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the United Kingdom. If a Labour Member from Scotland said that many people from Scotland wanted to speak, he could not rule out Conservative Members but allow all other hon. Members from Scotland to speak.Mr. Nicholas Budgen (Wolverhampton, South-West) : The hon. Gentleman should appreciate that he has a very special and important position in the House and is in general given a justified preference, particularly over run -of-the-mill English Conservative Members. He is frustrated and angered at the way in which he has not been able to speak, but let him consider for a moment the frustration and anger of those of us who have sat here day after day, constantly excluded, finding it possible only to make an intervention. He should understand the sense of resentment which permeates the Committee.
Rev. Ian Paisley : I certainly appreciate how all hon. Members feel about the debate because the ramifications and the influence of what we are doing now will affect every part of the United Kingdom. I fail to understand why we cannot have more time to debate these matters. The House does not do itself justice when people throughout the country are asking why, if the Government have an unassailable position, they are so afraid to have a debate.
The Second Deputy Chairman of Ways and Means (Dame Janet Fookes) : Order. The hon. Gentleman has made his point. He now has the floor and the opportunity to discuss the group of amendments under consideration.
Rev. Ian Paisley : Thank you, Dame Janet. If I had not been led on to By-path Meadow by the Minister, I would not have been in the delectable country that I wanted to traverse, so I shall come back to the straight and narrow way and talk about the cohesion fund, which I think is in order.
The Minister has made some amazing statements which do not go with the forecasts that even the Treasury put to us about the fund. I have a copy of the report of a Treasury committee on the perspective that was agreed on the basis of Edinburgh. The Minister talks about the cohesion fund being 5 per cent. but the perspective from the Treasury committee said that in 1993 it would be 2.2 per cent., in 1994 2.5 per cent., in 1995 2.8 per cent., in 1996 3.0 per cent., in 1997 3.2 per cent., in 1998 3.1 per cent. and in 1999 3.1 per cent. The figures that I shall put are not on the Minister's basis of 5 per cent., so we can almost double the amount when we talk about what we shall be contributing to this fund.
As the Minister is in such good answering form at present, can he tell me the basis of the proportion that we shall have to give to the cohesion fund? Is it a percentage of our overall European Community contribution? That, of course, includes the rebate, so the rebate cannot be used in the argument. Is it a percentage of the total overall contribution that we make? I see the Minister nodding.
Mr. Garel-Jones : As I have indicated to the Committee, Dame Janet, I will seek to catch your eye at a later point in the debate, and I will reply then.
Rev. Ian Paisley : As this is a Committee, there is no point in my building an argument on something that you now disagree on. You have nodded your head. I take it that you agree with what I have said. You do not agree? Then tell us why.
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The Second Deputy Chairman : Order. I remind the hon. Gentleman that he should address me in the Chair rather than the Minister directly.
Rev. Ian Paisley : I am very sorry, Dame Janet, that the Minister will not give me an answer on this. The fact is that the United Kingdom contributes to the cohesion fund in proportion to what it contributes to the overall European Community budget. One would like to know the specific figures, the amount of money, that we have to give to the fund.
Let us first look at what the fund is about. The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) talked about good causes. I think that by that he means the poorer regions of Europe. There is no difference between poor regions, whether they are in Italy, Greece, Portugal, Spain, Scotland or Northern Ireland, but the European Commission and Mr. Delors did not think about the regions and did not deal with the regions : Mr. Delors dealt with the countries that he desired to bribe or buy into the Maastricht treaty.
We heard this from the southern Irish politicians when they were selling Maastricht. They told their people that they were getting £3 million a day from Europe and that if the people voted for Maastricht the figure would go up to £6 million. That was their message, with Garret FitzGerald at the head of a European crusade in his own country. If the Parliamentary Under-Secretary of State for Scotland, the hon. Member for Eastwood (Mr. Stewart), could offer the people of Scotland £3 million a day and tell them that if they voted for Strasbourg it would go up, he might possibly be on a winner. Or perhaps the Scottish people are different and feel that there are more valuable things than £6 million a day. I hope that that would be true of many of the Scots people, especially in the islands. This was a buy-out settlement for those people. They were told that this would happen. The rage generated against Denmark and the rage generated against this House and the Prime Minister of the United Kingdom was all about the cohesion fund and the fact that they would lose out. We have heard a lot about helping one another, about the great European ideal and the great unity that we should have in Europe. Why cannot the European Commission, the Council of Ministers and the European Parliament unite to help all the poor regions and spend this money in all the poor regions?
Mr. Ieuan Wyn Jones (Ynys Mo n) : I am following the hon. Gentleman's argument carefully, but I am not sure whether the hon. Gentleman is arguing against cohesion funds or in favour of cohesion funds applying to more countries than they currently do.
Rev. Ian Paisley : I am arguing that if one has a cohesion fund and one tells people that it is for the poor regions, it should be for all the poor regions if one is a European. If one is a nationalist from the south of Ireland or from Portugal or Spain or Greece, then one would argue for giving nothing to Northern Ireland or to Scotland and for giving all the cohesion money to one's own country. I totally oppose that, and I hope that the hon. Gentleman opposes it, too. He would like to see a fair share of the cake for Scotland--
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Rev. Ian Paisley : I am sorry--Wales. He is a Celt, anyway, and we in Ulster have a bit of that in us, too. Perhaps we have some collusion--I think that that is the word.
If we have this cohesion fund, Britain will be a large contributor. I have heard that challenged by the Government Front Bench as well. It is important to note that the contributions each year are taken on the basis of the overall money that a particular country pays to Europe that year. Sometimes France, for example, does not make any real payment to Europe. The French contribution has gone up and down like a yo-yo. We want to see what the scale will be because that is what decides it.
Why does the Minister not stand up and tell us exactly how much money we shall have to give to the fund? He says that it is 5 per cent. On the figures that I have quoted from the Treasury document, over the first five years the cohesion fund will be 10 billion ecu--£8 billion--and the United Kingdom will contribute £144 million for the first year, with the figure rising each year thereafter. That is on the figure of 2.2 per cent., but the Minister says that it is 5 per cent.--so we can double it, making it nearly £300 million. The 5 per cent. is the Minister's figure, not mine.
The right hon. Member for Strangford (Mr. Taylor) replied to an hon. Member on the Government side who said it is all right to say that we can give so many million here, so many million there and so many million somewhere else, but from all over the House I hear cries for hospitals, roads, schools, nurses, and so on. We do not have the money to hand out in this way. If this money is handed out to the south of Ireland, it will do down the economy of Northern Ireland. The House should remember that. Under this fund there will be a special emphasis on transport--and transport is the key to the economy of the south and to the economy of the north of Ireland. When the channel tunnel opens, it will be all important to the people of Northern Ireland and of the south of Ireland. Money will be poured in by the people of Northern Ireland to create a transport structure which will help the economy of the south of Ireland while the people of Northern Ireland will not enjoy that benefit.
7.30 pm
Mr. Cash : Is the hon. Gentleman aware that one of the other criteria for obtaining cohesion funds is compliance with the convergence conditions? Does he appreciate that in the existing climate it is highly improbable, from all that we can tell, that there will be compliance with those conditions? It is therefore not just a question of bribery on a massive scale. Far more dangerous even than that, perhaps, is the raising of expectations that will be unfulfilled, as a result of which there will be a complete reversal of attitudes towards the Community. That will help to destroy the benefits of the Community's existing arrangements rather than enhance them. That is an extremely dangerous situation, given the uncertainty of the political landscape in Europe as a whole.
Rev. Ian Paisley : The hon. Gentleman is absolutely right. Mr. Bangemann, a former German Finance Minister and a vice-president of the Commission, is well known to members of the Committee, and I have sat with him in all the elected Parliaments of Europe. I asked him what would happen and he replied, "As a matter of fact, we have a problem with eastern Germany. The people here think that we are to be the paymaster. They will get a
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shock. We have to achieve convergence between eastern and western Germany before we can achieve convergence with the rest of Europe." That will be costly, and does anyone think that Germany will finance it--or that the British public will be prepared to wear other countries getting the things that Britain needs?I am sure that the people of Scotland and Wales are worried about their transport infrastructure. Their worry is justifiable, because transport will be all-important in the future business and economy of the United Kingdom. Why must we give to others that which we need for ourselves? We must consider that very realistically.
I do not know what will happen when the Minister stands at the Dispatch Box in the future and announces cuts here and cuts there in this country's spending on the necessities of life, while the cohesion fund goes on and on.
Rev. Martin Smyth : Reference was made to good causes. I follow the hon. Gentleman's argument about money for the regions. Is he aware that the Republic of Ireland boasted recently about the higher rate of social benefits that it pays to pensioners and others compared with our nation? Also, at a time when our industrial base is being eroded, Spain has a record of enjoying the fastest industrial growth in Europe. Is it not strange that those two countries should be earmarked to benefit from the cohesion fund rather than regions in our own nation where there is tremendous need?
Rev. Ian Paisley : I am trying to put that argument to the Committee. It is a solemn matter, and one that we must all consider. Certain nations are boasting of their prosperity and how well they are doing, while this country has suffered a series of cutbacks. No matter how optimistic one may be, no one imagines that the future will be rosy. Those of us who are close to the people know something of the agony of unemployment and its effect on our country. The British people, no matter from which part of the nation they come, would be happy if a fair playing field existed, so that all regions with the same difficulties received the same amount from the cohesion fund. Then there would be an argument for the fund. But that is not happening--the fund discriminates against countries outside a group of four nations, although they share the same problems, sometimes to a greater degree.
We should have been given time tonight thoroughly to debate that matter. I should like to see the Minister of State in his place, ready to answer those questions. If the figures that I gave are not correct, this is the time freely to debate them. Instead, this is being changed into a Second Reading debate, with the Minister replying at the end--though because of lack of time, he will probably say, "I am sorry, I cannot answer."
I should like to know how much this country is to contribute to the cohesion fund. Is the Treasury committee document right or wrong? Will the figure be 2.2 per cent. or 5 per cent.? Do we pay a proportion of our entire EEC contribution or not? If we do, what is the proportion? The Committee should concern itself with those questions.
As to countries which will benefit from the cohesion fund, mention has been made of their presence in other activities. Let us take Spain as an example. Anyone who knows about the fishing industry knows of the rage against
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Spain. Northern Ireland has a small but able fishing fleet, and one which makes a valuable contribution to Northern Ireland's economy. Spanish boats can come in and poach--lawfully, their owners say--in our waters and take away our fishermen's livelihoods. The fishermen say to me, "Why is it that the British Government are giving them special grants? Why do we have to pay, by way of taxes, into their special fund?" How does one answer that? How does the Minister answer that?Mr. Cash : If the hon. Gentleman does not receive a reply from my right hon. Friend the Minister, perhaps he would care to reflect on remarks made by my right hon. Friend the Chancellor of the Exchequer in January 1991, when he said that the consequences of going down that route, including a single currency, would create difficulties. He said :
"A programme of transfers--potentially huge--would be very difficult for the more prosperous countries to take. Even on present policies"--
and that does not include the deal that has just been concluded-- "by 1993 we will be funding a structural policy costing between £11 billion and £12 billion each year."--[ Official Report , 24 January 1991 ; Vol. 184, c. 478.]
That was my right hon. Friend the Chancellor taking a fairly effective potshot at the arrangements, which have been made considerably worse as a result of the Edinburgh deal.
Rev. Ian Paisley : That brings us to the balance between the cohesion fund and the structural fund. I noticed that the Minister tried to tie them together, so that we would not have a clear perspective of the cohesion fund apart from the structural fund. However, we also pay a large slice of the structural fund. Figures from the Treasury committee show that the United Kingdom's contribution will be 30.8 per cent. in 1993 ; 31.3 per cent. in 1994 ; 32.4 per cent. in 1995 ; 33.2 per cent. in 1996 ; 34 per cent. in 1997 ; 34.9 per cent. in 1998 ; and 35.7 per cent. in 1999. That is the extent of our contribution to the structural fund, over and above that to the cohesion fund.
Let me say a bit about the Committee of the Regions. There is a social committee in Europe. I am a Member of the European Parliament, but I have never met the Northern Ireland members of that committee, and I do not know what they do ; I should like to know.
What we are setting up is not a national quango, but a European quango. The Government seem to be resisting the idea of elected representatives being on the Committee of the Regions. Why is that? The Government say that this or that section of the people should be represented, but elected representatives represent all sections of the people, and hope to obtain votes from all sections of the people. If we argue that the commitee must have an agricultural representative, and representatives from medicine and education, for instance, where will it all end? Who will be left out, and how will the choice be made?
I differ from the right hon. Member for Strangford (Mr. Taylor), who comes from my own part of the United Kingdom. I do not think that all the Tories are joining the Unionists, or that the majority are doing so. Of course, some Unionists joined the Tory party ; now they are returning to their first love, which may be deemed a good thing or a bad thing. But there will still be Tories in Northern Ireland--and, if even one were elected to represent a Northern Ireland constituency, he might be an appropriate member of the committee. If members are
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chosen in the same way as members of other quangos, those who have too many votes will not be in ; only those who have fewer votes succeed, and they usually lose the seats that they have gained at a subsequent election. They have a consolation prize, at least. We should take a strong line on this : we should ask for elected representatives, and we should require their representation to be in proportion to the representation of their parties in the areas that they represent. I also believe that there should be three members from Northern Ireland.Ms. Quin : Earlier, a Conservative Member made a suggestion about the National Farmers Union, and another mentioned a banking representative. If we followed such advice, would we not simply duplicate the work of the economic and social committee, which already represents business, trade union and other interests? I agree with the hon. Gentleman that elected representatives would be far more appropriate.
Rev. Ian Paisley : This is, indeed, a time when we should have elected representatives on the committee. They know what the people are thinking, and they have to go back to the people. Surely some sort of accountability should govern the arrangements. To whom will the committee be accountable, if not the people whom it is supposed to represent?
Mr. Iain Duncan-Smith (Chingford) : Is not this the key factor? We are debating crucial funds, and much of the control over them lies with the Commission. The whole point is that the Commission will be empowered to look at those whom they wish to favour and those whom they do not. I believe that the funding will become retrospective.
Rev. Ian Paisley : Those who are in favour of Mr. Delors and Europe will move forward ; those who happen to be against them will not move forward. I am the only Member of Parliament who sits on the enlarged bureau, and I have seen the shenanigans that go on between parties. Even Mr. Delors is a member of that distinguished gathering, as it is called, and I have seen the way in which he manipulates it to get his way. After all, Mr. Delors is the man sitting in the Commission who will eventually say how the funds will be used.
Sir Russell Johnston : The hon. Gentleman describes Mr. Delors as "manipulating people to get his own way". Has he never manipulated anyone for that purpose?
Rev. Ian Paisley : I submit myself to the electorate, and I happen to get a larger vote than any other Member of the European Parliament. I do that by telling the people what I stand for, and they like that. The hon. Gentleman stood for membership of the European Parliament, but the electorate did not like him. He was not able to manipulate people. I was not trying to do so ; I believe in fair, honest representation, and I believe that there should be no buy-off.
7.45 pm
Mr. Roy Beggs (Antrim, East) : Does the hon. Gentleman agree that there is tremendous suspicion in Northern Ireland at present? It is suspected that, should cohesion funds go to the Irish Republic because of shenanigans, scheming, manipulation and deals made in
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various places, they might just be used to get new ships to compete against Northern Ireland's existing transport arrangements.Rev. Ian Paisley : That is possible. The Government of the Republic has made such a proposal twice ; it was turned down both times, and is now being considered for a third time.
The hon. Gentleman represents an area that I used to represent before the redistribution of seats. He knows how valuable the port of Larne is to the economy of Northern Ireland. He also knows that an effort is now being made to make those who travel from the south stop using the Larne ferries. Yet the money given by Europe was intended to establish that port and help it, so that it could aid both north and south. Now, money is to be given to the south to destroy what Larne was funded to do. I have asked the Transport Commissioner about this. What is the use of spending money in that way when the port has been helpful to the whole of Ireland? Fleets come to the south and use it, but now the aim is to divert that traffic.
When I was in Europe recently, I was shown a map on which the ferry service was not even marked. There was a little circle over the Holyhead route, indicating that the availability of funds was being discussed. I believe that everyone has the right of access to a port in their country, but I do not believe that it is right to try to develop a port in the south of Ireland which will take traffic away from Larne, which has been established with the help of EC money. The south of Ireland received special funding for culverting roads, which was not made available in the north. That was for the preparation of the road network for strengthening in the south to take traffic away from the north. If there is competition, we can have it ; but I do not believe that European funds should be used to help one part of the Community to the detriment of another. That is my objection to the cohesion fund, and to the whole proposal.
Mr. Peter Hain (Neath) : I wish to deal specifically with amendments Nos. 102 and 103, to which my hon. Friend the Member for Kingswood (Dr. Berry) and I have put our names.
Both the debate and the amendments are important. This area of policy bridges the gap between the constitutional and economic arguments for democratic reform of the European Community. I concede that the treaty undoubtedly makes some advance in that respect. For example, the protocol on the cohesion fund provides for financial transfers to improve the infrastructure of the four poorest countries--Greece, Portugal, Spain and Ireland. The protocol also specifies an enhanced role for the EC structural funds, principally the European regional development fund and the European social fund. Between 1989 and 1992, the structural funds doubled in size to 14 billion ecu and have since increased to 19.7 billion ecu for 1993. They are due to rise to 27.4 billion ecu by 1999.
Article 198a of the treaty establishes the Committee of the Regions which will consist of
"representatives of regional and local bodies".
Although it is a purely consultative body, it would be an important voice for the regions. That is very welcome, but it will be a toothless committee. The treaty's fatal flaw is the absence of a coherent and credible EC economic and
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industrial strategy. It echoes the failures of Britain's Thatcherite obsession with monetarism in the early 1980s and, indeed, throughout most of the 1980s.Last year unemployment in the European Community was driven up to nearly 17 million, or 9 per cent., which is significantly higher than the 7 per cent. average for the 24 countries in the Organisation for Economic Co-operation and Development. In the 1970s, by contrast, EC unemployment rates were lower than the average for the OECD. This year, we are looking to 20 million unemployed. According to the OECD, under the present monetarist policies enshrined in the Maastricht treaty, we can anticipate average unemployment across the Community increasing still further to 16 per cent., or 30 million, by the end of the decade--nearly double the figure for last year.
That total is absolutely horrifying. I believe that it will result in the social disintegration of Europe unless there is a radical change in the economic policy and economic perspective of the Community. Unless there is such a radical change, the whole European project will collapse. The regional dimension is absolutely critical in developing and pressing for that change.
Mr. Cash : The hon. Gentleman is pursuing an argument which is absolutely central to the direction in which the exercise and enterprise of Maastrict is going. Underlying the treaty there is a deliberate policy to create unemployment and to cut public expenditure. Whatever party one belongs to, the hon. Gentleman's arguments must be answered, not only by Ministers but by people outside, namely the trade unionists and others who support the Opposition. To what extent are they listening to the arguments of the hon. Gentleman and his colleagues?
Mr. Hain : I welcome the hon. Gentleman's comment and I also welcome him to the stable of supporters of public expenditure and government directed at that objective. I hope that the trade unionists and others who have backed the Maastricht treaty because it brings the social chapter, if not in Britain, elsewhere will consider the economic arguments more seriously, especially as they affect the so-called peripheral regions.
Mr. Llew Smith (Blaenau Gwent) : I want to take up the point made by the hon. Member for Stafford (Mr. Cash). The 3 per cent. budget deficit is likely to result in public expenditure cuts of about £12, 000 million. Will my hon. Friend hazard a guess at the effect on the valley communities in south Wales which have traditionally relied on a high level of public expenditure? Can he explain how people, including members of our Front Bench, can vote for £12,000 million of public expenditure cuts when they vote for the treaty? Mr. Hain : I think that the figure of £12 billion expenditure cuts is probably on the low side. However, I shall not pursue that idea for fear of being reprimanded, Dame Janet. My hon. Friend makes a valid point. Part of the problem is that the otherwise worthy objective of monetary union is being pursued without a coherent policy for growth or reflation and without any policy for full employment. In fact, the monetarist policy backed by rigid fiscal controls, notably on public sector
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debt and deficit, is imposing such a narrow economic framework on the whole of Europe that without any serious offsetting policies, which are not offered in the treaty, unemployment will increase savagely in the less competitive regions. Wales is an example of where that will happen.Within the existing nation states, changing levels of competitiveness have a different impact on different regions. They mostly result in changing levels of employment and unemployment. Within the context of an EC regime of monetary union, a worsening of member countries' competitive position will inevitably lead to rising unemployment unless there are offsetting interventionist policies directed especially at the weaker regions of those member states. In the absence of such interventionist policies, we have clearly seen how even the ERM's limited monetary union contributed to the deflation of the United Kingdom economy and a hike in unemployment towards 3 million in the past two years of membership. In existing nation states' monetary unions there is substantial Government intervention of one type or another. It often takes the form of supply-side policies such as active regional and industrial programmes and redistributive budgets. Even if, as we have regrettably seen in Britain in the past 14 years, such policies are not pursued with the necessary vigour, national Governments still appropriate and spend about 40 per cent. of national income. Therefore, to some extent, fiscal policy redistributes income between the most prosperous and the less prosperous regions.
How does it do that? Regions with rising unemploy-ment automatically receive a fiscal stimulus through a boost in benefit payments and a reduction in tax revenues. That is a type of automatic stabilising mechanism. Of course, in some cases, much more formal redistributive mechanisms operate, such as those between the states in Germany.
The implications are clear. If we support monetary union, the inescapable logic is to argue for much larger centralised European budgets and/or-- preferably both--automatic redistributive mechanisms as well as highly interventionist regional and industrial policies. Without them, monetary union will be a reactionary step. We are already seeing the effect.
That is one of the central problems of the Maastricht treaty. It provides neither the redistributive nor the supply-side mechanisms to counter the harmful effects of monetary union and its impact on the less competitive regions.
Mr. Calum Macdonald (Western Isles) : I take the hon. Gentleman's point, but will he acknowledge that nothing in the treaty rules out such a supply-side policy should it be decided by the Community collectively? The Commission, notably, the President of the Commission, has proposed exactly such a reflationary policy to get the whole European economy going and to tackle the problem of unemployment. Nothing in the treaty rules that out ; it is a matter for the Governments of the Community to pursue such a policy.
Mr. Hain : On the contrary. With all due respect to my hon. Friend, everything in the treaty rules that out. The economic deficit constraints, the monetarist regime and the 3 per cent. limit on budget deficit are driving us towards meeting the convergence criteria for monetary
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union which will block any hope of the redistributive supply-side mechanism which he appears to support. The crucial point is that monetary union in the European Community will be expected to operate without a central European budget of any significant size. Even under the recent settlement, itself substantially reduced from Jacques Delors' original proposals, the EC budget will be only 1.15 per cent. of total Community gross national product. Frankly, that is petty cash. It provides no basis for regenerating the economies of the deprived peripheral and less competitive regions. Most studies suggest that at least a fourfold increase in the European Community's budget would be required to meet the scale of the challenge. Even if we ignore how the existing budget is allocated, for example the totally inadequate amount that is devoted to reducing regional imbalances and the hugely wasteful agricultural subsidies, it is totally inadequate to provide the effective redistributive mechanisms that we need at the level of the Community.8 pm
Mr. Macdonald : Will my hon. Friend take on board the fact that the 3 per cent. deficit levels are not absolutely fixed? Community Governments can decide whether to apply them in the light of prevailing economic circumstances. Obviously, when they are as my hon. Friend describes, it would be sensible for those Governments to take a flexible view. Even in terms of pursuing national policies, national Governments will inevitably run into constraints in trying to run large-scale deficits year upon year. Such problems need to be tackled collectively across the Community rather than by individual nation states.
Mr. Hain : Again, I do not want to pursue that point too far, but I need to answer my hon. Friend's point. If the 3 per cent. limit and the 60 per cent. limit and so on are meaningless, why are they in the treaty? If they do not add up to a row of beans, why are they set in concrete in the treaty? Indeed, they are set down so explicitly that, if one does not meet them, one is fined. There is actually a provision in the treaty to fine defaulting member states for not meeting them. I do not accept my hon. Friend's point.
Mr. Llew Smith : Will my hon. Friend confirm that we are discussing a legal document, not just a statement that was made by a politician on a wet Sunday afternoon?
Mr. Hain : Indeed, we are discussing a legally binding document which binds all member states, if they are to meet the criteria for acceptance into the final stage of monetary union, precisely to meet those convergence criteria, with all the horrendous consequences for areas such as the south Wales valleys in terms of cuts in public expenditure on a colossal scale. My hon. Friend the Member for Blaenau Gwent (Mr. Smith) probably underestimated when he mentioned the figure of £12 billion. The figure is more likely to be £25 billion at the current level of budget deficit.
Mr. Rowlands : Will my hon. Friend draw to the attention of the Committee the fact that the protocol is not only in the treaty but in the Bill? We will actually write it into our legislation as well.
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Mr. Hain : My hon. Friend makes a valid, valuable point which enthusiastic and somewhat blinkered supporters of the treaty ignore at their peril, and certainly at the peril of my constituents.
Mr. Cash : On the hon. Gentleman's point about the amount of payments that are being made into the European Community and the remark by the hon. Member for Blaenau Gwent (Mr. Smith) on the fact that this is a legal framework, does the hon. Gentleman agree that the whole arrangement is highly centralising and fundamentally undemocratic and authoritarian, as a result of which, the greater the competencies become, the more money will be sucked into the centre, with corresponding decline in the democratic quality for those who, for example, might become involved in the Committee of the Regions or whatever, precisely because the main power will lie with those who run the system? That is the absolute acme of all parliamentary arrangements that have taken place over the century. At the bottom line, the authority and the power go where the money is, and it will be an undemocratic and authoritarian system.
Mr. Hain : The hon. Gentleman makes a valid point to which I shall return, but I wish to develop the point that I was making. In the absence of a central budget and redistributive supply side mechanisms and a highly interventionist policy from the European level, monetary union will have a deflationary impact on less competitive regions, leading to increased unemployment, especially for regions such as Wales which, in EC parlance, are regarded as being on the periphery. On top of that, the transitional terms for monetary union require policies that will impose deflationary
The Chairman : Order. The hon. Gentleman is now straying rather wide of the amendments. I have given him some latitude, and I think that he recognised that in some of his earlier comments, but I ask him to address the amendments.
Mr. Hain : I am grateful for your guidance, Dame Janet. All that I plead in mitigation is that I was led astray by hon. Members taking me down certain byways.
The Chairman : That is a well-used argument, but it is not accepted by the Chair.
Mr. Hain : Indeed, Dame Janet.
I am sure that you, Dame Janet, will accept that my next point is absolutely crucial in the context of regional funds and regional policy generally. There is a real danger of European Community growth and wealth being concentrated at its hub--that meets the point made by the hon. Member for Stafford (Mr. Cash)--the hub being western Germany, France, the Benelux countries, perhaps northern Italy and perhaps the south-east of England if we are lucky. Meanwhile, the periphery, including areas such as Wales, will decline. Unless there are very strong and heavily funded EC regional investment policies, vast areas of the European Community will become poorer. Following capital to the hub, political power will be increasingly centralised, as sure as night follows day. Those economic imperatives undermine the importance that the modern European Community rightly ascribes in theory to the regions. In one sense, the political thrust of European Community evolution focuses on the centre and
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the regions, with the national level receding in influence. Links between Brussels, for example, and Catalonia or Wales, if we are lucky, might override links with Madrid or London. EC structural funds are geared towards such redistribution or compensation at the regional level. The problem is that the economic imperatives that I have described mean that we have an enormously centralising force which is winning over the regionalising tendency which is in the heart of the Community. The centrifugal forces at work in the Community are triumphing over the centripetal forces and dwarfing them completely.Mr. Jenkin : I wonder whether the hon. Gentleman will allow me to amplify his point about the economic effects of the monetary union that he has described in relation to the regional policies that we are discussing. The regional policy that he describes and would espouse is largely practised in Germany, where there is a monetarist central bank. I am in favour of monetarism--perhaps the hon. Gentleman is not--but he is absolutely right to point out the effect of a monetarist central policy if it is not answerable in some way to the economic demands. That has been demonstrated in the failure of the exchange rate mechanism.
Unemployment in the hon. Gentleman's constituency, which was caused by German monetary policy being imposed on south Wales, is perhaps a portent. I am surprised that Opposition Front-Bench Members espouse that policy.
Mr. Hain : I do not think that the unemployment that has been imposed on south Wales is entirely to do with the European Community. Much of it is to do with the Government whom the hon. Gentleman supports. I take the hon. Gentleman's point about the importance of having a regional banking system. We do not have one in Britain. Again, we could address that topic on another occasion. If we are to have regions that are autonomous, powerful and viable in their own right, we need to decentralise our financial structures as well. It is important also that member states have structures of government which mesh into the regionalised Europe. It is significant that, until now at least, the most successful EC country, Germany, has had a federal structure, with significant autonomy delegated to the Lander.
The case for decentralisation is as much democratic as economic. We should insist on an active regional policy for the European Community and democratic methods to facilitate it, including devolution to Scotland, Wales and the English regions. We should press for a strengthening of the Committee of the Regions. They are not optional extras ; they are the vital means of ensuring that the regional dimension is not a one-way conduit for hand-outs from the centre but an active channel for empowering outlying areas and nations. We should also insist on a highly interventionist European investment bank. The aims of such a bank are described in articles 198d and 198e on page 55 of the treaty. While the treaty sets up the structure for the bank, there is no real content to it. There is no indication of the powers that such a bank would have or what its potential could realise.
In Britain in the 1980s, we have seen beyond dispute that investment decisions are much too important to be
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left to the market. The market has palpably failed to modernise the manufacturing infrastructure. We need a powerful investment bank at the British and European levels, otherwise poorer regions will be left behind. Against that desperate need, regional support and aid has been cut massively in Britain, especially in assisted areas where such support and aid have been slashed.Since revision of the assisted areas map in 1984, regional financial assistance has fallen from £518 million to £265 million--a cut of 50 per cent. That cut has had an enormous impact on areas such as south Wales, especially the deprived and neglected valleys. Given the size of the planned cuts in the Department of Trade and Industry's expenditure over the next three years, it is expected that the Government's record on regional assisted areas cuts will deepen. It is important to place this debate in the context of an active regional policy at not simply the European but the British level. For example, what do we find in Wales? Wales has had massive cuts in regional aid since 1979. In the decade to 1991, regional assistance to industry in Wales declined by 58.3 per cent. The valleys in south Wales have been subject to savage job cuts following colliery closures and the collapse of local manufacturing industry. Regional policy expenditure in those valleys fell by 44 per cent. between 1988-89 and 1991-92. That period coincided with the much vaunted valleys initiative programme. Over the same period, regional development grants to the valleys were cut by 86.8 per cent. When we examine the European dimension to answer the question of what extent the Committee of the Regions, its structural funds or whatever, addressed the glaring shortcomings in British policy, we find that they do not address the shortcomings at any serious level. Partly because of those shortcomings, adult male unemployment in the valleys increased by 11.2 per cent. between October 1988 and October 1992 and now stands at 19 per cent., compared with 13.5 per cent. for the whole of Wales and 13.6 per cent. in the United Kingdom. Yet, against that desperate background, we find that the economic consequences of the Maastricht treaty will make the situation worse. 8.15 pm
I concede that the establishment of the Committee of the Regions is a step forward. It will have advisory status. It will have more than 200 members, 24 of whom will be from the United Kingdom, and it will also have substitute or alternate members. All the members will be appointed not elected--for four years by the European Council acting unanimously on proposals from the member states. The term of office is renewable, so it could be a jobs-for-life syndrome if we are not careful.
The committee will elect its own chair and officers for two-year terms, but the rules and procedure will go to the Council for approval. Everything will be done on the say-so of the European Council or the Council of Ministers. The Committee of the Regions will be shepherded by the Council but it will be able to meet on its own initiative.
All that the Committee will do is offer opinions ; it will not have any powers to speak of. Effectively, it will be a talking shop. One could call it the organ grinder's monkey's monkey in the European context. We need a Committee of the Regions which is powerful.
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