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Mr. Calum Macdonald (Western Isles) : I believe that my right hon. Friend is trying to distinguish between full employment and high employment, and is complaining that although the treaty refers to "high employment" it makes no mention of full employment. Will he define full employment? Does it mean 100 per cent. employment? If not, surely we are talking about high employment.
Mr. Davies : I am not distinguishing between high and full employment. I would have made the point that when we talk of full employment we all know that it is not 100 per cent. employment. I was merely arguing that the phrase "high employment" was chosen carefully because those who drafted the treaty did not wish it to make a specific commitment on unemployment. The thinking behind monetarist strategy-- certainly as developed by the theorists in Europe in the 1980s, although it may be changing in the 1990s--is that employment takes care of itself.
Mr. Macdonald : Will my right hon. Friend give way?
Mr. Davies : No ; my hon. Friend can make his own speech. I have made my point.
I shall not repeat what I said last night about non-inflationary growth, but some of my hon. Friends have gone to town on the subject. My hon. Friend the Member for Hartlepool--who can perhaps be described as a member of the modernising tendency of the Labour party--wanted the subject to be contained in the Labour party manifesto. He said that everyone was in favour of non-inflationary growth. I noticed that as his speech and that of my hon. Friend the Member for Oxford, East progressed, the term "non- inflationary growth" was dropped in favour of the word "growth". However, before one achieves non-inflationary growth one must have non-inflation. Those with modernist tendencies must be careful.
I am not sure about non-inflationary growth. I do not think that the residents of Hartlepool who own houses that they are trying to sell want non-inflationary growth. Most of middle England and the middle classes-- perhaps I should say, a la Clinton, the working middle classes, although I do not think that the British middle classes would like to be called that-- do not want non-inflationary growth. In fact, they are desperate for inflationary growth. I caution my hon. Friends who are going a bundle on monetarist theory--as I have said, I do not use the term pejoratively--that they must treat that policy as part of a
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pattern. Non-inflationary growth fits in with a school of thinking which has existed for a considerable time : it existed in the 1970s and was developed, mostly as academic theories, in the 1980s. We must be careful when we try to gain assistance from specific phrases simply because they make up part of the treaty.Title VI of the treaty--perhaps it should be subtitle VI, although I can see why it has been made title VI--deals with economic and monetary union. There is article 104c, which deals with excessive deficits, and article 105, which deals with monetary policy and sets up the European system of central banks. I will deal first with excessive deficits, because there was some dispute on this side of the Committee and my hon. Friends--certainly my hon. Friend the Member for Hartlepool--dealt with it at length.
We can agree that according to the treaty the budget deficit must not be more than 60 per cent. of gross domestic product, and Government debt--not strictly the public sector borrowing requirement, but Government debt--must not be more than 3 per cent. of GDP. My hon. Friend the Member for Hartlepool--having told us that it is really all a matter of the broad sweep, the general interpretation, and that the politicians still have their hands on it all and therefore it is all right--proceeded to embark on a textual criticism of the article on excessive deficits. He looked at almost every comma and every word to try to show that it did not really mean 3 per cent. and that we would not be affected.
Then, after all this hoo-ha and argument, my hon. Friend came to a conclusion with which I agree. I tried to intervene to say this, but I do not criticise him for not giving way because he had given way so often. This is what he said, and I agree entirely :
"The main requirement in relation to the deficit is for progress to be made towards the target."--[ Official Report, 13 January 1993 ; Vol. 216, c. 1003.]
I cannot disagree with that statement. It is an almost ministerial type statement, well honed, well considered. We all admire the way my hon. Friend does these things and we all admired his speech. So the beautiful summing up of the article is that the main requirement is progress towards the target. The Financial Secretary may even repeat the words, taken from a Treasury brief, when he is winding up. It does not have to be done in one year, of course. No one could get the Italian deficit down to 3 per cent. in one year ; even those who framed this treaty in their ivory towers realise that. It is not a big bang theory at all ; it is death by a thousand cuts. It will happen gradually because, as my hon. Friend says quite clearly, it is progress towards the target. The target we are concerned with is the percentage of GDP that the Government borrow. We understand that at the moment it is around 7 or 8 per cent., so the Government will no doubt start now, and will certainly have to start on 1 December 1994, if the Bill goes through the House and the treaty is ratified. The Government will have to start when stage 2 starts, not by imposition but gradually over the years, reducing that 7 per cent. to the 3 per cent. in the treaty. I am sure that my hon. Friend would not argue that that is wrong ; it is what is said in the treaty.
Mr. Peter Shore (Bethnal Green and Stepney) : My right hon. Friend is being almost too generous with regard to these reference figures, 3 per cent. and 60 per cent., even allowing for the margin of movement, because both
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sub-clauses contain the words "close to" the reference level ; they must be moving in the right direction and they must also be close to the reference level.Mr. Davies : Yes, indeed, they have to, because the whole purpose of the exercise is to get eventually to economic and monetary union and a common currency.
This exercise will probably have to go on, because we shall not have arrived at 3 per cent. by the time the next Labour Government take over in 1996 or 1997. We may not have reached 3 per cent. by then ; we may be around 5 per cent.--who knows? The Government of my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) will come in faced with this. The Government will perhaps be composed of a number of parties. We may find as deputy Prime Minister the right hon. Member for Yeovil (Mr. Ashdown)--we do not know--and my hon. Friend the Member for Oxford, East having worked hard in his unproductive orchard, will by then have become Financial Secretary. My hon. Friend the Member for Hartlepool will be a vigorous Back Bencher, striving to get Government money for the inner cities of the north-east, particularly Hartlepool. He will be asking my right hon. Friends for more money, but they will be looking at his speeches and quoting back at him his statement that we have to reach the target. He will have to go back to Hartlepool and explain matters to his constituency party. Young people, not only in Hartlepool but in Llanelli, who drive around in cars that are not theirs and put matches into petrol tanks will probably not come to any of our meetings, but it will have to be explained to them, too, somehow or other, that we cannot do much about it ; it is there in the treaty and unfortunately the Lib-Lab Government, or whoever they may be, with the modernising tendency no doubt in the vanguard, will have gradually to start making cuts.
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We may not have to cut expenditure, however ; we may put up taxation. We have assumed that the way to get to the 3 per cent. is to cut public expenditure, but it is a reduction of Government debt and, as far as I am aware, there are two ways of reducing Government debt : reducing expenditure or increasing taxation, or a combination of the two. That choice will still be there.
My hon. Friend the Member for Hartlepool referred to "hands-on" politicians, and certainly the hands-on politician will have to decide whether we put up taxes or cut public expenditure.
Mr. Walter Sweeney (Vale of Glamorgan) : Does the right hon. Gentleman accept that the way to balance the books is not to increase taxation but to increase revenue? Results in the past have shown that very often there has been an increased take from taxation accompanying a reduction in income tax.
Mr. Davies : I do not know whether the Laffer curve made any sense. If the hon. Gentleman wants to talk about the Laffer curve, which I believe was something drawn on the back of an envelope in a Washington restaurant, that is fine, but it is not something that we should go into at the moment.
Mr. Richard Shepherd : On this wonderfully fair-minded valuing of an increase in taxation or a decrease in
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expenditure, the Community is charged with trying to harmonise taxes, which constrains the ability of the Government to do one side of the accounting.Mr. Davies : That is the point that I was seeking to make--that, even if there is this marvellous freedom of choice whether to increase taxes or cut public expenditure, there are constraints on taxation. If there is harmonisation of indirect taxes, that imposes constraints, and there may be other harmonisation measures.
Mr. Marlow : Just supposing that the mythical modernising future Labour Government are unable to tear up their election promises and are unable to fulfil the requirements of the treaty that some of his hon. Friends seem so ready to impose upon themselves at the moment, is it not the case that Community institutions, on the basis of a two-thirds majority of countries outside the United Kingdom, would be able to make the Government's task even more difficult by imposing fines upon them?
Mr. Davies : That is what will happen eventually, but it will not happen overnight ; they will have another meeting, make a statement, bring a little pressure to bear here and there, and an application from the Hartlepool development corporation to the European Development bank for a loan will be refused. There are many ways of doing these things, and ultimately there may be a gunboat, or whatever--I do not know. Whatever happens, however, there will have to be compliance, because that is how the system works.
I do not think that we should underestimate the effect that the "excessive deficits" article will have on both parties' policies, and the constraints that it will place on them to spend judiciously with the aim of maintaining economic growth.
Mr. Spearing : Will my right hon. Friend also consider the issue of direct taxation? Under article 8a as it currently stands, there is to be no frontier within the union, but would not differentiation of direct taxation of income through labour ultimately constitute that? Given that there must be a level playing field in regard to skills, and in regard to firms employing people throughout the Community, might not differential income tax constitute a fiscal frontier which might be judged inconsistent with article 8a?
Mr. Davies : I do not know. Even now, in practice, we are constrained by the tax rates of other EC countries, because we trade with them now and will trade more with them in the future. Actual constraints already exist, whether or not they constitute legal constraints.
My hon. Friend the Member for Hartlepool made a marvellous speech, which is no more than we would expect of him. He had worked hard at that speech. At some stage, he threw out an observation about Delors 2. He said that he was in favour of it--which, of course, is perfectly all right. Delors 2 says that there should be more money in the budget ; if it had been accepted, I believe that the budget would have been 1.8 or 1.9 per cent. of the gross domestic product of the 12 countries. However, I did not understand the reference to Delors 2 in the context of excessive deficits. On the one hand, we are told that we must cut our expenditure to an eventual 3 per cent. ; on the other, we are told that we must find money to give Mr. Delors so that he has public expenditure funds to pay back to us.
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I am sorry if I have done an injustice to my hon. Friend the Member for Hartlepool ; that may not be what he meant. I made my comment en passant, as they say. In any event, he was right to mention Delors 2, which illustrates a real problem. Once countries embark on the exercise of converging economies without actually doing so--the exercise, in fact, of converging monetary and financial indicators--and establish a common currency, as the United States has done, massive transfers will be needed. Conservative Members may not agree with that--it may not accord with their philosophy--but many non-ideological economists will confirm that massive transfers are needed between, say, California and North Dakota.Mr. John Butcher (Coventry, South-West) : May I draw the right hon. Gentlemen's attention to a rather curious aspect of the matter? Hon. Members may belong to the Liverpool or the Cambridge school of economists, they may be Keynesians or monetarists, they may be Ministers, or they may be Opposition Front Benchers, but what unites virtually all hon. Members is the consensus that, at a time of recession, deficits should be allowed to widen. It is hoped, of course, that they will narrow at times of recovery. Why, given that this part of the treaty will deny consensus to the House, are we all expected to vote like sheep for such a ridiculous proposition? Mr. Davies ; That is a good point. I am not sure whether the religious school in Liverpool will agree with what the hon. Gentleman has said ; certainly, it does not necessarily accord with strict monetarist philosophy.
Mr. Bill Walker : Does the right hon. Gentleman agree that a splendid example of the single currency and the single bank currently operates in the United Kingdom, where substantial amounts of taxpayers' funds are transferred from the well-paid to the poorer areas? The right hon. Gentleman comes from Wales, and I come from Scotland ; we understand that system, have seen it in operation and do not disagree with it.
Mr. Davies : That is the point that I was trying to make. The same can be observed in the United States. In any event, massive transfers would be required.
In the 1970s, the McDougall report said that, with a common or single currency within economic and monetary union, transfers would have to constitute about 7 per cent. of GDP--and that was before Portugal, Spain and Greece joined the Community. We must now envisage a transfer of between 10 and 12 per cent. of GDP to alleviate the problem of unemployment in South Dakota, and to lessen the difference in wealth between it and California.
That money is not going to arrive, partly because it is not there and partly because no mechanism exists to provide it. The Germans are the paymasters, and they have problems in their own country ; certainly, Britain cannot provide it. If no Government have the power to raise taxation at European level, the money will never be there. We are in the worst of all possible worlds. We have transferred democratic power, and we are moving towards a common currency, but we have none of the instruments needed to alleviate--I put it no higher than that--the concentration of economic power in a single currency.
Mr. Barry Legg (Milton Keynes, South-West) : Does the right hon. Gentleman agree that many of the economic problems suffered in 19th-century Ireland were due to a
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single currency ? The Irish economy fell further and further behind. Another consequence was the mass emigration of the Irish population to the United Kingdom mainland.Mr. Davies : I have enough problems trying to understand the treaty without going into Irish economics. The current Irish position is very interesting, however. I am told that Ireland has achieved economic success : apparently, it has managed to get inflation down to about 3 per cent. ; meanwhile, interest rates have risen 100 per cent. overnight, and unemployment stands at at least 17 per cent. of the people who are left in the country. That, evidently, is the blueprint. The French socialists have pursued the same policies. It is a modernising party, which has not existed for long and looks as though, after the next election, it will not exist at all. Labour Members sometimes refer fondly to the French socialist party as our sister party. I used to be Labour's defence spokesman ; the youngsters in the House will not remember that. Sometimes I would go and talk to members of the French socialist party. "Sister party" may not have been the right description.
The French socialists sold out very early. Now France has a strong economy : it has been stronger than the British economy for a long time. It has low inflation, along with rising unemployment, high interest rates and the "franc fort", which is practically a Vichy franc : it is locked into the Bundesbank and is desperate for support. Come March, we shall see a proliferation of parties, the breakdown of the present Government and all sorts of problems. I remind my hon. Friends that that does not apply only to France ; the left in Europe had better start thinking, because all these developments are destroying it.
The beneficiaries will not be the Christian Democrats. The Minister does not like the Christian Democrats. I will tell his relations in my constituency about that. He said yesterday that he did not like them. Nice Herr Kohl will not be the beneficiary of all this because lots of nasty people far to his left will benefit from it. So if the modernising tendency thinks that this is some kind of modernising blueprint for the Labour party, let them just look at the French socialist party.
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Mr. Hugh Dykes (Harrow, East) : The right hon. Member modestly reminds us that he has been a defence spokesman for his party. With even greater modesty, he omitted to say that before that he was a Treasury Minister for the Labour Government in the mid-1970s. We have enjoyed his extremely amusing speech, particularly his obsession with his hon. Friend the Member for Hartlepool (Mr. Mandelson) and his speech last night-- subject to reading the record carefully, I think that he mentioned his hon. Friend 27 times--but I remember what he said when he was a Treasury Minister. It is a long time ago and the right hon. Gentleman will forgive me if I bring up something of great importance : he has refused ever since to retract it, but I remember it vividly and it is on record in Hansard. He said that the proportion of the French population engaged in agriculture in those days was 25 per cent. I remember that I and other hon. Members asked him to correct the figure because it was 7 per cent., but he refused to do so. Notwithstanding his hugely amusing speech, therefore, how can we attach any credence to what he is saying now? [Interruption.]
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Mr. Davies : It is all right, I knew what the hon. Gentleman was going to say. He says it all the time. He caught me out on one occasion. When he is a Minister--if he can keep working at it, I hope that he will eventually become one--I will try and catch him out. I have referred to the speech of my hon. Friend the Member for Hartlepool not because of anything to do with him personally but because he is a representative of the modernising tendency in the Labour party, and I am very concerned that the modernisation goes ahead properly, without leading to the destruction of the party. I was merely pointing out that the kind of modernisation carried out by the French socialist party has not worked very well.
In any event, I will move on to article 105 and the European central bank. The bank is to be the instrument for the control of inflation and of monetary policy. It is quite interesting to look at the set-up because, as one of my hon. Friends said, it is called the European system of central banks. It is described in this way because the Germans have plonked into the middle of this treaty their own federal system of the Bundesbank which has lots of other little banks all round the La"nderbanks. So when this goes through, and after the statute has been brought in to make the Bank of England more or less autonomous according to the statutes of the central bank, we, too, shall have a La"nderbank which will be the Bank of England, as it were, on the outside and the European central bank in the middle. The object of the central bank is to control inflation by monetary means. It is a monetarist treaty. The belief is that inflation can be controlled only by monetary means. There is a lot of mythology about this, about reserves and corsets and things like that, but monetary control is basically a matter of interest rates and, in the end, whatever few extra reserves the Bundesbank puts into the economy or the Bank of England takes out, whatever straitjackets are put round, whatever dual rates of interest the French may play with--the commercial or the financial franc--control of monetary policy is about interest rates, and the object of the central bank is to control interest rates.
The control of interest rates is the prime instrument for trying to arrive at price stability. Price stability means getting as close as possible to zero inflation, not every price being stable but there being stability across the board and prices not moving up and down. So the bank exists and it is autonomous for that very reason because, as Mr. Gavin Davies, who works for Goldman Sachs, pointed out in a perceptive article in The Independent this week, the theory used to be, and the continental theory still is, that the control of inflation is a technical matter and that, because it is technical, it should be taken out of the hands of politicians and put on auto-pilot. The matter is then dealt with purely technically, with no consideration of output, growth or unemployment.
This, too, reminds me of my days as defence spokesman. I think it was Edward Teller or one of his ilk who devised something called the doomsday machine. They did not believe that people could actually carry out deterrence ; in other words, politicians might not unleash the weapons when the time came. The only way deterrence could work was to programme this doomsday machine, and when the Russian missiles passed a certain point, half-way across the Atlantic or wherever, the machine would trigger off the American response and the Russians would know that.
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It would be a bit like that for control of inflation. The autonomous bank is the auto-pilot and merely carries out decisions. When my hon. Friend the Member for Hartlepool was speaking yesterday, one or two hon. Members interrupted from a sedentary position to say that this was nonsense, that the Bundesbank was not independent, that it listened to politicians and that it was subject to pressure. Obviously, even the Bundesbank cannot live in a complete vacuum, but those of my hon. Friends who fondly believe that the Bundesbank is not autonomous should just talk to former Chancellor Schmidt. What happened to him in 1980 or 1981? He is convinced that, by refusing to go along with what he wanted, the Bundesbank brought down his Government. But we have no need to go back as far as 1981 ; we need only look at what is happening now. So the Bundesbank is as autonomous as it is possible to be and, on a European scale, it will be even more autonomous because it will not have a Government breathing down its neck : it will have something called ECOFIN which seems to figure broadly in some debates, but there will be no Government there even to make speeches and tell the bank what it should do. The bank is autonomous, it decides on interest rates and, as we have seen, it does so without too much consideration of the effects.Mr. Bowen Wells (Hertford and Stortford) : May I draw the right hon. Gentleman's attention to article 2 of the treaty and what it says, because this is what article 105 on monetary policy is related to? Perhaps he will tell the Committee if he is in favour of the objectives in article 2, which reads,
"It shall be the aim of the Community, by establishing a Common Market and progressively approximating the economic policies of Member States, to promote throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increased stability, an accelerated raising of the standard of living and closer relations between its Member States." That is what article 2 says, and the means of achieving this is said to be the establishment of the central bank.
Mr. Davies : I have dealt with article 2. I tried last night, but no one was listening. I tried just now, but again the hon. Gentleman was not listening. So I will not go back to it.
I turn now to the split between economic and monetary policy inherent in setting up the bank. It seems to me very silly, to use a not particularly elegant word, to split economic policy from monetary policy. We have seen what is happening in Germany today. I am not saying that the problems in east Germany could be alleviated easily if there were no separate Bundesbank, but if ever there was an exercise to demonstrate that perhaps it does not make sense to separate economic policy from monetary policy, east Germany is it. The German Government want to increase public expenditure to revive the economy of east Germany, but the Bundesbank, quite properly, pays not a blind bit of interest because, by statute, it is concerned only with the internal value of the currency. In a sedentary intervention--I think that I heard him right--my hon. Friend the Member for Durham, North (Mr. Radice) said that during reunification the Germans exchanged one east mark for one west mark. That, apparently, was a good example of how politicians can overrule the Bundesbank. That is not true. The Bundesbank is concerned only with the internal value of the mark, which basically is inflation. That is why
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Mr. Kohl was able to offer--in an expensive and damaging way--one west mark for one east mark. Karl Otto Po"hl resigned because he disagreed with what the Government were doing, but that was within the province of the Government, not the Bundesbank.Mr. Richard Shepherd : The hon. Gentleman is making a terribly important speech. I do not recall reading in the Labour party's manifesto-- for which, I know, the right hon. Gentleman is not responsible--or in our manifesto a proposal to set up an independent British central bank. I should like to know when that became Labour policy and whether the right hon. Gentleman thinks that it is an appropriate device for effecting a fundamental change in our economic management through the surrogacy of this Maastricht treaty. The House has not debated the principles behind an independent central bank for this country alone, yet we are legislating for it without a proper debate.
Mr. Davies : That is right ; it is article 108, I think, which will be enacted under the Bill.
I am told that an independent, autonomous British bank is Labour policy-- [ Hon. Members-- : "Since when?"] It was decided by the non- modernised Labour party at last year's conference--I do not know what the modernised one will do. In a short composite resolution, it decided that the Bank of England should be independent or autonomous. I prefer "autonomous". My hon. Friend the Member for Hartlepool is good on words. Perhaps he appreciates that the word "autonomous" conveys the impression a bit better.
All I am saying is that the proposed split is very silly, but the mistake is being repeated with the European central bank. The European central bank will be responsible for the internal value of the ecu. We were told yesterday, "It is all right ; the exchange rate of the ecu will be determined by politicians". I do not disagree. The external value of the ecu will be floating. I do not think that perfect floating can be achieved, but party policy is managed floating. I do not know what that is, so I had better read the conference resolution. I am confused because apparently we must have fixed exchange rates at the moment, but once we have reached the promised land the ecu will float.
Mr. Shepherd : I can bring the right hon. Gentleman hot news from the Frost interview with the Prime Minister. Maastricht is slightly out of date as the Prime Minister is working on a world exchange rate mechanism : the Japanese yen and United States dollar will be intimately linked in this more universalist approach. I know that some foolish hon. Members--even Conservative Members--have giggled at the suggestion, but the right hon. Gentleman should impress on the House the importance of these developments.
Mr. Davies : A world ERM is basically Bretton Woods.
Finally--
Mr. Ron Leighton (Newham, North-East) : More.
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Mr. Davies : I have run out of things to say.
What depresses me about my colleagues who are in favour of this European venture is that they now tend to deny it. I should have thought that the ends justify the means and that they would rejoice in the convergence
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criteria, the central bank and everything that has been set up because the object is to achieve EMU and a single currency as soon as possible.Previous members of my party--the Jenkinses and Levers--would have rejoiced and said, "The pain is all worth it ; the end is justified by the means", which is almost a Leninist approach to economic and political life.
Mrs. Ann Winterton (Congleton) : Would the right hon. Gentleman like to add to his general list of subjects for rejoicing the fact that the promised land is not yet upon us? The Danish Government have resigned, which I understand will mean that the Danish referendum will be held later, so those who support Maastricht will have to wait a little longer for heaven on earth.
Mr. Toby Jessel (Twickenham) : On a point of order, Dame Janet. Can what we have just heard affect the way in which time is assigned to the Bill? The Prime Minister gave a clear assurance that the Bill will not be given a Third Reading until after the second Danish referendum. If the second referendum is to be postponed by a change of Government and a possible general election in Denmark, that gives us much more time to discuss fully every clause of the Bill, and neither the Government nor anyone else should be in any hurry.
Mr. Marlow : Further to that point of order, Dame Janet. This is momentous news. It was the intention of the previous lamented Danish Government to put the Edinburgh conclusions to the people of Denmark in a second plebiscite or referendum. There is now no Government in Denmark. The next Danish Government might decide that they do not want to proceed further with this rotten treaty. As there is much uncertainty, is not it appropriate for a Minister to inform the House of the Government's proposals in these new circumstances? It is futile and fatuous for us to continue the debate when there is no Government in Denmark, no prospect of a referendum, and probably no prospect that the treaty will proceed in Denmark. Why proceed with the debate when the whole thing is stone dead?
Mr. George Robertson (Hamilton) : Further to the point of order, Dame Janet. Before the Committee gets overexcited, may I point out that sometimes we imagine that we are at the centre of the world, but occasionally are reminded that we are not? So far as I know, only the Danish Prime Minister has resigned. As the Conservative party knows only too well, and as the Opposition know to our cost, that does not automatically mean a general election.
The Second Deputy Chairman : I think that I can now answer the point, having heard the points of order. As Chairman of this Committee of the whole House, I have no responsibility for other Governments or what impact they might have. My only concern is with the Committee stage before us.
Mr. Dykes : I have a point of order, Dame Janet, but not exactly on that point, which I am not seeking to follow, as you have given us your conclusion, for which we thank you.
Can you guide the House? Many hon. Members on both sides are shocked and angered by the anti-Europeans saying that the sovereignty of this Chamber and this Parliament is sacrosanct and not to be negotiated away ;
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yet they are constantly harping on the constitutional activities of another country and saying that they should be considered before we come to a decision. Can you guide the Committee?The Second Deputy Chairman : Yes. That is not a point of order for the Chair. As the hon. Member well knows, hon. Members must be responsible for what they say.
Mr. Davies : If the Danish Government had resigned I was proposing to go on for another hour, but as it was just the Danish Prime Minister I shall sit down. I merely say that these are fundamental issues both for my party and for the House and there is also the question of democracy to be taken into account quite apart from economic policy. No doubt we can come back to these matters when we reach further amendments. I think that we should look at them in the interests of the economy of this country and I see nothing here that will do other than cause damage.
Mr. Ian Taylor (Esher) : We have listened to an impressive speech from the right hon. Member for Llanelli (Mr. Davies). He is genuinely one of those witty speakers to whom one could listen for hours. Indeed, we did. Despite the usual courtesies, the right hon. Gentleman will, of course, wish to leave the Chamber quite rapidly and I well understand that, because clearly his constituents will want to know that the speech he made in the Committee this afternoon and last evening brought down the Danish Prime Minister. That is obviously momentous news. It is quite difficult to follow that speech and I shall endeavour to be slightly briefer, but the right hon. Gentleman has made important points on this cluster of amendments. The fact that the Danish Prime Minister may have resigned is obviously of great interest to this Committee, but in the midst of a well-attended Committee session we should value the fact that the Committee is scrutinising the Maastricht Bill for itself. The provisions of the Bill are important to the Committee and this country and the attitudes in another country are not of immediate importance, Indeed, the timetable that the Prime Minister has set forth, to complete Third Reading by May at the latest, would still be valid and if the Danes decided to delay their referendum we would clearly maintain that timetable because the original intention was on the basis that the Prime Minister believed that the Danes would have had an earlier referendum.
Mr. Richard Shepherd : I am at a loss to understand quite the point, because as I understand it the Foreign Secretary has assured us that if the Danes fail to ratify the treaty, it is dead. Therefore, this Committee hangs upon the events that take place in Denmark. I should point out to my hon. Friend that I was a Member, as was he, when we passed, lamentably, the Bill called the Football Spectators Bill. The House was marched to the passing of a statute which hung upon someone else's judgment. That is self- denigratory and humbling to this Committee and inappropriate for the passing of great legislation. The truth of the matter is that if the Foreign Secretary's statement stands, the Committee's deliberations are consequential on what the Danes do.
Mr. Taylor : With great respect to my hon. Friend, who is a learned constitutional expert, the reality is that this
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Committee's deliberations on the Bill are the responsibility of this Committee. The fact that the whole Maastricht treaty may be rendered invalid by the Danish decision is a separate matter. But there are very great differences to the interests of this country according whether or not we merely respond to what the Danes do. I strongly hope that this country and this Parliament will make their own decisions. If, subsequently, the Danes were not to ratify the treaty, clearly the 12 members of the Community would need to get together and the Foreign Secretary has rightly said that the Danish membership of the Community is as important as that of the other members, in the sense that there are 12 members of the Community. That is not the same thing as delaying decisions in this Committee because decisions may be delayed in another country. I strongly think that this Committee should take itself sufficiently seriously to make sure that we conduct our deliberations on the treaty in this country's interests.Mr. Spearing : I am grateful to the hon. Member for giving way because he may be surprised to know that I welcome almost everything he has just said, but has he not forgotten one important factor? Unless the Folketing recommends that the consequences of the decision taken in Edinburgh will precipitate another referendum or unless the Danes believe that those recommendations can be made--and they were made, were they not, and negotiated, perhaps for completely different reasons, by the Prime Minister who has only just resigned--is it not possible that another Prime Minister will make another
recommendation? There is as yet no full guarantee that any referendum will take place. In those circumstances, at least the need for speed or indeed for any further proceedings at all may disappear.
Mr. Taylor : I am grateful to my old sparring partner, the hon. Member for Newham, South (Mr. Spearing), for his support and I may store that up for the future as well. On the wider point, we do not know what the Danish Parliament will do, but the idea that we should suspend these discussions because we do not know--
Mr. Giles Radice (Durham, North) rose--
Mr. Taylor : I am endeavouring to answer the first point, then I will give way.
Mr. Radice : I was trying to help.
Mr. Taylor : Let me help myself before the hon. Member helps me, if I may. The reality is that seven of the eight Danish parties are now, effectively, in favour of what the Danish Government negotiated, so I think that we should stop second-guessing the Danish situation and look at our own.
The point about the amendments in this group is that they effectively remove the amendments to the treaty of Rome that were negotiated at Maastricht. We have heard various arguments about why that should be the case. The difficulty I find is that those who support the amendments before us would therefore be left with the treaty of Rome and the Single European Act unchanged. That is particularly interesting for my hon. Friend for Stafford (Mr. Cash), who is not with us at present. The fact that he supported the Single European Act is a matter of interest and slight confusion for many of the rest of us. I raised this in the debate in Committee in December and it was raised
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again yesterday. The fact is that it was the Single European Act that made the dramatic step forward from the treaty of Rome and the arguments that were used yesterday, that the treaty of Rome and the Single European Act were all about an economic community, as if we had never left EFTA, are clearly and self-evidently bogus. In the treaty of Rome there are many references to matters other than economics and if one looks at the Single European Act one will find that it added many items other than those specifically connected with the single market, the 1992 programme. The chapter headings of the Single European Act themselves indicate that social policy was very much in the forefront of the minds of the people who negotiated the treaty, and economic and monetary co- operation, with "union" in brackets, were also very much in the forefront of people's minds with the consequences that flowed from that, which are, of course, not just free trade consequences.Indeed even in title II, article 3, there were several insertions into the activities of the Community made by the Single European Act. One of them was policy in the social sphere compromising the European social fund, for example. Another was strengthening of economic and social cohesion.
It is impossible to say that if we were to abolish all the changes made in the Maastricht treaty we would be left with something that was about economics. That is simply not the case.
It is interesting that, had he but realised it, my hon. Friend the Member for Stafford was in some difficulty with the grounds on which he chose to defend his position. In order to achieve the 1992 programme--the 285 measures required to create a free market with free movement of goods, people, services and capital--we had to have a series of strong Community institutions and a strong referee to ensure that the measures were applied evenly--I shall deal with that issue later--and we had to overcome the protectionist instincts that could arise over a variety of issues in any of the member countries. That was understood by our then Prime Minister, Lady Thatcher. It was why the Single European Act embraced qualified majority voting. 7 pm
In order to arrive at the very thing that my hon. Friend the Member for Stafford defends himself as having supported, we had to strengthen the institutions that he now says he cannot abide and which he regards as marking the end of Britain as we know it. That is bogus. We joined the European Community in the 1970s, after a big debate, because it was believed to be in Britain's interests that there should not be built on the continent a bloc which we failed to influence.
Indeed, we joined the Community to prevent something which, in the 1950s, we thought would never happen--the solidifying of the Franco-German alliance. That is an important point. As a Labour Foreign Secretary, Anthony Crosland, remarked, it represented the first permanent attachment of Britain to the continent since the Reformation. It was the first time that we believed that we had to make such a commitment to prevent what has always been part of British foreign policy, which is that there should not be a continental bloc that we would be unable to influence. Influencing it was so essential to us that we joined the Community with all the infrastructure that it embraced.
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Mr. Michael Lord (Suffolk, Central) : My hon. Friend is taking great pains to explain that the Community was never only about economics and spoke about our joining the "European Community". In fact, we did not join the European Community--we joined the European Economic Community. If he asks his constituents, he will find that they believe that we principally joined a Common Market and were not involving ourselves in other political institutions. I believe that, until the Maastricht treaty is ratified, the title is still the EEC. If the treaty is not ratified, it will remain so.
Mr. Taylor : My hon. Friend takes a great interest in these matters, but I advise him to have another look at the treaty of Rome. The fact that the Community was called "the European Economic Community" should not delude us into believing that that meant it had nothing to do with anything other than free trade. For heaven's sake, we left a free trade area to join the Community. We knew what the institutional structure was--
Mr. Bill Walker rose --
Mr. Taylor : Please let me finish this point, and then I shall willingly give way.
We knew what the institutional structure was when we joined. We knew that the Community's ambitions covered a range of issues and could not be achieved by free trade alone. The institutional structure has been apparent since we joined, and we knew what we were in for. Indeed, the words "European Community" have been used in all except legal documents in the Community since 1978. We had nearly 10 years' warning of what we were doing when we signed the Single European Act.
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