House of Commons Hansard Debates for 19 Dec 1991

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The Prime Minister should have gone to Maastricht arguing for a positive union policy. Unfortunately, he went to Maastricht arguing for nothing. He had a clear idea of what he was against, but no idea of what he was for. For reasons which combined a lack of faith in British industry with party political prejudice, he was against the social charter.

No honest person now pretends that the social chapter would supersede domestic industrial relations legislation. However, it would promote a wide range of social benefits, many of them vital to part-time workers and women workers. How does the Prime Minister defend himself against the charge that he has missed an opportunity? He says that the costs of the social chapter are too great for British companies to bear. We are entitled to ask, and the country is entitled to know, why, after 13 years of Tory Government, and constant claims of a recurring economic miracle, we cannot afford for our workers what Germany, France and Belgium can afford for theirs. The truth is that the Government regard the provisions in the social chapter-- improved maternity benefits, which have been referred to, and the extension of redundancy payments, which are equally important--as, in the words of the previous Prime Minister, "socialism by the back door". It happens to be the sort of socialism which appeals to Helmut Kohl and every European Conservative leader with the exception of the Prime Minister. That is why the Prime Minister was excluded from the meeting of European Conservatives which preceded Maastricht. He was allowed to tag along at the end. The tragedy is that tagging along at the end has become the Prime Minister's habit and his preferred position.

By opting out of the social chapter and offering as an excuse for this that it is too expensive, the Prime Minister has designated this country as a low-cost economy which tries to attract investment by promising minimum labour costs. Fortunately, Britain cannot succeed in that role. If we try to attract investment by talking about low labour costs, other countries will do it better than we will do, will undercut us and beat us at that game.

Mr. Michael Colvin (Romsey and Waterside) : Will the right hon. Gentleman give way?

Mr. Hattersley : No, I have only two minutes left and I must go on.

Our pitch should be not for low costs, but for high skills of labour. Fifteen years ago, when the Ford motor company established a new plant in south Wales, Henry Ford told Ministers in the Labour Government who had helped in those negotiations that what he was looking for was not low wages but high skills and highly skilled workers who expect, for instance, decent redundancy rates. They even expect decent maternity leave because, whether Conservative Members know it or not, some highly skilled workers happen to be women. The other thing about the social chapter that the Prime Minister does not understand, which means that he may never speak for Europe in the way that we need someone to speak for Europe, is that the social chapter has given the Community some meaning, some importance, some relevance for the typical family and the average citizen. It has meant that the Community is no longer simply the bankers' and brokers' Europe ; it is not simply a Community of unrestrained free enterprise which does not care for living standards and employment opportunities. It

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has given it a meaning and to sacrifice that importance is to do the Community untold damage in the eyes of the typical British family and worker.

We have heard a great deal, this evening and yesterday, about the importance of widening the Community rather than deepening it. Let me make my position clear. I want to see the EFTA countries as members. I want to see the new democracies, as they emerge in eastern Europe, pass through association status into full membership, but if that is going to happen, and if the Community of 12 is to become a community of 18, there has to be a deepening and strengthening of institutions or the Community will disappear under the weight of numbers. Some Conservative Members may want to recreate Europe in terms of a free trade area. I believe that Europe is something more creative, more positive and more dynamic than that. If it is to be more than a free trade area with Austria, Sweden, Switzerland and Hungary in it, the institutions have to be strengthened. That is why every European leader with the exception of the Prime Minister believes that strengthening the institutions and accepting new members are two related processes which must go on at the same time.

We have heard a great deal this evening about democracy. I dare say that the Chancellor of the Exchequer will tell us that he cannot commit himself now to even the principles of monetary union in the third stage because of the democratic necessity to obey and respect the House of Commons. Because of changes in the world and the way in which the world has evolved, Britain has, during the past 25 years, whether we like it or not, lost a great deal of its independent sovereignty. By joining a democratic Europe we can regain a great deal of our influence and that is what I want to see.

The idea that a man, an honourable Gentleman, who has been a Minister for the past 12 years should tell the House that the Government cannot tell it what they want to about Europe because of their respect for parliamentary institutions and the votes of the House of Commons is ludicrous. Britain has seen 12 years of what Lord Hailsham called an elective dictatorship before he joined one by becoming Lord Chancellor to the right hon. Member for Finchley (Mrs. Thatcher). The idea that the Government should hide behind that excuse shows their pathetic inability to mount a credible case for what happened last week. It may have impressed the Daily Express and the Daily Mail, but the more people think about it the more shoddy it seems, and the price will be paid in April, May or June. 9.31 pm

The Chancellor of the Exchequer (Mr. Norman Lamont) : I listened carefully and with interest to the first part of the speech of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). After having heard half of it, I was going to say that, although I disagreed with it, the right hon. Gentleman had at least set out a clear position ; a clear difference between the Labour party and the Conservative party.

The right hon. Gentleman said that he was prepared to commit the Labour party to move to a single currency provided that convergence was achieved, that he would

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give that commitment irrevocably now and that he did not understand why we would not. The difference was crystal clear--black and white. Then the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) intervened to ask whether there were any circumstances in which the Opposition would not move to a single currency. Those of my hon. Friends who were present will know that the right hon. Member for Sparkbrook was completely unable to give a straight answer. The right hon. Gentleman started off pretending that he was clear about the single currency, but then he could not answer his hon. Friend. He then went on to attach many more conditions which he thought should be included in the treaty amendments, making his attitude to a single currency even less clear.

Four weeks ago, the Government came to the House and set out their objectives in the negotiations. We were clear about what we would propose, what we would agree to and what we would reject. Now we are able to return to the House with an agreed set of treaty amendments that accords exactly with the objectives that we set out. The agreements reached by the 12 member states of the Community at Maastricht are widely recognised as an historic step forward. They point the way for the future of the Community. But, as the right hon. Gentleman acknowledged, the development of the Community must not stop at Maastricht. More and more over the past few months, people have come to realise that Europe is not just the Twelve. The challenge for the Community over the years to come is to extend prosperity and the benefits of Community membership across Europe. That is why we have strongly supported the creation of the European economic area, but we have made it clear that in years to come the Community must embrace not just the well-off countries which may be able to join and whose entry will pose few problems for the Community, but the countries of eastern Europe.

I am glad that the right hon. Member for Sparkbrook confirmed that he supports Community membership for eastern European countries, but he did not mention that my right hon. Friend the Prime Minister was the first leader of a Community country publicly to say that he wanted that to happen.

I agree with the right hon. Gentleman at least that the association agreements with Poland, Hungary, and Czechoslovakia are just the first step. The countries of eastern Europe made it clear that they see full Community membership as their ultimate objective, and we must all work for that.

In last month's debate, I pointed out that the individual countries of the Community and their foreign policies have different interests--and that, for that reason, we had to retain the freedom to act alone. The agreement that my right hon. Friends the Prime Minister and the Secretary of State for Foreign and Commonwealth Affairs reached on defence and foreign policy does just that. At the same time, it provides the right framework for European foreign and security policy in the 1990s.

I certainly want to respond to some of the points raised by the right hon. Member for Sparkbrook, and I will answer more frankly and directly than he did when responding to the question posed by the hon. Member for Crewe and Nantwich.

I will focus my remarks on economic and monetary union and on the agreement reached at Maastricht. In the last debate, I set out our four key objectives in the

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negotiations. First, Britain should not be committed to move to a single currency without a decision at the appropriate time by the United Kingdom Government and Parliament.

Secondly, in the next stage of monetary union, responsibility for monetary and fiscal policy in the second stage should remain firmly with member states--something that was pressed on me by right hon. and hon. Members on both sides of the House, but not of course by members of Labour's Front Bench.

Thirdly, any future monetary union should be soundly based and should rest firmly on durable economic convergence.

Fourthly, even within any monetary union--even when a single currency was established--member states should have the maximum possible freedom to make their own economic policies, including fiscal policy. That point is important to this side of the House and to some Opposition Back Benchers, but apparently it is not in any way important to members of Labour's Front Bench.

I am glad to tell the House that, after the negotiations at Maastricht-- difficult and intensive though they were--the agreement reached met all the objectives laid down in our last debate. First and foremost, Britain is not committed to move to a single monetary policy or to a single currency. That is clearly spelt out by the United Kingdom protocol, which is an integral part of the treaty. It was drafted by the United Kingdom to meet our specific concerns, and was agreed by the 11 other member states.

Not just the United Kingdom but all 12 member states clearly stated :

"the United Kingdom shall not be obliged or committed to move to the third stage of economic and monetary union without a separate decision to do so by its government and Parliament."

That was our objective, and we achieved it.

Mr. Paddy Ashdown (Yeovil) : Personally, I cannot envisage any circumstances in which, were a single currency to be formed, Britain would not want to be part of it. However, the Chancellor's case is that only the opt-out clause provides that option. Surely it is the case that nothing in the treaty compels Britain to join economic and monetary union. Assume the case in which it went ahead on one or other of the prescriptive dates, and in which Britain fulfilled the convergence conditions. Surely there is nothing in the treaty that compels us to join at that moment--is there?

Mr. Lamont : I am surprised that the right hon. Gentleman misses the point. As a result of the changes made between the last text presented to the House and the final text, it is now agreed that people are committed-- provided that they meet the convergence conditions--to move, irrevocably and without a separate choice, to a single currency. That is there. The right hon. Gentleman, who takes a close interest in those matters, ought to look more closely at what was agreed.

For us, the main point was that this country should be given a choice. The House will recall that, earlier in the negotiations, the Dutch presidency circulated a text that would have permitted every member state to enjoy the same right--a general exemption clause. The right hon. Member for Manchester, Gorton (Mr. Kaufman) attempted to make out that that represented some great

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reversal for the Government ; the important point, however, is having that choice, not the form in which the text exists. While the general exemption clause was acceptable to us, other member states made it clear that they had difficulties with it. I must say that I am sometimes puzzled by the fact that other countries do not want to consult their Parliaments. It is not for me to speculate about the reason-- it is a matter for them--but, in our opinion, that is not an acceptable route for the present Government to take, even if it is acceptable to the Opposition. We feel that this is a profound and important decision which should be made by the House of Commons.

Mr. Hattersley : I am distressed to find myself suspecting that the Chancellor imagines that he has answered the question that he was asked yesterday by my right hon. Friend the Leader of the Opposition. We all believe that this is a profound and important decision, and one that the House must make. The question is this : if convergence had been achieved by this country, and if the other countries had moved to stage 3 and the single currency, can the Chancellor imagine himself recommending that we stay out of it? I cannot imagine myself doing so.

Mr. Lamont : I believe that there are certain conditions-- [Interruption.] Let me make two points. First, I believe that we are discussing a matter of principle which ought to be decided by the House. Secondly, let us suppose that only three member states met the convergence conditions. In fact, only three Community countries meet them at present. Suppose that three small countries were irrevocably committed to a single currency, as they have to be under the treaty. Germany does not meet the convergence conditions at present. Suppose that we had a proposed monetary union of three small countries--or of three countries, excluding Germany. Does the right hon. Member for Sparkbrook think that we should have signed a treaty committing ourselves now, irrevocably, to becoming a party to monetary union? [ Hon. Members :--"Answer."] The right hon. Member for Sparkbrook asked me a direct question. I have given him an answer ; why does he not answer my question?

Mr. Hattersley : I am glad to see that the Chancellor has learnt at least one thing from my right hon. Friend the Leader of the Opposition. Imitation is the sincerest form of flattery.

The answer is that the right hon. Gentleman's question is too stupid to need an answer. He knows perfectly well that to hypothesise that monetary union could be built around Ireland, Belgium and Luxembourg is simply ridiculous. The fact that he used that example shows how defensive the right hon. Gentleman is about his failures yesterday.

Mr. Lamont : The right hon. Gentleman--[ Hon. Members-- : "Answer."] Of course I will answer : I am rather better at answering questions than the right hon. Gentleman seems to be.

The right hon. Gentleman invited me to hypothesise, and then refused to answer a question, saying that he would not hypothesise. What he apparently does not

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realise is that, as I have said to him, as of this moment only three countries qualify for the four convergence criteria that are laid down. They are Denmark--

Mr. Kaufman : Nineteen ninety-seven.

Mr. Lamont : The hon. Gentleman clearly does not understand the treaty. He says that a mass of seven countries is required. The whole point is-- [Interruption.] The right hon. Gentleman said that, and the whole House heard him say it. The point is that, under the amendments to the treaty, we do not need to have a minimum of seven countries.

Mr. Kaufman : Will the Chancellor give way?

Mr. Lamont : I will give way in a minute.

It is perfectly possible that the monetary union of only three countries could take place in 1999. Only three countries meet the conditions now. Is the right hon. Gentleman saying that we should irrevocably commit ourselves to joining a currency union, however many countries there are in it and regardless of the conditions? The right hon. Gentleman will not answer that question, but I shall answer it for him. He wants to say yes. That is his policy. He wants to commit this country irrevocably to joining monetary union. Our position is clear : that we wish this House of Commons, this Parliament, to have the say at that time. I believe that that is right.

Mr. Kaufman : No doubt because of the noise in the House, the right hon. Gentleman misheard what I said, so I shall now tell him what I said and ask him to answer my question. I said nothing about seven countries. What I spoke about was the year 1997. Has the Chancellor, together with the Prime Minister, signed up to transition to the third stage of economic and monetary union, which they accept is irreversible and irrevocable, by the end of 1997, the date of the beginning of the third stage? That is what we want to know. Of course convergence has not been reached in 1991, but what about 1997? What would his answer be then?

Mr. Lamont : The right hon. Gentleman has totally missed the point : that if the European Council cannot set the date for stage 3 in 1997, it happens automatically in 1999. As a result of the clause that we have negotiated, to which the Opposition are opposed, we have a choice. We and Denmark are the only two countries in Europe that will not move automatically to a single currency. I am afraid that the Opposition do not understand that.

Mr. Kaufman : It is the right hon. Gentleman and his right hon. Friend the Prime Minister who do not understand what it is that they have signed. The Prime Minister and the Chancellor have signed a protocol on the transition to the third stage of economic and monetary union in which they, not just the other 11, declare the irreversible character of the Community's movement to a single currency. They agreed that the Community shall enter the third stage irrevocably. That is what the British Government have signed up for.

Mr. Lamont : The right hon. Gentleman should know--[ Hon. Members :-- "Tebbit knows."] I know that the right hon. Gentleman does not want to hear the answer, because he has got it all wrong and his party is in an impossible

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position, but the answer is that our protocol takes precedence over the language in the main treaty amendment. [Interruption.] Of course that is absolutely right. That is why this country has the option to opt out. That is why, as a result of our negotiations, we have the choice--rightly, I believe--to decide whether to move to a single currency.

The Leader of the Opposition made a very forceful and good speech yesterday. [Interruption.] Yes, it was a very good speech indeed, but I think that he was a little bit inebriated with his own enthusiasm. In his brilliant speech yesterday, he seemed to forget what he had said four weeks ago. On 20 November, he said : "there is no possibility of any Government certainly no British Government and certainly no Labour Government, not referring to their Parliament for a mandate before taking a step into entering monetary union".--[ Official Report, 20 November 1991 ; Vol. 199, c. 284.] Yesterday, the right hon. Gentleman was so carried away that he reneged on that. He made it crystal clear--the right hon. Member for Sparkbrook has made it clear again today--that, if the United Kingdom met the four convergence conditions set out in the treaty, that would be the end of the matter.

The Leader of the Opposition should explain why, had he been Prime Minister, he would have given one undertaking on 20 November and gone back on it three weeks later. Will he explain why he is prepared to see a single currency automatically imposed on this country regardless of the wishes of the House? That is an abdication of responsibility that Conservative Members are not prepared to make. The Labour party wants to put the future of Britain's currency on auto-pilot. It wants to sacrifice for no gain Parliament's right to take the final decision about a single currency. That is also what the Labour party would like to do on the social chapter, as the debate has demonstrated all too well. Nothing separates our attitude to this treaty more clearly from that of the Labour party than its willingness to sacrifice the rights of the House.

As the right hon. Member for Chesterfield (Mr. Benn) so rightly said last month, that is the real issue. It is not whether their social policies or our social policies are right. It is more profound than that. The issue is whether the Community should have the right to impose social policy measures on this country or whether the way we work should remain primarily a matter for the House. It is whether measures opposed by the Government and the House can be imposed on this country by qualified majority voting.

The Labour party's attitude is an illustration of its lack of confidence in its ability to persuade the British people at the polls. Why does it have so little confidence in its ability to win the argument or to win an election that it wants to chuck the power away and give it to Brussels?

If the Community is to have a social dimension, the top priority must be job creation-- [Interruption.] Our policies in the 1980s gave us a job creation record as good as any in Europe. Between 1983 and 1989, the United Kingdom created more jobs than any other member state. The OECD has recently noted that, between 1984 and 1990, the United Kingdom-- [Interruption.] We all heard the Labour party's ritual demonstration about today's unemployment figures. It does not seem to know by how much unemployment is rising in France.

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The social chapter proposed at Maastricht had nothing to do with job creation. We know from experience that an inch of Community competence means a mile of red tape. We know that our attitude is supported by British business. We know that British business men know that what we are doing is right for Britain. Six leading business men said in a letter to The Times that Britain must

"strive to prevent the excesses of regulation"

in Europe.

The Association of British Chambers of Commerce said :

"The Government was quite right to stick out for an exclusion on the Social Chapter. All 800 Chambers of Commerce in Europe have rejected the Commission's plans to legislate in areas such as hours of work. There will be many continental businesses today envying their UK competitors for the comparative flexibility in labour costs".

Because we have a more flexible labour market and because of the reforms of the 1980s, this country has attracted inward investment in Europe far more than France and Germany.

What was depressing about the debate was the emptiness of the speech of the right hon. Member for Manchester, Gorton (Mr. Kaufman). He did not make a single constructive suggestion. He did not give the faintest outline of the Labour party's policy--30 minutes and no suggestion whatsoever of the way in which the Labour party believed that it would have handled the negotiations.

The revealing feature of today's debate is the Order Paper, as my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth) said. Where is the Labour party's amendment spelling out its attitude to the negotiations? We have a Liberal Democrat amendment, a Welsh nationalist amendment, a Scottish nationalist amendment and even an amendment from my hon. Friend the Member for Winchester (Mr. Browne), the longest amendment of them all. But we do not have an amendment from the Labour party.

Labour's policy is a blank sheet of paper. Labour Members are not usually at a loss for words. Perhaps they lost their amendment ; perhaps they were at a Christmas party ; perhaps even at this late stage they will table a manuscript amendment ; or did the Labour party just calculate that, after its failure in the last debate to get its members in the Lobby, it was best not to spell out any policy? A blank sheet of paper is the only way to unite the Labour party. There is no doubt that the federalist views of the right hon. Member for Sparkbrook are not shared by Labour Back Benchers. He felt that the only way that he could unite his party was by not tabling an amendment.

We returned from Maastricht having met all the objectives which we set ourselves. We said that we would secure defence arrangements compatible with NATO, and we did. We said that we would preserve the freedom to act alone in foreign policy, and we did. We said that we would retain the right to decide whether, as well as when, to move to a single currency. We did, and we believe that we were right to maintain that condition.

We said that we would persuade our partners that monetary and fiscal policy in stage 2 should remain with member states, and we did. We said that we would create a treaty which, even in the event of monetary union, left each country with the maximum freedom to conduct its own economic policy, and we did just that. We said that we would require improved enforcement of the implementation of Community agreements, and we obtained it. We

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made it clear that this country could not accept the so-called "social chapter" in the treaty, and we secured its removal. The Government have done exactly what they said they would do. The result is a treaty that strikes the right balance between European co- operation and national independence. It is a treaty that allows the Community to progress while opening the door to the expansion of its membership. It is a treaty that this country has played the fullest role in shaping.

The key difference between the two sides of the House in this debate is that we are absolutely determined to retain for the House the right to decide whether to move to a currency union. The right hon. Member for Sparkbrook, speaking for the Labour Front Bench but not supported by his Back Benchers, seems prepared to commit his party irrevocably to moving to a single currency regardless of the circumstances. We reject that approach.

Our success has been the reward for pursuing practical proposals and consistent objectives. That approach is in the sharpest possible contrast to an Opposition--and especially the right hon. Member for Gorton--whose attitude to Europe has been inconsistent, impractical and dictated first by blanket hostility to the Community and then by fanatical adherence to every proposal which comes from it. We have protected the rights of this Parliament, which the Opposition would have signed away. We have secured the best possible agreement for Britain, whereas they would not have bothered to try. That is why it is this Prime Minister and this Government who enjoy the confidence of the country and who should have the confidence and support of the House in the Lobbies.

9.59 pm

Mr. Rhodri Morgan (Cardiff, West) : When the Prime Minister and the Foreign Secretary returned from Maastricht, they--

Mr. Tim Boswell (Daventry) rose in his place, and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to. Question put accordingly, That the amendment be made :-- The House divided : Ayes 18, Noes 364.

Division No. 32] [10 pm

AYES

Alton, David

Ashdown, Rt Hon Paddy

Beith, A. J.

Bellotti, David

Bruce, Malcolm (Gordon)

Campbell, Menzies (Fife NE)

Carr, Michael

Fearn, Ronald

Howells, Geraint

Hughes, Simon (Southwark)

Johnston, Sir Russell

Kennedy, Charles

Livsey, Richard

Maclennan, Robert

Michie, Mrs Ray (Arg'l & Bute)

Steel, Rt Hon Sir David

Stephen, Nicol

Taylor, Matthew (Truro)

Tellers for the Ayes :

Mr. James Wallace and

Mr. Archy Kirkwood.

NOES

Adley, Robert

Aitken, Jonathan

Alexander, Richard

Alison, Rt Hon Michael

Allason, Rupert

Amery, Rt Hon Julian

Amess, David

Amos, Alan

Arbuthnot, James

Arnold, Jacques (Gravesham)

Arnold, Sir Thomas

Ashby, David

Aspinwall, Jack

Atkins, Robert

Atkinson, David

Baker, Rt Hon K. (Mole Valley)

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