House of Commons Hansard Debates for 24 Sep 1992

Mr. Dennis Skinner (Bolsover) : We are still working on that.

Sir Edward Heath : I do not think that the hon. Member will have much success.

Mr. Skinner : The right hon. Gentleman should not kid himself.

Sir Edward Heath : It must be noted that, when we had a referendum on Europe--Harold Wilson was overturned and went against his undertaking made at the time of our entry into Europe--those who were most forceful about our having a referendum never accepted its result. What is the point of having a referendum if one is not prepared to accept the decision of the people? There are two right hon. Members on the Opposition Benches who have no claim on a referendum.

Mr. Benn : The right hon. Gentleman is asking us to get the Danes to think again after their referendum. Is it not

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possible for arguments to continue? Do elections and referendums conclude the matter, particularly when new proposals are made?

Sir Edward Heath : Asking the Danes to think again does not affect our having a referendum. I know that the right hon. Gentleman proposes to introduce a Bill which he hopes will be successful. It will not be, but if it is successful he will have to provide the funds for running a referendum.

I strongly support the Prime Minister on the three major points I have outlined. He has said that there will be a detailed examination of the situation following last week's events. I welcome that, too. I hope that the examination will not be limited to the ERM or to last week's events. I hope that it will cover a much wider range of Government policy which has to be taken into account if we are to restore the economy.

We must not hide the fact that there are bound to be inflationary pressures as a result of a 14 per cent. devaluation. We must warn the country and consumers of them. We have experience of this from several other occasions and it would be foolish to try to deny that there will be inflationary pressures. One can say, therefore, that the task will be greater. Various opportunities that will have to be taken to deal with it must be made more acceptable.

From that point of view, I hope that the Prime Minister's review will go much wider. He is also--rightly--conducting a review for the summit meeting in the middle of October. I ask him to recognise--I am sure he does--that a review of a major item of the Community's life, and its industrial and financial proceedings cannot be done satisfactorily in such a short time. It cannot possibly be done. Nor can satisfactory discussions take place and conclusions be reached in a day's summit. We have suffered far too much from short summits, most of which are taken up with lunch and dinner.

Mr. Skinner : The right hon. Gentleman had a few.

Sir Edward Heath : Yes. I have been trying to lose weight ever since.

The review also requires detailed discussion with the other members of the European Community. I take as an example the faults that are now said to be found in the ERM. Perhaps the Chancellor of the Exchequer will go into rather greater detail about what the faults are. Major members of the Community do not accept that there are faults in the ERM. If this matter is to be discussed at the summit, it will have to be done with great care.

Already, I am afraid, there is in the Community a belief that the British have taken the presidency to run and change the Community. That is giving rise to resentment and counter-reaction to the proposals. It is not the job of the president to run the Community or even to tell the Community what it should do. The Minister who represents Britain speaks for Britain and makes the arguments about what we think should be done. We will not achieve our ends if we overlook the nature of those discussions in the Community. That brings me to the question of the Danes. At the time, I expressed regret that Britain had stalled its action because of the Danish vote. Other countries did not do that ; they went ahead. Ireland produced a large majority

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in favour of Maastricht. Referendums are part of the life of the Irish : they are constantly calling referendums. We do not do that. Why did we not celebrate the great Irish achievement, and say, "Yes, we will follow the Irish"?

The point about Denmark is this. If, at the summit, the Danes come forward with an answer as to what they propose to do, that will free us to go ahead with our own Bill in the House of Commons. If, on the other hand, the Danes say that they will do nothing until autumn next year--and that is what is coming out of Copenhagen at present--we cannot possibly be bound by that to do nothing, when the other major powers in the Community have already gone ahead. I hope that the Prime Minister will make it plain to the Danes that our consideration of their position is limited.

Also coming out of Copenhagen is what the Danes want. It is said that they want more social service arrangements--more than are contained in the Maastricht treaty--and that they voted against the treaty because they were not going to be given those arrangements. We took the opposite position ; we opted out of the social chapter entirely. That explains the Danish vote : the Danes wanted more than they were getting, not less.

It is also said that the Danes want nothing to do with defence. Of course, they are not bound to defence provisions by Maastricht ; but let me put a point to them. They expect to receive the best from the Community, and they expect to be defended by it if anything happens. Why, then, are they not prepared to play their part in Community defence? This is a serious point. The Danes ought not to be allowed to influence our timing of a referendum, or our reaction to it. I understand that the Danish Prime Minister has said that he believes that Brussels should be much more open. What does he mean by that? Does he mean that people should be admitted to the discussions of the Commission, Ministers and Heads of Government? I have never been to Denmark, and I do not know whether the Danish Prime Minister invites visitors to Danish Cabinet meetings, just so that they can listen. Is the British Prime Minister prepared to go along with that? Is he prepared to admit all Cook's tours to Cabinet meetings at No. 10--in addition to the IRA? Those are impossible requests, all of which stem from misunderstanding and misinformation about the way in which the Community and the Commission work.

Last week, a revealing article by a correspondent unknown to me appeared in The Daily Telegraph --not a paper which I usually read, but the article was pointed out to me. It showed the extent to which Whitehall has elaborately decorated the arrangements that emerge from the Commission in Brussels. Do we not blame the Commission all the time? It is the Ministers who make the decisions, but, when they return to their Parliaments, they do not stand up and say, "Yes, I decided this" ; they say, "It is that Commission again." That is completely unjustified. It does not achieve our ends, and it ruins a great deal of what is going on in Europe.

I suppose that the question of currency is by far the most important. The Chancellor will tell us what really happened, but it is said that we rushed out of the exchange rate mechanism at the last moment. I do not rely on newspaper reports, but it is said that there was not time or proper consideration for the full support that should have

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been given to sterling to be organised. The Chancellor can explain all that, but it is what a considerable number of people now believe.

We must ask ourselves why Germany with the mark and France with the franc can work together so closely, while we apparently could not. There must be an explanation. That question goes to the heart of another question : that of our attitude towards, and co-operation with, other Community members. It looks as though the franc is holding--

Mr. Skinner : It is in trouble.

Sir Edward Heath : The hon. Gentleman wants it to be in trouble--he wants trouble everywhere. How the hon. Gentleman can call himself a socialist or be acknowledged by others to be a socialist when he has such hatred of his fellow men and women in other countries, I do not understand.

Mr. Skinner : Unlike the right hon. Gentleman, I have not been taken in by all the bureaucrats in the Common Market. I did not fall for the daft notion that the Common Market treaty would last for ever. I did not ever believe that there would be political and economic union in the Common Market. I believe that the halcyon days of the Common Market and economic growth are over. Some of us have seen treaties before ; we have read this country's history. This country has signed a thousand treaties with other nation states in the past 10 centuries. Most of those treaties have finished up in the political dustbin, which is where the unmitigated disaster of a Common Market will finish.

Sir Edward Heath : I must thank the hon. Gentleman for using far more refined language than he did last night on television. The crux of the matter is that, if there is a flaw, it is not in the ERM, but in the problem of how to cope with speculation of the scale that exists today, which is unchallenged by all the commentators in a modern world with every means of communication at its disposal. That is the crucial question--what is to be the answer? That is the problem to which we must address our minds. Some people will say that we have a long time in which to do so. I am not so sure that we do have such a long time.

Mr. Po"hl, the former head of the Bundesbank, has said today that he believes that there must be a common currency. When a former head of the Bundesbank says that, and we see the possibility of Germany, France and the Benelux countries joining to use a common currency, we must take account of those factors. If such action occurs, it will happen fairly quickly--one cannot delay it. Therefore, I ask my right hon. Friend the Prime Minister to give serious consideration to that possibility. We do not want to be left on one side again.

Mr. Nigel Spearing (Newham, South) : I think that the House understands the importance of speculators who look ahead, but do not the most successful speculators speculate on what appears to be a good chance or a dead cert? If the right hon. Gentleman is right and the only way forward is one currency, does that not mean one economic policy, one Government, one state?

Sir Edward Heath : I gave way to the hon. Gentleman as I always know what he is going to say, and I have the answer for him. The single market will require the

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development of those aspects--that is plain to everyone. The form that they will take has yet to be examined and decided on. There must be overall control with a single market.

When the former head of the Bundesbank says that he believes that there should be a single currency, one should respect his view. We must move to reduce our differences before we achieve that aim. However, the argument about differences is not borne out by what has happened with the single currency in the United States. Let us consider the different economic powers and standing of different states of the United States, which all get on with one single currency. Let us examine the difference between California and New York state, and some of the smaller southern states. The differences between them are enormous, but they all use one single currency.

Mr. John Marshall : Does my right hon. Friend agree that there is to be a new north American free trade area with three different currencies?

Sir Edward Heath : Yes, but they have not got it together yet. They have not even signed the agreement. I was in Canada last week.

Mr. Skinner : Who paid for it?

Sir Edward Heath : I cannot give that away. It was not an Arab-- [Interruption.] I must apologise to the Prime Minister.

Which people are laughing over the free trade area proposals? The Mexicans, of course. They have infinitely lower labour costs, can churn the stuff out, and will spread it over the United States and Canada. Very well, but that is not what we want, and it is not what we had in the European Free Trade Association either.

The only long-term answer--

Mr. Michael Shersby (Uxbridge) : My right hon. Friend has made a very profound statement this afternoon. He says that he believes that one of the answers to the problems that we face is a single currency, one Government and one Community. Can he tell the House over what period of time he believes that that should be brought about, in view of the economic difficulties that we are facing?

Sir Edward Heath : We are one Community now--we have all signed the treaty and the House has approved its signature. That is quite clear.

From 1 January 1993, we shall be one single market. That is clear, and we have supported it completely. The question is how shall we develop after that, and that is through the Maastricht treaty, which the Prime Minister says is good for us and good for Europe. We shall pursue that. On the question of a single market, I believe that the quicker that we get there the better and that it will come more quickly than people think.

I do not want us to be caught out by there being a single market of the original members of the Community. I do not know whether it would include Italy, but it would certainly include France, Germany and the Benelux countries and would be very powerful. If there is to be a single currency, I want us to be in there.

On the Community, it is essential that we explain much more to the people of this country about what has been, is and will be involved in Maastricht. The Prime Minister, the Foreign Secretary and the Chancellor of the Exchequer

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have spoken consistently and fully about it. I sometimes wish that other members of the Cabinet had been trooping around the country doing so as well and as frequently. One of the problems is that people do not understand.

Consider the referendums that are being held. What is the answer to the French referendum? It was not a referendum on Maastricht. The cities and the business classes all voted for Maastricht and there was a vote against by country areas and farmers. That was a vote not against Maastricht but against their treatment in the Community. Farmers, especially in France, are fed up. Our farmers have lost 30 per cent. of their real standard of living as a result of policies carried out by the Government and confirmed by the House, but our farmers lie low. The French farmers do not ; they protest, and the referendum was a means of protesting. It was not concerned with Maastricht.

Now I shall be accused of stirring up the farmers, but I am not doing so. When I first came to the House the president of the National Farmers Union was a major figure. When he made a speech we paid attention to it. I must confess that I do not have a clue who the present president of the NFU is.

That is what has been happening over Maastricht. We must now pay more attention to understanding people's real needs and how we can meet them, and not have people deciding everything, as they cannot do so. In supporting Maastricht, and refusing to allow a referendum, the Prime Minister is absolutely right, and he has my fullest support.

Madam Speaker : Order. Will hon. Members who are leaving do so quietly, so that we can continue with our business?

4.19 pm

Mr. Paddy Ashdown (Yeovil) : It is always a pleasure to follow the right hon. Member for Old Bexley and Sidcup (Sir E. Heath). It is not always easy, but it is always a pleasure. The right hon. Gentleman said things with which I profoundly agree. I shall touch on some of those in my speech, but perhaps his most significant comments, at the start of his speech, were about the right hon. and learned Member for Monklands, East (Mr. Smith). I take great pleasure in welcoming the right hon. and learned Gentleman to his position as Leader of the Opposition. As the right hon. Member for Old Bexley and Sidcup said, the right hon. and learned Gentleman's speech will be regarded by many both inside and outside the House as an excellent speech and an excellent start in his new duties.

As the right hon. and learned Member for Monklands, East said, we are debating a motion which asks us to approve the Government's economic policies. I had rather hoped that we might hear what those were, but the Prime Minister's speech, probably intentionally, gave us no clue. There were one or two pious hopes in that speech, but not one of the actions needed to turn those hopes into reality. There was a commitment to respond in an ad hoc manner to the conditions of the market, but there was absolutely nothing about what the Government's lodestar or guidelines will be. There was nothing about their exchange rate policy and nothing about how to balance interest rates against the capacity to stimulate future inflation.

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We have before us a one-line motion which says nothing--to be precise, no doubt it can be read to mean whatever the various opinions held, not only by Government Back Benchers but within the Cabinet itself, want it to mean. Probably that motion, framed by the Whips, is the only motion which the Conservative party could have tabled for which all Conservative Members will be able to vote tonight. Goodness only knows what it says to the markets out there, which are looking for some kind of guidance or assurance about Government policy. As usual, what comes first is the unity of the Conservative party ; what is in the best interests of Britain's economy and of our present economic situation comes second. What we do know is that last Wednesday the central plank of the Government's economic policy--and of their foreign policy--was obliterated in a single day. All the things that the Prime Minister told us would not happen did happen. In speech after speech, the right hon. Gentleman gave us an absolute assurance that he would not devalue. But he did devalue. In speech after speech he gave us an absolute assurance that his aim was to put this country at the heart of Europe. But last Wednesday he put this country at the periphery of Europe. During the election and afterwards, he gave us undertakings that he had healed relations with our European colleagues, most notably with the Germans. But since last Wednesday, Minister after Minister has been queuing up to blame the Germans in an attempt to shift the blame from themselves.

Whenever something goes wrong under the Conservative Government, why is their first action to blame others instead of taking action to put it right? I have some sympathy with them because this time their traditional targets for blame--the Opposition parties--were no longer available to them. We made it clear that we did not support devaluation. Indeed, the calls for devaluation came from Conservative Members ; those voices were from the Prime Minister's own party. One could speculate that, of all that was done last week to destabilise our economy and undermine our pound, the comments of Conservative Members about the need for devaluation must be foremost.

Of course, the Government cannot attack their own, so what they cannot find at home they grub up abroad. They have sought to blame not their bungling, not their mismanagement and past policies, but the present attitude of the Germans. So discreditable an act--an act for which we shall pay a heavy price--is difficult to comprehend. Perhaps the best way to describe what has happened is to look, as the Prime Minister recommended to one of his hon. Friends, at the Conservative party's manifesto in 1992. It is quite revealing. It says :

"When the exchange rate mechanism was being created, during the final days of the last Labour Government, the then prime minister decided Britain could not take part. It is easy to see why. The economy was too weak The Conservatives have changed all that." Well, so they have. So they have.

The Prime Minister's own words--he said them, not me, and we might describe our present condition best in the words that he chose himself--were that devaluation would betray our future and be a route to the second division in Europe. Correct. What he has described he has now done.

After last Wednesday, thanks to the Government's policy, Britain is now condemned to being one of the second-tier economies in Europe, alongside and in the

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company of Italy, Spain and Portugal. It will take a long time to rebuild and recover our position and it will take a Government with a clear and determined policy in order to do so. I hoped that we would see that today, but I have to tell the Prime Minister that we have seen none of it.

Mr. Stephen Day (Cheadle) : I do not wish to take any hon. Member into the realm of fantasy in this serious debate, but I do not imagine that that would be hard for the right hon. Gentleman. If the right hon. Gentleman had been the Chancellor on that day, bearing in mind what he has told the House, bearing in mind that the Government took great measures to protect their membership of the ERM, bearing in mind that they announced an increase in interest rates, which took great political courage, and bearing in mind that that did not stabilise the pound, what would the right hon. Gentleman have done to protect Britain's membership of the ERM? Would he have raised interest rates even higher than the Government proposed? What effect does he think that that would have had on the economy?

Mr. Ashdown : Our position in the ERM could not have been protected on Wednesday because it was the Government's action long before Wednesday that made that simply indefensible, as I shall seek to show the hon. Gentleman in the next portion of my speech. The Prime Minister's defence before us today was that that was an act, as the hon. Gentleman has just suggested, of pure common sense ; an act about which the Government had no option ; the Government were, just on Wednesday, overwhelmed by a peculiar and singular event. What nonsense. The fact is that the origins of Wednesday's debacle do not rest in last week.

Mr. Skinner : De ba cle.

Mr. Ashdown : It is an interesting experience to have my French corrected by the hon. Gentleman.

The origins of last week's catastrophe lie not in last week but in the underlying weakness of the British economy which has persisted, under Labour and Tory Governments alike, these last 40 years, because we have failed to tackle the real problems of the British economy. They lie in the decision in 1985 not to join the exchange rate mechanism when we could have done at a rate that would have been suitable for Britain and when our joining the ERM at that stage would have prevented the hyperinflated boom of the late 1980s and the deep recession of the early 1990s. They lie in the timing and rate chosen by the Prime Minister himself, personally, in 1990. As Chancellor, he chose the time and the rate, nobody else. He is responsible for that.

Mr. Greg Knight (Lords Commissioner to the Treasury) : What did the Liberal Democrats say in 1990?

Mr. Ashdown : In 1990 we said that we were delighted that we had gone into the exchange rate mechanism, but let me make it clear to the hon. Gentleman that that was the least worst option at the time. When the Prime Minister, then Chancellor, decided to go in, the ERM was 39 months old. I have taken a look at it. Of those months, 30 would have provided better conditions than the month that the Prime Minister chose to go in.

Mr. Malcolm Bruce (Gordon) : He did it for the Tory party conference.

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Mr. Ashdown : Exactly right. We all know why the Prime Minister did it then. He did it because of the Conservative party conference. It had nothing to do with the best interests of Britain ; nothing to do with what was right for our economy. It was short-term economic management for the benefit of the Conservative party. That is what has dogged the Government, week in, week out, month in, month out, year in and year out.

It does not end there. The position was progressively weakened by inaction since the election, and compounded by the most desperate complacency during the summer months. The markets were not commenting--as the hon. Member for Cheadle (Mr. Day) half suggested--on the value of the pound in a single day. They were commenting on the weakness of the British economy, in which- -directly as a result of Government policy--30 per cent. of our manufacturing base has been destroyed over the past 12 or 13 years. It is the same trend that yesterday produced redundancies at British Aerospace, followed today by further tragic redundancies at Ford and Rolls-Royce.

The markets were commenting not on a short-term phenomenon that arose only last week, but on this country's long-term economic management, and the Government's failure to establish an independent central bank and their short-term economic fumbling and mismanagement last week.

The markets were commenting when they acted last week not on some short- term scenario but on the uncertainties surrounding Britain's long-term intentions--as to whether we will be part of European monetary union or outside it. That led to uncertainties which undermined confidence in sterling, which was reflected in the markets.

Mrs. Angela Browning (Tiverton) : The right hon. Gentleman made allegations about Conservative party conferences. With the benefit of his knowledge of the background to sterling, will he comment on the statement made by the Liberal Democrat economic spokesman, the right hon. Member for Berwick-upon-Tweed (Mr. Beith) last Wednesday, during the course of that party's annual conference, that sterling should move as swiftly as possible to the 2.5 per cent. band?

Mr. Ashdown : The hon. Lady overlooks my right hon. Friend's other two propositions. He suggested that a clear statement be made about our intention to establish an independent central bank, and that we should immediately take steps in that direction. That would have reassured the market. [H on. Members :-- "Oh."] That would have reassured the market. If it had been possible to go to the narrow band, that would have had the same effect. Both comments were perfectly reasonable and I fully support them.

Mr. Salmond : I agree with the right hon. Gentleman that the origin of the crisis goes back a long way, but long after it was clear that the parity of sterling against the deutschmark was unsustainable, it was publicly supported by the right hon. Gentleman and by the Labour leader-- who now argues for realignment, but did not do so then. There must be a better reason for supporting an unsustainable value for sterling against the deutschmark than that the right hon. Gentleman did not want to take the rap from the Tory Benches.

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Mr. Ashdown : The hon. Gentleman again excludes, presumably deliberately, the other points that we made. Of course we said that we ought to seek to hold the value of the pound, but we also said that other steps should be taken to increase the underlying strength of the British economy by beginning to invest and moving towards an independent central bank.

We now pay the price for those long years of Government mismanagement--for the wrong policies and decisions taken at the wrong time. That price is not paid by Government Members or even by Opposition Members, but in the form of more lost jobs, more lost homes and more broken businesses throughout the country. That is the suffering caused by the whole miserable catalogue of Government blunder and mismanagement.

The Government could have taken three actions to avoid the consequences of last Wednesday's debacle. First, they could have established in Britain that which every other modern economy has--an independent central bank that is mandated to maintain and to sustain price stability.

Mr. John Watts (Slough) rose --

Mr. Ashdown : Forgive me, but I have already given way a number of times.

If such a bank had been established, there is no doubt that the confidence created in the market would have enabled the Government to use a larger sum of money to invest in the country's

infrastructure--such as transport--and in those other things that the economy will need in the 1990s. Above all, we could have released the controls on capital spending in part if not in full, to enable councils to use the money that they produced from the sale of council houses to stimulate the construction industry and to get building started again in this country.

The Government could also have cleared up the dangerous uncertainty about our long-term intentions in Europe, saying that we would not opt out on monetary union but that we would be part of it. No question mark should hang over that.

Mr. Tony Marlow (Northampton, North) rose --

Mr. Ashdown : I must make progress, but I shall be happy to respond to the hon. Gentleman later.

If the Government had taken those actions, Britain's economic position would have been much stronger and we could perhaps have coped with the circumstances of last week.

That which the Government should have done is what now needs to be done. The Government say that they continue to make fighting inflation the centrepiece of their economic policy. Very well : let them prove it. Let them give independent status to the Bank of England, and mandate it to maintain and to sustain price stability in this country. If the Government will do that, people will begin to believe in their capacity to stick to their undertakings. The Government say also that they want to strengthen the economy. Let them prove it, by at least sustaining the level of investment in our capital expenditure. I believe that there will be serious cuts in the next review of public expenditure. Let the Government at least give an undertaking that capital expenditure will be sustained, and release the capital sums held for councils, to help stimulate the construction industry.

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I fear that the economy is in such a weak state that a fall in interest rates by one or two points will lead not to further spending but--as it did in the United States--to people using the greater amount of money that they have to pay off the mountain of private debt that is now borne in Britain. That happened in the United States, and it is likely to happen here.

Even if there were more private expenditure, it would serve only to create a consumer boom that would suck in more and more imports. To get the economy moving again, it will be necessary to do more than simply reduce interest rates. The Government must take a hand in beginning to stimulate economic activity. If the Government are serious about rebuilding the United Kingdom's position in Europe, let them face up to the challenge posed to this country and to this Parliament by the Maastricht treaty.

We all understand that the treaty has its flaws, but it was never intended to be a destination. It was always meant as a transition point. If the journey stops at Maastricht, progress towards unity in Europe will begin to unravel, with devastating consequences for Europe and for this country.

Government policy, as revealed by the Prime Minister, is that, instead of confronting the challenge of bringing Maastricht before the House and staking their own reputation on getting it ratified, the Government take refuge in delay and dodge. I am surprised that the Labour party seems to have joined the Government in that. We heard from members of both Front Benches today that Britain intends to hide behind the skirts of the Danish Government and of the Danish people.

It strikes me as odd that the Prime Minister was prepared to recommend a firm yes to the French but not to give real advice to the British people about the Maastricht treaty. Shortly after the Danish referendum, the Foreign Secretary told us that the 11 other member states would proceed immediately to ratify. We now hear that Britain must instead wait upon the Danes to decide. Why must we hesitate when almost every other European country finds it possible to proceed? Luxembourg, Ireland, Greece and Italy have all been able to decide without waiting for the Danes, and those countries will shortly be followed by Portugal, Germany and Belgium.

Why is it that Britain and this Parliament cannot face up to that decision and ratify immediately? That shows a vacuum of leadership which is made worse because with the Government's current presidency of the Community they ought to be giving a lead to not only Britain but the wider European community.

Mr. Hugh Dykes (Harrow, East) : Is not the right hon. Gentleman being a little alarmist? If we have only to wait effectively for the preliminary and initial announcements of the Danish Government, Danish political parties and Kobenhavn as to their intentions and how they intend to formulate the questions to be contained in another referendum to the Danish people, there need be no delay in producing our own Maastricht legislation. That can be done well before Christmas.

Mr. Ashdown : Christmas this year? I must disabuse the hon. Gentleman of that notion. I wish that it were the Government's intention, but it is not and we know that.

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They will not bring the matter before the House until the spring of next year, if not later, for the reasons given by the right hon. Member for Old Bexley and Sidcup.

Mr. Marlow rose--

Mr. Ashdown : If the hon. Gentleman will forgive me, I will not give way, as I am keen to give other right hon. and hon. Members an opportunity to speak.

Why is there such a delay? Why are the Government, apparently aided and abetted by the Opposition, prepared to delay and allow the Danes to decide first? It is not because it is in Britain's interests, but quite simply because it is necessary to hide the divisions in both parties. Britain will pay a real economic price for that. For as long as we do not confront the challenge of Maastricht and we dodge the issue of ratification, for so long will the markets doubt our long-term intentions. For as long as we try to maintain the value of the pound at some given parity--we know not what--so long will the markets require higher levels of interest rates from us in order to do that. For so long it will also cost jobs. While the Front Benches delay and dither, for so long will the voices of the anti-Europeans in both the Conservative and Labour parties grow stronger and stronger and the uncertainties over this country's future become deeper and deeper.

I want to make one final point before I sum up--a point on which the right hon. Member for Old Bexley and Sidcup touched. If there is one lesson to be learned from last week about what we must do in the face of the growing power of the markets and speculators, it is that we can solve the problem only by going into a single currency and not by running away from it. If we really want to be part of a system that can stand on its own feet against the speculation and the raids to which the Prime Minister referred, that is the lesson we must learn. Mr. William Ross (Londonderry, East) rose --

Mr. Ashdown : I think that I have given way often enough and I must conclude shortly.

That is the lesson, but the Government dodge it and run away from it. There is no refuge for this country outside an exchange rate system that includes our major trading partners. Because of the effects of the Government's economic policy, it will now be very difficult to get back into the system, but we must get back in. The country and the House must face that fact.

There is no refuge in allowing a floating exchange rate policy that enables us to devalue. Freedom to devalue is the freedom to suffer inflation, to have lower growth, to decline while others prosper and to boom and bust, just as we have done for the past 40 years. Given Britain's record, asking for that freedom is like asking for the freedom for a drunk to go back into the pub. This country must begin to face the disciplines that we have just been pushed out of because of the Government's failures last week.

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