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That is what I believe lies at the heart of the debate and probably at the heart of all our discussions on the European Community.
Ms. Short : I agree with my right hon. and learned Friend. With the greatest respect, I think that my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) and my hon. Friend the Member for Newham, North-East (Mr. Leighton)--my honourable comrades if I may call them that-- are stuck in the past. We now need Europe to regulate capitalism in the way that we used to seek to use the nation state to regulate it, but I must say to my right hon. and learned Friend that the terms of Maastricht are so deflationary and so monetarist that I am deeply worried that they will cause a blight across Europe with regard to levels of unemployment. Does my right hon. and learned Friend accept uncritically the terms on which we are supposed to enter the Maastricht agreement in respect of economic and monetary union?
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Mr. Smith : I do not accept them uncritically, and nor does the reasoned amendment tabled by the Labour party. If my hon. Friend will allow me, I shall develop precisely that point by making criticisms of the arrangements which emerged from Maastricht.
The shared sovereignty of which I speak is reflected in commonly agreed policies and in common institutions. One of the issues which rightly concern us is the question of democratic accountability in the decision- making processes of the Community, especially as it enters new spheres of economic and monetary competence.
In previous debates, we urged the Government to place special importance on that issue, especially in relation to the European central bank and the general policy-making framework for economic and monetary policies. There is, I regret to say, no evidence whatsoever that the Government have shown the slightest interest in that fundamental question from the beginning of the debate on the Delors report right up until today. They have not produced concrete proposals to achieve and maintain a proper system of accountability for the new institutions proposed in the Maastricht treaty. From the competing currencies plan of 1989, through the hard ecu of 1990 and the opt-out of 1991, the Government have sought ways of avoiding the issue, rather than tackling it. It has been left to others--for example, the French socialist Government--to fight that corner with no help from British Conservatives. It was, for example, Mr. Beregovoy, the former Finance Minister and now Prime Minister of France, who tabled proposal, for greater accountability of the European central bank to Finance Ministers and who also insisted on the Economic and Finance Council being given the responsibility to develop Community economic policy. In the negotiations, the French were forced to compromise and the model for the bank is not what they or, indeed, we find ideal.
Direct accountability to the elected Finance Ministers would have been preferable. However, the French secured a significant limitation to the bank's autonomy by ensuring that decisions about the level of the exchange rate of the proposed single currency are to be made by the Council of Economic and Finance Ministers.
We should like to know--no doubt the Chancellor will tell us--what the British Government were doing during the international economic conference on that matter. No report has been made to the House nor, so far as I know, has there been an attempt by Ministers to deal with it in their speeches. Instead, their approach has been to try to avoid the issues entirely by the opt-out device. We are asked not to bother about the issues because they say that, at the end of the day, Britain is not committed to sign up for the single currency. The Government used to talk about being opposed to an imposed single currency, but there was never any question of a single currency being imposed on us or of the final decision on whether to join a single currency being made other than in the House. The Government expended their political capital at Maastricht on negotiating the opt-out on EMU and on the social chapter instead of exerting themselves with others to improve the decision-making framework for economic and monetary policy. At present, that framework has been decided without any substantial input--or perhaps any input at all--from the British Government.
Nor did the Government appear to make a great deal of progress on how excessive budget deficits by member
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states were to be handled. In the pre- Maastricht debate on 21 November, I raised that point directly with the Chancellor of the Exchequer and asked him what the Government's position was on the rules proposed in the draft treaty, which was then before us. The Chancellor replied :"the proposals in the treaty are too onerous. We shall be working to ensure that the procedure catches only deficits that are clearly excessive and unsustainable. We shall try to secure in the negotiations rules that ensure that limitations on deficits operate with the lightest possible touch."-- [ Official Report, 21 November 1991 ; Vol. 199, c. 517.]
As far as I can see, no substantial change was made to the treaty in that respect, although the Chancellor claimed in the post-Maastricht debate that he had achieved the objectives laid down in the previous debate. No doubt he will seek to explain how he claims to have secured a modification of the rules.
Mr. Terence L. Higgins (Worthing) rose--
Mr. Smith : I am terribly pushed for time, but I shall give way to the right hon. Gentleman.
Mr. Higgins : Is not the issue modified considerably by the provisions of the opt-out clause?
Mr. Smith : I was talking about how the system will work, if and when Britain enters into the single currency. I do not believe that the provisions of the opt-out clause are relevant to that. We do not believe that the policy of the Community on that issue should rest only on the provisions of the protocol on excessive deficits procedure annexed to the treaty--a reference value of 3 per cent. for the public sector borrowing requirement and 60 per cent. for the national debt. More emphasis should be placed on paragraph 3 of article 104 of the treaty, which obliges the Commission to take account of levels of Government investment expenditure and "all other relevant factors, including the medium term economic and budgetary position of the Member State."
There must be a flexible rather than rigid approach to this matter if it is to work effectively. If not, it will become an artificial impediment to the progress of the whole venture.
We regret, as we made clear in our reasoned amendment, that the convergence criteria set out in the treaty are too narrowly formulated on financial and monetary issues. It would be preferable for the criteria to be expanded to take account of the real economy, including progress on sustainable economic growth and the attainment of high levels of employment--which, after all, are set out as objectives of the Community in article 2 of the treaty. I remind the House that article 2 sets out the tasks of the Community as to promote
"balanced development sustainable and non-inflationary growth, respecting the environment, a high degree of convergence of economic performance, a high level of employment and of social protection, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States."
The fundamental flaw in the opt-out strategy has been pointed out in previous debates, but I do not believe that it has yet been answered by the Government. The opt-out is relevant only in circumstances in which the British economy has achieved convergence, because any country that fails to achieve convergence would have been given a derogation from the treaty at the point at which the single currency was formed.
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Mr. Budgen rose --It is hard to envisage circumstances in which the United Kingdom could afford to opt out when convergence has occurred and a sufficient number of countries are ready to establish a single currency.
The other important omission from the Maastricht treaty is the Government's decision to opt out of the social chapter. We have consistently supported the concept of a strong social dimension in the European Community. The improvement of the standard of living and the enhancement of personal opportunity for ordinary people who live in the partner countries seems to us to be a basic and highly desirable objective.
In other countries, the interlocking of economic progress and social justice is better understood than it is in this country. It is a sign of the ideological isolation of British Conservatives that they are alone in their dogmatic approach to the social chapter of the treaty. It is worth reminding ourselves that it involves improvement of the working environment to protect health and safety conditions of work, information and consultation of workers, equality between men and women in the workplace and help for the long-term unemployed and disabled. In all those important areas, the result of Britain opting out will be that our people will be disadvantaged in relation to the common progress that will be established in the other 11 member states.
The justification offered by the Government appears to be that there will be economic advantage for Britain if our people are entitled to fewer rights than the citizens of other Community countries. That seems to flow from the British Conservative delusion that we cannot so much compete as undercut, that jobs can be secured and maintained only if wages and conditions are worse and that investment will somehow be attracted if we have a low-tech, low-skill and low-wage economy. The Government are choosing to be a bargain-basement economy on the edge of Europe.
The Labour party believes that analysis to be fundamentally flawed. It is deeply unfair for those of our citizens who are trapped in low wages and poor conditions, and it shows a fatal misunderstanding of what is necessary to create a modern dynamic economy. The Government do not understand that the way forward for Britain is to create a high-tech, high-skill economy that will produce high rewards for our people. Instead of joining the rest of the European Community to achieve that, we ostentatiously turn our face against their joint conclusion--all 11 of them--and choose the cul de sac of opt-out. My right hon. Friend the Leader of the Opposition pointed out at the beginning of the debate yesterday that Britain's poor record on social progress has not brought us economic success. It has not done so in the past and it is unlikely to do so in the future. We cannot see why decent levels of maternity leave and maternity pay, which could bring such benefit and security to ordinary families, should be regarded as either undesirable or threatening to the basis of our economy. Surely this is a matter upon which we should seek to make common cause with other countries by creating a floor of minimum provisions that would prevent bad employers from obtaining an advantage over the good, with families in every country gaining the benefit of the provisions.
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I stress the point about employers, because it is important that the employer who wishes to achieve civilised conditions and good levels of pay for his work force should be protected against the activities of others in this country or elsewhere in the Community who seek to undermine the progress that he is seeking to make. So, while it is a great advantage for people who work for their living, as the majority of people in Community countries do, it is also a significant advantage for those who employ them. I am glad to say that that is understood clearly, particularly by the employers' organisations in the Community. Unfortunately, it is not understood by the British Conservatives.The Prime Minister said at the beginning of the debate that he thought that the social chapter was about ideology against common sense. And so it is-- it is the dogmatic and blinkered ideology of the Conservatives against the common sense of all the other countries of the European Community. It is a triumph of ideology, but the Prime Minister has got it the wrong way round, and not for the first time. Regrettably, the Government have no ambition for the social progress that the rest of the Community seeks and which is embodied in the protocol attached to the Maastricht treaty. We regret very much that Britain is excluded from that and from the decision taking process in the years ahead. The Government have shown no real understanding of the economic challenges of the decade ahead. Both those tendencies are present in their opposition to the social chapter and in their opt-out mentality.
There is no future in Britain being relegated to the sidelines as the rest of the Community advances in terms of social progress and economic success. That lack of balance--the lack of understanding of the interconnection between social progress and economic advance--flaws the domestic policies pursued by the Government, which are revealed in their stark simplicity compared with the activities and views of other member states, and it is deeply to be regretted that in the Maastricht process, once again, British Conservatives preferred their ideology to the needs of our people and of the wider European Community. For that reason, but also for other reasons, we shall vote for our reasoned amendment.
9.30 pm
The Chancellor of the Exchequer (Mr. Norman Lamont) : As the right hon. and learned Member for Monklands, East (Mr. Smith) observed, this is our third debate on the negotiations at Maastricht. In November, the Government sought in advance the House's endorsement of the key objectives of the negotiations, and after Maastricht we returned and explained fully to the House the results and how we had satisfied the objectives that we had set ourselves. Today, we are debating the Second Reading of the Bill that will enable us to implement the objectives that we set ourselves.
Each of those debates has been significant, and each one more so than the last. This two-day debate has been even more important, but it goes without saying that the most important debate is the one that will eventually decide whether we move to a single European currency.
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The result of this process has been that the issues involved have been more widely understood throughout the country before, during and immediately after the Maastricht summit. No other country in Europe has been through the same process as us or had such an open and public debate. It is quite obvious that a number of countries in Europe are beginning to regret that. In Germany, attachment to the deutschmark as a symbol of German economic success is strong, and there are those who question the wisdom of a firm commitment now to move to monetary union in 1997 or 1999 without some form of parliamentary review, as we have negotiated for this country. That is true of France, too, where doubts have been expressed about the political implications of a move to European union. In Denmark, the referendum necessary to accept the treaty may be closer than originally expected.My expectation is that in all 11 other member states, as here, the Maastricht treaty will eventually be ratified. As President Delors commented, the other member states might well have been better advised to stimulate public discussion before, rather than after, the treaty was agreed.
In the past two days, we have had a remarkable debate. As the right hon. and learned Member for Monklands, East said, some considerable and notable maiden speeches have been made, particularly by my hon. Friend the Member for Blackpool, South (Mr. Hawkins), who expressed scepticism about what he saw as the centralising tendency of the Community and outlined his reasons for so believing.
We heard some remarkable speeches from different viewpoints--the speech of my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) and, from a different viewpoint, the powerful speech by my right hon. Friend the Member for Shropshire, North (Mr. Biffen). I would not be half as hard as the right hon. and learned Member for Monklands, East was on his poor old friend, the right hon. Member for Bethnal Green and Stepney (Mr. Shore), who made some telling points on which the House would be wise to reflect. The negotiations leading up to Maastricht were arduous and complex and there were certain key objectives that we had to secure. Above all, we sought a treaty which struck the right balance between co-operation in Europe and national sovereignty and which laid out the road to economic and monetary union without committing Britain to move to a single currency--a treaty that enshrined the principle of subsidiarity, and did not allow economically damaging legislation to be imposed on this country. The treaty to which we agreed at Maastricht satisfies all those objectives.
As my right hon. Friend the Prime Minister said yesterday, the provisions dealing with subsidiarity are, for us, an important part of the treaty--not just for what they say, but because they represent the beginning of a debate about what it is appropriate for the Community to do at its level, and what it is appropriate for nation states to do at their level.
The absence of guidance on that point in the past has led to some damaging measures emanating from Brussels in the name of Europe--centralising, standardising, inefficient and highly bureaucratic measures. With the subsidiarity provisions included in the treaty, of course we have not yet won the argument, but the subject is now firmly on the agenda--and so it should be.
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My right hon. Friend the Foreign Secretary set out earlier today the treaty provisions covering co-operation in foreign and security policy, and in justice and home affairs. In response to the right hon. and learned Member for Monklands, East, I shall deal with the subject of monetary union and a European currency. There could not be a more important issue for the House, but, in our view, that issue should not be decided finally and irrevocably today.We have debated before the potential advantages seen in the idea of a single European currency. First, as my hon. Friend the Member for Leominster (Mr. Temple-Morris) emphasised, there are commercial advantages. There would be reductions in transaction costs both for businesses and for tourists. It would no longer be necessary to change money from one Community currency into another to buy goods or services. Secondly, the elimination of exchange rate risks could provide a significant boost to European trade and investment. Thirdly, substantial potential advantages for Britain's important financial services industry could flow from our participation in a single currency, given the important position of the City of London as an international financial centre.
Perhaps the most important potential advantage that could be held out for a European currency is low inflation. An independent European central bank could be a powerful anti-inflationary force across the whole of Europe.
Mr. Salmond : When the Chancellor of the Exchequer and the Prime Minister go to Edinburgh at the end of this year, they will be welcomed by the new Scottish National party lord provost of that city. Will the Chancellor then be able to say that he has been backing the "Eurofed for Edinburgh" campaign, or will his party back London, as usual?
Mr. Lamont : I shall deal with that point in a minute, if the hon. Gentleman will contain himself for a moment.
Mr. Stuart Bell (Middlesbrough) rose --
Mr. Lamont : I shall continue, if the hon. Gentleman will allow me.
I have described the advantages put forward in favour of a single European currency. On the other hand, as the hon. Member for Motherwell, South (Dr. Bray) said, we cannot ignore the uncertainties that surround a single currency. Unless the economies of Europe are genuinely prepared for it, a single currency could exacerbate regional imbalances and unemployment, necessitating huge transfers of resources between countries. Both those things would be undesirable. The political implications are even more important. The treaty provides for the irrevocable locking of exchange rates--an irreversible commitment. Such a step involves transferring important powers over economic policy from national Governments to an independent monetary authority.
Yesterday I listened carefully to the speech of the Leader of the Opposition, and greatly admired the clarity and certainty of his conviction, just as I admired the clarity and certainty of his conviction when he used to argue that we should get out of the Community. He asked why we could not decide today on such an important issue. He
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believes--the right hon. and learned Member for Monklands, East persisted with the point--that we should make that choice today. We take a different view. A move to a single currency may well not occur until the end of the decade. We cannot precisely predict the future shape of Europe at that time. I entirely accept what my right hon. Friend the Member for Old Bexley and Sidcup said about the countries of eastern Europe and about it taking a long time before their living standards are up to the level at which they can be full members of the Community. That is a powerful point and I entirely agree with it. In the interim, it is in the interests of eastern Europe and of the Community that we should open up our markets to give those countries all the help and encouragement we can. That process should begin now, and some countries in the Community have been far too reticent about doing that.Whatever the claims, it is impossible for us to say now that a single currency will definitely help to deliver price stability. We do not know what economic conditions will prevail when the time to make a decision comes. We do not even know how many members the Community will then have. I very much hope, and subject to what my right hon. Friend the Member for Old Bexley and Sidcup has said, that in the years to come it will be possible to expand Community membership first to the European Free Trade Association countries and then, when they are ready, to the emerging democracies and emerging market economies of eastern Europe.
Nor do we know how many other Community countries will be moving to a single currency at the time when a decision has to be made. If the move were to take place in 1997, a majority of member states would have to move. If it were to take place in 1999, there would be no minimum--in theory, any number of states between two and 12 would be significant.
The other factor is that there is to be another intergovernmental conference in 1996 which may have some implications for the institutional balance and the development of the Community. Is that not also something that should be taken into account before we make a final decision on the matter?
Mr. Cash : Does my right hon. Friend agree, in the light of what he said in December in the Maastricht debate about there being a price to be paid for a single currency and a central bank, that the price, if we were to accept it, would include the derogation of our democratic principles in the House? Does my right hon. Friend have a comment to make on that? Will he kindly explain that, if we were to hand over those powers to unelected and unaccountable bankers, it would effectively mean the end of the monetary and economic policy that he follows in his high office now?
Mr. Lamont : If my hon. Friend will bear with me, I will come on to precisely that point.
Mr. Bell : Will the right hon. Gentleman give way?
Mr. Lamont : For the reasons I have given, it is the Government's view that a decision of such crucial political importance cannot be prejudged now, rubber-stamped and simply left to some automatic judgment and something called "convergence criteria". It is a bigger decision than that.
I was astonished by the right hon. and learned Member for Monklands, East. His speech was at least memorable
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when he talked about the "cul de sac" in an opt-out clause, which was a fairly remarkable phrase. The protocol gives us an absolute assurance that the decision will be taken at the right time by the elected Parliament of the day in the full possession of the relevant facts. In our view, that is precisely how it should be. The protocol does not in any way diminish our right to participate in stage 3 on exactly the same terms as other member states. If we meet the convergence conditions, we have an absolute right to join the single currency if Parliament so decides.One common issue has run through all the debates. It was expressed by my hon. Friend the Member for Stafford (Mr. Cash) in his speech. It was expressed very forcefully by my right hon. Friend the Member for Shropshire, North and it has been expressed by the former right hon. Member for Finchley. The question is : is it possible to have European economic and monetary union without also being obliged to move towards political union--towards the creation of a European state? That is the question that has bothered some of my hon. Friends--how far are monetary union and the single currency compatible with the vision of Europe that the Prime Minister spelled out yesterday--a vision of a more liberal, more open and wider Europe? The answer to this crucial question depends on the precise terms of the framework of the single currency and how it develops. Clearly, a currency union cannot function without some overall discipline on national budget deficits. A single currency could not work if Governments pursued irresponsible, lax fiscal policies. But having a general fiscal rule is not the same as surrendering control over the levels of taxation and expenditure.
It is, however, clear that a single currency--here I approach the point made by my hon. Friend the Member for Stafford--involves removing control of monetary policy from national Governments. The treaty proposes that it should be handed, not to a European executive, Government or state, but to a monetary authority independent of all national Governments--[ Hon. Members :-- "Unelected."] Indeed, but many countries in Europe and throughout the world have already made such arrangements with their national central banks, and I have often heard hon. Members on both sides of the House argue for an independent central bank even without a commitment to a European currency. These are profound issues, and it was awareness of them that dictated our objectives at Maastricht.
Mr. Bell : The European central bank seems to be dominating the debate. Would it not be more desirable for this country to participate in a European central bank on whose board the Governor of the Bank of England would serve and involving accountability through ECOFIN than to attend on the decisions of the Bundesbank, which affect the whole of Europe? Are we not better off controlling our own destiny through such a bank than allowing the Bundesbank to control it for us?
Mr. Lamont : That is precisely the issue that I am trying--no doubt somewhat laboriously--to deal with. I am trying, to the best of my ability, to sum up the pros and cons.
Although some member states would have preferred a more substantial stage 2, we argued that, unless and until
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a decision on a single currency had been made, responsibility for economic policy--this is the result of the treaty- -should remain unambiguously in national hands. The treaty makes it clear that in stage 2 member states will have the freedom to pursue their own economic policies as they judge right in their own circumstances. That applies not just to Britain by virtue of its protocol but to every other country in Europe--but only because we negotiated and pressed for it.Mr. Benn : Let us suppose that an independent bank imposes, through its power, deflationary policies that cause mass unemployment in the name of price stability. What remedy will be available to the electorate or the Government to prevent a repetition of the tragedy of the 1930s, when we had mass unemployment, with political consequences that everyone in this country and Europe still remembers?
Mr. Lamont : Unlike the right hon. Gentleman, I believe that tough anti-inflationary policies are more likely to generate jobs than their alternative. I know that he does not agree, but if I had to choose between submitting to the discipline of an independent bank or submitting, after mistakes has been made, to the disciplines and letters of Mr. Witteveen of the IMF, I know what I would choose. What I said of stage 2 is true of both monetary and fiscal policy. In stage 2 of economic and monetary union, the Community will be able to offer economic advice to member states over budget deficits, but it cannot interfere with their right to tax, spend and borrow as they see fit.
Our third objective was to ensure that, whatever our reservations about a single currency, if a monetary union were to come into being, it should be practical and it should work. Therefore, it was important that it be founded on lasting economic convergence. A monetary union or a single currency based only on mounting fiscal transfers between countries or on sharply rising unemployment would be unsustainable and undesirable. The convergence conditions set out in the treaty are intended to be demanding and to make that less likely.
To be eligible to move to the third stage of EMU, a member state will need to bring its interest rates and inflation rates closely into line with the best performing states in the Commumnity. That is essential if a monetary union is to be workable.
Yesterday, the right hon. Member for Bethnal Green and Stepney referred to what I said to the CBI. The point that I was making there was that, whether or not we eventually move to a single currency, the convergence criteria, for us at least, are a useful goal for macro-economic policy. A firm exchange rate, firm budget disciplines and low inflation are valuable in themselves, regardless of whether or not we are a member of a future single currency zone.
The right hon. Gentleman made an elegant and powerful speech and gave the House much on which it will wish to reflect. However, to be frank, he was less persuasive when he simply objected to these policies because he disagreed with the objectives. We pursue the aims of low inflation and sound finance not because of the treaty or any obligations but because we have chosen to do so and because they are the right objectives.
Our fourth objective was to establish the principle that, even within an eventual currency union, member states--here I come to another point raised by the right hon.
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Gentleman--should have the maximum possible freedom to pursue their own economic policies, particularly fiscal policy.Mr. Rhodri Morgan (Cardiff, West) : Will the right hon. Gentleman give way?
Mr. Lamont : I am addressing a point made by the right hon. Member for Bethnal Green and Stepney.
As I have already conceded, in a currency union some general overall discipline on budget deficits nationally is clearly required. Our objective was to see that, even in stage 3, any Community-level discipline operated with the lightest possible touch. As the right hon. Gentleman recognised, we got the provisions altered, contrary to what the right hon. Member for Chesterfield (Mr. Benn) said. My right hon. Friend the Member for Worthing (Mr. Higgins) knows that. We got them altered, so they are less onerous. If some member states choose to run lax fiscal policies and have large budget deficits, that can affect countries throughout Europe and push up interest rates and undermine the success of a single currency.
We do not believe that a single monetary policy requires the central determination of individual countries' levels of taxes and spending. We were seeking a balance between what was responsible and necessary, and the freedom of countries to determine their own levels of taxes and spending. I believe that the treaty achieves that. The right hon. Member for Bethnal Green and Stepney referred to the so-called 3 per cent. deficit ceiling written into the treaty. Let me emphasise that it is intended merely as a trigger for investigation and analysis by the Commission and the Council of Ministers. It is not 3 per cent. by itself ; it is 3 per cent. that has to be considered judgmentally against the background and history of the individual country's fiscal policy.
It is for the Council to determine whether a deficit is excessive, taking into account all the relevant factors, including the past and the cyclical positions. Only then could the Council apply sanctions to a member state. That process would inevitably involve an element of judgment, with the budget being looked at over a number of years. Therefore, the 3 per cent. ratio would be neither a ceiling nor a limit, and it is not right to argue that the treaty prohibits deficits of a certain figure.
Certain points were raised--
Mr. Morgan : Will the right hon. Gentleman give way?
Mr. Lamont : No. I wish to answer a point raised by my hon. Friends the Members for Worcestershire, South (Mr. Spicer) and for Ludlow (Mr. Gill) and by my right hon. Friend the Member for Shropshire, North, on which I think there has been genuine misunderstanding. I assure my right hon. and hon. Friends that article 99, which deals with the harmonisation of indirect taxes, is merely repeating the words contained--they may object to them anyway--in the Single European Act about the harmonisation of indirect taxes insofar as that is necessary for the internal market. The article has merely added a provision about consulting the Economic and Social Committee. I assure my right hon. and hon. Friends that we shall adhere to our policy of agreeing only tax harmonisation that we believe is necessary for the proper functioning of the single market. We entirely reject the harmonisation of direct taxes.
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Mr. Morgan : Will the Chancellor of the Exchequer give way?
Mr. Lamont : I am sorry, but I must reply to points that were made in the debate.
The right hon. and learned Member for Monklands, East and others raised the question of the location of the European monetary institute and the central bank. The priority must be to decide on the location first of the EMI. The United Kingdom was the first to argue for the establishment in stage 2 of an institution like the EMI instead of having a central bank in stage 2. In our view, Britain therefore has undoubtedly a strong claim to be the seat of the EMI. It would be very much in the interests of the Community and the new institutions if they were based in the Community country with the leading financial centre in Europe. London is the leading player in the rapidly growing private ecu market. When the decision is taken to set up the central bank, we believe that Britain--not London alone but other centres--will be the strongest candidate.
We continue to reject unnecessary harmonisation of social policy. It is no surprise that the Labour party should seek to surrender the right of the House to make decisions that govern how the people of this country should live and work. The Opposition have clearly lost any confidence that they used to have in their own ability to persuade the British electorate, so they seek instead to bring back trade union power through the back door from Brussels. Our decision not to sign the social chapter means that they cannot get via the back door what last month's general election demonstrated they could not get openly from the British people.
The social chapter would have allowed agreements by employers and trade unions at Community level to become binding on all employers and employees across the Community. It would have given trade unions powers that they did not even have in the 1970s. That in itself would have been enough to make it unacceptable. We were not prepared to have the effect of the trade union reforms that we worked so hard to introduce in the 1980s undone by the provisions in the social chapter. That is why the Government were not prepared to sign it. The other 11 member states may, if they so wish, use their separate Maastricht agreement to adopt new and far-reaching measures on social policy, but those measures will not apply to us and we will not be obliged to implement them.
The draft working time directive, although it has been brought forward under existing treaty provisions, is a good example of the sort of job- destroying legislation that we feared might be proposed under the social chapter. We will continue to resist similar damaging and misguided proposals in future, too. But our task would have been infinitely more difficult had we done as the Opposition suggest and signed away our right of veto over the entire range of social policy issues.
There is no denying that the Maastricht treaty has major implications, but I shall make clear what it does not mean. It does not imply that this country will be obliged to increase its contribution to European Community expenditure. Several of my hon. Friends have raised questions about the expenditure implications of the treaty. Let me make it clear that the treaty does not involve any commitment to increase expenditure. When it comes to funds for cohesion, we insist that that is something that is to be examined in the context of other existing structural
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funds. There is no commitment to increased expenditure. When it comes to increasing the own resources ceiling, we are far from convinced. We see no need for that ceiling to be increased. It goes without saying that we are determined to preserve our own abatement. The Bill puts forward the vision of Europe of my right hon. Friend the Prime Minister--an open Europe, a Europe that will grow wider, a Europe that is open to market forces and a Europe that will increasingly be seen to be in concert with the wishes of the people of this country and Members of this place. I commend the Bill to the House.Question put, That the amendment be made :--
The House divided : Ayes 261, Noes 360.
Division No. 18] [10.00
AYES
Abbott, Ms Diane
Ainger, Nicholas
Ainsworth, Robert (Cov'try NE)
Allen, Graham
Anderson, Donald (Swansea E)
Anderson, Ms Janet (Ros'dale)
Armstrong, Hilary
Ashton, Joe
Austin-Walker, John
Banks, Tony (Newham NW)
Barnes, Harry
Battle, John
Bayley, Hugh
Beckett, Margaret
Bell, Stuart
Bennett, Andrew F.
Benton, Joe
Bermingham, Gerald
Berry, Roger
Betts, Clive
Blair, Tony
Blunkett, David
Boateng, Paul
Boyce, Jimmy
Boyes, Roland
Bradley, Keith
Bray, Dr Jeremy
Brown, Gordon (Dunfermline E)
Brown, N. (N'c'tle upon Tyne E)
Burden, Richard
Byers, Stephen
Caborn, Richard
Callaghan, Jim
Campbell, Ms Anne (C'bridge)
Campbell-Savours, D. N.
Chisholm, Malcolm
Clapham, Michael
Clark, Dr David (South Shields)
Clarke, Eric (Midlothian)
Clarke, Tom (Monklands W)
Clelland, David
Clwyd, Mrs Ann
Coffey, Ms Ann
Cohen, Harry
Connarty, Michael
Cook, Frank (Stockton N)
Cook, Robin (Livingston)
Corbett, Robin
Corston, Ms Jean
Cousins, Jim
Cox, Tom
Cryer, Bob
Cummings, John
Cunliffe, Lawrence
Cunningham, Jim (Covy SE)
Cunningham, Dr John (C'p'l'nd)
Dafis, Cynog
Dalyell, Tam
Darling, Alistair
Davidson, Ian
Davies, Bryan (Oldham C'tral)
Davies, Rt Hon Denzil (Llanelli)
Davies, Ron (Caerphilly)
Davis, Terry (B'ham, H'dge H'l)
Denham, John
Dewar, Donald
Dixon, Don
Dobson, Frank
Donohoe, Brian
Dowd, Jim
Dunnachie, Jimmy
Dunwoody, Mrs Gwyneth
Eagle, Ms Angela
Eastham, Ken
Enright, Derek
Etherington, William
Evans, John (St Helens N)
Ewing, Mrs Margaret
Fatchett, Derek
Faulds, Andrew
Field, Frank (Birkenhead)
Fisher, Mark
Foster, Derek (B'p Auckland)
Foulkes, George
Fraser, John
Fyfe, Maria
Galbraith, Sam
Galloway, George
Gapes, Michael
Garrett, John
Gerrard, Neil
Godman, Dr Norman A.
Godsiff, Roger
Golding, Mrs Llin
Gordon, Mildred
Gould, Bryan
Graham, Thomas
Grant, Bernie (Tottenham)
Griffiths, Nigel (Edinburgh S)
Griffiths, Win (Bridgend)
Grocott, Bruce
Gunnell, John
Hain, Peter
Hall, Mike
Hanson, David
Hardy, Peter
Harman, Ms Harriet
Hattersley, Rt Hon Roy
Henderson, Doug
Hendron, Dr Joe
Hepple, John
Hill, Keith (Streatham)
Hinchliffe, David
Hoey, Kate
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