House of Commons Hansard Debates for 13 Jan 1993

Mr. Spicer : Precisely. That means that from the beginning of the third stage, and for as long as a member state has a derogation, paragraph 1 shall apply by analogy to the exchange rate policy of that member state. Paragraph 1 talks about the common interest. My hon. Friend the Minister may give us his opinion that the common interest does not mean that we will have to re-enter the ERM, but after we ratify the treaty his views will not matter. That is one of the problems. The views of the judges and of those people to whom the matter is appealed are what will count.

Mr. Budgen : Will my hon. Friend invite the Government to get some independent advice? It is all very well for us to act as though we were well-qualified amateur lawyers. Most of us are doing so out of ignorance and prejudice. A definitive statement of how the Commission and the European Court interpret the matter is required. Mr. Martin Howe argues forcefully that we shall be obliged to join the ERM--after all, he comes from a family which has some prejudices on the issue. However, the Minister says that there is no chance of the United Kingdom being forced into the ERM. Definitive and objective advice is required, either from the Commission's legal department or from the European Court, so that we know what will happen.

Mr. Spicer : The one thing that cannot be said of my hon. Friend is that he is an amateur lawyer--he is extremely knowledgeable on the matter. After we have analysed the question, it will be handed to the European Court and to the Commission to determine. It will be for lawyers to figure out how to determine it, but it seems to me that the "common interest" could be interpreted by the court to mean that we would have to rejoin the ERM as other countries are doing so. My views are no more worth while than the Minister's, because ultimately the matter will be determined by the court.

Mr. Denzil Davies : I am sure that the question of whether there is a legal requirement for us to rejoin the ERM is an interesting argument, but, in practical political terms, does the hon. Gentleman agree that if the Maastricht treaty were ratified and the Bill were to become law, the Government would rejoin the ERM around the turn of the year because there would be no logic in their being part of the exercise without doing so?

Mr. Spicer : Yes, I agree that that would be part of the logic and part of the new Maastricht philosophy which would have been accepted.

Mr. Ray Whitney (Wycombe) : My hon. Friend is being very generous in allowing interventions. I invite him to return to the phrase that is causing him so much serious

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concern--article 109m. Is he saying that he foresees a court or an amateur or professional lawyer interpreting the phrase,

"each Member State shall treat its exchange rate policy as a matter of common interest"

as the same as saying that each member state shall enter the ERM?

Mr. Spicer : That is one interpretation. I did not want to bore the Committee by reading out all of article 109m, but the next sentence states :

"In so doing, Members States shall take account of the experience acquired in co-operation within the framework of the European Monetary System and in developing the ECU, and shall respect existing powers in this field."

In that context I could understand why lawyers might decide that that was tantamount to an instruction to go back into the ERM.

Mr. Marlow : The problem with all these treaties is that the same point is addressed in several different places within them. Article 102a, under the title "Economic Policy", states :

"Member States shall conduct their economic policies with a view to contributing to the achievement of the objectives of the Community, as defined in Article 2".

If we ratify the treaty we will commit ourselves to that. Article 2 states :

"The Community shall have as its task, by establishing a common market and an economic and monetary union".

How are we to have such an economic and monetary union without passing through the ERM first? Whatever the other opt-outs and bits in the treaty, if we agreed and ratified that part of the treaty it would be used against us by European institutions that want us to come along with them more quickly than we would want. They would say that we would have to get back into the ERM.

Mr. Spicer : That is why it is unimaginable that, having signed up to the treaty and become part of it all, we would then be able to exert opt -outs. We would have signed up to the objectives and philosophy set out in the treaty and to those institutions.

Mr. John Townend : Does my hon. Friend agree that something in the way in which the Government are putting over their case does not ring true? On the one hand, they have said that they intend that Britain shall be at the centre of Europe, but, on the other, they say, "Haven't we done well? We have got an opt-out from the single currency." If we exercise that opt- out and there is a single currency or even a joint currency of member countries and we are neither in that currency nor part of the ERM, we will not be able to claim that we are in the centre of Europe. We will be on the edge of Europe, as we always have been and always will be.

Mr. Spicer : One of the paradoxes of the entire debate on this matter and one of my major criticisms of it is that the full logic of what has been done has never been spelt out. Despite everything that I have said and the strong arguments held by many of my hon. Friends and by others, the question remains as to whether, politically, matters are now so sewn up in this country as to make further resistance and debate a waste of time.

In the weeks that lie ahead some people may wonder why those of us who oppose ratification of the Maastricht treaty will continue to argue our position hard and in great detail. We have powerful arguments to place on record. One of the features of the entire debate--acknowledged by

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most dispassionate observers--is the fact that those of us who do not support Maastricht have made most of the running with the arguments in the past months. That has not necessarily happened because we are more assiduous than the treaty's defenders, but because that defence has been flawed in one crucial respect. Its defenders have not been prepared to argue for it in the only terms possible--on the basis that its avowed objective is a new, federalist state of Europe. There has not been so much coyness in other countries. I can respect the federalist position, but I do not accept it for the reasons that I have already given. I cannot accept or respect, however, the position of those who say that we can have Maastricht while at the same time retaining the sovereignty and independence of our democratic institutions.

People may still ask what is the point of resisting the united determination of those occupying the Front Benches to plough ahead with this treaty. It is a fact that the leaders of the three major parties are working together, either explicitly or implicitly, as they did, some might say to disastrous effect, over the ERM, and as they did in years gone by, with even more disastrous consequences, over the gold standard. I am beginning to wonder whether a new law of politics is about to emerge which dictates that when those on the Front Benches agree they are almost invariably wrong.

Mr. Dorrell : I am grateful to my hon. Friend for his generosity in giving way. Earlier my hon. Friend sought to explain what the common concern concept meant in the context of exchange rate policy. He said that under article 109m the exchange rate would remain a matter of common concern even if we exercised our right to stay outside monetary union. He said that he feared that lawyers might interpret that as a commitment to rejoin the ERM against our will. My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) also suggested that we should take legal advice on that point. I can tell the Committee that we have, today, published legal advice on precisely that subject in the form of a memorandum to the Treasury and Civil Service Select Committee. My hon. Friend may also like to consider that the commitment by member states to regard their exchange rate as a matter of common concern is not a recent invention, but was contained in article 107 of the treaty of Rome, which was signed more than 20 years before the ERM was invented. Therefore, it would be rather difficult to interpret that commitment, which dates back to 1958, as a commitment to join the ERM.

Mr. Spicer : My hon. Friend may make that interpretation--

Sir Russell Johnston : On a point of order, Dame Janet. May I respectfully say that your instructions to Ministers to face you has also had the consequence of their turning their backs on the microphone. While it may, for reasons of your own, be an advantage for you, Dame Janet, to see Ministers, it is also desirable that we should be able to hear them.

The Second Deputy Chairman : When I made my request I was thinking in terms of a back clearly shown to me. I have not the slightest objection if Ministers face what I call the normal way. Perhaps, for the purposes of the microphone, that would be better.

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Mr. Nicholas Winterton : On a point of order, Dame Janet. The Financial Secretary has drawn the attention of the Committee to a memorandum that the Treasury has apparently published. Is that document available to the Committee, which is currently debating this rather important matter? I should be very pleased to hear that it is, but could I have your confirmation as to whether you are aware that that document is available not just to members of the Select Committee, but to this Committee?

The Second Deputy Chairman : I have no knowledge of that and, if I heard aright, I am not sure that that is entirely a matter for the Chair.

Mr. Giles Radice (Durham, North) : I believe that I can help you, Dame Janet. The first report of the Treasury and Civil Service Select Committee was published today and the hon. Member for Macclesfield (Mr. Winterton) will be able to obtain a copy of it from the Vote Office if he goes there now.

The Second Deputy Chairman : That seems to have settled the matter satisfactorily. Is the hon. Member for Worcestershire, South (Mr. Spicer) still speaking to the amendment?

Mr. Spicer : I am trying to draw my remarks to a close, but I have been intervened upon many times by my right hon. and hon. Friends on the Front Bench--obviously they are trying to filibuster.

Given the collusion, or at least the firm agreement, that seems to exist on broad matters of policy, particularly the issue now under debate, among those on the three Front Benches, one must ask why we do not recognise reality and accept that the best way in which to keep a secret is to make a speech in the House on Europe. One may ask why we do not shut up and get on with Third Reading. I venture to suggest that, were we to do so, no one would be more embarrassed than members of the Government who are committed to not having that Third Reading before the Danish referendum.

8.30 pm

Of course, the Danish referendum will now largely determine whether the treaty is ratified. The Danish Government are hard at work trying to persuade their countrymen of two things. The first is that at Edinburgh they achieved some sort of victory for Denmark. However, no less a person than Chancellor Helmut Kohl recently knocked that idea on the head in the article that was quoted earlier by my hon. Friend the Member for Stafford (Mr. Cash). Today the Minister of State confirmed that there was absolutely no change in the treaty as a result of Edinburgh. Therefore, the question to be put to the Danish people will be precisely the same one and it will be about precisely the treaty to which they earlier said no.

Perhaps recognising the paucity of what was achieved at Edinburgh from their own point of view, the Danish Government have a fallback position--to persuade the Danish people of the dangers of standing alone against the rest of Europe. Fortunately, in this context, the British Government have already said very clearly that if Denmark rejects Maastricht, they, too, will reject it. In the meantime, the Danish people need to know that the debate goes on in Britain and in its Parliament--that in the run-up to their referendum they are not on their own. The candle of democracy still burns in the British Parliament.

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That will be the message that will go out in the next few weeks. It is a very sorry state of affairs that it has come to this--that we shall now, in large measure, be playing the role of cheerleaders, depending for our future on the will of the electorate of another country. This choice has not been of my making or that of my colleagues. We must, however, work with events--whether they be the Danish referendum, the crumbling facade of the ERM, the growing unwillingness of the Germans to sacrifice control of the deutschmark, or the increasingly anxious expressions of the British people. Time is required for these events to unfold and, in this country, for the details of the Maastricht treaty to be better understood. That is what the forthcoming debates will be all about. Let me state my position and what I take to be the position of my colleagues. Far from being a "little Englander", I am concerned, above all, to set the relationships between Britain and the other countries of Europe in the context of the high seas, of well-established international alliances and of a commitment to free trade and democracy.

Mr. Peter Mandelson (Hartlepool) : I hope that the hon. Member for Worcestershire, South (Mr. Spicer) will not mind if I do not follow on directly from his very lengthy and interesting tirade against the Maastricht treaty. No doubt, however, I shall pick up some of the points that he has made.

I want to begin by addressing those articles of the treaty that many of my right hon. and hon. Friends and I consider to be at the heart of what Britain stands to gain from the treaty and from what has come to be known as the Maastricht process--notably the aims expressed in title II of the treaty. Amid the seemingly never-ending torrent of prejudiced and selective information on this subject, people can be forgiven for overlooking--they may never even have been told--the content of this vital provision. I regard it as so important and so admirable that I shall quote it in full :

"to promote throughout the Community a harmonious and balanced development of economic activities, sustainable and non-inflationary growth respecting the environment, a high degree of convergence of economic performance, a high level of employment and social protection, the raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States."

That is an absolutely superb set of aims at the heart of the treaty. From Labour's point of view, it must be the most important part of the treaty. Indeed, as has already been said, it could have come straight from a Labour party manifesto. Any of my right hon. or hon. Friends could have written it. In fact, some probably have done when composing manifestos in the past. It is no surprise that this has caused such problems for Conservative Members.

The hon. Member for Stafford (Mr. Cash), who moved amendment No. 40 a very long time ago and whom I regard as the authentic voice of Conservative Members who oppose all matters Maastricht and European, rubbished these aims. He did so in the most eloquent, albeit disagreeable, terms. The heart of his argument was that article 2 seeks to fetter free markets and to prevent proper and responsible Government intervention in order to secure these very important objectives.

Mr. Nicholas Winterton : The hon. Gentleman has talked, quite rightly, about the attraction of article 2. Surely he is aware that one of the weapons to be used to achieve these desirable objectives is the ERM. But the

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ERM has created poverty, unemployment and industrial collapse in many parts of the European Community--not least in the United Kingdom. Perhaps as a result of the ERM the United Kingdom has lost 1 million jobs.

Mr. Mandelson : The hon. Gentleman is entitled to his opinion, but many Labour Members take the view that poverty and unemployment in the United Kingdom has more to do with the policies of the Government and the Conservative party than with our membership of the ERM.

Mr. Shore : I am sure that my hon. Friend agrees that there is a mixture of factors here. Undoubtedly one of these is the failure of Government policies over a long period, but another is the obligations of the treaties that we have entered into. The failure of Government policies, the appalling weakness of the British economy and the consequent total inability of Britain to stay in a fixed exchange rate system without sustaining massively high and unnecessary unemployment is a peculiar and lethal mixture. My hon. Friend's declaration about article 2 is fine-- nobody objects to that--but the trouble about the mention of high employment as an objective is that nowhere else in the 130-odd pages are those words repeated. All the rest is about particular policies of economic and monetary union that would work absolutely in the opposite direction.

Mr. Mandelson : I respect the views of my right hon. Friend--indeed, he is a genuine and long-standing friend. However, others take the view that the economic problems that he describes are due equally to the failure of Ministers to use the opportunities that are available through greater European integration and co-operation between Governments, which is precisely what the Maastricht treaty seeks to expand and strengthen.

Mr. Butcher : If Ministers fail, if the electorate does not like what they do, they can be sacked at a general election. But after this treaty has added to the rolling progress of Europe we shall not be able to sack the Ministers responsible for ruining the economy. The point is that our being one twentieth of a democracy will eliminate a major part of our power to control our own rate of employment or unemployment, our own interest rates and our own dynamic activity in the economy. The Labour party, the Conservative party and the Liberal party will lose that right for ever.

Mr. Mandelson : I do not accept the hon. Gentleman's view. I do not believe that we are simply victims of economic circumstances. I do not think that we are offering ourselves as corks to bob along the surface of the stormy Maastricht treaty, unable to formulate policies within the framework offered by the treaty to overcome precisely the economic and employment difficulties that the hon. Gentleman has identified. Political hands are indeed very important, and I believe that political hands other than those currently in power in this country, resting on a ratified Maastricht treaty, would create very many more opportunities for economic and social progress. For that we must wait for the next election.

Mr. Calum Macdonald (Western Isles) : My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) implied that nowhere else in the document on Maastricht is there a reference to the goal of lasting high

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employment. However, there is an agreement on social policy which has that precise aim, which the Government have opted out of but which a future Labour Government can opt into. Article 1 of the agreement on social policy says :

"The Community and the Member States shall have as their objectives the promotion of employment, improved living and working conditions, proper social protection, dialogue between management and labour, the development of human resources with a view to lasting high employment."

Mr. Mandelson : I am grateful to my hon. Friend who, characteristically, has his finger and eye on all the provisions of the treaty, not just those which some other hon. Members would selectively pick out to serve their jaundiced points of view.

Mr. Budgen : Will the hon. Gentleman give way?

Mr. Mandelson : The hon. Gentleman will forgive me if I make a little progress.

If the points which my hon. Friend the Member for Western Isles (Mr. Macdonald) has brought out so successfully from the treaty were at the front of Ministers' minds at recent European Council meetings, we would have had a different outcome from those meetings. It is shameful that Ministers, both at Birmingham and subsequently at Edinburgh, did not have those provisions at the forefront of their minds when addressing the appalling mass unemployment that exists throughout Europe. Instead of following that course, at the Birmingham summit our Government and the President of the Council refused even to place the need for European recovery on the agenda. At Edinburgh, the self-same President relegated discussions on unemployment and the need for economic recovery to talks over lunch and then forced the Council to agree a diluted set of measures and a diluted European recovery programme, which the Commission had originally sought to put before the Council for agreement. That is a shameful record and a tragic indictment of the Government's economic policies. Moreover, it is a disagreeable and disgraceful indictment of their record throughout their presidency of the European Council and how they seek to lead policy and debate on European matters in this country.

Possibly to an extent against their better judgment and will, the Government have been forced to sign up to first-rate articles at the head of that treaty which Opposition Members should applaud. We should not jeopardise that very important gain but should do everything in our power to strengthen and further it. However, it is only a start. The treaty provides us with a framework for further progress. I do not regard the treaty as an end in itself. I do not put out the flags and celebrate with beer and sandwiches the fact that we have arrived at last and have full employment and social progress now and for ever more simply because we have signed on the dotted line. The treaty is a framework--a start.

Articles 2 and 3, which some hon. Members have subjected to so much textual and literal analysis, are not a set of policies. They must now be hammered out on the basis of the articles and titles that have been agreed. They depend in turn on the policies that stem from the treaty the policies that allow national Governments to develop and implement them within the framework of the treaty. They must now be hammered out within national Parliaments and Governments and between national Governments. The fight for the full implementation of the

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treaty following its ratification will only begin once ratification has taken place. The way in which national Governments take those decisions and seek to implement the treaty will shape economic policy making post-Maastricht, and so much depends on that if we are to realise the treaty's aims.

The treaty is permissive and sets a direction. It encourages and directs us to hammer out policies of a particular nature, with goals to which we strongly subscribe, but the proof of Maastricht will be in its implementation.

8.45 pm

Mr. Denzil Davies : My hon. Friend says that the treaty is permissive. Does he agree that, on economic and monetary union, leaving aside the opt-out negotiated by the Government, it is certainly not permissive? It means irrevocable progress towards economic and monetary union.

Mr. Mandelson : Yes, which I strongly support.

Mr. Davies : But it is not permissive.

Mr. Mandelson : The framework permits the hammering out of economic policies, guidelines and decisions which have yet to be discussed. My right hon. Friend must allow me to continue to make the case as I wish-- [Interruption.] I believe that the attainment of economic and monetary union is desirable and necessary. I remind my right hon. Friend that that view is shared by the overwhelming majority of those who attended and were represented at the Labour party conference last autumn-- [Interruption.] I shall not be disrupted by points about how we arrive at our votes. Some people like to trumpet votes in favour of matters with which they agree but when they disagree with the vote, they prefer to hide it under the nearest seat. I am at least consistent in those matters. It has been my privilege for a long time to adhere to and trumpet party policy in the series of roles that I have had within my party.

Sir Trevor Skeet : I understand the hon. Gentleman's point about the mandatory obligations under the second article, but if he refers back to the treaty of Rome he will find similar mandatory obligations there. That treaty was ratified 36 years ago and there has been ample time to hammer it out, but what has been achieved?

Mr. Mandelson : I am not sure what point the hon. Gentleman is making. However, I shall take from it a reinforcement of my view, which is that those matters are in political hands and depend on political judgments and decisions. If the politicians are lacking, so will be the implementation of agreements forged between Governments. The priority to be given to growth, employment and closing the gap between rich and poor regions is important to the Labour party.

Mr. Budgen : Will the hon. Gentleman give way?

Mr. Mandelson : I am sorry, but I must carry on. I shall give way later.

The means of achieving those priorities must be fought for in the implementation of the Maastricht treaty. All is

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to play for, but one makes a decision, one forms a judgment, about a treaty like this : will the treaty and its implementation help or hinder in the attainment of those goals? The judgment that I and my party have reached is that the treaty will help us in pursuit of those goals--growth, employment and closing the gap between the rich and poor regions. That, I believe, is and will remain a settled policy for my party.

Therefore, the platform upon which the Labour party stands is not simply the treaty's articles or titles alone. They are the skeleton of the treaty. The platform on which we stand is what I could describe as "Maastricht- plus", the flesh which must be added to the skeleton of the treaty--the economic policies that are required in Britain and throughout Europe to enable our country to compete and to grow without being blown off course, as we have so often been before, by recurrent currency speculation, by inflation risks and by deflationary pressures, and in the process to rid the continent and, above all, our own country of the scourge of mass unemployment. For the goals of economic and monetary union to be fully realised, there must be a strategy--I fully accept this and believe it to be the case--to build on the treaty's strengths as well as to combat its weaknesses. What is the key to this? What is the Maastricht-plus that we need to put in place, round which core we can construct a strategy to attain those economic and employment goals which are the end of the creation of economic and monetary union? The answer lies, in my view, in the economic as opposed to the monetary wing of the provisions of economic and monetary union, economic provisions and proposals which for some reason are frequently and conveniently ignored by some of the treaty's opponents in making their rather prejudiced case against the treaty.

The key is the requirement of member states, set out in the treaty, its provisions and protocols, to co-ordinate their economic policies within a framework called the economic policy guidelines which national Governments are obliged to draw up in the framework provided for in the treaty, drawn up by the Commission and adopted by qualified majority vote in the Council. These guidelines will be set in accordance with the treaty, with a view to advancing those economic objectives of the treaty which are set out in article 2, which is certainly not monetarist or Thatcherite or rightist in any shape or form and one which could have come from the lips of any of my right hon. and hon. Friends.

Moreover, the treaty provides for a regular evaluation of the extent to which these policies, which have been hammered out and put together within the economic policy guidelines that are a feature of the Maastricht process, and the economic developments throughout the Community are consistent with these guidelines. In other words, they will keep under permanent review--the Commission working together with the Parliament and the Council--how these goals are being realised, whether we are making progress towards them, how well we are performing in attaining the objectives set out in article 2, and whether we need to make any adjustments to our policy in order to boost that performance and realise those objectives.

Furthermore, there will be crucial opportunities for political pressure-- because this is what it is all about--to be exerted to achieve economic policy making, both by national Governments and Governments working in concert throughout the Community, not only in the

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interests of individual countries but in the interests of the Community as a whole. It is not hard, for example, to see how this kind of economic policy making, based on a commitment to policy co -ordination and conducted within the framework of common objectives set out in the treaty, would have produced a very different course for German fiscal policy and interest rates from the damaging one followed in recent months.

Mr. Peter Hain (Neath) rose --

Mr. Mandelson : I will give way in a moment. If we had had that framework in place, if we had secured that co-ordination and that altogether saner way of conducting our policies, we would not have the economic problems that have been generated by German policies. We would, on the contrary, have had a Europeanising of German policy which would certainly have served us and Europe very much better and also, in the medium and long term, the German people themselves.

Mr. Hain : The comments of my hon. Friend about the Europeanisation of Germany's economic policy are welcome and I agree with them, but he is quoting selectively from the treaty. He has referred to article 2, what I call the "sunny weather and cold ice cream" clause, the kind of clause that no one can disagree with because its general sentiments are admirable. Let us look at the implementation of the economic policy to which he refers, and particularly paragraph 2 of Article 3a. It refers to an economic policy based on

"the irrevocable fixing of exchange rates leading to the introduction of a single currency, the ECU, and the definition and conduct of a single monetary policy and exchange rate policy the primary objective of both of which shall be to maintain price stability"--

The Chairman : Order. The whole point of interventions is that they are brief, succinct and certainly not repetitious.

Mr. Hain : I take your guidance, Mr. Morris, but--

The Chairman : Order. Mr. Mandelson.

Mr. Mandelson : Thank you, Mr. Morris. I am sure that this is an argument that my hon. Friend and I can pursue at greater length, possibly over a cup of tea, later.

The point that I would like to stress now is that in the macro-economic sphere, in macro-economic policy-making, Maastricht offers us clear gains for sane and enlightened conduct of policy. The extent to which we are successful in cobbling together sane and enlightened policies depends on the actions, decisions and judgments of politicians ; everyone is fallible, we are only human. But what we are talking about is a framework and whether we have in place a framework that allows us to behave in a sane, rational and enlightened way. I believe that the treaty gives us that framework.

Mr. Denzil Davies : My hon. Friend talks about economic policy. Does he not agree that the problem with the Maastricht treaty, as with Germany, is that monetary policy is not in the hands of politicians, but economic policy is? That policy is codified in the Maastricht treaty, which will present the problem.

Mr. Mandelson : Whatever the advertised strengths and independence of the Bundesbank, I think that politicians in Germany would be surprised to hear that they have absolutely no influence in German monetary policies.

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Mr. Radice : My hon. Friend is absolutely right. German politicians fixed the terms of the German monetary union, which has been so disastrous, not the Bundesbank, which had a sensible policy. 9 pm

Mr. Mandelson : I recognise that some of my right hon. and hon. Friends have fears about the monetary policy. Anxieties about the possible deflationary effect of the treaty have been expressed in the debate, as they have been before and will no doubt be on many occasions in future.

I understand those fears, which are real, but are hugely exaggerated to serve a political argument. They represent a highly partisan and coloured view of the treaty and the Maastricht process. Those fears exist, although we should separate them in our minds from the parody of objections contrived by those who are not just anti-Maastricht, but fundamentally anti -Europe and are refighting a battle over our entry in the European Community that was won 20 years ago.

Many such fears focus on convergence and the terms under which we move towards economic and monetary union. I do not wish to speak at great length on the convergence criteria as that issue was addressed in detail and with considerable eloquence by my hon. Friend the Member for Oxford, East (Mr. Smith) when he spoke from the Front Bench. However, I shall reinforce his views. I strongly believe that member states' readiness for EMU must be tested, not only by the narrow, financial criteria based on interest and inflation rates, and the fiscal deficit--which are constantly mentioned by the treaty's opponents--but on the readiness and convergence of the real economy. Two important additional criteria must be considered and must lie at the heart of the convergence process and our approach to it. Those criteria relate to the performance of our economy, notably the levels of unemployment and investment. I strongly echo the repeated calls from Opposition Members for precisely those economic, industrial, training and skill-raising policies of investment in the infrastructure and human resources throughout our economy, which will improve the performance and strength of our economy. That will enable convergence to take place expeditiously and smoothly.

Fulfilling those crucial additional criteria relating to employment and investment is central to the Maastricht-plus programme advocated by Opposition Members. We must ensure the full implementation of the Delors 2 proposals for financing regional development and social cohesion--factors which are so important for the regions of our country, such as the northern district which contains my Hartlepool constituency. We must raise the level of investment and employment throughout the country if we are to secure convergence and succeed in meeting the criteria that will be applied as we move towards economic and monetary union. I hope that Conservative Members and, certainly, Opposition Members will share my view and support the crucial initiatives required to strengthen the competitiveness, performance and investment of the real economy in this country.

In addition to the views and fears expressed about the convergence criteria, two other types of fears and principal objections to the treaty are made, particularly by some of

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my right hon. and hon. Friends. The first is that EMU would mean a Europe dominated by unaccountable bankers and the second is that, under the treaty's provisions, member states would have to cut public expenditure.

First, I shall address the issue of the so-called bankers' Europe. It is said that the proposed central bank system would have the primary objective of maintaining price stability and

counter-inflation policies which, in the view of those who advance that argument, would be deflationary. The system's independence would ensure that it followed policies that could not be influenced. The arguments are presented in a way that leads one to assume that the policies would be uninfluenced by any other economic goal or consideration. Therefore, the entire central banking system would be biased against growth and employment and in favour of tight and rigidly applied monetary policies whose sole aim was deflation. Finally, the relevant national central banks, rather than the European system of central banks, would have to mirror those provisions and be equally independent.

To the best of my ability, I have looked into the matter with care. I have read the treaty and all the comment on it. The argument that I have outlined is based on a selective and misleading reading of the treaty. The proponents of the argument speak about the primary objective of the European central bank system and some have said that that is its only objective. It is easy to slip from one word to the other, from primary to only, transforming the meaning and intent of the treaty.

Article 105 sets out the price stability objective. It also states that the European system of central banks

"shall support the general economic policies".

It does not mention only the narrow monetary aim of attaining price stability but refers to

"the general economic policies in the Community as laid down in Article 2."

I quoted that at the beginning of my speech.

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