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Mr. Shore : The important words are the connecting ones to "the objective of price stability"
and the other aims of the Community. Those important words are "without prejudice to the objective of price stability". That is not to say that that is the only aim, but it clearly establishes that it is the major aim, the primary aim, of the European bank.
Mr. Mandelson : I quoted the article properly. It refers to "The primary objective".
I hope that my right hon. Friend will not argue, as was argued earlier by my hon. Friend the Member for Great Grimsby (Mr. Mitchell), that price instability is almost desirable. It has never been my party's approach to policy making to regard price instability as going hand in hand with fast growth and high employment. In my experience, precisely the opposite is the case. Price instability goes hand in hand with unemployment and subsequent deflation.
Mr. Shore : That experience is an inevitable consequence of my hon. Friend's age. The only period of price stability that I can remember was during the 1930s when there was mass unemployment. We have not had price
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stability under any post-war Government and, as we all know, all periods of price stability have been brought about by massive deflation.Mr. Mandelson : Not for the first time, my right hon. Friend has outclassed or upstaged me in terms of his years. I cannot compete with him on that basis.
Mr. Radice : Will my hon. Friend give way?
Mr. Radice : I remind my hon. Friend of the experience of my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) when he was a Minister in the 1960s. At that time inflation was low, as was unemployment. There can be a relatively stable price system at the same time as relatively low unemployment. That is the experience of our respected right hon. Friend.
The Chairman : Order. I hope that we shall not explore the 1960s. We are on amendment No. 40.
Mr. Mandelson : Speaking on behalf of the forward-looking and modernising--
Dame Elaine Kellett-Bowman (Lancaster) : In advance of the 1960s, in the days of Selwyn Lloyd, we had precisely the same phenomenon of stable prices and a prosperous country.
Mr. Mandelson : Bring back Selwyn Lloyd, in whatever guise.
Dr. Roger Berry (Kingswood) : What policies would my hon. Friend pursue to achieve price stability or zero inflation, and what would be the effect on employment and economic growth of those policies?
Mr. Mandelson : I think that that would--
The Chairman : Order. The hon. Member should not be tempted down that route.
Mr. Mandelson : I shall not be tempted to follow that course, Mr. Morris. I merely refer my hon. Friend to the latest policy documents that have been issued by the Labour party and the policies that will be revealed next week as we prepare our ground for our pre-Budget campaign. I am sure that enlightenment will follow.
Mr. Andrew Smith rose --
Mr. Mandelson : I give way to my hon. Friend on the Opposition Front Bench.
Mr. Smith : I return to the 1930s, as it were, and to the intervention of my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore). Is it not the case that in the 1930s prices were falling? A central bank operating under the injunction to sustain price stability would have had to adopt an expansionary monetary policy, which would have regenerated the economy, stopped prices falling and been good for employment.
Mr. Mandelson : With respect for you, Mr. Morris, I shall not pursue the matter any further. I merely say that the points that have been made in interventions are absolutely right and apposite. I shall move on to make two final points--
Mr. Corbyn rose --
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Mr. Mandelson : I shall give way to my hon. Friend.
Mr. Corbyn : It is an apposite point--
Mr. Mandelson : I am sure that it is.
Mr. Corbyn : Will my hon. Friend tell us how he proposes to influence a European central bank that is composed of bankers who are appointed for eight years, who are answerable and accountable to nobody and whose policy objective has been set down? How does he propose to influence them when there is no mechanism to allow that to happen?
Mr. Mandelson : My hon. Friend's intervention was genuinely apposite. It can be dealt with now and not over a cup of tea later. First, decisions and jugments will be taken and made within the framework of a politically determined economic strategy within economic policy guidelines in a way that I have already described. I do not know whether my hon. Friend was present for the earlier part of my speech. These matters would be considered politically within the economic policy guidelines that are a feature of the treaty. Secondly, such matters would be co-ordinated through the Council of Economic and Finance Ministers. Thirdly, important decisions, such as the control of the exchange rate, would remain with those Ministers, and would be politically controllable to a large extent, albeit in a different way. At the end of the day, decisions would be determined politically and would be in the hands of Ministers. The question is which Ministers, and that is a wider and separate issue which we have dealt with during the debate.
My next point concerns not the system of European central banks but our national central bank. I can imagine no circumstances, and certainly no reading of the treaty, that yields the conclusion or inference that our own national central bank, however independent, would go entirely unconstrained by some element of political control under any Government of any party, just as the German Bundesbank does not go entirely unconstrained by political influence exercised by duly and properly elected Ministers.
9.15 pm
Mr. Marlow : I thank the hon. Gentleman for giving way. He is being very patient and decent. I draw his attention to article 107 which says :
"When exercising the powers and carrying out the tasks and duties conferred upon them by this Treaty neither the ECB, nor a national central bank, nor any member of their decision-making bodies shall seek or take instructions from Community institutions or bodies, from any government of a Member State or from any other body." So how accountable are they?
Mr. Mandelson : The truth is that they are somewhat accountable and should be more accountable. It is precisely the aim of the Opposition's policies and proposed amendments to the Bill to increase and enhance that political accountability and to strengthen that political framework within which decisions and the operation of the national central bank, as well as the system, take place. Just as the German Bundesbank has, by law, to take account of the views of duly elected Ministers and politicians, so would our own independent national central bank, and so, too, would the European system of central banks as a whole.
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Mr. Budgen : I hope that the hon. Gentleman realises that if that part of the treaty to which my hon. Friend the Member for Northampton, North (Mr. Marlow) referred was amended by the House and the matter was taken back to the German people, they, in their legitimate pride in the independence of the Bundesbank, would without doubt reject the treaty. It is no good pretending and fuzzing this over. Is it not the case that the Bundesbank has an obligation to take account of political views, but it is an independent bank? If the hon. Gentleman and the Labour party seek to alter that independence in the European central bank that will be the end of the treaty.
Mr. Mandelson : I do not accept the premise of what the hon. Gentleman says. It is a myth that the Bundesbank is totally independent and entirely uninfluenced by Ministers and by political considerations. I understand why the hon. Gentleman wishes to create that view. He wishes to present the treaty and the Maastricht process as some sort of appalling monster that will devour Economic and Employment Ministers and lay bare the continent of Europe so that the outcome of the implementation of the treaty and the Maastricht process is the exact reverse of what we want to achieve, and what I firmly believe we will achieve if we move towards economic and monetary union and the full and proper implementation of the treaty.
Mr. Macdonald : I do not expect my hon. Friend necessarily to agree with my view here, but sometimes the whole question of independence of the central bank is rather exaggerated and overrated. My hon. Friend has already given the example of the German Bundesbank and the way in which it undoubtedly takes some guidance from the German Government. The independence of the American Federal Reserve did not impede the pursuit of a new deal programme in the 1930s by the Democratic party. The Swedish central bank has been independent since, I think, the 16th or the 17th century and that has not impeded the pursuit of socialism in that country. Therefore, the question of independence is sometimes rather exaggerated.
Mr. Mandelson : My hon. Friend makes a good point. There is nothing automatic in the creation of a set of institutions which means, as sure as day follows night, that the policy prescriptions will be negative, deflationary or whatever. The fact is that institutions do not automatically or inevitably lead to any development ; the political decisions that are made within the economic and monetary framework that is clearly established in the treaty will determine how those institutions perform, and whether they help or hinder the process of employment creation and growth that Opposition Members want.
The first principal objection to the treaty related to the establishment of a "bankers' Europe"--not an attractive term, but one with which we have effectively dealt. [Interruption.] It may not have been dealt with to the satisfaction of all my right hon. and hon. Friends, but it has certainly been dealt with to the satisfaction of my hon. Friend the Member for Durham, North (Mr. Radice), whom I regard as a bit of a pushover. The second principal objection relates to the argument that the implementation of the treaty would result in a cut in public spending.
That, too, does not strike me as an automatic or inevitable consequence of the treaty. It is our job to ensure that it is not. The argument is based on article 104c, which establishes restrictions on Government borrowing under
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economic and monetary union and sets a target for the deficit : it should not exceed 3 per cent. of gross domestic product. Overall Government debt should not exceed 60 per cent. of GDP.It is clear, however, from any reasonable reading of the treaty, and from any reasonable interpretation of the way in which politicians--separately, jointly and severally--might seek to implement its provisions, that the rules are very flexible. The main requirement in relation to the deficit is for progress to be made towards the target.
Mr. Mandelson : I must say that I would rather have the economic policy guidelines of the European Community and the framework of joint policy making prescribed by the Maastricht treaty than the IMF on my back again.
Mr. Winnick rose--
Mr. Denzil Davies rose--
The Chairman : Order. The hon. Gentleman must pay attention, and make it clear to whom he is giving way. He sat down without making it clear whom he wished to take the Floor.
The hon. Gentleman has been speaking for nearly an hour. I must ask him to concentrate--but I now understand that he wishes to give way to the hon. Member for Walsall, North (Mr. Winnick).
Mr. Winnick : I am grateful to my hon. Friend. It should be said, in all fairness, that he has been subjected to many interventions. The treaty prescribes a 3 per cent. limit, along with the penalties that would be incurred by Governments who exceeded that limit. The employment position is spelt out in very general terms, but the same does not apply to the 3 per cent. limit. In recent months, a socialist Government in Spain decided to cut public spending substantially, using the 3 per cent. limit although the treaty is not yet in force. They say that they want to implement economic convergence as quickly as possible. If a socialist Government are willing to do that, what would a Government such as ours do if the treaty were in force?
Mr. Mandelson : It is an illustration of what the politicians and Ministers in the Spanish Government chose to do. The operative word is "may"--they chose to do it for whatever reason that was relevant either to the circumstances of their domestic economy or to any other consideration. If they pray in aid the treaty's terms, provisions and convergence criteria to justify their actions, that is up to them. The crucial point is that those are political decisions--judgments formed by Ministers.
Such decisions should not be taken under the treaty in isolation from any other consideration of the economic policy, guidelines, and framework prescribed by the treaty, and it is up to national Governments to make it clear that they see the 3 per cent. deficit target as something at which they will aim and make progress towards, but which will not be rigidly applied--as is their right. It would only be operable over the time of an economic cycle.
Mr. Denzil Davies rose --
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Mr. Mandelson : I am sorry, but it is 25 minutes past nine--and although you, Mr. Morris, were not fair when you said that I had been speaking for one hour--
The Chairman : Order. I said that the hon. Gentleman had been speaking for nearly one hour.
Mr. Mandelson : Nearly right, Mr. Morris. Before I use up any more of your patience, I will conclude--if you do not mind.-- [Laughter.] I said "if you do not mind" because I have received some encouragement to speak considerably longer, with what ulterior motive I do not know and can only guess at.
I will make three points in conclusion. First, our overriding aim is to make the treaty and the whole Maastricht process into what most of its authors wanted--an engine for sustainable growth, not an instrument of deflation in this country or any other member state. Taking the requirement of economic policy co-ordination, a medium length of time, and the properly defined nature of the convergence criteria described gives us the scope to pursue policies that will achieve that objective in practice.
Secondly, the treaty is not a set of commands. It is not immutable. Its terms are not set in tablets of stone. The treaty specifically provides for the further development of its provisions--for example, the replacement of the protocol of convergence by appropriate measures to govern the operation of convergence in practice. The treaty is capable of change, of evolving, and of being turned into an instrument of our need and desire to serve our national purposes and those of the Community.
Above all--and I make no apology for concluding on this point--it is the political nature of national Governments and the political balance of forces within Europe that will determine the success or otherwise of the Maastricht project. It is not the dots, commas, and every letter of the treaty's articles and titles that will determine whether the project is a success. That will depend on politicians taking political decisions, having formed political judgments. Maastricht is an instrument to be used, honed, developed and bent to the economic needs of the Community. On that basis, I regard it not only as a wholly necessary and desirable further stage in the evolution of the Community of which I want this country to be at the heart but an absolutely necessary and important condition for the economic progress within this country that I and members of my party want to achieve.
Mr. Whitney : I am happy to join the hon. Member for Hartlepool (Mr. Mandelson) in welcoming the Maastricht agreement and to endorse the emphasis that he placed throughout on the need to fight unemployment. But that objective--which all Conservative Members share--is in direct conflict with the support of the hon. Gentleman and his party for the provisions of the social chapter : whatever the extent of its impact, that chapter will undoubtedly have a negative impact on employment.
I agree that the Committee should reject the amendments in the group, which are of a broad and sweeping nature and which, in effect, amount to a rejection of the Bill. I find that surprising, given that not so long ago, on Second Reading, the House voted by a majority of 244 for the principle of the Bill. Moreover, all three major parties fought the general election on a campaign programme that endorsed the Maastricht treaty.
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Both today and in our debates before Christmas we have heard hon. Members--and some right hon. Members--on both sides of the House attempt not only to stop the clock but actually to move it back. Some hon. Members have a long tradition of being wrong about Britain's role in Europe. I am more concerned about the position of hon. Members who, over the years, have voted to support Britain's adherence to the treaty of Rome, the Single European Act, qualified majority voting and the rest--which we have already discussed at length this evening and on which I shall not therefore dwell--but who are now finding excuses to move away from the position that they endorsed.9.30 pm
Mr. Bill Walker : I do not rise to defend myself, because I am not one whose position has changed. I should have thought, however, that the essential ingredient of parliamentary democracy is that when hon. Members think that something is wrong, they should admit to it and say, "Perhaps I made a mistake." If we do not do that, what is the point of our debates?
Mr. Whitney : I am happy to agree with my hon. Friend the Member for Tayside, North (Mr. Walker). But most of us find those hon. Members' position odd because at the time when they voted to support Britain's involvement, the arguments for our playing a positive role in Europe were somewhat weaker than they are now. As the years go by and as views in Europe develop, the argument for Britain's playing the part in Europe that the Government advocate for it grows stronger.
Of course we understand concerns about "federalism", which I would call centralisation--there is a translation problem because the word "federal" means different things to different nationalities. But there is and always will be an unashamed battle between those who envisage a centralist western Europe and those of us who do not. We should remember the lessons of the past 12 months--the success of Maastricht and the achievement of turning it away from the direction in which the original Dutch draft was headed and into the agreement that finally emerged. Public opinion has been demonstrated not only in the Danish referendum and the French vote but in Germany and in many other parts of Europe and there is clearly a strong feeling that people do not wish their national identities to be submerged. That should encourage my hon. Friend the Member for Tayside, North and any other doubter who believes that the Maastricht process is a remorseless juggernaut moving in one direction alone.
Some of my hon. Friends give the impression that they are living in a cloud of their own making. For example, my hon. Friend the Member for Worcestershire, South (Mr. Spicer) spoke of the abolition of the nation state. I wonder where he has been for the past 10 or 12 months. Let him go to France and tell any Frenchman that he voted for Maastricht, albeit narrowly. We understand that the French referendum involved many other issues and was certainly not on the Maastricht treaty. If my hon. Friends suggested to any Frenchman that he was moving towards the evolution of the nation state, my hon. Friends know the sort of answer that they would get. The achievements must not be underrated.
The concept of subsidiarity was an easy concept to mock. Subsidiarity is a difficult word. No one could find a satisfactory substitute for it. Gradually, as a result of the
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steps that were taken and the efforts led by my right hon. Friends on the Front Bench, the concept of subsidiarity has been accepted as part of the European scene, and increasingly will be so. We should take account of that and take pleasure in it. No one can deny that there will be difficulties in converging the existing 12 member states and in enlarging the Community in the future, but the objective is worth while and important.It is important that the House considers carefully this Bill, which, although it is short, is undoubtedly crucial. The procedural difficulties in the Bill are not great, and the impact of unnecessary delays in the passage of the Bill is sometimes overlooked by some hon. Members.
Mr. Spearing : I agree that the Bill is short. Does the hon. Gentleman agree with the analogy that it is nothing but a pipeline which connects us legally to the obligations in the treaty? Does that not mean that we need to examine carefully the complex legal obligations, especially those contained in the titles which we are now debating? Ideally, we should re-examine the treaty line by line and find out what it is about. Without such an examination, we do not know what the treaty is about.
Mr. Whitney : We all know that too much logic leads to serious trouble. If the hon. Gentleman pursued his argument to the logical conclusion, we would not stop at the 130 pages in the Maastricht treaty. Almost every paragraph in the treaty takes us back to the treaty of Rome, so this treaty must be limited. We want to amend the appropriate parts of the British law. Although that fundamental is important, no one argues with it. The fundamentals are finite and manageable in parliamentary terms within a reasonable number of hours. They do not extend the time unnecessarily. We have been extremely generous in the progress that we have already made. It is important for those hon. and right hon. Members on both sides who are inclined to delay such events to take into account the national interests of Britain. In a letter to The Times on 2 November 1992, the president of the Confederation of British Industry and 27 top leaders of British industry asked for an early passage of the Bill. In the letter they pointed out :
"Continuing uncertainty over the Maastricht treaty and our future in Europe is already having a damaging effect. Without a clear message soon from Parliament, political uncertainty will translate into more lost output and unemployment."
I beseech my hon. Friends to take account of that message. Sir Michael Angus and his friends speak from the business and commercial point of view. While I dwell on the letter, I point out that Sir Michael Angus and his friends also emphasise :
"The single market is more than a free trade area : it requires regulation and enforcement to ensure that barriers to competition are removed. The ratification of Maastricht will assist the development of that regulatory framework and will help to ensure that the single market continues to move forward."
Since then we have passed the date at which the single market is, at least theoretically, in operation. Yet we have still to make significant progress in the ratification of the treaty.
That plea from the leaders of British industry about the economy and tackling unemployment should not go unheard by any of us in the House. Some of the comments that we have heard today and in earlier debates from those who are doubtful about and hostile to Maastricht betray
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a lack of confidence in our country. I know that they wish to stand up for British interests, but they display a lack of faith in our ability to do so.For example, I reject the idea that for years to come we shall never put the economy of Britain into a state in which we can look in the eye the economies of continental Europe and, therefore, in due course rejoin the ERM and adopt a single currency. But that is for the future. Certainly, today we must ensure that we do not retreat and say that we cannot compete with our partners in the European Community. We most definitely can.
It is an odd arrangement that some of my hon. Friends say, "This is going too far ; all that we would like is a free trade area", when our erstwhile partners in the European Free Trade Association are passing us coming the other way. Just as we seem to want to move into the outer corridors of the European Community, we meet the Swedes and all the rest coming in. They have understood the benefits of the European Community as it now is. It would be odd if we moved in the opposite direction.
The concept that the European Community has only ever involved trade and economic affairs is false. The treaty of Rome, for accession to which virtually all my hon. Friends who now object to Maastricht voted, referred to an ever closer union. That was the original concept of the treaty of Rome in 1958.
I refer the Committee to a far-sighted statement made by a Head of Government some eight or nine years ago which said :
"It must be our objective to aim beyond the Common Commercial Policy through Political Cooperation towards a common approach to external affairs This means giving greater depth to the Community both in its internal and external activities."
The message concluded that we should
"take the necessary steps to strengthen the voice of the Community and make its influence felt in the world ; heighten the consciousness among our citizens of what united us".
The current word is vision. That was a statement of vision. That statement was made on 25 June 1984 by Baroness Thatcher. She was right then. Those aims should certainly remain our objective. I hope that from time to time Lady Thatcher will take down from her archives that memorandum and remind herself of the foresight and vision that she demonstrated to the other Heads of Government eight and a half years ago.
In the interests of furthering the debate, I do not wish to prolong my speech. I merely wish to say that the single market that we have put into operation has underlined even more the need to make progress on ratification of the Maastricht treaty. It underlines the dangers that unnecessary delay would cause to Britain's national interests. Finally, we must concentrate on Britain's national interests and not on those of Denmark--they are the responsibility of the Danish legislators and their people. We have our own interests and we should have our own timetable, which should be a steady, but relatively rapid, approval of this excellent treaty.
9.45 pm
Mr. Denzil Davies : Because of the nature of the amendments, the debate has ranged over practically all of title II. Someone like myself, who has been in the House for 20 years and has sat through many such debates, may
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be surprised at the transformation in the attitude of so many hon. Members on both sides of the House to the European Economic Community, or the Common Market as it used to be called when I came to the House.I remember 1972, when a demoralised Conservative party, frightened of the unions at Upper Clyde and having ditched Selsdon Man in the first two years of the Administration, was persuaded by the then Prime Minister and a few of the zealots around him that the treaty of Rome was only about trade and economics. They believed him for some time.
We moved on to the Single European Act--as it is rather oddly called--and again a Conservative Prime Minister was able to convince himself, perhaps, and the rest of the Conservative party that the Single European Act was only about free trade. Somewhere between that Act and the Maastricht treaty, a large section of the Conservative party has realised that it is all about union. The treaty may be about economics and about trade, but it is far more than that--it is about union.
I remember saying that the Celts recognise unions--they can sniff them out and they know them when they see them. The English do not know much about unions, but a large section of the Conservative party has now realised that the Maastricht treaty is about union, as was the Single European Act and the original treaty of Rome.
The hon. Member for Worcestershire, South (Mr. Spicer), who is not in the Chamber, tried to justify--as other Conservative Members who were in the House in 1972 have--his support for the treaty of Rome and for the Single European Act and his opposition to the Maastricht treaty. I understand his attempts at justification.
The treaty is a substantial step on the road to union, but it is not basically very different from what went on before. Perhaps I shall be in the House for the single European final act--the final solution. There will be another Act--there has to be, because the structure that is being set up is neither fish nor fowl.
We have spent a long time arguing whether the treaty is federal. What is it? No one quite knows, except that we know that it will mean the transfer of a substantial amount of democracy. We do not have to use the old- fashioned word sovereignty if we do not want to. The treaty will transfer a substantial amount of democracy from the Parliaments and elected Governments of all 12 countries to non-democratic institutions. That is a fact and it may or may not be a good thing for some people. There will be a significant transfer of power to the European central bank and to the Commission to the detriment of democratic accountability.
Matters have been mapped out in a brilliant fashion. Those who are behind the policy know that pressure is bound to increase to relieve the democratic deficit, as it is called. They will attempt to do that by increasing the powers of the European Parliament and by setting up some kind of executive. All that will reduce still further the powers of national Parliaments. That will lie behind the final Act and I may still be in the House when it is introduced. If we still have a Conservative Government then, no doubt the Prime Minister will make speeches at Tory party conferences to assure people that, although our sovereignty may go, our national identity will be retained. I remember the little old lady from the Scilly Isles who asked the present Prime Minister not to lose our national identity in a federal Europe ; he was happy to reassure her about that.
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