston (Inverness, Nairn and Lochaber) : I shall not spend a long time on the speech made by the right hon. Member for Finchley (Mrs. Thatcher) because I suspect that other hon. Members will do so. [Interruption.]

Mr. Speaker : Order. Will the hon. Gentleman wait a moment? Would hon. Members leave the Chamber quietly, please?

Sir Russell Johnston : I shall simply remind the right hon. Lady of two short quotations. The first is :

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"Periodic expressions of pessimism about the future of the Community have never turned out to be justified. Europe needs to advance its internal development. The progress that has been made towards an ever-closer union of the peoples of Europe' of which the Treaty of Rome speaks is unlikely to be reversed."

The second quotation is shorter :

"It must be our objective to aim beyond the Common Commercial Policy through Political Cooperation towards a common approach to external affairs. Such a policy can only be achieved progressively : it must nevertheless be the aim before us."

That quotation was from the declaration of Fontainebleau made by the right hon. Member for Finchley in July 1984. Certainly to my ears the right hon. Lady's position now, as expressed today and in recent days when she has made some remarks, is in tone and attitude very different. It is much more negative and much more--dare I say it--nationalist.

Why are we talking about political union in Europe? It is because we are doing more and more things together, in our economies, in agriculture, transport, the environment and many other areas. We need to find some way of regulating those activities in a democractic fashion. Unlike the Foreign Secretary, whose remarks I shall come to, Liberal Democrats do not accept that such regulation is felicitously achieved through the Council of Ministers. We are far from being the only people who take that view.

It is right that the word "federal" should be at the heart of the argument. I am astonished at the notion that no one in Britain knows what the word "federal" means and that it means something different in those funny continental countries. Have we forgotten that we gave federal systems to Australia, Canada and the Federal Republic of Germany? Why did we give a federal system to the Republic of Germany? It was in order that Germany would be a decentralised country. Now we are claiming that we do not know the meaning of the word. The argument about Scotland's government appears to have passed the House by. People seem to have forgotten that the argument was between independence, the status quo and a federal solution of some nature. My dictionary says that federal means "founded upon mutual agreement"--that is a good start--and

"a union or government in which several states, while independent in home affairs, combine for national or general purposes". That is exactly what we seek to do--to combine for certain purposes.

The Foreign Secretary attacked my right hon. Friend the Member for Yeovil (Mr. Ashdown)--perhaps attack is a little strong. He tapped him with a paper napkin and said that my right hon. Friend was guilty of deploying fine phrases. I have never noticed it myself-- [Laughter.] The Foreign Secretary said that my right hon. Friend did not entirely understand those fine phrases. Let me quote some fine phrases to the Foreign Secretary.

"Thinking as a European and being firmly rooted in one's own native soil,"- -

that would appeal to the right hon. Member for Finchley "I am convinced that in order to succeed, Europe will have to learn to live by the motto of Unity in Diversity' (it) is in fact a very sound and pragmatic structural principle of the sort of federal system we have in mind for Europe. Europe will be a federal Europe--it will not be a unitary Europe."

That was from a speech made by Chancellor Helmut Kohl in Edinburgh on 27 May this year when he accepted a doctorate in that university. I do not think that the good

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burghers of Edinburgh were astonished at the use of the word or found it incomprehensible. On the contrary, they knew exactly what it meant.

The Liberal Democrat argument is that federalism is about more democracy, not less. The difference between us and the Government is that the Government, as the Foreign Secretary said, think of an intergovernmental Europe in which the Governments parley, debate and deal. We think of a citizens' Europe in which individuals in each of our Community countries have a direct voice in what happens through the European Parliament. Federalism is about limiting central power.

Mr. Sillars : Will the hon. Gentleman give way? I seek a genuine clarification.

Sir Russell Johnston : The hon. Gentleman is always genuine. Carry on. Hurry up.

Mr. Sillars : The hon. Gentleman is usually more courteous. He explained that he is talking about power expressed by the peoples of Europe in a European Parliament. Does that also imply a European Government, which is the Executive of that Parliament?

Sir Russell Johnston : In time, it will. None of us knows exactly what shape that will take, but in the present circumstances we are dealing with the existing institutions--the Parliament, the Council and the Commission. There may be a time long hence, when we shall have some sort of "Europe des regions." I was most attracted by that idea, but it will not be realised overnight.

The point that I was about to make is worth stressing for the benefit of the right hon. Member for Finchley. She attacks federalism as some sort of centralising concept, which is the opposite of what it is. It must be said that, during the past 10 years, centralisation within the United Kingdom has dramatically increased. Local government has been weakened. There has been no attempt to establish regional centres of power in England and no recognition of the aspirations of the Scots and the Welsh to some sort of

self-government. I aver that the Conservatives have been complaining about centralisation abroad while practising it at home.

Mr. John Gorst (Hendon, North) : Will the hon. Gentleman reflect and perhaps comment on the news that we are receiving from Yugoslavia, which is facing the problems of federation when the republics would prefer confederation, which is a looser arrangement? Will he also reflect on the growing difficulties of the Soviet Union? The problem there is that when disparate peoples have been brought together too closely they do not necessarily work harmoniously together.

Sir Russell Johnston : I hesitate to cogitate for too long, because many hon. Members wish to speak, but I shall lance that argument straight away. In the case of both the Soviet Union and Yugoslavia, centralised power was artificially imposed by dictatorial force. I accept that in the Soviet Union there was a mirage of federalism, but it did not exist in reality. There was a little more reality in Yugoslavia, but nothing like enough to appease the feelings of the Slovenes or Croatians. In the European Community, we are talking about people coming together

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willingly because of the impetus of the economy to decide how things that must be done together should best be done to benefit everyone.

People continually say that no one makes the position clear. We are quite clear that we want the European Parliament to be strengthened and given powers of co-decision with the Council. We also want it to be elected under a common, fair, proportional system. I am tired of people prating and pomping about democracy when one considers how unrepresentative the House of Commons is. I want discussions in the Council to be open. It is in the interests of the United Kingdom, Germany and France to work for common foreign and defence policies. The advantages of monetary union to individual citizens and our industries are clear. First, it will make trade and cross-border capital flows easier as barriers to trade are reduced and currency fluctuations ended. A single currency is the logical next step from a single market, as was said by the right hon. Member for Old Bexley and Sidcup (Mr. Heath), whose long, trenchant and honourable defence of the Community I salute.

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

Sir Russell Johnston : It is not that I do not like to give way, but time is pressing and I do not wish to give way too often. Businesses are looking for stability and the capacity to project price, which this will give them. Secondly, monetary union will give the British economy the balance of a sustained counter-inflation policy that it has long been denied. We are not only not afraid of an independent central bank--the Labour Front Bench indisputably is--but we welcome it. We should be only too pleased to follow the example of the Bundesbank model because it works. Neither do we think that the Bundesbank will somehow totally extricate itself from the democratic system. On the contrary, one saw that in Kohl's decision to override Po"hl on the unification problem. It was an institution committed to price stability.

Finally, contrary to what the right hon. Member for Finchley said, this is good news for the central and eastern European countries that have come to democracy. In the United States the right hon. Lady spoke about "a wealth wall" being built between the European Community and the new democracies. With respect, that is nonsense. Her argument exploits the new freedoms in the east to block further progress in the west.

I accept that Europe does not end with the European Community, but the new Europe begins with the European Community. The new democracies want us to succeed. They want a dependable currency to which they can relate. They would prefer that to be the ecu rather than the deutschmark and we should be pleased that the Germans want that, too. That will be possible because Germany takes not an aggressive but a co-operative view. In nightmares, I sometimes wonder what it would be like if the right hon. Member for Finchley had been Chancellor of Germany.

The European debate should be less about the power of nations, because the nation state has brought much blood to the European continent. The nation state in terms of the old concepts of sovereignty has seen its day. I want a Community that lives in the minds of its citizens. I accept that, of necessity, the Community will set certain parameters, frameworks, minimum standards and rights

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for trading relations, fair competition and minimum entitlements in the social sense, and will provide opportunity through the regional and social funds and rights before the law. However, in my view it will not suck in more and more power but will be a group of people seeking a Europe that will not only benefit its own citizens but will make a remarkable contribution to the democracy of all the world. 6.15 pm

Mr. Edward Heath (Old Bexley and Sidcup) : I felt sad that the right hon. Member for Manchester, Gorton (Mr. Kaufman) attempted to turn a motion on the Adjournment--intended to be an open discussion of probably the most serious problem facing us at the moment--into a party issue, particularly one of personalities. It was unlike him, and he probably regrets it. I am saddened even more by the Opposition's decision to vote against the Adjournment motion tonight. It is unusual in this House to vote against an Adjournment motion, and it will be taken by all the Labour party's friends in the European Community as another change in the Labour party's position and as being against the views expressed by the Prime Minister. Again, that is a matter for regret.

It is 41 years to the day, the hour and almost the minute since I rose, at 6.12, to make my maiden speech urging the then Labour Government to participate in discussions on the formation of the first European Community. I spoke then for 14 minutes. It think, Mr. Speaker, that you would adjure me that, without interruption--I had no interruptions then--I should take only the same time, and I shall therefore endeavour to do so.

Why did the then Labour Government refuse to take part in those discussions, to which they were invited by Jean Monnet and the six other countries that had agreed to take part? Their reason, amongst others, was that there was no definition of a Community. The answer to that was, "No, but we shall work together to produce the definition of a Community," and that is precisely what they did. We are now in exactly the same position over the political developments of the Community. The Prime Minister has been absolutely right to try to dissuade us from entering a long artificial and sometimes bitter argument about federalism, because what we are invited to do, and what the Foreign Secretary will do, is discuss the political organisation, how it should be built up, and what its powers and effectiveness should be. We should accept that immediately and not say, "Yes, but what will the end be?" The purpose of the operation is for us to take part in defining and creating the end. That is how the Community works.

The Foreign Secretary rightly said that, after this debate, his job is to get down to that work. He will recall the work on the Community negotiations that was carried out from 1970 to 1974, when he was with me. Time and again, in the 1960s, in our first negotiations and again in the 1970s, the political leaders in the Community said, "We just do not understand how you can carry on a negotiation and, on every occasion, have to return to the House of Commons to read a long detailed report, be subjected to 45 minutes or an hour's questioning and be pressed from all sides to give solemn undertakings about particular aspects of it." That is absolutely true.

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Therefore, I hope that the Foreign Secretary will never be either surprised, or ashamed of saying, "This is a matter with which we are dealing, and I shall not be bound absolutely by the words that I say now." If he did not say that, we would have no freedom for negotiation and no ability to persuade, hopefully successfully, other people to share our views.

We are in the same position as we were in 1950 over the future developments of political unity, foreign policy and defence policy. As the then Labour Government refused to participate, it took us 22 years before we became a member of the Community. We must never make that mistake again. We cannot afford to do so, whether in relation to monetary or foreign or defence policy or political union. We can see how such developments are already taking place in Europe, and I beg my right hon. Friends the Foreign Secretary and the Prime Minister not to take the view that, in order to satisfy some part of opinion, they must say no to begin with, drag out the process and finally accept that the other 11 want it. That would not give us a status in the Community that we could later use for other purposes, but it would make the jobs of the Prime Minister and the Foreign Secretary infinitely more difficult than they would otherwise be.

All the signs are that, certainly across the Community and to a considerable extent in this country, people are not as worried about federalism as apparently we are in the House. We gave federalism to Canada, Australia, Nigeria, India and a large number of colonies which wanted their independence--[ Hon. Members-- : "They were not colonies."] A number of them were colonies. Why do we think that not only the word "federalism" but that system of government is so horrible? The Community is responsible for working out what form of government there will be.

Sovereignty exists to be used for the benefit of the people, not for the satisfaction of Governments or politicians. Unfortunately, for many centuries sovereignty was used to wage war in Europe against other countries. That era is over, thank God. When the second world war was over, those of us who survived were determined to prevent it happening again. That was the origin of the creation of the Community. It was Churchill who, in 1940, first stated in his proposal to France that we would become one country and one nation, and it would be an indissoluble unity. Future unity will be discussed at the end of the year. Ever closer unity is set out in the treaty that we signed and fully accepted.

Sir John Stokes (Halesowen and Stourbridge) : Will my right hon. Friend give way?

Mr. Heath : No, I am sorry. I am trying to stick to Mr. Speaker's request that our speeches should be as short as possible, because 49 hon. Members wish to speak. Otherwise, I would gladly give way to my hon. Friend, who was a great Oxford friend. However, if I give way once, I shall have to give way again.

Every member of my Cabinet agreed to ever closer unity for the whole of the Community.

Mr. Dennis Skinner (Bolsover) : Every member?

Mr. Heath : The hon. Gentleman interrupted earlier, and said that it was the Whip that achieved that agreement, but we had a free vote. It was the Labour party which used the Whip that night, but 72 of its Members defied it, and we won with a majority of 112.

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On the subject of monetary policy, I am sure that entering the exchange rate mechanism was absolutely right and is still right. I regret that we did not do so five years earlier, but that is history. Economic monetary union must come as soon as possible, and with it the single currency. Industry wants the single currency, and we must pay attention to the requests and demands of industry.

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