House of Commons Hansard Debates for 24 Nov 1992

Ms. Joyce Quin (Gateshead, East) : Having listened to the debate, I am more than ever convinced that the dilemma for the Government in their European policy is that they are unable to obtain the agreement of their supporters on whether Britain should be at the heart of Europe, or whether we should have some kind of special semi-detached status on the periphery of Europe. The dilemma hampers the Government at every stage. It will continue seriously to weaken our position within the European Community for the foreseeable future. The single market, to which the Foreign Secretary referred when he opened the debate, is a good example of the Government's illogicality and inconsistency. They claim to be enthusiastic about the creation of the single

Column 818

European market and about the need for a level playing field within it. However, the single market is about four freedoms : freedom of movement of goods, services, capital and people. The Government seem to believe in a level playing field for the first three freedoms but not in a level playing field for the fourth freedom--people and their working conditions.

The Government's position on the social charter and the opt-out from the social chapter undermines their wish to create a level playing field in other areas. Other European countries rightly wonder why, if the Government are interested only in a partially level playing field, should British goods be allowed free access to their markets, where there are higher standards of social protection and social legislation and where the social charter and the social chapter have been fully accepted ?

In an earlier exchange with the hon. Member for Derbyshire, South (Mrs. Currie) I referred to the fact that the opt-outs, including the financial opt-out, are damaging the Government and Britain's position within the European Community. I referred to the recent survey by Ernst and Young, which clearly states :

"There is already evidence that the United Kingdom's attractiveness for inward investment is being reduced by a perception that we are not in the main stream of the European debate."

That is a serious matter.

The hon. Member for Derbyshire, South and I are aware of the importance of investment, both of us having experienced the benefits of foreign investment in our parts of the country. If investment is dropping, as it certainly is, and if investment is threatened by the Government's European stance, there will be real worry. Both the Government and my former colleague in the European Parliament, Jacques Delors, have got it wrong. Far from Britain being an investment paradise, the result of this country being marginalised in Europe in future will be that inward investment will deteriorate rather than improve.

There are many sound reasons why British business and the Government should change their mind about the social opt-out. If the social opt-out is maintained, it will create many worries for British business. For example, multinationals with branches in the United Kingdom and other countries may find it easier to close plants in the United Kingdom during the recession, simply because the costs of closure and employment protection are lower in the United Kingdom than elsewhere. In addition, United Kingdom companies that are also multinational companies are concerned that, because other parts of Europe have accepted the rules of the social chapter, they will be subject to those rules elsewhere in Europe, but the United Kingdom will be unable to participate in discussions about the implementation of those aspects of social legislation.

Finally, and perhaps rather contradictorily, there is evidence that, even if it is thought in business circles that the social opt-out is desirable, they feel that in practice it is not possible and that the Government will be dragged unwillingly into accepting certain social regulations.

There is already evidence for that, due to the Government's half-hearted acceptance of the directive on the rights of pregnant women to work and their grudging acceptance of the need for all employees to have a written statement of employment, as well as their even more grudging acceptance, which has huge implications for the compulsory competitive tendering procedure in the United Kingdom, of the acquired rights directive.

Column 819

Business is starting to say that it is surely better to be in there negotiating rather than eventually having to be dragged along, without any influence, and therefore getting the worst of both worlds. The Government's claim that employment protection measures destroy jobs looks increasingly threadbare, at a time when Britain has the fastest rise in unemployment in the European Community. In case there should be any doubt about it, my belief in the social charter and social chapter is due to my conviction that they will bring benefits to some of Britain's lowest-paid and least protected employees, and there are all too many of them. In the past, Britain was described as a nation of shopkeepers. What worries me is that, if the Government persist in going down the route that they have chosen, we shall become a nation of sweatshop keepers. In addition to the moral reasons for accepting the social chapter, there are good practical reasons for ending the social opt-out that the Prime Minister agreed at Maastricht.

Many hon. Members have referred to the economic situation, and Labour Members have referred to the weakness of the United Kingdom economy within the European Community. Government policies have weakened our position, and significantly the United Kingdom was the only EC economy that contracted last year. Our weakness was evident during the turbulence on the money markets earlier this year. The pound buckled under the pressure, whereas the franc managed to survive.

That was a consequence of the weakness of our economy and of the foolishness of the Government in joining the ERM at a time that was politically convenient because of the Tory party conference rather than industrially appropriate, and at a level that would have helped industry and the exports on which we all depend. Furthermore, a Government who were at the heart of Europe would have been able to reorganise a general realignment of currencies before the monetary turbulence, but the Government's marginality at that time was clear. I should like Britain to attach greater priority to economic growth and co-ordinated European action to create jobs, as many hon. Members have said. It seems that the Government have made a mini U-turn in the autumn statement and in their recent pronouncements that they would like to agree a recovery package with our European partners. I agree strongly with my hon. Friend the Member for Ashfield (Mr. Hoon) that it is a pity that the Government have adopted that attitude only at this late stage. Many of us argued for such a co-ordinated recovery package in the recession at the beginning of the 1980s, never mind in the current recession.

It is outrageous for the Government to claim that Europe is following the lead that they gave in the autumn statement. Many people in Europe have wanted the United Kingdom Government to take a more positive attitude to economic recovery, and have

beendisappointed when the Government have been unwilling to put money into European infrastructure projects. That was particularly true at a time when the Government were running a huge budget surplus, which offered a golden opportunity to lay the foundations for our economic prosperity.

My hon. Friend the Member for Ashfield referred to cuts in the research and development budget, and I echo his concerns. We should not be cutting this key area of European spending, and certainly not at this economic juncture.

Column 820

Subsidiarity has been mentioned by many hon. Members, including the hon. Member for Eastleigh (Mr. Milligan) and the Foreign Secretary. I always understood it to mean that decisions should be taken at the lowest appropriate level. I therefore agree with Labour Members who said that subsidiarity has obvious relevance to our structure and decision-making within the United Kingdom, as well as to European decision-making. It has obvious relevance not only to Scotland and Wales but to the regions of England. Much has been done recently by local authorities and regional bodies in the northern region to forge direct links between the regions and the European Community. I assure the Foreign Secretary that, in my part of the country, there is real feeling that subsidiarity is relevant to us and our regional future not only within the United Kingdom but within the European Community. I should like to commend to him the work of the Northern Development Company, which was set up with the support of local industry, trades unions and local authorities to achieve a high profile in Brussels and to promote the economic development of our region at home.

Activities in the northern region have been paralleled by those in other regions of the United Kingdom, including Yorkshire and Humberside, the east and west midlands, the north-west and the south-west, all of which have taken steps towards establishing their own identity within the European Community, and wish to benefit from the principle of subsidiarity.

My hon. Friend the Member for Copeland (Dr. Cunningham) referred to the Committee of the Regions. I hope that, when the Government finally get round to dealing with the United Kingdom's representation on the committee, they will ensure that not only Scotland and Wales but each of the English standard planning regions are represented. The representation of the committee should reflect the political views of the region, and its members should be chosen from the regions, rather than being appointed by the Government from within the ranks of their own supporters.

In the three areas to which I have referred--the economy, the social dimension and the regions--Britain is in danger of being marginalised and weakened if the Government pursue their present course. By treading the fine line between their pro-European and Euro-sceptic supporters--and failing to satisfy either--they are isolating and damaging Britain and the British people. If we are to make a success of our EC membership, and if the British people are fully to benefit from it we must change course and achieve greater co-operation with our European partners.

8.45 pm

Mr. Jonathan Evans (Brecon and Radnor) : If I may, I shall turn later to some of the remarks made by the hon. Member for Gateshead, East (Ms. Quin), because I particularly wish to deal with her views on the ERM.

I shall begin by referring to two excellent speeches made by Conservative Members. My hon. Friend the Member for Eastleigh (Mr. Milligan), whom I am pleased to see in his place, made a magnificent speech. I also commend the speech of my hon. Friend the Member for Esher (Mr. Taylor), who spoke with some force about the fact that of late the European debate has been affected by too much

Column 821

negativity. That negativity may have been stimulated by two events in the summer--the Danish vote on Maastricht and the currency turmoil in the ERM in September.

Much of that negativity was evident in the speeches of Opposition Members, such as in the gloomy prognosis of the hon. Member for Alyn and Deeside (Mr. Jones). I know the hon. Member, who I am sorry is not in his place, very well from his former role as shadow Secretary of State for Wales. We heard from him a litany of gloom that we have heard so many times. He was the shadow Secretary of State 13 weeks ago, and there have been three shadow Secretaries of State for Wales in the past 13 weeks, compared with three Secretaries of State in the past 13 years. Those Secretaries of State have managed to achieve a substantial transformation in the Welsh economy largely because of the positive stance that each has taken to our role within the European Community.

Those who paint gloomy pictures of the difficulties that business may be facing should consider the example of Wales, where the rate of unemployment is lower than the national average. Just after the war, 250,000 people were employed in the mining industry in south Wales, whereas today, even before the latest announcement that has caused so much turmoil in the House, only four mines remain in operation. However, jobs were found for so many of those people in enterprises backed by the substantial record of inward investment that we have managed to achieve in Wales.

A fifth of all United Kingdom inward investment has come to Wales. Why? Because the Secretary of State and his team have sold the benefits of Wales as a part of Europe. It is the advantage of being able to manufacture in Wales and to be able to sell to the European Community. Many people in Wales now have employment in Bosch, in Sony, in Panasonic and in other well -known companies which have chosen to base themselves in Wales primarily because of what we have been able to achieve in terms of a positive relationship with the Community. That is why it is so important that the House should start to develop a more positive approach towards our position in the European Community.

From time to time, there may be good reasons to question some aspects of our European partners' policy. There are good reasons for us currently to question German monetary policy. We may all agree that we question France's stance on the general agreement on tariffs and trade settlement. However, that is not a reason why we should decide that we shall be negative generally about our membership of the Community.

At Edinburgh, Mr. Delors is expected to present a statement about the economic situation in the Community. It is essential that the Community addresses the difficulties being caused across Europe by the recession. All hon. Members must recognise that the recession has caused difficulties across Europe. The difficulties have been substantially alleviated in the longer term by the excellent settlement that has now been reached in the long-standing dispute between the EC and the United States. We now hope that that settlement will lead eventually to a proper GATT round settlement. In that regard, it is somewhat churlish of Opposition Members not to recognise the demonstrable qualities of my right hon. Friend the Prime Minister, who decided to

Column 822

take charge of that situation. He averted a trade war which threatened not only Europe, but the whole world. We were days or weeks away from such a prospect. My right hon. Friend managed not only to achieve the reinstatement of Commissioner MacSharry but the backing of Jacques Delors, the President of the Commission, for the proposal.

I represent an agricultural constituency, so I recognise many of the concerns in the farming community about whether the settlement can be accommodated in the terms of the common agricultural policy reform settlement which was agreed earlier this year. Farming has been in recession for some time, and many farmers are concerned that there may be yet further reductions in farm incomes. However, my constituents recognise that a GATT round settlement is important to the whole of Britain, to the whole of Europe and to the whole world. In those circumstances, they believe that it would be disastrous if the settlement were set aside in the narrow, sectional, national interest of French sunflower growers.

There is no justification for the French Government's current position. I also find it unacceptable that, during the course of what was likely to be a difficult negotiation, the French, or some elements within the French team, seemed to have tried to strengthen their hand by the inspired leaks of documents which exaggerated the effects of a settlement. We have come to expect such conduct from the Labour party, but we do not expect it from our European colleagues. I hope that that point will be made with some force during the discussions between our Ministers and their French counterparts. The hon. Member for Gateshead, East mentioned the turmoil in the exchange rate mechanism in September. That has also had a fundamental effect in terms of confidence and in an attitude of negativity towards the Community. However, we are wrong to assume that coming out of the ERM was some great boon or bonus for the British economy. On the contrary, the effect of the devaluation on our trade deficit is that it has now broadened, as reported in our newspapers today. That is contrary to all the blandishments we heard on the matter from the Euro-sceptics. I note that there has been a far more positive approach from Conservative Members in this debate. Incidentally, I do not understand the operation of the so-called J-curve, another economic manifestation which seems to have worked its way into financial analyses of late.

There seems to be a presumption that the turmoil in the ERM affected only Britain in September. That was implicit in the remarks by the hon. Member for Gateshead, East. She said that the franc had survived--for now, I am bound to say. It seems that Mr. Schlesinger, the head of the Bundesbank, displeased by the 0.25 per cent. reduction in interest rates that was forced on him in September according to The Guardian , which I note from earlier debates today can be quoted in the House, may now be prepared to jettison the franc and even Maastricht in dealing with inflationary pressures on the mark.

We know that the franc is vulnerable. The competitiveness of the French economy has been damaged by the series of devaluations and realignments of other European currencies. It had been felt that France might have escaped by being offered an interest rate cut by the German authorities, but those prospects have evaporated today with the news, which I was at pains to draw to the attention of my hon. Friend the Member for Esher, that Germany's M3 money supply figure out today shows a

Column 823

surge to 10.2 per cent. against an annual 5.5 per cent. target figure. That seems to remove the last prospect of an easing of German interest rates.

That increase clearly shows that even Germany is not immune from the effects of currency fluctuations across Europe. It is the fact of those currency fluctuations with so many of the funds flowing into the mark which has resulted in the substantial expansion of German monetary supply. According to City analysts, the next targets for the currency speculators are the French and the Irish. The latest news appears to show that the strain on those currencies is building day by day. That news demonstrates the clear need for far greater economic co-operation between the countries of the European Community.

I was pleased to note from the remarks of my right hon. Friend the Chancellor this morning that he has for some time been pressing the German Finance Minister on the operation of German monetary policy. It is clear that the way in which German monetary policy has operated in terms of interest rates has had a most damaging effect not just in Britain but on all the countries in the EC--and will shortly, it seems, have such an effect on Germany itself.

The Delors 2 package appears to have been welcomed by the hon. Member for Ashfield (Mr. Hoon). It was particularly interesting to hear his glowing tribute to Delors 2, given that only three weeks ago he was in the Opposition Lobby voting to kill Maastricht dead. The Government's position on the Delors 2 package is quite right. At a time such as this, it is appropriate that we should be seeking value for money from all the operations of the Community and important that we should expose the myths as they come across.

My hon. Friend the Member for Eastleigh mentioned some of the myths that have been put about concerning European regulations. I am pleased to note that my right hon. Friend the President of the Board of Trade has been put in charge of scything through home-grown regulations, because, from my experience of the Ministry of Agriculture, Fisheries and Food and also of the regulations that come from Europe, I believe that there is even more work for the President of the Board of Trade to do here at home than there is in Brussels. 8.59 pm

Dr. Norman A. Godman (Greenock and Port Glasgow) : As a Scots Member, I envy the hon. Member for Brecon and Radnor (Mr. Evans) and the people of Wales the Welsh Development Agency. We had a Scottish Development Agency which the hon. Gentleman's ministerial colleagues in Scotland chose to execute--a matter of regret for many Scots. Like the hon. Gentleman, who represents a Welsh constituency, I live in a multinational state, so I have a fairly relaxed attitude to the multinational European Community.

One of the most sickening moments that I have experienced in recent months was when the Government opted out of the European Community's social chapter. That is where the hon. Member for Brecon and Radnor and I part company--pretty fundamentally, I am sure. The appearance of the social chapter in the Maastricht treaty represented for me the first real glimmer of hope that the Community might become the liberating association of peoples that its founders envisaged. Every other EC Government were enthusiastic but the British

Column 824

Government--those market force morons-- sought to scupper the social chapter, which they effectively but disastrously did.

It is typical of the myopia of the English Tory Government that they took us into the EC promising us huge economic benefits, whereas in fact we have finished up with the grant grabbing of the common agricultural policy and what I have described elsewhere as the Spanish piracy of the common fisheries policy. I have a great deal of sympathy with the remarks of the hon. Member for Banff and Buchan (Mr. Salmond) about the plight of the Scottish and, indeed, the United Kingdom fishing industry as a result of the management of fisheries by the bureaucrats in Brussels.

The original concept of the EC was remarkable : it represented a bringing together of European nations to prevent war, improve living standards in general and promote freedom. Those were laudable objectives. The social chapter is evidence that the early vision was not just a dream. The Community has expanded and will continue to expand and clearly cannot remain the greedy trading club which some little Englanders in Downing street and elsewhere desire. Admittedly, trade still seems to be the main engine of change in the Community, as evidenced by the Single European Act and monetary union, but in agreeing to the social chapter, other member Governments accepted that the rights of individual citizens and not just the rights of capital must be the Community's first concern. That, again, is an admirable view.

I should like to see the social chapter reinserted in respect of the United Kingdom, and its scope broadened to strengthen basic rights and working conditions and to cover provisions covering racial and sexual equality, pension rights, trade union recognition, maternity and paternity benefits, and so on. I want the harmonised standards specified to be based on the best standards, which are certainly not those of the United Kingdom. The biggest employer in my constituency--IBM, a major American multinational-- has no worries about the social chapter, because it more than meets the stipulations laid down in that part of the treaty.

Priority must also be given to the decision-making processes in the EC, which remains profoundly undemocratic. It is true that new powers are to be promised to the European Parliament. Even so, as an institution it will remain essentially powerless to constrain the bureaucrats in Brussels and the Council of Ministers democratically. Within the past few weeks, I have asked in the House whether some openness could be introduced into the deliberations of the Council of Ministers, but was told that that cannot be the case because of confidentiality and the Council's rules, even though I think that there is a regulation on the Council's deliberations which would allow that.

I shall be brief as I know that another hon. Member wishes to speak, but I cannot sit down without a mention of subsidiarity. Nearly every other hon. Member has mentioned it en passant, even the hon. Member for Brecon and Radnor.

Subsidiarity could deal with some of the problems associated with the absence of checks on decision making, but the Prime Minister's version of it is that decisions should be taken at the lowest appropriate level--but certainly no lower than No. 10 Downing street. In Scotland, subsidiarity has a different meaning. We believe that it should mean consideration of key EC matters by a

Column 825

strong Scottish Parliament with wide-ranging social, industrial and economic powers--a Parliament which would be much better in that regard than the German La"nder or the Spanish regional Governments, which still exercise control over social and domestic matters in a way that we in Scotland can only dream of. Without that definition of subsidiarity, the idea of a Community of the regions remains a meaningless catch-phrase.

The Prime Minister's stocktaking of the governance of Scotland is a disingenuous attempt to lull or gull the people of Scotland into quiescence. We are all fortunate that the Scottish secessionist movement is, quite properly, peaceable and adheres to parliamentary democracy. Long may it remain that way, no matter how support for the Government, low as it is, may dwindle in the next few years. Without the social chapter, the Maastricht treaty is unacceptable, and I shall argue along those lines during the next few weeks. The Government's definition of subsidiarity is also unacceptable. I have mixed feelings about the European Community, because I welcome the establishment of the European Court of Justice, as a supreme court for the Scottish and English legal systems. What the Government deny us in the so-called United Kingdom we can sometimes obtain from European Community institutions and from that supreme court. I hope that it will decide against the Government in the case of commissioner's decision CS/27/91, made in Liverpool, which stated that the Department of Social Security's decision to stop the payment of invalidity benefit to women in the United Kingdom at the age of 60 was incompatible with a directive on equal treatment in social security matters which became European Community law as far back as 1979.

I asked a question of a Minister at the Department of Social Security on the Government's reaction to the commissioner's decision. The chief adjudication officer's office told me that he intends to appeal against the decision made in Liverpool. I asked what information the Secretary of State had

"concerning the timing of the hearing of the appeal, at the Court of Appeal, of the chief adjudication officer against a commissioner's decision and if he will make a statement."

The Parliamentary Under-Secretary replied :

"A date for this case to be heard by the Court of Appeal has not yet been set since a decision is awaited on another case dealing with related issues and which is currently before the European Court of Justice".--[ Official Report. 16 November 1992 ; Vol. 214, c. 77. ] Many thousands of women in the United Kingdom lose their invalidity benefit at the age of 60. Some of them have lost as much as £30 a week. So we must seek assistance from the European Court of Justice. I have written to Commissioner Papandreou asking her to take the British Government to the European Court of Justice for their refusal to adhere to the commissioner's decision. More than 400 women in my constituency alone have been urged by me to apply for the benefit. One of them--Mrs. MacLatchie, of Port Glasgow- -on the basis of the commissioner's decision received arrears payments of about £1,000 and is now receiving invalidity benefit.

Column 826

The European Court of Justice is determining the issue, and the Official Journal of the European Community stated in its edition of 11 February, volume 35, that the court was considering the question :

"Where national law provides that there shall be pensionable ages of 60 for women and 65 for men for the purpose of granting old age and retirement pensions and that there shall be an invalidity benefit scheme for persons of working age, does Directive 79/7/EEC require a Member State to apply the same upper age limit (if any) for both men and women when defining the scope of the scheme for invalidity benefit?"

I hope that the judges who make up that supreme court for the 13 legal systems within the 12 nations of the European Community answer in the affirmative. I say that because the British Government, in the form of the Department of Social Security, are seeking to challenge in the English appeal courts the decision of the Commissioner to which I referred.

Commissioner Skinner said that the Department of Social Security was infringing European community legislation. I think I am right in saying that, under the treaty of Rome, the laws in those 13 legal systems must be compatible with European law. Thus, in the case that I have raised, concerning 400 of my constituents and thousands of women in other parts of Britain, I hope that the European Court of Justice will decide that the British Government are wrong to stop the payment of invalidity benefit to women claimants at the age of 60 when men continue to receive it until they are 65.

I confess that I was not happy when the European Court instructed the British Government to change a provision in the Merchant Shipping Act 1988, an instruction which harmed the fishermen of Scotland and elsewhere, including the constituents of the hon. Member for St. Ives (Mr. Harris). But in the types of case to which I have referred today, involving social directives, that court has proved to be in every sense of the word a supreme court, with power to instruct national Governments to adhere to European legislation.

My hon. Friend the Member for Barrow and Furness (Mr. Hutton) expressed his concern about the problems bedevilling the shipbuilding industry. I too have those problems. I believe that methods can be evolved within the Community which will give the same amount of protection to our communities as has been given to those in east Germany. But, as I have said, Maastricht without the social chapter is unacceptable to Labour.

9.15 pm

Mr. James Paice (Cambridgeshire, South-East) : As the House will be aware, pulling up the tail end, so to speak, before the Lord Major's show gets back on the road is not the most delightful experience. However, I will try to make one or two points, which have been expressed already in various ways.

First, however, I want to make the point that one of the most enjoyable things about sitting through several hours of this debate--there have not been many enjoyable aspects--has been that the majority of speeches from both sides of the House have been by hon. Members who clearly have the interests of Europe, and this country within Europe, at heart. Although there have been difference of opinion between those on the two sides of the House, basically centred on the level of public expenditure in its European guise, there has been evidence of a widespread belief that this country's future is inextricably entwined

Column 827

with the future of Europe. That is a tremendous change from many debates that we have had in the House on Europe.

I have unashamedly supported the Maastricht treaty ever since my right hon. Friend came back from Maastricht nearly a year ago. I want the House to move very quickly towards its ratification. I recognise that it will take many months of debate in the House to achieve all the Bill's stages, but, like others, I hope that we shall see the Third Reading early in May or soon after, even if the Danes do decide to defer any future referendum at that time.

There are many reasons why I support Maastricht. One of the most significant is the whole question of enlargement. I have always believed it somewhat strange that we should appropriate the term "Europe" to describe a minority grouping of the countries of Europe. In my view, the European Community will never be a full community until it reaches out and is able to embrace all the countries of the continent of Europe that wish to be part of it.

There is an element of British self-interest in seeking enlargement. It is a question of the balance of power between those who are contributors to, and those who are recipients of, the European Commission's expenditure. My right hon. Friend the Prime Minister has made the point abundantly clear, and I endorse it. The pressure for increased expenditure from the centre-- the demand in Delors 2--supported, as we have heard this evening, by many hon. Members, will be considerably reduced with the admission to the Community of the European Free Trade Association countries, which will be helping to pick up the bill for any extra expenditure and, through their voting powers within the Community, seeking to redress that balance.

There are, of course, other aspects connected with enlargement. One is the size of the European Parliament, and I hope very much that my right hon. Friends will resist the pressure from Germany to increase its representation. At the moment it is a simple system, with larger and smaller countries grouped into different brackets without specific reference to differences in population. It would be a retrograde step to move along the road of more closely reflecting population differences, because there would then need to be a clear reassessment of the representation of all countries, not just Germany.

The same applies in many ways to the question of the size of the Commission. It is important to provide sufficiently flexible and wide structures for Europe to allow for maximum participation by others as the Community develops in the short and medium terms.

Much has been said this evening about the European Community's significance to our economy. I wish to comment specifically on fiscal harmonisation and value added tax. Almost all the other member nations of the Community have multiple rates of VAT. We are in a tiny minority to restrict ourselves to just a standard and a zero rate of VAT.

I have always supported the Government's market-led approach towards harmonisation, but it is a two-way process, which requires the Government to respond to the market. I have spoken previously in the House about VAT on bloodstock, and I am delighted that my right hon. Friend the Paymaster General, who is responsible for that, is in his place tonight. I shall not go through all those arguments again, as he is familiar with them--

Column 828

Mr. George Robertson : Watch the time.

Mr. Paice : I am well aware of the time. Perhaps the hon. Gentleman should draw it to the attention of the hon. Member for Greenock and Port Glasgow (Dr. Godman) who, having said that he would take only a few minutes to speak, took 17 minutes. I wish to make a few quick points before I sit down.

The Government must re-examine their approach to fiscal policy vis-a-vis business competitiveness. We cannot demand and expect sovereignty over our fiscal policies and taxes while ignoring the external pressures placed on them. Although it is correct to say that our future economic well-being is tied up with that of Europe, it is perverse to ignore any fiscal handicaps placed before it. I have made that point to my right hon. Friend the Paymaster General several times in the past, and I look forward to his resolving the difficulties with which he is familiar.

I conclude--grudgingly, because I wanted to make a number of points--by echoing the words of my hon. Friends who have said that we must make progress in Europe with determination but with the spirit of ensuring that our future well-being within Europe is not jeopardised. We must fight for what we believe to be right. Europe is not an ogre. It is all of us and all around us, and our economy is clearly entwined within it. However, the development of Europe must work with the flow of public opinion, not against it. Some national leaders within the Community have not yet caught up with the change of public opinion in their countries against the trend of centralism. In this country, we are at one. When and if one can explain to the people of this country my right hon. Friend the Prime Minister's policies on the future of Europe, the vast majority of people will support that approach.

The sting in the tail is the word "explain". We have much more to do. Many hon. Members on both sides of the House are guilty of allowing the floor to be held too much by those who are basically opposed to an extension of our involvement within Europe. We have allowed the minority to have their way for too long. One message that has come out of tonight's debate is that the tide has now turned. 9.23 pm

Mr. Andrew Smith (Oxford, East) : I agree with the hon. Member for Cambridgeshire, South-East (Mr. Paice) about the constructive tone of the debate. It is a pity that the contributions have not been matched by the motion, which shows the Government's poverty of ambition and action. It amounts to nothing more than taking note of that great bundle of documents.

Where are the proposals to fire the imagination of peoples across Europe and rebuild confidence in what the Community can achieve? Where are the proposals to set in motion the reform of Community financing? Where is the action to tackle the democratic deficits? Where is the force for emancipation to which my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) referred? Hon. Members will look in vain through the documents, just as they will have listened in vain to the Foreign Secretary for such information, other than what he said about GATT. Indeed, the Foreign Secretary found the motion so eminently forgettable that he almost forgot to move it.

Column 829

As is perhaps inevitable with such a big bundle of documents covering so many aspects, the hon. Members who participated in the debate have approached the issues from a variety of angles, some more technical than others. I look forward to the Paymaster General's response to the issues raised by the hon. Member for South Hams (Mr. Steen) on the impact of the fiche d'impact, and those raised by my hon. Friend the Member for Greenock and Port Glasgow and the hon. Member for Banff and Buchan (Mr. Salmond) on fishing and fish of all sorts, including the Hogmanay haddock. The needs of both small firms and the fishing industry are crucial, and deserve a proper response from the Government.

The hon. Member for Wolverhampton, South-West (Mr. Budgen) presented a persuasive case, stating that the operation of parliamentary democracy would be immeasurably enhanced if we did not have the Tory Whips. I thought that that was an interesting observation.

I agreed with what my hon. Friend the Member for Gateshead, East (Ms. Quin) and the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) said about subsidiarity having to apply to the counties and regions of the United Kingdom. They said that additionality must mean extra spending, not substitution for spending that would have happened anyway. I join the hon. Member for Ross, Cromarty and Skye in praising the achievements of Commissioner Bruce Millan in that respect.

The hon. Member for Leominster (Mr. Temple-Morris) ably embodied, as did the hon. Member for Esher (Mr. Taylor), the group characterised this evening as "Whitney's Wonders". They embody one side of the chasm in the Conservative party. The hon. Member for Leominister was right to speak of the difficulties to which an indefinite attempt to stand aside from managed exchange rates would cause this country. The Government would do well to heed that warning.

The hon. Member for Leominister was also right to speak of the tragic farce of the channel tunnel being linked to the high-speed rail network on the other side of the channel, but having no similar links on this side. It should be linked to the whole of Britain as well as to London. However, the hon. Gentleman must ask whose fault that is. The Government must accept their responsibility for that abject failure.

Britain desperately needs coherent and positive policies for infrastructure investment and a proper industrial strategy. My hon. Friend the Member for Barrow and Furness (Mr. Hutton) spoke powerfully and with expertise on behalf of shipbuilding in general and his constituents in particular. How right he was to stress the importance of a concerted British and European strategy to build up and build on our superb engineering skills. He was also right to talk of the value of European co-operation and the Maastricht process in countering the appalling outbreaks of fascist and racist violence that the Community has witnessed.

As my hon. Friend the Member for Copeland (Dr. Cunningham) said, it is clear that the Government are in utter confusion over their European policy, European recovery, the EC budget and, today, the United Kingdom abatement. The House will have seen the headlines that were full of the Government gloss of Euro-expansion. Yesterday's edition of The Daily Telegraph proclaimed :

"Major urges Europe to go for growth".

Column 830

What does that amount to ? It is so much froth, and will be even more short-lived than the confident hype surrounding the autumn statement.

When I listened to the Chancellor on the "Today" programme this morning, I heard no hint of Euro-growth. I see that the Chancellor is entering the Chamber on cue. He said that he hardly recognised what was in the newspapers. Perhaps that was because it was the Prime Minister who put the stories there and not the Chancellor. However, the Chancellor denied this morning that there was to be lots of new spending for European recovery. He stressed that no figures had been discussed at any time. He announced no new projects. I see him nodding. He said that anything that happened would be reallocation of existing money.

We would have welcomed yesterday's change in rhetoric. We have long been urging a concerted European programme for recovery. As my hon. Friend the Member for Alyn and Deeside (Mr. Jones) said eloquently, we need, Wales needs and his constituents need precisely such a programme. The problem, as with the autumn statement, is that yesterday's rhetoric is not matched by today's reality. How much better it would have been if, instead of this anodyne motion, the Government had proposed real measures showing how the EC budget and the European economic recovery programme were setting Europe on the road to sustainable prosperity and full employment.

As to the budget itself, far from any stimulus to growth, the papers before us show cuts in important Community programmes. Unlike the hon. Member for Derbyshire, South (Mrs. Currie), who could not make up her mind whether to disparage more the excellent Derbyshire county council or the Treasury, I find the Treasury memoranda helpful. Annexes A and B to the memorandum of 19 November set out precisely the cuts that we face. My hon. Friend the Member for Ashfield (Mr. Hoon) referred to them.

At a time when the United States and Japan are planning to spend huge sums on research, what possible sense can it make for the British presidency and the European Council to propose cuts of 12 per cent. in Community-funded research? That is bad not just for Europe but for Britain, because research is one of the areas in which the United Kingdom has derived benefit from Community expenditure. At the start of the full operation of the single market, when environmental and social concerns have never been more pressing in Europe, how could it be right to propose cuts of 8 per cent. in the budget for environmental policy, consumer protection and social policy?

When there is such starvation in the third world, how can even the British Government attempt to justify cuts in food aid of no less than 22.5 per cent.? Those cuts show the lack of vision of the British presidency, and how the Government are failing to respond to world and European needs, just as they have failed to respond to Britain's needs. Indeed, as my hon. Friend the Member for Gateshead, East pointed out with her telling reference to the Ernst and Young report, Britain is already paying a price through lost investment as a consequence of the Conservative Government's semi-detached stance towards Europe.

Fundamental problems remain over the resolution of the EC budget itself. I ask the Paymaster General to make clear to the House what the Government propose on the cohesion fund. It is conspicuously absent from the Council

Column 831

version of the budget before us. The Government are on record, in the Chancellor's evidence to the Select Committee on the Treasury and the Civil Service last February, as having

"reservations about the whole question of achieving an adjustment by the transfer of resources".

Will the Government now tell us whether they accept the need for resources so that the cohesion fund can be set up, and how much they propose to put into it?

A further problem, aggravated by the Chancellor's comments on "Today" this morning, is the United Kingdom abatement. The Chancellor said that there would be

"no serious, significant, adverse change in our abatement ; that would not be easy for us to accept."

That has spread further confusion, because the Chancellor did not say that such a change was unacceptable ; indeed, he seems to accept that some change may be envisaged.

Next Section

Home Page