Previous Section Home Page

Mr. Kaufman : We made it clear in the debate when the Bill was introduced that we support a great deal of what is in the treaty which the Bill seeks to ratify. However, we take serious exception to some parts of the treaty--including the protocol which excludes us from the social chapter, among other things. If we could secure a treaty

Column 995

that met all our aspirations we should readily support it. Unfortunately, that is not what is before the House at this stage.

Mr. John D. Taylor (Strangford) : We need further clarification of what the right hon. Gentleman has just said. He gave the House the impression that the Opposition would oppose the Bill if it were brought before the House again before Denmark made a decision. He then qualified that by saying that the Labour party would oppose the Bill only if a guillotine were presented. Which is it? Does the Labour party oppose the Bill in principle, or only if a guillotine is proposed?

Mr. Kaufman : There is a great deal of misapprehension, not about our attitude, which I shall state in the most specific terms, but about the parliamentary procedure before us. Unless the Government introduce the famous confidence motion that keeps being floated in and out of the No. 10 machine, there will be no voting for or against the Bill. If the Bill is resumed it will go into Committee. The Labour party will move a great many amendments in Committee, and we shall expect adequate time to be given to debate them. We shall decide our attitude to Third Reading on the basis of what is in the Bill after the Committee stage.

Mr. Charles Kennedy (Ross, Cromarty and Skye) : Will the right hon. Gentleman give way?

Mr. Kaufman : No, I shall proceed now.

That is what the Committee stage is about--whether a Bill can be altered.

Our position is a great deal clearer than what the Government are telling us. They imply that there could be a painless--or even painful--formula that could solve the problem of the Bill for them. Soon after the referendum, the Foreign Office floated the idea that the United Kingdom presidency could patch things together with a protocol to the treaty. Clearly that had not been thought out, because when the Leader of the House, standing in for the Prime Minister, was questioned about the notion, he said that such a protocol was

"one of the possibilities which can clearly be considered, but without commitment at this stage."

It was

"one among a range of others that can sensibly be considered in the uncertain circumstances".-- [Official Report, 9 June ; Vol. 209, c. 143.]

There is a specific reply for us.

The possibility of the protocol was soon removed from sight, and as for that range of other possibilities to which the Leader of the House referred, nothing more was heard about them, whatever they may or may not have been--and a good thing too. This ailment cannot be cured by political quack medicine. It needs careful thought and sensible ideas.

There are ways of moving forward from the Danish referendum. Last week, the Danish Social Democratic party, which must play an indispensable role in any new moves for Danish ratification, advocated priorities including the strengthening of democracy and the promotion of employment and social justice. Such issues should be at the heart of the United Kingdom presidency. Sadly, they will not be. The Opposition believe that the objectives of the United Kingdom presidency should be

Column 996

enlargement and a much more specific effort to obtain agreement in principle on the admission of certain applicants. It is far too negative to say that enlargement should wait upon the ratification of Maastricht. Agreement in principle on admission of Sweden and Finland could well affect favourably the mood of the electorate of Denmark, who could see that their country would not be the lone Scandinavian country in the Community.

The Lisbon summit was far too negative on that subject and was even more unacceptably negative on the application of Cyprus. I am not satisfied with what the Foreign Secretary said today about that subject or with his ample references, once again, to the desirability of a stronger relationship with Turkey. It is quite wrong to say, as was said at the Lisbon summit, that consideration of the application by Cyprus must be postponed because the island is divided. That division exists because of an illegal occupation of part of Cyprus by Turkish forces. It is wrong to reward Turkey and penalise Cyprus because the latter is the victim of aggression by the former. The United Kingdom presidency should make it clear to Turkey that she will not be admitted to the Community as long as her troops are present in Cyprus against the will of the legal Government. It should proceed positively to consider the application by Cyprus for membership.

The United Kingdom presidency should make human rights a major theme of its term of office. The power and influence of the Community should be used to draw attention to and, where possible, remedy violations of human rights outside Europe--in Indonesia, Thailand, Burma and South Africa--and in Europe as well.

I should like an early declaration by the ministerial Council that no aid of any kind will be provided for Albania until that country ends the abomination of public hangings. Since the Secretary of State announced today that he will visit Tirana shortly, I hope that he will make clear to the regime our disgust at its barbaric public executions.

During the United Kingdom presidency, the Community should have, as a priority, agreement on positive policies for economic divergence--I mean convergence [Interruption.] --I mean both divergence and convergence. It should have agreement on those policies to strengthen the regions and to assist in the structural change of industry and in easing the process of industrial change.

The United Kingdom presidency should co-ordinate policies to fight unemployment. The Prime Minister was pitiful on Monday when he implied that the unemployment problem in this country was not as intolerable as it might be because it was getting worse in Spain. The Foreign Secretary was even more complacent yesterday when he had the nerve to warn against what he called

"abandoning people who are unemployed and looking for jobs"--[ Official Report , 1 July 1992 ; Vol. 210, c. 838.]

It is the Government who have abandoned such people. We want the Community to remedy that callous neglect.

We call upon the Government to give real meaning to the social dimension. The Prime Minister was at his most astounding on Monday when he said :

"we agree with the social dimension, but we do not agree with the social charter itself."--[ Official Report, 29 June 1992 ; Vol. 210, c. 584.]

That was like saying, "We agree with the principles of the ten commandments, but we can't go along with those

Column 997

niggling bits about not making graven images, honouring thy father and thy mother, and not coveting thy neighbour's house, or wife, or ox or ass." The Government are seen to be alone in believing that the single market must be an adventure playground for capital without providing the necessary protections for employed and unemployed people. The Government are alone in Europe in rejecting the social chapter and the social charter. That attitude must change. I say to the Prime Minister and to the Foreign Secretary that this is the last speech that I shall make from the Front Bench. I do not begrudge the Government their election victories, but I cannot forgive them for what they are doing to the thousands of poor in my constituency and in many other parts of the country who eke out an existence in poor housing, who are poorly clothed and who are far too often poorly fed. They have children whom they love as much as any hon. Member on either side loves his or her children. Yet they are unable to bring up their children in decent circumstances, in a decent environment, with any hope for the future or any hope of a job when they leave school. In their thousands they are unemployed, suffering one of the worst unemployment rates in the country. The poor have to go to the Department of Social Security offices to beg for help, for money for a second-hand mattress or a second-hand cooker and, mostly, they are turned away. They are rejected for income support and they are rejected for crisis loans. They are excluded from the Prime Minister's classless society because they are too poor to claim membership of any class at all.

I intend to devote my time in this Parliament to fighting for all my constituents, but above all for the excluded poor. One reason why I shall fight for the inclusion of the social chapter in the Maastricht treaty is that it goes beyond windy generalisations about being at the heart of Europe and could provide practical help in putting heart into my constituents who, God knows, need it and have earned it.

The United Kingdom presidency should not be about logos and cliche s--it should be about people. It should be about the common humanity of all the people in all the countries of the European Community. That is what a Labour presidency would have been about and that is what the Labour party will never give up fighting for.

5.36 pm

Mr. David Howell (Guildford) : The right hon. Member for Manchester, Gorton (Mr. Kaufman) gets more and more entertaining as he gets demob happy and his party's position on this matter gets odder and odder and more and more confused. We have enjoyed some of his remarks, without agreeing with any of them. I salute his passing from his present position and look forward to him popping up in some other position in which he is rumoured to have an interest.

Those with longer memories will remember that the Maastricht treaty was born of a couple of intergovernmental conferences some two years ago, which the British Government did not like the idea of. However, there was nothing under the Community arrangements that we could use to stop them. We were severely criticised at the time and Britain was depicted as the laggard-- the one against the 11, which all knew where they were going and where the intergovernmental conferences were taking us.

Column 998

I propose to my right hon. Friends that we should use the presidency to turn the tables. We should take intellectual, philosophical and, in terms of ideas, total command of the future agenda of the Commuity. We should urge that, in due course, there should be another intergovernmental conference to begin to shape the kind of Europe that more and more people throughout Europe, including in this country, want to see-- a Europe heading in a different direction from the one in which it appears to have gone in recent years.

I can suggest that proposal with confidence to my right hon. Friends because, as my right hon. Friend the Foreign Secretary said with great eloquence, the whole debate has changed, even in the past few months. We are no longer judged as insular, ostrich-like Britain which is sitting glued to the station platform while the great and stately train of European unification rolls out to distant destinations. A completely different picture is now emerging, just as a photograph in a dark room gradually takes form. We can see a pattern emerging that puts the development of Europe in a different context.

Instead of the decentralisers and those who are suspicious of too much unity and centralisation being the laggards, it is the centralisers who are the past and the decentralisers who are the futuure. That changes the context of the debate, because it is no longer fair or correct to suggest that those who held back from the higher flown rhetoric of Maastricht were lingering in the past while the centralisers were the future ; it is now the other way round. The old vocabulary about momentum ; of not just ironing out the level playing field, but flattening every detail of the variety and diversity of the European Community to total billiard table smoothness ; the calls for trains leaving stations, for social cohesion to the point of redistribution to the extent of destroying the wealth-creating momentum of Europe and the calls for superconvergence--they have all acquired a sepia tint. They have become the language of the past and my right hon. Friends deserve immense credit for spotting that before most people in Europe and, in their negotiations on the Maastricht treaty, for bringing out the trend for the future and rejecting the trend of the past. If we apply the new template to the Maastricht treaty text as it is before us, with the derogations secured by my right hon. Friends, it is clear that parts belong to the centralist past. They are old-fashioned and contain the old-fashioned language. However, there are also parts that belong to a much more vigorous and diversified future. They offer strength through diversity and diffusion. That strength will make Europe a far more effective force than the old centralising shibboleths and nostrums of the centralisers. One example of that is the single currency, to which my right hon. Friends have not committed us. Another is the single central bank. A single currency may not be necessary for a single common market. Mr. Feldstein said in The Economist the other week that it might actually slow down and undermine the growth of trade and prosperity in the Community.

There has been discussion today about excise and sales taxes. My right hon. Friend the Chancellor of the Exchequer has taken a strong and determined stand about that. As my hon. Friend the Member for East Lindsey (Sir P. Tapsell) so characteristically and perceptively said, we need only consider the United States, which is the greatest, most successful and oldest single market in the world, to

Column 999

discover a vast variety of sales taxes and encouragement for people to trade across state borders and take advantage of the differences and variety in those taxes.

There has also been much talk about the single bank. The concept of a single, monolithic, physical institution running Europe's monetary policy is antique. Europe's monetary policy in future is bound to be multi- centred. A single bank does not belong to the modern world. I have the same doubts about the single passport, which, alas, has already been implemented and which has nothing to do with the Maastricht treaty.

It is not technically necessary to have the single burgundy passport for everyone, although the technicians tell us that it is. Electronics could cope with all control matters and we could retain separate documents that would give us more of a feeling of identity. While we are considering the different aspects of the Maastricht treaty, we might question the repeated concept of the level playing field. Policing the single market is very important. Whatever some of my hon. Friends who are opposed to the Community and all its works say, such policing will require a good deal of political clout being delegated to the Community and its institutions. However, policing the single market to the point where obsessive economists begin to insist that to create a single market it is necessary to itemise everything down to the part of the year at which one may kill a magpie to stop it robbing birds' nests, or set vocational training or any other absurd detail, carries us well out of the realms of practical commerce and into the realms of economic levelling and ideology on a scale to which it would be right to call a halt. That overkill brings the single market into disrepute. It is the role of responsible European policy makers--at the head of whom I place my right hon. Friends the Prime Minister, the Foreign Secretary and the Chancellor of the Exchequer--in the coming presidency to rescue Europe and the single market, which is a magnificent goal, from the Europhobes and the Euro-fanatics.

Mr. Giles Radice (Durham, North) : We have heard many fine words about decentralisation from the right hon. Gentleman. One would have no idea from what he said that the United Kingdom is the most centralised state in the European Community.

Mr. Howell : In respect of subsidiarity, that means that each country does things in a way that it believes best.

Mr. Derek Enright (Hemsworth) : Will the right hon. Gentleman give way?

Mr. Howell : No, I do not want to delay the House.

With regard to regionalisation, we must work out our own patterns for the future. They need not necessarily be the same as those occupied by the German lander or the other provincial schemes elsewhere in Europe. Let us do our own thing in our own way. We should work out our own problems. I see no difficulty with that. As I said, overkill on the scale that has confronted us brings the ideal of the single market into disrepute. There are those who argue--I hear them behind me now--that in the light of the present situation, the best course is to tear up the Maastricht treaty and start again. I agree that it makes no sense--my right hon. Friends recognise this very correctly--to press on immediately with the parliamentary

Column 1000

process. We have had the Second Reading of the Bill associated with the treaty which, in effect, was a preliminary ratification. I am sure that my right hon. Friend the Prime Minister is right to say that we should wait and see how others handle the matter. I fully support that policy.

Given Britain's presidency and its towering position of intellectual strength-- [Laughter.] Labour Members may laugh, but that is the laughter of the past. They are the people who want to centralise and control in the socialists' interests the affairs of this country from Brussels. That is not the pattern of Europe's future.

Given the powerful instruments that are built into the Maastricht treaty, it seems pointless to throw away Britain's hand when we hold the trumps. I believe that it would be wiser to concentrate on changing the whole tempo and vocabulary of the European process by setting out boldly both the new vision of a modern and enlarged Europe of nations and the path by which to attain it.

We need to promote a Europe of nation states. We need a positive plan of reform of the institutions and that lies in the future. We need to review the Commission's role. We need to list the functions to be returned to the nation states. That process of listing should be carried out by the nation states. In effect, and my right hon. Friend the Prime Minister was pointing rightly in that direction, a bonfire of regulations and directives--

Mr. Cash : And of vanities.

Mr. Howell : --indeed, and of vanities--so that we may give the Europe of the future consistency and strength instead of over-centralised fragility and brittleness. We need to redefine the philosophy of the single market. We do not need to flatten everything to create a single market. We need diversity and variety in taxation and many other things for a single market to work.

We must also redefine cohesion. It is not true that all aid creates development. Aid can stop development both within and outside of the Community. We should go all out for enlargement, and my right hon. Friend the Prime Minister said that is right. We should limit the ambitions of the budgeteers in Brussels. Perhaps my right hon. Friend the Chancellor will do that.

We should halt the potential merging of foreign policy into a common EC foreign policy. That is not a worthwhile ambition. There will be problems with joint declarations. We may make joint declarations with the rest of the Community, but in many other areas we will want to pursue with other interested powers--perhaps the United States in some cases or Germany and France in others--our own particular policy interests. That pillar of foreign policy co-operation must not be allowed to be merged into the trunk of the Community. There are tendencies at work that could easily do that and we must guard against them.

That is our agenda for the presidency. It not only deals with today's problems but captures the commanding heights of the ideas when we come to the next intergovernmental conference, because today's ideas shape tomorrow's decisions. If we want to win on those decisions, we must get on with this business now.

Column 1001

5.49 pm

Mr. John Morris (Aberavon) : No one should underestimate the opportunity that the British presidency provides for us. We can influence a wide range of subjects. The holder of the chair is an important cog in the machinery of the European Community. I am fairly sure that I am the only Opposition Member who has actually chaired a meeting of the Council of Ministers--the Employment and Social Committee. I fear that my tenure was of one session and one session alone, but my achievement was to get through the business at a reasonable hour--half-past 9, as against the expectation of an all-night sitting. My experience in the House considerably sharpened my mind.

The issue about which I wish to speak briefly is the real and perceived democratic deficit in the EC. The further one goes from Westminster or, more accurately, the further one goes from all of us who inhabit this Palace, the greater the distrust of the European Community. I suspect that it is the same in other countries. The cognoscenti, the mandarins and the mandarin class have always been in favour of the EC, but I suspect that people generally feel less sure. What has bedevilled popular support for the European Community is the impression that it is a meddler, and a meddler unnecessarily, and that, with its inflated bureaucracy, it has pursued uniformity for uniformity's sake and intruded into matters of minor importance when it was not necessary so to do.

I suspect that that feeling had a great influence on the referendum in Denmark. It did not do so in Ireland, obviously, because every man, woman and child there is a major beneficiary. It is almost like going to the opera at Covent Garden when a great part of the bill is met by the Treasury --in this case, the EC. Of course, the Danish referendum is a chance for all of us to stand back and take stock. The people of Denmark, outside the capital of Copenhagen, feared what they had seen, and they feared as much if not more the sounds then coming from the Commission. There has been a remarkable--a touch of democracy can be quite salutary--change in the tone of Mr. Delors since that fateful watershed. The truth is--we all accept it- -that the treaty is juridically dead ; it is in tatters until and unless there is popular approval in Denmark.

The lesson is that lectures on what is good for us by the great and good either in this country or elsewhere are not necessarily welcomed. Indeed, it is frequently the reverse--otherwise, we in this country might have been governed by a combination of civil service mandarins of Whitehall, heads of our great colleges, holders of the sees of Canterbury and York and, for good measure, the Moderator of the Church of Scotland. That is not how democracy should run. During negotiations it looked as though the democratic deficit would be tackled by reducing the Commission's powers and by giving the European Parliament an enhanced role in the legislative process. That has not happened and there have not been many significant changes in the Commission's role. Article 8 of the treaty that set up the Commission states :

"It shall be the duty of the high authority to ensure that the objectives set out in this treaty are attained in accordance with the provisions thereof."

Flowing from that are the treaty provisions for achieving and implementing that high aim.

Column 1002

I do not know of any organ of government in any democratic country that has been given so many powers to initiate and propose, an appointed, non-elected, almost faceless organ. I should like to know of a parallel. The inevitable result is that such an institution will gather a momentum of its own. It has done so, and it has sought to increase its influence. Each Commissioner in turn, with varying competence and success, has sought to put a stamp of significant change on his own period of office in his own sphere. That is a perfectly normal human aspiration-- indeed, collectively it is the aim of the Commission. But is it necessary for the Commission to have such a life of its own? Is it because of that life of its own that it has meddled unnecessarily and certainly failed to capture greater public support in this country and elsewhere?

When the total membership was six, an additional engine of power in the centre may have been necessary, but now that we are part of a larger body-- I hope that Her Majesty's Government will continue their campaign for enlargement, perhaps up to 20 members or so--more initiatives should come from the European Parliament and the Council of Minister, and the role of the Commission should be diminished. That is where the balance should be. Ministers, individually and collectively, are much more likely to be politically sensitive than appointees, however eminent. The greater the membership of the EC, the greater the need for political sensitivity, and that is why we should meet and tackle head-on the democratic deficit.

I regret that the European Parliament has not been given more powers. If being a Member of the European Parliament is to mean anything, it must be given those powers. If decisions in Brussels and Strasbourg are to be accepted, the institution of the European Parliament is ready at hand to provide the appearance, and, I hope, the substance, of popular support. It would then be much easier to accept whatever edict flows from Brussels or Strasbourg.

Against the background of Maastricht, of planned economic and monetary union--I for one have grave doubts about the speed and direction in which we are heading--there must be popular support. If people believe that there is popular support, they should be ready to put it to the test. I certainly would not dissent from having a referendum on the issue.

A common foreign and security policy would be light years from obtaining popular support. Some of our European partners did not come out well in the Gulf war. I remember the dilatory and unhelpful attitude of the Belgians in demanding their pound of flesh for ammunition ; it left a sour taste. Also, the Foreign Minister of Luxembourg, no doubt an inestimable gentleman, strutting across the world's stage, speaking on behalf of Europe, certainly did not inspire confidence. I rushed to compare the size of the population of Luxembourg with some of the units of government in south Wales, and I thought that some of our civic leaders in the Principality might have done a better job. Certainly they would have had more democratic credibility.

The lesson is that Buggin's turn might be all right when we discuss technical matters, but in matters of earth-shattering importance it certainly does not go down well. If low intensity economic activity has already caused anxiety about the manner and extent of implementation, how much more anxiety will there be when one pauses to consider the canvas post -Maastricht?

Column 1003

The logic of subsidiarity necessitates a complete rethink of the role of the Commission. Is it necessary in its present form? How many of its responsibilities could be carried out by the Council of Ministers, its own semi-permanent national Ministers or our own civil service permanent representatives? Is it not time to consider that possibility? I believe that we should do so.

I was glad to hear some of the earlier comments in the debate. In our presidency we should ruthlessly examine each and every decision taken in the past by the Commission. I welcomed the suggestion that I heard just now of a bonfire. I would welcome a bonfire of the decisions of the past which were not strictly necessary to the well-being and good government of Europe. Any examination should be of not only future but past decisions. If the concept of subsidiarity is to mean anything, there should certainly be retrospective examination.

The philosophy for the future should be the minimum of centralisation in decision-making unless it is seen to carry public approval and the repatriation of a raft of activities which so far have been carried out in Brussels or Strasbourg. Subsidiarity will mean the transfer of power to the elected assemblies of Scotland and Wales in due course and to the organs of regional and local government in Britain. That would leave the Commission, or whatever body succeeded it, to concentrate on activities which are essential to the well-being and common good of all member states. The Commission will certainly undertake new activities, but it should become involved only in essential matters.

I am sick and tired of the criticism levelled at Britain whatever Government are in power. If we object to a proposal in Europe, it is said that we are anti-communautaire. That is nonsense. We have a national interest and a European interest. We are entitled to fight our corner without being regarded as anti-European. We can be as good Europeans as the next man in the next country and yet oppose a proposal. But that criticism is always thrown in our faces if we object to anything that is discussed in Europe. That was certainly my experience.

There are other matters in which we have a particular interest, but there is no time to go into them now. During our presidency we can wield a great deal of power. It is an important period in the life of Britain and of Europe. I hope that we can make real advances in repatriating so many decisions which have unnecessarily been taken at the centre when that was not in the interests of the well-being of Europe.

6.3 pm

Mr. Peter Brooke (City of London and Westminster, South) : The Venerable Bede, one of the ancestors of contemporary Europe, gave a vivid image of a bird's flight through the windows of a hall to illustrate the life of man. The European Community owes its origins to what happened in the middle of this century and I dare say that it will still be evolving in the middle of the next. Against that sweep of history, our current six- month presidency is as the flight of the bird to the Venerable Bede.

However, the century of building which I foreshadow is not unlike the building of that most European of institutions, a cathedral. Cathedrals grow sometimes

Column 1004

slowly, sometimes fast. While under construction the ground site is often more of a builders' yard, rent with builders' language, than a place of God. Yet the purpose is always clear and the outcome is always remarkable.

In this building, whether of cathedrals or of Europe, nothing is more important than that the foundations should be sound. No national contribution to that aspect has been more important than that of Britain. The great Sam Rayburn of Texas once said that the three wisest words in the English language were, "Wait a minute." In the past 15 years, my noble Friend Baroness Thatcher has deserved well of all of us in Europe by reiterating those three words again and again. My right hon. Friends who are now in charge of decisions on Europe have been wholly faithful disciples to her in preventing the Euro-rhetoric of others from interrupting the soundness of the foundations that are needed.

In this brief speech, I wis` to remark on a single chapel in the great cathedral. I confess instantly that I am motivated by constituency interest. In the six months of our presidency of the European Community, the Community is committed to resolving the location and site of the European monetary institute and the European central bank. It is a subject in which the City of London is profoundly and properly interested.

On 3 June my hon. Friend the Member for Hazel Grove (Sir T. Arnold) had an Adjournment debate to which my hon. Friend the Economic Secretary, who is present on the Treasury Bench, replied. My hon. Friend the Member for Hazel Grove rehearsed in splendid detail the scale of the dominance of the City of London as a financial centre over its continental rivals and on a global basis. Given that the facts and statistics are, in the words beloved of certain Departments, "on the record", I do not propose to reiterate them today, especially on an occasion when time is as gold dust. I remark in parentheses that gold dust is but one of the commodities in which the City provides Europe's dominant market.

I wish to use these few moments to remind the House of London's European pedigree. It goes through the Lombards, who gave us so much of our current banking language ; through the Hanseatic League where the Hansards resident in the Steelyard on what is now Cannon Street station were otherwise known as Easterlings, a word thought to have given rise to sterling ; through the first chartered company--not involved with the East Indies, the Levant, Africa, Hudson's Bay or the Falkland Islands--the Muscovy company ; through the sacking of Antwerp in 1576 by the Duke of Parma, which gave us our first opportunity for entrepot and third-country trading ; to the serried European names of London's merchant bankers such as Hambro, Lazard, Schroder, Rothschild, Kleinwort and Warburg.

Those cosmopolitan and maritime origins bred London's willingness to trade in all risks. It is that willingness which my hon. Friend the Member for Hazel Grove described so eloquently and so significantly on 3 June and which gave rise to London's supremacy in financial circles.

Of course, in the City of London we are, above all, realists. I realise that, although the technical arguments are strong, the decision might go against London on political grounds. In that case, it would be odd if the new institutions went to Germany, where the Bundesbank is so vehement in its rejection of political considerations and interference. There would be a particular retrograde

Column 1005

disadvantage if the institutions went wholly to Germany. It would mean that German rather than English would become the language of operations. That suggests that the operating arm of the bank should be in London, not least because no EC institution is yet in London. Nothing would seem more suitable for London than a financial institution, especially one specifically dealing with financial operations and markets.

Against this background, Her Majesty's Government have an obvious and particular role to play during our presidency in determining the location of the European financial institutions along the lines which my hon. Friend the Economic Secretary so encouragingly described in the Adjournment debate on 3 June. That would be to the ultimate benefit of all the people of Europe. It should go without saying that the Corporation of the City of London and the City's other institutions will be happy to reciprocate that support by the amplest of co-operation.

6.9 pm

Mr. Charles Kennedy (Ross, Cromarty and Skye) : I shall not follow too directly the speech of the right hon. Member for City of London and Westminster, South (Mr. Brooke), but I think that it is significant that the case that he made so eloquently, with his characteristic use of vocabulary and imagery, has been all but lost, if not already lost, for this country. The technical and technological aspects of a central European bank have been lost, not just to London, but to other parts of the United Kingdom. I am thinking of Edinburgh and the "diversity"--to use the word of the right hon. Member for Guildford (Mr. Howell)--of practical banking arrangements that would go with the central European bank. The success of those diverse activities would spread to other parts of the United Kingdom

Perhaps it is a reflection of my political party background, but I tend to believe that every cloud has a silver lining. That being so, I hope that we can view the referendum in Denmark in that way. It has given everyone in the European Community time to pause and think, which must be a good thing. There is no doubt that the politicians and bureaucrats were running ahead of the citizens of the European Community in terms of the developments that were taking place. The problem is that the rallying cry now is "subsidiarity"--not the most potent of words around which to gain momentum. I think that the Foreign Secretary acknowledged that the other day.

The Government have adopted the correct political stance since the Danish referendum, and are continuing to do so. The British presidency will have to be cautious and painstaking, and the Prime Minister, Chancellor and Foreign Secretary are three individuals who are well equipped to take precisely such a detailed and sensible approach. We want to take Denmark with us if possible, not leave it isolated. I pay tribute to the fact that those three politicians have consistently stressed that.

However, there are uncertainties about the time scale, and they have not been helped by the Foreign Secretary's remarks today or the Prime Minister's remarks following the Lisbon summit at the weekend. He seemed to suggest--to use a phrase that he has hitherto used of Scotland and is now applying to Denmark--that the Government would take stock of the situation and decide by the end of the

Column 1006

summer, at about the time the House returns from the recess. I notice that the Leader of the House is now in the Chamber. It is not clear whether the Government will introduce a Bill to be discussed in Committee before the end of the year. One suspects that they are hanging back on that decision until they have seen what happens in the French referendum and events in Denmark are more clearly established, but the sense of uncertainty is unhelpful. Similarly unhelpful were the comments of the right hon. Member for Manchester, Gorton (Mr. Kaufman) about what the Labour party might do as and when the Bill reappears. The Labour party's strategy was as clear as mud. We have substantial misgivings and disappointments about some aspects of the Maastricht treaty and would like it to have gone much further. However, when the Bill eventually comes before the House on Third Reading and the definitive vote is taken, we shall support it, as it is the best on offer. As believers in advancing towards a more integrated Community and, we hope, ultimately a more federal one, we think that the Bill offers the best prospect at present. I am sorry that the Labour party's views on that issue are not equally clear. Its attitude will not help the political process over the coming months.

Mr. Stephen Milligan (Eastleigh) : Will the hon. Gentleman explain why, talking of the Danish referendum, he said that politicians and bureaucrats were running ahead of the people, when his party advocates a more federal Europe and believes that the treaty should have gone further?

Mr. Kennedy : The hon. Gentleman will be aware that we are also advocating a referendum. Therefore, although we have a clear wish and intention on how we would like Europe to develop, and how we see this country's role in it, we believe that the question should ultimately be put to the people at the ballot box. We could then argue our case for this country ; if we can persuade people to agree with us, so be it. Even if we do not succeed, it is healthier for Europe if the public are able to have a direct say on the subject.

I should like to return to the speech of the right hon. Member for Gorton, and perhaps the hon. Member for Hamilton (Mr. Robertson) will intervene. The time scale suggested by the right hon. Member for Gorton was unfortunate. I followed his speech with care until I heard the unmistakable sound of the clock striking 13. When he seemed to argue that, if Finland and Sweden entered the Community--presumably, by the end of the calendar year in time for a Hogmanay party--Denmark might be favourably disposed to ratify the Maastricht treaty early next year. I do not know how frenetic a pace of diplomatic activity the right hon. Gentleman thinks there will be over the next six months, but it is stretching credibility beyond all known bounds to suppose that Finland and Sweden will enter the Community within the next six months. I do not think that the Government are seriously exploring that option.

The Maastricht treaty follows logically from the Single European Act. That is why it is strange that the Joan of Arc cum rottweiler, who has been set loose in the House of Lords today, takes such exception to the treaty. She was the one who, as Head of Government, pushed the Bill

Column 1007

through with a guillotine and a three-line Whip and curtailed discussion of it. If she is looking for someone to blame, she should look in the mirror.

Whatever the treaty's shortcomings, such as opt-out clauses and inadequate internal European democracy, if one takes the Thatcherite critique of bureaucracy in Europe--some of which I agree with--there is a logical corollary. The natural consequence is surely that more power should be given to the European Parliament to ensure more accountability. I do not think that it is more democratic to try to achieve that on an intergovernmental basis--the policy to which the Government presently adhere.

I hope that during the next six months sterling will come into the narrow band of the exchange rate mechanism. Perhaps in the autumn a White Paper will be presented on an independent Bank of England, and perhaps the single market will be completed to benefit this country, as well as our trading compatriots and competitors.

The Maastricht treaty is positive in that it establishes the basis of a common citizenship across Europe. When one considers the widening of Europe --the enlargement on which the Prime Minister places such stress--we see the problem that the Government created for themselves at the Lisbon summit on the issue of linked cohesion funds. That issue will not be finally settled until the Edinburgh summit at the end of the year.

The Government must acknowledge the suspicion of some of the other European countries that the British adherence to enlargement as a way forward is also because they view it as a braking mechanism to slow down the pace of existing Community integration, which is unfortunate. If the Government are serious about enlargement, they cannot continue to set their face against additional cohesion funds to make enlargement worth while and economically possible for the poorer states in the Community.

The Foreign Secretary touched on the issue of subsidiarity. As my right hon. Friend the Member for Yeovil (Mr. Ashdown) is saying somewhere else today, subsidiarity is the flip side of federalism. In a recent radio interview, the Foreign Secretary was decent enough to acknowledge that federalism means different things to different people in different parts of Europe. I bemoan the fact that, in this country, federalism has become associated with a mythical super-state in which Jacques Delors and various unaccountable bureaucrats impose foreign designs on Britain.

Our view of federalism is much more in line with mainstream European thinking--that federalism involves the very diversity of power and structures mentioned by the right hon. Member for Guildford. We would like it to go further. I do not understand how subsidiarity can stop at the English channel or how its logic can be denied within the United Kingdom, whether with regard to Northern Ireland, Wales, the regions of England or to Scotland, which is my concern, as the Minister will understand.

We want an end to existing divergence and the establishment of commonality throughout the Community with regard to the voting system that will be used for the next set of European elections, and I am sorry that the Foreign Secretary did not mention that. Within

Next Section

  Home Page