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Mr. Calum Macdonald (Western Isles) : I believe that I am the first Scot to be called to speak this evening, and I hope that my remarks will give a Scottish perspective to the debate, much of which has proceeded on a false premise. That was particularly so of the remarks by my right hon. Friends the Members for Chesterfield (Mr. Benn) and for Bethnal Green and Stepney (Mr. Shore). I admired the fluency and power of their speeches, but their basic assumptions were wrong. In so far as they and other right hon. and hon. Members defended the notion of national sovereignty and the powers and privileges of our national Parliament, they defended something that does not exist. I refer not to the powers and privileges that, as other hon. Members pointed out, have constantly been eroded--which makes a good argument for trying to recover some of that real power by mixing our sovereignty with other countries. I refer to the non-fact of a national Parliament. This House is not a national Parliament but a multinational Parliament. It is the Parliament of our United Kingdom, representing nation states that were previously independent and sovereign, and which enjoyed self-government but relinquished it.

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If the arguments in defence of a British Parliament made by my right hon. Friends the Members for Bethnal Green and Stepney and for Chesterfield had been heard by the members of the Scottish Parliament that existed in 1707, this British Parliament would never have come into existence. In that sense, my right hon. Friends' arguments were self-defeating. If one pursues the notion of national sovereignty, which advocates self-government, that is an argument for the break-up of Britain, not by mixing the present British Parliament into a higher federal union, but by breaking it up into the separate components of Great Britain.

It is ironic that those in Britain and in the House who are fighting a desperate rearguard action against the European Community fail to recognise European union as the logical successor of, and the greatest possible compliment to, the success of the British union--which can serve as the model for the European union of the future.

I am a unionist in both the British and the European sense, because in principle I favour the establishment of the broadest possible political community. I believe also in the principle of subsidiarity, not just within a new united Europe but within the existing United Kingdom as well. I find it odd that Conservative Members who advocate the principle of subsidiarity in Europe deny it within the United Kingdom, when they deny the possibility of devolution to Scotland. There is no conflict between the principles of unionism and of subsidiarity. They are the two sides of the same federalist coin, and are entirely consistent. What is inconsistent and illogical is the curious muddle into which some hon. Members have got themselves in the course of tonight's debate.

As I have said, some Conservative defenders of subsidiarity advocate political devolution in Europe while denying it in the United Kingdom. The Scottish National party--its members have yet to speak tonight, but no doubt we shall hear from them--support separatism and sovereign independence from the English, but favour ever closer union with the Germans and the French, thus reducing their philosophy to simple anti- English prejudice. That is an illogical position, born of political opportunism.

Two lessons can be learned from the union of Great Britain if, as I suggest, we take that union as the logical and historical precedent for European union. The first is that there is no risk whatever of a loss of national identity, other than the loss of identity that follows naturally from the greater influence of commerce and trade within the Community. That bogey is dragged out time and time again. Even after 300 years of political, economic and monetary union, it is still easier to distinguish an Englishman from a Scotsman--on the basis of accent, name or even manner- -than it is to distinguish a Serb from a Croat. That is despite the fact that the union of Great Britain is much more rigid and centralised than the proposed European union. In the British union, differences have not only survived but flourished, and I believe that, in a European union, national differences would flourish to the same extent.

The second lesson is that we should not replicate the centralised nature of the British union. The EC is now

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rightly moving towards a different model--a federal structure that would allow the institutions of the centre to deal with responsibilities that are rightly drawn into the centre. I refer to such macro-issues as monetary policy, environmental policy, trade and, ultimately, foreign affairs and defence.

It showed either inconsistency or a simple failure to understand the case for the right hon. Member for Plymouth, Devonport (Dr. Owen) to advocate the notion of a common foreign policy, while opposing the idea of institutions that would make such a policy effective. That is a recipe for the muddle against which so many people have warned us. If we are to avoid the muddle of the Gulf war and the contentions of the Yugoslav crisis, we must develop institutions that will allow us to overcome such differences.

Those who pretend that we are not moving towards a framework that will allow the Community to counter common decisions on foreign and defence policy are living in a dream world. Even after 1992--quite apart from the treaties that we are discussing--the single market and European competition policies will impose pressures for national Governments to achieve greater convergence on defence procurement. Once that happens, pressures will be imposed for them to reach greater convergence on defence policy in general.

Mr. David Winnick (Walsall, North) : Will my hon. Friend give way?

Mr. MacDonald : I cannot do so if I am to abide by the 10-minute recommendation.

Those, then, are the macro-issues that should be left at the centre. At national and regional level, we can deal with domestic issues such as schools, health care, social services and local transport. Striking such a balance will avoid the constitutional stresses and strains that in recent years have afflicted the United Kingdom in particular. The treaties will embody that federalist approach--for that, in principle, is what it is, even if the word itself cannot be used because of the childish objections of British negotiators.

The treaties will begin the necessary task of making Community structures at the centre more directly accountable to European citizens, by extending and strengthening the powers of the European Parliament. That is extremely important. Eventually, this process will rightly lead to the Commission becoming more directly accountable to the electorates across Europe, not just indirectly accountable, as it is now, to the European Parliament and the European Council.

By extending the competence of the British union, in line with that federalist principle of subsidiarity and by making the union more democratic and accountable to its citizens, the European Community can begin to forge a union that will, in time, be as great a success as the British union has been.

In forging that union, Europe has a particularly great advantage, in that no country can dominate that union in the way that England has inevitably dominated the United Kingdom, or Russia has inevitably dominated the Soviet Union. That is the answer to the point made by my right hon. Friend the Member for Chesterfield. He raised the fear that union would lead to a rise of resentment, and thus to nationalism. The European union can be a genuine partnership of equals. It is one to which Britain must

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belong if it is to secure prosperity and influence in the future and also if it is to be true to its own multinational unionist past. 9.26 pm

Mr. Terence L. Higgins (Worthing) : I greatly welcome the motion in the name of the Prime Minister and his right hon. Friends. I shall support it when it comes to the vote. I very much welcome also the opening paragraphs of my right hon. Friend's speech, in which he made it absolutely clear that he, together with the Foreign Secretary and the Chancellor of the Exchequer, would do their utmost to seek a negotiated settlement on this issue that was the best possible deal available. I do not believe that we could have a better team to try to achieve that deal.

My right hon. Friend went on to say that if, none the less, he felt that that deal was not satisfactory, either from the point of view of the United Kingdom or from the point of view of the Community as a whole, he would not go ahead and sign it. I think that we can have confidence that that will be so, although each of us will also have to decide whether we think that the best deal that has been negotiated is acceptable to us.

I very much hope that that deal will be one where we do not have to go for the so-called opt-in/opt-out clause. If we go down that route, we shall not only not have a full role in the further negotiations but, under the draft treaty as it stands, we shall be specifically precluded from participating in a number of important decisions. That opt-in/opt-out clause is very limited in its scope. Therefore, I hope that my right hon. Friend will be successful in negotiating an arrangement that is acceptable without the use of that clause. As for the referendum--or, I should say, referendums, because the plural of "referendum" is "referendums", not "referenda"--let me say very clearly that I am totally opposed to referendums in any shape or form. I believe profoundly, as the Prime Minister has made absolutely clear, that this is a representative parliamentary democracy. We are not here, in Edmund Burke's words, as delegates. If one has a referendum, there is a danger that one comes here as a delegate. If there is one thing that is absolutely clear, it is that this issue is of immense complexity and least of all suitable for a referendum. I pointed out in the debate on the Queen's Speech that if one asked one's constituents, "What is the difference between a common currency and a single currency?", they would be unable to say, yet that is a crucial distinction. I issued a press release to that effect. The chief reporter on my local paper asked me whether I could tell her the difference between a common currency and a single currency, which seemed to me to make the point. We are responsible for considering these complex issues and making the decision on behalf of our constituents.

I have not been able to obtain the edition of Dicey referring to a referendum from which my right hon. Friend the Member for Finchley (Mrs. Thatcher) was quoting, but if it is argued that, if all political parties take the same view of a particular issue, the electorate do not have a choice and a referendum should be held, a rather difficult technical problem arises. What happens as a result of a referendum? Will all the political parties say, "We shall accept the referendum and not what all of us believe"? I understand from Dicey that a referendum would not constitutionally bind the following Government, so such a

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referendum is not the escape route that my right hon. Friend the Member for Finchley suggested. It is our responsibility, as representatives of our constituents, to make a decision on this matter.

Mr. George Robertson (Hamilton) : I agree with all the arguments that the right hon. Gentleman has advanced. He quoted the Prime Minister in aid of his argument. Is he as surprised as I was to learn that No. 10 Downing street has been briefing the press to the effect that the Prime Minister has not ruled out the possibility of a referendum in some future Parliament?

Mr. Higgins : I cannot comment on No. 10 briefings. I am clear about what my hon. Friend the Prime Minister said today, at Question Time yesterday and in the leadership campaign a year ago. Like me, he believes in representative parliamentary democracy and is against referendums. I have no doubt whatsoever about that.

The right hon. Member for Chesterfield (Mr. Benn) sought to say that the electorate have lost faith in democracy. It is not the electorate who have lost faith in democracy but people such as the right hon. Gentleman and other hon. Members who feel they have to resort to a referendum rather than carry out their true duty.

Mr. John Browne (Winchester) : Will my right hon. Friend give way?

Mr. Higgins : I cannot. I wish to stick to the timetable, because I believe that Privy Councillors should seek to do so.

The draft treaty contains dates for the achievement of a single currency, but the crucial aspect is whether the necessary convergence has been achieved before that takes place. I have not time, I fear, to go into detail on the issue of a single currency, but it is absolutely clear that a single currency is not a reason why one should opt for the control of fiscal deficits and seek to undermine the fundamental control of money, taxation and public expenditure, which has been the basis of our power since the time of Simon de Montfort. It is important to stress that a single currency does not require the control of deficits.

I shall not go into detail on article 104B, although it is fundamental to the issue. The editor of The Times has been more than generous in allowing me to advance my views on that point. However, I want to deal with a point that my right hon. Friend the Prime Minister made this afternoon. The wording of paragraph (1) of article 104B is crucial. It says :

"Member States shall avoid excessive Government deficits." The protocol explains what that means and other paragraphs state that the decision on whether a deficit is excessive shall be determined by the Commission in carrying out an investigation and then by the Council of Ministers.

The impression has got around--for example, in the speech of my right hon. Friend the Member for Finchley--that this is somehow only a question of surveillance. That is not true. The article says quite clearly :

"Member States shall avoid excessive Government deficits." I therefore very much welcome the statement of my right hon. Friend the Prime Minister that that paragraph must be amended, because I have no doubt that we shall be entering into a binding agreement if we sign the treaty as drafted.

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The fact that article 104B contains a paragraph which states not only that the penalties specified do not apply in stage 2, but that the existing sanctions in the treaty as a whole will not apply in stage 2, leads to the bizarre situation where one part of the article states clearly, "You shall not do it," but provision is made in other parts of the article to make that unenforceable. We should not doubt that, if we signed the treaty as drafted, article 104B would be binding and we would have agreed not to have an "excessive deficit". That strikes at the basis of control over public expenditure. We are short of time and I am anxious to keep within the limit, so I shall deal with the crucial distinction between an agreement being binding and being enforceable. It is clear that when our Parliament signs an agreement in the European Community we abide by it. We have a better record than any other country of implementing what we have signed. I am becoming very concerned about the way in which that works in practice, because it is apparent that other countries in the Community have a different philosophy. Often they do not implement the proposals in the intended manner.

The Confederation of British Industry has recently criticised the Department of Trade and Industry. I am worried about the way in which that Department, for example, is implementing proposals imposed on us by the Community, although they are not being implemented in other countries. This is to our competitive disadvantage. It is tremendously important that when we implement such proposals the timing of the implementation should be related to that of the other countries in the Community. At present, the Department of Trade and Industry is too concerned with regulation and not enough with protecting our interests.

It is very important that my right hon. Friend the Prime Minister should now negotiate as toughly as possible. I believe that he will achieve the best possible deal but, having done that, he and we must consider whether we can accept it. I have not the slightest doubt that we as representatives of our constituents must take the decision in this House. To try to pass off the responsibility in the form of a referendum is wholly abhorrent to me and, I hope, to the House as a whole.

9.37 pm

Mr. Denzil Davies (Llanelli) rose --

Mr. Jonathan Aitken (Thanet, South) : On a point of order, Madam Deputy Speaker. You had been in the Chair for only a few seconds when an Opposition spokesman made an important intervention. He made the rather surprising announcement that No. 10 Downing street had tonight given a briefing to the effect that a referendum had not been ruled out and, therefore, I suppose, might be ruled in. That is relevant to the debate and to the amendment in the name of my right hon. Friend the Member for Chingford (Mr. Tebbit), myself and other hon. Friends.

If that announcement is correct, we should be told, because it has an important bearing on our proceedings. We have here no lesser personages than the Minister of State, Treasury and the Foreign Secretary's Parliamentary Private Secretary. The announcement might be merely one

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of the late night fantasies to which the the Opposition are prone, but we need to know whether such an announcement-- [Interruption.]

Madam Deputy Speaker (Miss Betty Boothroyd) : Order. Let us hear the hon. Gentleman.

Mr. Aitken : I seek your guidance, Madam Deputy Speaker, before the proceedings continue. Can we have a statement from the Government to clarify what has or has not been said?

Madam Deputy Speaker : The House has heard what the hon. Gentleman has to say. Since I was a mini Back Bencher, I have always believed that any announcement of such a nature should be made first to this House. Those on the Government Front Bench have heard what the hon. Gentleman has said and what the Chair has had to say. I hope that they have taken that message to heart.

Mr. Winnick rose --

Madam Deputy Speaker : Order. The House is now using very valuable time. There can be no further points of order. I have made the Chair's position quite clear.

Mr. Denzil Davies : I take it that my voluntary 10 minutes runs from now, Madam Deputy Speaker.

The amendments to the treaty of Rome on economic and monetary union, which mean a single currency and an unelected European central bank, go to the heart of our parliamentary democracy, as others have said. The amendments add up to a substantial transfer of control over money from a democratically elected Government and Parliament to an unelected committee of European bankers. When the spirit of the age and the spirit of Europe are for more democracy, better democracy and deeper democracy, the Government have been asked--indeed, encouraged by some--to act completely contrary to that spirit of the age. I find it perplexing that so many groups in Britain today demand--rightly--better British democracy and criticise our democracy, yet many of those people are prepared to acquiesce in the transfer of power which will diminish the British democracy that they apparently want to enhance and improve. It seems that peoples and parliaments are not to be trusted with money ; money has to be taken out of the democratic process and out of the democratic powers.

Over the ages, the European elite have often sought to entrench certain principles and rights in fundamental documents and fundamental laws. They do that basically to keep those rights and principles away from the people. Medieval theologians sought to make all human law conform to the higher law --the higher jus naturale. The divine right of kings was apparently not to be challenged by Parliaments or by people. Even Lenin, if one can call him a member of the European elite, tried to entrench the dictatorship of the proletariat and to put it out of reach of democracy and of popular control. I am told that some sections of the loony right in the United States even speak about something called the "law of the marketplace". Even that is now a kind of law to which all other laws must conform.

At least the medieval theologians sought to entrench rather uplifting moral and religious principles, but we are being asked to entrench for ever, if the amendments to the treaty go ahead, the little theorems and little equations of

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economic theory, such as money supply, price stability, currency management and percentages of gross national product-- and we have heard about 3 per cent. public sector debt ratios. All those rather simplistic and fashionable theorems and equations of economics are to be entrenched for ever in the new, amended treaty of Rome. Governments, including ours, will then have to conform. If they do not conform to the provisions about excessive budget deficits, for example, they will be fined and punished. They will be charge-capped like recalcitrant local authorities under the poll tax provisions. All that will be under the control of bankers who will be the high priests of the mysteries of money. They will make all the decisions that will affect the lives of ordinary people.

I have a confession to make. I believe that price stability is quite a good thing. I do not really accept the argument that devaluation is a panacea for all the problems of British industry. I believe that Government borrowing should be controlled. In my day, I was a bit of a monetarist. However, tenets of economic theory are not absolute. They change with fashion. To attempt to entrench them in treaties which are outside the control of a democratic Parliament is ridiculous.

Sometimes it is necessary to trade inflation against unemployment. Sometimes it is necessary to realign the currency either upwards or downwards to protect industrial capacity. Sometimes it is necessary for the Government to borrow for investment and to redress grievances. Sometimes in a recession it is necessary to have budget deficits--large ones and perhaps even so-called excessive ones. I do not know what the amendments to the treaty of Rome do to the Keynesians. I think that they are dished. They have had it, because they will not be allowed to have cyclical deficits, which are the basis of the philosophies and theories of John Maynard Keynes. I read nothing in The Guardian about the amendments to the treaty. I am surprised. I do not know where the Keynesians are. Where are the 300 Keynesians who like to write letters to The Times and The Guardian ? I should have thought that they would be out demonstrating against the proposed amendments, which would entrench monetarism. In their amendment, my right hon. and hon. Friends rightly urge the Government to work for several aims with which all Opposition Members agree. The amendment also talks about "social cohesion". I am not sure what that means, but there is a danger that, by transferring to unelected bankers the power to control money, we shall create a problem in respect of social cohesion. The precedents of the 1920s and 1930s in respect of social cohesion are not good. I do not understand the argument, but many people argue that the gold standard was far more flexible than what is proposed in the amendments to the treaty.

On re-reading my right hon. Friends' amendment, I was glad to see that we have dropped the silly idea that ECOFIN could control the European central bank. Even the Prime Minister floated that idea some time ago. I believe that it was thought up by some cynical French politicians--they do not come any more cynical than that--who thought that they could sell to the French electorate the idea of a central bank similar to the German Bundesbank by pretending that the animal called ECOFIN could control it. My right hon. Friends do not pretend that in their amendment.

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The Opposition motion refers to ECOFIN as a "counterpart" to the European central bank. When I read it, I thought at first that it was a misprint for "counterweight". But it was not. When I looked up "counterpart" in a dictionary, I found that it was merely an opposite part to a part. Of course, the opposite part cannot control the part to which it is opposite.

We shall have a European central bank which is far more independent than even the Bundesbank. At least the Bundesbank has a Government breathing down its neck. We saw that when the governor of the Bundesbank had to agree to exchange one westmark for one eastmark. But there will be no Government watching over the European central bank. There will be only 12 Finance Ministers rushing back and forth to Brussels, checking plane and train timetables and rushing back to the House of Commons--often, if we have a hung Parliament--to make sure that the Government do not fall.

At least our motion is clear. We have accepted a single currency and everything that goes with it in terms of a central bank and control over Government expenditure. I am sorry that we have done so. It is an historic break with the tradition and beliefs of the party of which I am a member. I disagree with that move, but it is a fact, and one which we must all recognise.

As I said at the beginning of my speech--the Prime Minister said it, too-- the economic and monetary union proposals are amendments to the treaty of Rome. When the United Kingdom acceded to the treaty of Rome, we accepted a large burden. The large burden was that, in terms of international law and sovereignty, we could not withdraw from that treaty without the consent of the other 11 members. But as lawyers always say, if there is a burden there is a benefit. The counterpart of the burden is the benefit that we do not have to agree to changes either. We can prevent the other 11 countries from making changes as the counterpart of the burden in that treaty.

Perhaps it is a forlorn hope, but I hope that one of these days--perhaps even at Maastricht--a British Government will finally have the courage and conviction to say, "Sorry, this is nonsense. Most people know and believe it is nonsense. We are not going to agree to these changes, because people outside the House and most hon. Members believe that they do not make any sense and will diminish our democracy."

9.50 pm

Mr. John Biffen (Shropshire, North) : Like many other hon. Members, the right hon. Member for Llanelli (Mr. Davies) has spoken of the Maastricht proposals and the philosophical challenge that they represent. I should like to think that a debate is now being undertaken in every other parliamentary assembly in the European Community with the candour and commitment that the House is showing. The fact that we are having this debate underlines that we are good Europeans because we view these issues with great seriousness and believe that they have considerable import for the Community's development, as it stands and in relation to a wider setting. Mr. Tony Banks rose--

Mr. Biffen : I shall not give way. Allow me to get under way. Many other hon. Members would like to speak and

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many hon. Members would like me to speak briefly, even more than they would like to listen to the hon. Gentleman's witty intervention.

If one looks back on the Community, one sees that one aspect of its economic development has been successful and has certainly been enforceable --the negative but highly productive policy of dismantling tariff barriers. The common external tariff was secured and internal tariff barriers eliminated, and there was little concern about the efficacy with which that was conducted. However, when the Community has had to deal with more positive economic operations, the story is quite different.

I take the example of the common agricultural policy, not because it is almost the institutional Aunt Sally, but because it has been in operation from the beginning of the Community and there has been a recurring commitment for its reform, which has failed.

What I find fascinating about the current state of the CAP are, first, the figures prepared by Mr. Anthony Rosen, an agricultural journalist, who approaches these matters with a robust pen, I admit. He has identified that, of current Community spending on agriculture in the Community, £18 billion comes from national aid and £24 billion comes from the CAP. I am not disparaging national aid, although I find it extraordinary that when I asked the Ministry of Agriculture, Fisheries and Food for its assessment--I did not wish merely to take a journalist's figures--its answer was :

"The Government does not keep comprehensive details of the national subsidies and other state aids available to farmers in other Member States, since to do so would not be a cost- effective use of resources."

Again, I do not disparage Whitehall's reaction, but one immediately sees the problem. In a major area of economic policy, there is a national and a Community element. The Court of Auditors tells us that there is considerable fraud. I accept that that is in no sense a continental European characteristic--it is inherent in the policy, however and wherever it is applied. However, if that situation exists, we ought to stop and consider the best framework to establish for future economic co-operation which involves the positive involvement of Community decisions.

If we are to transfer responsibility for energy, the environment, health and social security--the list is ambitious--we must at least reflect on what we think are likely to be the consequences. Many of my hon. Friends are worried about the actual transfer, and I acknowledge that anxiety. What concerns me is the total volume of public spending. There will be, not just a transfer, but more spending because there will be one further layer of government. If I may trivialise my argument, it will be local government reform writ large.

Those circumstances require the most careful consideration by both sides of the House--by the Conservatives because we have an anxiety about levels of public spending anyway, and by the Left because public spending is a most sensitive item of policy. It should be under clear, identifiable, political control. We are drifting towards, not some great tyrannical community, like a huge, effective leviathan, but a great lumbering spender of money without appropriate political direction. Nothing that I see in prospect at Maastricht persuades me that that fundamental problem is being addressed. It is being accepted.

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Nevertheless, I do not disparage the idea of having Maastricht. From time to time there must be a major stocktaking in the European Community. As my right hon. Friend the Member for Guildford (Mr. Howell) and many others on both sides of the House have pointed out, the most extraordinary development over the past couple of years has been the disintegration of the Soviet Union. A number of Warsaw pact countries, such as Hungary, Poland and Czechoslovakia, are already developing a relationship with the west. I am sure that that trend will be carried further east to incorporate central Europe and, eventually, whatever pattern of states evolves from the decayed Soviet Union.

If there is to be an attempt to reassess the Community and redesign its objectives--we should have a new Messina in order to take stock of these challenges and then design a new European structure--that is what we should be considering. Obviously, that cannot be secured speedily. The situation in the successor states to the Soviet Union is still completely in flux. The situation in central European countries needs patient handling. Nevertheless, priorities are beginning to rebuild themselves. There is need for a political agreement, some military agreement as well as some economic agreement that can be phased in over time. That will provide the framework of a wider Europe, which is the real challenge. It is the challenge to which Maastricht is almost wholly irrelevant.

Given that situation, we must think of what institutions we need to anticipate that wider Europe which not only challenges us, but is unavoidable. I have no doubt about the words of President de Gaulle at his press conference in September 1960--after all, he had talked of a Europe from the Atlantic to the Urals--when he said :

"What are the realities of Europe? What are the pillars on which it can be built? The truth is that those pillars are the States of Europe States each of which, indeed, has its own genius, history and language, its own sorrows, glories and ambitions, but States that are the only entities with the right to give orders and the power to be obeyed.

Those words are clear and relevant.

Then, in good faith and good nature, I consult the Order Paper, and read the Government motion, the Opposition amendment, the amendment of the Liberal Democrats--they are all about 20 lines long. I cannot think of another such extraordinary situation in which an issue of principle evokes such a response. That leads me to believe that there is an attempt to sidestep the profound central issue of principle. That issue is that Maastricht, by a fast route, a slow route or almost any other route, is not relevant to the real challenge before us. Reflecting thus, I feel that my course must be to vote against the Government motion.

10 pm

Mr. Jim Sillars (Glasgow, Govan) : It is always a pleasure to listen to the right hon. Member for Shropshire, North (Mr. Biffen), but because of lack of time hon. Members will understand if I do not follow up many of the controversial things that he said.

I look at Europe from a different perspective. I am a member of a party that urges Scottish independence and full member status for the Scottish nation within the European Community. We do so because we believe that the union of the United Kingdom is unequal, that the Scots are politically frustrated within its framework, and

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that we are more likely to find within the union of the European Community the equality necessary to alleviate our present frustration.

There will be seven small states in the Community which, while accounting for 16 per cent. of the population, will wield 37 per cent. of the votes in the Council of Ministers. On the "Analysis" programme on BBC radio 4 on 19 September, the Danish Prime Minister was asked about his country's position on loss of sovereignty. He replied :

"I feel today a lot more powerful than a Danish Prime Minister would have felt years ago. Why? We have influence, and we have a lot more influence than is fair, considering that we are such a small nation".

I have never understood the logic of people who argue against Scotland being a member state of the Community, as are Denmark and Ireland. We would have far greater power and influence over the European matters that affect us, and would have considerable sovereignty on domestic affairs--matters peculiar to Scotland. I do not approach the debate simply from the point of view of Scottish self-interest. We approach the European Community in the context of Europe as a whole, both west and east. To the Scottish National party, Europe after the cold war seems to be divided into three zones. There is a zone of turmoil--consisting of the Soviet Union, Yugoslavia, Romania and Albania--a zone of considerable economic difficulty--comprising Hungary, Poland and Czechoslovakia--and a zone of stability--that is the European Community and the EFTA countries surrounding it--of which the European Community is probably the most important part.

Whatever criticisms we may have, compared with the rest of Europe the European Community has been successful both politically and economically. The continuation of the Community's solidarity and integration is extremely important for dealing with the problems in the zones of difficulty and turmoil. That is why we welcome whatever impetus might come from Maastricht and elsewhere towards closer union between the member states of the Community. Therefore, any criticism that we make of the draft treaties is done in a constructive spirit in the hope that Europe, when it moves closer towards unity, will do so effectively and with the maximum sensitivity.

Earlier, an hon. Member said that Maastricht was the rubicon, but that is a matter of opinion. I do not believe that we crossed the rubicon in 1972 when we signed the treaty of accession, or in 1975. I believe that this state crossed the rubicon when we signed the single market agreement. There is a paradox associated with the liberalisation inherent in the single market, because one needs a great deal of regulation to ensure a level playing field for everyone. As the need for regulation develops within the Community, there will be more unity and joint action. That will lead to great pressure, principally from the business community, to produce for that single market a single monetary policy, a central European central bank and, ultimately, a single currency. There is logic in that theoretical argument.

I greatly doubt whether, at the end of 1996, the convergence of eight countries will be sufficient to allow them to move to a single currency. It is interesting that there are break points every two years after 1996 in the draft EMU treaty. Those breaks will enable member states to re-examine the situation to see whether they can move towards that single currency.

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I was fascinated by the speech of the right hon. Member for Finchley (Mrs. Thatcher). She discussed what would happen if eight former separate currencies, or perhaps 11, moved to a single currency. The right hon. Lady asked whether sterling, if disengaged from that single currency, would shadow it, or float free from it. She also asked why, if sterling shadowed the single currency, it should not be part of that single currency in the first place. The right hon. Lady then said, however, that she would vote for the Government motion. That is a triumph of loyalty over logic, because the whole tenor of her speech was that one cannot sign the draft treaty because if we do, ultimately, no matter what one says about an opt-out, we will be part of the single currency anyway. She believes that everyone will face catastrophe thereafter.

I was also rather disturbed by the speech from the right hon. and learned Member for Surrey, East (Sir G. Howe), who made a cogent argument for greater unity and commonality in decision making within the Community. However, on 13 November he wrote an article in the Financial Times in which he said that, if one extended the competence of the Community to social affairs, it would be "a bridge too far". Why? If we are to liberalise capital movements and the free flow of capital goods and services, surely working people should be entitled to defend themselves by taking central action throughout the Community under the social charter. The Conservative party cannot have it both ways. If it is all right to have the liberalisation of capital, it is okay to mobilise working people to defend their interests.

We are in favour of greater unity. How we forge that unity is an important principle that will no doubt be dodged at Maastricht. Some argue that it should be forged on a federal basis. That means a contract between states which join an organisation which, theoretically, divides the power between them. Let us consider what has happened in the 19 existing federations. There is a great tendency for the centre to take power unto itself, principally because it makes the great decisions about war, peace and security. It therefore becomes the most powerful part of the federation, no matter what the constitutional theory might be.

We are not in favour of federalism, because we do not believe that that is the right framework by which to try to govern about 350 million people. If the Community extends to between 24 and 30 states, we will be talking about 450 million people. The federal basis would not be sensitive enough to the needs of all those people. We prefer the confederal system, where ultimate political and legal supremacy rests with the constituent members--the sovereign states. The central institutions are subordinate to them and the legislative body consists of member state delegates who decide upon common policies. That is a reasonable description of a Community which would be sui juris but which would be based on a confederal model. We do not want any departure from the legal basis of the Community, which means that sovereign, independent states--as recognised in international law--agree through international treaties to pool a certain amount of their sovereignty, but only that amount which they are willing to give to central institutions. The Community will not depart from that.

I understand that, in December 1992, which is after the general election, the European Council will hold a summit in Edinburgh. As the Scottish National party expects to

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win the mandate for independence at the next general election-- [Laughter.] Hon. Members may laugh now, but they will laugh on the other side of their faces after the general election. We look forward to hosting that summit in Edinburgh.

10.10 pm

Mr. Christopher Gill (Ludlow) : Many eminent commentators have said that the political union treaty is more important than the economic treaty. I entirely reject that view, as any realist would. A realist would understand that ultimate power and authority rest with he who holds the purse strings. It is ridiculous to believe that we can have an independent defence or foreign policy if we do not control our own money.

For example, does anyone seriously believe that the Falklands campaign could have been fought if economic and monetary union had been in place in 1983, or that we could have gone to war in the Gulf in support of our United States allies if a single currency had been in force last year? Some would say that such freedom of action is impossible only if we do not control our own fiscal policy, but all the evidence points to the fact that the European Community wants ultimately to do just that--control our fiscal policy.

To paraphrase the words of my right hon. Friend the Member for Finchley (Mrs. Thatcher), if we give the European Community an inch it will take a mile. I must warn hon. Members that talking up the importance of political union and talking down the importance of economic and monetary union is simply a device to get hon. Members through the eye of the proverbial needle, whence there would be no return.

Other commentators point out that there is no danger in signing the treaty at Maastricht because of the opt-out clause, which would allow exemption from a single currency. However, that opt-out is sustainable only if it is continuously and vigorously defended. The sword of Damocles would hang over us for ever and a day until, perhaps by the process of attrition, the House accepted the principle of a single currency. If it did not happen in that way, the arithmetic shows that this or any successor Government could introduce a single currency on a whipped vote. Alternatively, on a free vote, all Liberal Members, the majority of Labour Members and a sufficient number of Conservative Members would ensure that a single currency reached the statute book.

I invite hon. Members to search their hearts and ask whether it will ever be any easier than in the vote tomorrow night to express their candid view on a single currency. They should have no doubt that the adoption of the draft treaty proposals means nothing less than the full acceptance of a commitment to a single currency. Tomorrow night's vote is not a vote of confidence ; subsequent votes may be.

The principle of a single currency is wrong and the Government should be prepared to walk away from the conference table. The British people will neither forgive nor forget the party that fudges this issue. To the electorate, one is either for or against the single currency ; there are no shades in between.

What effect will a single currency have on hon. Members? I represent an agricultural constituency, and

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farmers there say to me, "Your Government do not have a policy for British agriculture," to which I reply, "As long as we embrace the common agricultural policy, we cannot have a domestic or national policy. The common agricultural policy has to be my Government's policy." I hear what those farmers say, and my right hon. Friend the Minister of Agriculture, Fisheries and Food perhaps agrees with what they say, but without the support of the other countries in the Community, he is relatively powerless to satisfy those farmers. Let us consider the position of other Ministers, particularly the Chancellor of the Exchequer, were we to have a single currency. There would be but one effective Chancellor of the Exchequer, and he or she would not be at No. 11 Downing street. My right hon. Friend the Chancellor would find himself in the same hapless position as our current Agriculture Minister--he would have all the responsibility without the authority to discharge it. That is a classic formula for disaster, and disastrous it would be, not just for the House and the parties represented in it, but also for the members of those respective parties.

When the British people discover that one party is no different from any other in the sense that, if elected to government, each would bear the responsibility for our nation's affairs without the authority to deliver people's natural and legitimate aspirations, the electorate will reject the entire body politic as we know it. The events of eastern Europe should be a warning to us all. The people of eastern Europe and Russia have not rejected federalism because their central Governments satisfied their aspirations. On the contrary, they have decisively rejected federalism because it denied them their aspirations.

What is the man in the street entitled to conclude when he sees the break- up of federalism in eastern Europe and Russia, and tiny countries such as Latvia, with a population of only 2.5 million, rejecting the eastern-style single currency of the rouble area and coming to this country with a request to the royal mint to mint their own sovereign currency? The man in the street might conclude that his country's politicians were either myopic or out of touch with the people. He might ask whether anyone had given him a satisfactory answer to the question that he might reasonably ask about what benefits he would derive from a single currency. I am speaking of tangible benefits, not abstract ones, which satisfy nobody and pay no bills.

It is not enough to say that we might miss the train or be left behind. How much is that worth on a balance sheet, when the other side of the sheet shows ever-increasing movements of funds from the United Kingdom to southern Europe, which is what would happen? One has only to consider the United Kingdom experience. In the United Kingdom, which for a long time has enjoyed political and economic union complete with a single currency, there has been a substantial and continuing movement of funds from the one richer country to the three poorer countries.

I am tempted to say now, particularly to those Opposition Members representing the regions of our nation, that charity begins at home. I say that because the prospect for the regions of Scotland, Wales and Ireland is that they will no longer be competing with each other for the British taxpayer's money, but competing in the greater Community against the countries of southern Europe--Greece, southern Italy, southern Spain and Portugal. If they believe that in that arena they will do better than they are doing now, they will believe anything.

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