House of Commons Hansard Debates for 24 Mar 1993

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At one time, we were repeatedly told that the single market could not come into force unless the treaty was ratified. Maastricht has not been ratified, and the single market has been with us since 1 January. The single market has been with us since 1 January, even though--dare I say it--Germany has not ratified the treaty because of a technicality. I am not sure when Germany will ratify the treaty. The point that we will remain in the single market even if we do not ratify the treaty should be made time and again to our trading partners, especially those outside the European Community. I suspect that those well-informed gentlemen in the top echelons of Centrepoint--I refer to the CBI--have deliberately misunderstood this, believing that the single market will collapse and our membership of the single market will end if we do not ratify the treaty.

Sir Ivan Lawrence : My hon. Friend is making a most impressive speech, and is using some material which is obviously well informed. He made the point before about British business men. They believe that signing up for Maastricht will save their businesses. They believe, because they have been told it and they have not read the treaty and do not understand anything about what it means, that they would have to leave the Common Market if the treaty was not ratified. They are told that time and time again.

I was in Copenhagan last week. People there who said no in the referendum because they believed that it was not in the interests of Denmark to sign up to Maastricht are now being told left, right and centre that, if the treaty is not ratified, they will be out of the European Economic Community and all their businesses will collapse. Whoever one asks says exactly the same thing--that they will be left out of Europe if they do not sign up. Something has to be done to bring an element of honesty back into government and business so that that particular myth is killed.

My hon. Friend may be coming shortly to the views of the chief executive of Jardine Matheson, who wrote a letter to the The Times and telephoned around leading business men. He found that most of them believed that the future was not in the signing of Maastricht.

Mr. Winterton : Representations have been made to me by Jardine Matheson, but as my hon. and learned Friend has given the information to the House, I know that you would say that I was being repetitive, Mr. Lofthouse, if I repeated it to the Committee. My hon. and learned Friend's request for honesty should be answered by the Government and the CBI and all the other organisations which have peddled inaccurate and biased information, for whatever reason.

Before I come to the next issue, I return to the Budget. Again, it is relevant to economic policy and the deficit. The deficit is particularly relevant to the matter that I wish to raise. The Government have decided to extend value added tax to heat and light. I wonder why they chose to do that. Was it to reduce the deficit? That was the explanation provided by the Chancellor and other Ministers. Perhaps, Mr. Lofthouse, you will say that I am being too suspicious. Perhaps I am not trusting enough of my colleagues on the Treasury Bench. Did they extend VAT to bring the tax structure and the base of value added tax in Britain more in line with the rest of the EC?

I wonder what further measures my right hon. Friend the Chancellor will announce to the House in the years

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that lie ahead. He has extended VAT to heat and light. I did not support that, and I will not support it unless he provides certain assurances to me that the vulnerable groups, whom we all know about, are fully and adequately covered.

Mr. Barry Porter (Wirral, South) : I can think of better things to do at 4 o'clock in the morning. I would not mind if we were discussing what is before the Committee, but in the past half hour I have heard a broad onslaught on the treaty of Rome, the Single European Act and the general wickedness of the European Community. It is not possible for you to bring the speeches into order, Mr. Lofthouse, so that they deal with the Maastricht treaty and nothing else?

The First Deputy Chairman : Order. That is a matter for the Chair. However, on occasions my patience has become somewhat exhausted because the hon. Member for Macclesfield (Mr. Winterton) has ventured into industrial policy, whereas the amendments deal with economic policy. If the hon. Gentleman would bear that in mind, I would be extremely grateful.

Mr. Winterton : Of course I fully accept the view that you have just expressed, Mr. Lofthouse, and as a member of the Chairmen's Panel I accept without question the ruling of the occupant of the Chair. You have always been impeccably fair whenever I have taken part in any debate in the Chamber. However, if industrial policy and the importance of manufacturing are not inextricably entwined with economic policy, I do not know--

The First Deputy Chairman : Order. As the hon. Gentleman is fully aware, there has been a separate debate on industrial policy. 4 am

Mr. Winterton : Sadly, on that occasion I did not succeed in catching your eye because, yet again, the Government sought to short- circuit debate in the House on a vital constitutional issue and I was unable to make a speech. I do not wish to get out of order, Mr. Lofthouse, or to tempt you to rise to your feet again, but the issues that I have touched upon are relevant to economic policies and deficits.

If my hon. Friend the Member for Wirral, South (Mr. Porter) doubts my reference to value added tax on heat and light, he will know that the Chancellor apparently introduced that policy to reduce the Government deficit. He may have done it partly for that reason, but I am suspicious that he has done it to bring the base of taxation in Britain closer to that of the European Community and I am strongly opposed to that.

Once again, I am referring to the deficit and my hon. Friend the Member for Wirral, South is tempting me, provoking me and forcing me to go further. Having introduced that measure, we are putting a number of vulnerable groups into grave financial difficulty. As a result, the Government will have further to increase the deficit in order to increase the pension and raise by the appropriate amount state income-related benefits and income support.

Mr. Bill Walker : Is not my hon. Friend saying that the redeeming feature was that it was our Chancellor who took the decision to adjust the deficit or do whatever he wished with it? The amendments are about whether or not

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the House, the Chancellor or any future Chancellor will have the opportunity to do just that. That is what the debate is all about.

Mr. Winterton : My hon. Friend is correct in that we wish the House to have the authority to decide economic policy in all the areas that I said would be handed over to the European central bank, for example, if the Maastricht treaty is ratified, and inevitably other measures that are in the pipeline would follow.

Let me now move on to Maastricht-- [Interruption.] Perhaps my hon. Friends are inexperienced in theatrical delivery and did not take account of the pause. I was about to move on to Maastricht and inward investment, which is closely tied up with economic policy. Inward investment into Britain comes from a number of sources such as the United States and Japan. As my hon. Friend the Minister is inclined to talk, lecture and ram down our throats in economic and other debates in the House, we have been an extremely successful recipient of inward investment. This has been a notable ingredient of our economic success, particularly during the 1980s.

I would like to give a number of reasons for that investment. I pay tribute to the United Kingdom Government, a Conservative Government, for their sympathetic and positive attitude to inward investment. Also, dare I say it --and in no way seeking to upset the nationalists, who are not here, although we have with us the president of the Liberal Democrat party--the English language is one of the reasons why we get inward investment. English is especially important for the Japanese whose second language it is. Another reason is the culture of this country.

Sir Ivan Lawrence : My hon. Friend and the Committee might like to know that two weeks ago I asked a Japanese ambassador if our not signing Maastricht would mean the withdrawal of the Japanese investment in Toyota, which is just outside my constituency. He said that, provided that not signing Maastricht did not mean that Britain would come out of the European Community, there would certainly be no withdrawal of investment, thereby making two points. The first was that their investment is in Britain because we are in the European Community. The second and sinister point, which links up to the point that I made when last I intervened in my hon. Friend's speech, was that there is still the idea going round that if we do not sign Maastricht we will be out of the European Community. That idea must be killed.

Mr. Winterton : My hon. and learned Friend makes the point extremely well, so much so that if ever I need a lawyer he will certainly be my man because he expresses the case so positively, so forcefully and so accurately.

Sir Trevor Skeet : Perhaps I can endorse what has just been said, in alignment with my hon. Friend's own speech. Mr. George, the incoming Governor of the Bank of England, is reported as follows in the Financial Times of 3 March 1993 :

"He told a seminar organised by British Invisibles, the export promotion body for services, that the City's position depended on the completion of the single market rather than monetary integration." That, I think, is conclusive.

Mr. Winterton : I can only say that I am eternally grateful to my hon. Friend the Member for Bedfordshire, North (Sir T. Skeet), whose knowledge of industry and

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certain sectors important to our economy is well respected. The point that he has made is a good one--and far be it from me to argue with the future Governor of the Bank of England. I entirely endorse the view that he has expressed.

Another reason why this country is so attractive for inward investment--I pay tribute to many hon. Members on the Opposition Benches, not necessarily on the Government Benches--is that we have a highly trained and highly productive work force. Given the opportunity to work, they work, and work very well. I suspect that my hon. and learned Friend the Member for Burton (Sir I. Lawrence) may seek to intervene again because I have had this out of the mouths of business men from Japan. They believe that our work force are even better than their work force, and they are very happy to come here for that reason. They are skilled, they are hard-working, they are committed--

Mr. Day : And released from the shackles of socialism.

Mr. Winterton : I will not enter into a party political debate, even though I am tempted to do so, because on this I am sure that I carry both sides of the Committee with me.

Again, they want to come to this country because of our strategic position and because we have a relatively good and improving infrastructure and communications.

I make this challenge on economic policy : think of the improvements created for industry and industrial efficiency, if only the Government would spend the £3billion that we contribute to the European Community on this country's infrastructure. Think how many tens of thousands, or perhaps hundreds of thousands, it would put back to work, especially in the hard-pressed construction and allied industries.

Our membership of the European Community and the single market is important, but the ratification of Maastricht is of no importance.

Mr. Barry Porter : What are we doing here then?

Mr. Winterton : My hon. Friend is tempting me again. What is the Committee doing spending so much time on this confounded, irrelevant and unnecessary debate on the Maastricht treaty and the Eruopean Communities (Amendment) Bill? He also has the good sense to come from the north-west of England, albeit from the other side of what was the county of Cheshire, on the Wirral, and if only he would make the strong representations to the Government that I have suggested, perhaps this whole charade and farce would be brought to an end. For all the reasons that I have described, the United Kingdom is recognised as a centre for inward investment by the Japanese. My hon. and learned Friend the Member for Burton referred to the huge investment by Toyota close to his constituency.

Dr. Godman rose --

Mr. Winterton : Yet again, I am happy to give way to an informed Opposition Member.

Dr. Godman : The Japanese are not the only investors who are ready to acknowledge the high qualities displayed by our work forces. I met senior directors of IBM recently, in the immediate aftermath of the bad news that they recently had to announce. They assured me that the plant at Spango valley in Greenock was among the best in IBM

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worldwide, and that it would always receive the support of the headquarters in America. They spoke very highly of the work force on the lower Clyde.

Mr. Winterton : The hon. Gentleman never misses an opportunity to advance the interests of his constituency and the interests and success of Scotland, which is such a vital part of the United Kingdom. I can only entirely agree with him.

Mr. Bill Walker : IBM had been in Scotland for a long time.

Mr. Winterton : My hon. Friend the Member for Tayside, North (Mr. Walker) agrees with the hon. Member for Greenock and Port Glasgow. For all the reasons that I have given, the United Kingdom is recognised by the Japanese as a free-trading nation, with a distinguished and long tradition and an open attitude to world trade, which is epitomised by the City of London. For that reason, one is so saddened that the City has joined--for whatever reasons--the disinformation about business being almost entirely in favour of the ratification of the Maastricht treaty.

Our country attracts inward investment, but the same is not true of our major European Community partners, in particular France and Germany, for reasons that are well known to Conservative Members. It is unlikely, however, that inward investment will return in the immediate future to the levels of the 1980s, which were a build-up from a very low base of inward investment.

Japan is a very powerful country. Bearing in mind the strictures of my hon. Friend the Minister in the previous debate--if you will allow me about 15 seconds, Mr. Lofthouse--about the importance of an independent bank, the most economically successful country in the world has been, and still is, Japan, which has a central bank--the Bank of Japan--which is extremely dependent. It is not independent but extremely accountable to the Japanese Government. All the nonsense that Ministers talk about the vital role of an independent European central bank is similar to much of what they say.

Sadly, the Japanese now have a shortage of capital, and that is likely to continue for some time. They have had to withdraw some of their overseas investments and to cut back their banking and securities operations. Indeed, even those in the United Kingdom have had to be reduced. However, Japan is still a major investor in this country. As my hon. and learned Friend the Member for Burton has said, it has absolutely no intention of withdrawing its huge investment. Indeed, that investment will be added to. The only stipulated important criterion is that the United Kingdom should stay in the European Community. No Conservative Member suggests for one moment that we should come out.

Sir Teddy Taylor : What?

4.15 am

Mr. Winterton : I have never been able to speak with confidence on behalf of my hon. Friend the Member for Southend, East, although one of his luncheon clubs, at his suggestion, has asked me to speak in his constituency. I am very happy to have accepted the invitation, and I look forward to visiting Southend, East, where I know I shall come across a very large number of people who believe

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that Maastricht is a total waste of time and should be shelved for good--if not, as some of my hon. Friends might say, just for the foreseeable future.

Sir Teddy Taylor : We want a credible case for staying in the EC. No such argument has been heard by the people to whom my hon. Friend refers. What we are facing up to now is nonsense, and what has happened under the Single European Act and the treaty of Rome has turned out to be a disaster for Britain and for democracy.

The First Deputy Chairman : Order. This group of amendments is not about coming out of the EC.

Mr. Winterton : Nor is it about going to speak in Southend, East, but I wanted to mention that visit in passing.

The fact that these amendments are not about coming out of the EC is important from the point of view of reassuring those countries that make considerable and important investments in the United Kingdom. Neither the United States nor Japan, despite their domestic difficulties, has withdrawn manufacturing businesses from this country. I only wish that our Government had as positive an attitude towards manufacturing as have many overseas investors. It is unlikely that either the United States or Japan will ever remove any manufacturing capacity from the United Kingdom. The very good reason, which will appeal to Conservative Members and--I say to the hon. Member for Liverpool, Walton (Mr. Kilfoyle)--to Opposition Members, I believe, is that their businesses here are highly profitable. Professor Williams' report to the CBI confirms this : most of the investment has already been made, and substantial follow-on investment from Japan is still to come but may be delayed because of the financial squeeze in that country.

Mr. Bill Walker : Does my hon. Friend agree that part of the deficit problem that the United Kingdom faces is accounted for by the fact that, for decades, we have been reducing substantially our ability to generate sufficient wealth to meet the expenditure that the Government have undertaken and added to? This situation has been brought about in part by the fact that the Japanese have been able to sell to the United Kingdom goods worth more than £7,000 million, whereas, as the most recent figures show, we sell goods worth just over £2,000 million to Japan. The Japanese have been able to penetrate the United Kingdom market and the market in the rest of the European Community. Thus Japan, which is not a member of the Community, has improved its deficit situation.

Mr. Winterton : I can only say that my hon. Friend the Member for Tayside, North makes an interesting and valid point. He has said that the Japanese are prepared to invest here because of the huge market to which that gives them access--perhaps the European Community has not had as much access to the Japanese market as the Japanese have had to the European market. It is to this country that the Japanese have wanted to come to locate their manufacturing.

The report of Professor Williams to the CBI continues in a manner that is relevant to our debate. It states :

"Only a small number would see this"--

the non-ratification of the Maastricht treaty--

"as having any major effect on their investment"--

those that come to this country with inward investment

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"provided it did not lead to withdrawal or exclusion from the single market."

It is for that reason that I have grave concerns about the briefing document put out by the CBI to which my hon. Friend the Member for Stafford referred.

The argument so often advanced by Ministers of a two-speed Europe that will be to the disadvantage of the United Kingdom as we would no longer be at the heart of Europe is specious. Under the second and third stages to the run-up to the European central bank--the heart of Maastricht--countries will be able to unify their economies completely only when they have satisfied four convergent criteria. The latest date for the start of the European central bank is 1999, but it could start with only two member states as its members.

Mr. Michael Spicer : I appreciate that the debate is not about coming out of the Common Market, but does my hon. Friend accept that there is no single EEC country with a higher standard of living per capita income than any single country of the European Free Trade Association, including Austria and Finland--except Luxembourg ? Does not that show that there is some sort of life to be had on the margins of Europe ?

Mr. Winterton : My hon. Friend is correct to draw the Committee's attention to the fact that being a member of Europe is not necessarily a recipe for a successful and good-quality life. However, the currency and economy of Austria are quite closely linked to the deutschmark. I say that as one who has a skiing holiday there every year, as well as many friends there--we have a home quite close to the German border. Perhaps the Austrians gain some benefit from their German bedfellow--the German republic. My hon. Friend made a valid point in respect of the other EFTA countries, not least Sweden--although, like most other countries, Sweden currently has an economic problem.

It could be that, initially, only two member states will be members of the European central bank. It is likely that, thereafter, for a time there may be five, then there could be seven or 10. We could have a five-speed Europe, a seven-speed Europe or a 10-speed Europe. Therefore, to talk about a two-speed Europe is specious and dishonest.

The United Kingdom cannot be excluded from the single market or any decision about the future of the single market. Whatever happens to Maastricht, our participation in, and membership of, the single market--and that of our partners in Europe and the single market--is a matter of international law. To say that we could be damaged and that our membership of the Community and our involvement in the single market would be affected is nonsense.

Secondly, after Germany, we are the largest single contributor to the EC budget. I fully support the expansion of the European Community--if it was merely a trading unit and a free trade area, which is what most of our people voted for in the early 1970s. I note that the Opposition's main spokesman in the debate, the hon. Member for Newcastle upon Tyne, East (Mr. Brown), nods in assent. He believes what I believe, that a majority of our people thought that that was what they were voting for in the 1975 referendum. I am surprised that the Opposition are not now in favour of a referendum, because when they were in government they passed legislation for the 1975 referendum. The people of this country know rather more than the Government are

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prepared to give them credit for, although at that time they thought that they were joining a trading partnership. However, there was far more to it in the small print of the treaty of Rome. I have said that we are the second largest contributor to the EC budget. We are also running a massive trade deficit with our EC partners. I have made many speeches all over the country outlining my reasons for opposing the Maastricht treaty and any further step along the path to a federal, centralist state. I repeat what I said in those speeches : that the countries of mainland Europe need us far more than we need them, for the financial reasons that I have spelt out.

Mr. Day : Will my hon. Friend give way?

Mr. Winterton : I am happy to give way once more before I sit down.

Mr. Day : My hon. Friend said why he thinks that the Maastricht treaty is a threat, especially to industry. He also said that he was totally opposed to a centralised, bureaucratic Europe, as are most hon. Members and certainly Conservative Members. Why does he think that Europe has developed in that way? Why is Britain reactive rather than proactive? Could it be because Britain has never been positive about its membership of Europe and gives the impression of having one foot in and one foot out? Some of my hon. Friends give the impression that they do not want to have even one foot in.

The First Deputy Chairman : Order. We are departing from the subject of the debate, which is economic policy.

Mr. Winterton : I hope that you will not blame me, Mr. Lofthouse, for my hon. Friend's intervention. That would be unfair and I have the greatest admiration for you in the Chair. My hon. Friend tempts me to say that I would rather have one foot in the grave than two. Some people, and especially the members of the Government, wish that I had both feet in the grave, but they will have to do better than they have been doing so far to bring that about. You have been extremely patient, Mr. Lofthouse, and tolerant of my brief contribution to the debate on these important amendments. My right hon. Friend the Prime Minister has said that we will remain at the heart of Europe. Even without Maastricht, Europe wants us and our influence is greatly appreciated. Wherever I have travelled in Europe as a holidaymaker rather than as a Member of Parliament or with Select Committees or other groups, I have found that the people of the country that we are visiting are always immensely impressed by the United Kingdom and its parliamentary system. Does my hon. Friend the Member for Cheadle not believe that this country's culture is slightly different from those of France, Germany, Belgium and Holland?

Mr. Charles Kennedy : Of course it is.

Mr. Winterton : For that reason

The Chairman : Order. As the hon. Gentleman knows, we have had a debate on culture.

Mr. Winterton : You, Mr. Lofthouse, were of course right to call me to order.

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The United Kingdom has a unique, positive and responsible contribution to make to the European Community. We have done so and can continue to do so--and we do not need the Maastricht treaty to enable us to do it.

Dr. Godman : On a point of order, Mr. Lofthouse. I have been sitting in the Chamber since 9.30 pm, and it occurs to me that the central heating has been switched off, because it is very cold. I wonder whether the temperature is below a tolerable level. It has certainly cooled down quite dramatically--which is purely coincidental with the forceful and brilliant speech of the hon. Member for Macclesfield (Mr. Winterton) lasting upwards of an hour.

The First Deputy Chairman : I noticed that some heat had been generated over the past couple of hours, but as to the temperature in the Chamber, those responsible will no doubt have taken note. 4.30 am

Mr. Winnick : It is scandalous that we should be debating these matters at 4.30 am. There was no justification for the Government to proceed after 10 o'clock, and they could not have carried the business motion without the support of the Liberal Democrats. The Jopling report, which will be debated in due course, argues that the House should rarely sit later than 10 pm.

To debate these vital constitutional questions, whether one is for or against them, in the early hours of the morning is quite wrong. It makes a mockery of the Government's commitment to proper and adequate debate. Clearly, they want--so far as they are able--to get most of the economic issues out of the way. I have registered my protest. The hon. Member for Macclesfield (Mr. Winterton) gave us an overview of the amendments and new clauses under consideration. I say straight away that I am not in favour of the Maastricht treaty. I will remain in order and address immediately article 104c and related matters, but I do not want to give the impression that, if it were not for article 104c, I would favour the treaty. I am against it. I am against the transfer of sovereignty in such a way.

I am not in favour of Britain leaving the European Community, whatever the pros and cons. After 20 years of membership, I think that it has become accepted that there would be many more problems and headaches in leaving the Community than remaining in it. Since the 1975 referendum, I have never argued that we should leave it. There is no question in my mind but that we should remain a member of the Community.

Dr. Godman : Does my hon. Friend agree that, whether one is pro- Community or a critic of it, because there is no promise of a referendum, each and every right hon. and hon. Member owes it to his or her constituents to scrutinise the Bill in as tough-minded and rigorous a way as possible ? Surely that is the case.

Mr. Winnick : That is certainly the case. I live in the real world, and I am under no illusion but that the Government will get their way one way or another and that the Bill will be passed in due course. However, the problem will not go away for the Government, or even for my party. Given that there is such a division of opinion and dissatisfaction in the country, the treaty will remain an issue of great controversy. It is sheer nonsense to imagine that it will no

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longer remain so once Parliament approves the Bill. The debate will continue. I certainly will not change my mind as a result of the Bill's passage ; it would be very odd if I did.

I have said that I would remain opposed to the treaty even without article 104c, but I am even more opposed to the deflationary flavour that characterises so much of it--and, in particular, characterises the article, the clauses and the amendments that we are now discussing. I hope that every hon. Member--not just those who are present now--will read article 104c, if they have not already done so. It uses two and a quarter columns to set out the way in which member states should avoid excessive Government deficits, and goes on to explain the procedures that will be involved when a member state is considered to have exceeded the permitted deficit. We know the related protocol, which clearly states that the deficit should be no more than 3 per cent. of GDP.

Earlier, I asked the Library to check the present position. The Library responded in the efficient and courteous way in which it usually deals with Members' queries. I am informed that a United Kingdom deficit of 8.2 per cent. is forecast for 1993. Achieving the convergence required by the 3 per cent. figure would require a £33 billion cut in public spending, unless taxes were increased. Unlike some Conservative Members, I have little confidence in the Government's commitment to public spending. Over the years, they have carried out a number of cuts with which Opposition Members have strongly disagreed. But if there was ever an incentive for a Conservative Government with no great love of public expenditure to make further reductions in basic services, surely it is article 104c of the Maastricht treaty. Let me point out to Opposition Front Benchers in particular that, however critical we were of the Government's cuts in public spending, as long as convergence was being secured the Government would have an alibi.

It is not just a question of when the treaty will come into force. The emphasis will be on trying to achieve economic convergence before it comes into force, and before the third stage. That is part of the emphasis in article 104c. It does not merely refer to economic and monetary union as such ; measures will need to be taken, and member states will be encouraged to take those measures before the third stage is reached, whether or not the United Kingdom decides to go ahead with EMU in 1996.

I know that those on the Opposition Front Bench will say, "We are not committed to the 3 per cent. figure." That may well be so, and I shall listen carefully to what my hon. Friend the Member for Oxford, East (Mr. Smith) has to say ; but the treaty is the treaty, and no remarks from either Front Bench can change its nature. Article 104c directly contradicts all that the labour movement has fought and campaigned for ever since it came into existence, and I find it inconceivable that we could support a treaty that contains such an article. It is of course true that, if a member state exceeds the 3 per cent. limit, there is no immediate fine or punishment. It is not part of my case that stern disciplinary measures will be taken at once if a member state goes over the limit. I concede that point, but article 104c outlines the steps that will be taken to ensure that a member state is kept in line.

The requirements will mean that a member state must go to the Commission and the Council and explain precisely what is being done to reduce the deficit. That is

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a very humiliating experience for an independent country. If we believe that certain measures are necessary in our overall interest, but the Commission decides that they are creating a deficit above the permitted level, we shall have to explain our position. Do those who support the treaty believe that we should have to do that? When we have a Labour Government, do we want Labour Ministers to go first to the Commission and then to the Council of Ministers to explain, as far as they can, why the deficit has gone above the permitted limit and what action is to be taken ? Is that the role of an independent country ? Those who argue that the treaty is not as bad as we paint it must explain how and why they support such a measure.

Mr. Betts : I do not understand why such a scenario should concern my hon. Friend. Is he objecting to countries in the European Community trying to work together on economic policy and to one country discussing with others why it is pursuing certain policies, what its objectives are and how they match those of the whole Community ? I see nothing wrong with such a process.

Mr. Winnick : I should have been surprised by my hon. Friend's response even if the proposal were not so deflationary. Why should we have to defend and justify our position in the way he outlined ? Why should a country which has retained its independence for so many centuries have to virtually grovel and explain why it was necessary to exceed the permitted limit ? Have we reached a stage where the practices and policies of the other member states are so superior to ours, and our practices of parliamentary government and democracy so inferior, that we have to do what my hon. Friend suggests ?

Mr. Cash : Does the hon. Gentleman agree that, basically, we are being put through this humiliating and absurd procedure because it is within the framework of what is intended to be a united states of Europe ? Are not people literally deceiving themselves and the British public continuously, in the belief that we shall somehow gain some advantage from the miserable negotiation that led to the pathetic treaty ? The European People's party, to which my party is now apparently married, is the prime advocate of a united states of Europe. That is the truth of what is happening.

Mr. Winnick : I entirely agree, and no one should think otherwise. The other countries involved in the negotiations found it odd that the British dislike the word "federal", so they decided to humour us by leaving it out. Anyone who believes that the process is not leading to a federal Europe lives in a dream world. The hon. Gentleman is absolutely right. I would have more respect for those who are in favour of the treaty if they would say so openly. However much I disagree with the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), he at least knows where he stands. He is for a federal Europe.

The right hon. Gentleman supports the article because he believes that it is a necessary ingredient in securing the sort of federal arrangements that he wants. Indeed, when he was challenged by my hon. Friend the Member for Newham, South (Mr. Spearing) to say whether a single currency would mean a single Government, the right hon. Gentleman nodded. He was perfectly happy with that idea. He would argue that he is a deeply patriotic individual, and I have no reason to say otherwise ; we all know about

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his military service during the war. He believes that the treaty is the best way in which Britain's role in Europe can be set. But I fundamentally disagree with the right hon. Gentleman. I do not want us to be part and parcel of a federal Europe. The hon. Member for Stafford (Mr. Cash) could not be more right ; all the preconditions are there for the road that will ultimately be taken.

4.45 am

Dr. Godman : My hon. Friend said that a country, a member state, could be forced to grovel at a meeting of the Council. May I point out to him that it is not a country but a Government that would be in that position. If a Government are criticised and censured in public during an election year, the Council's intervention could have a decisive effect on the outcome of the election. The Council could play an important role in censuring Governments in public under article 104c(8), especially in an election year. The Council is an extremely exclusive club ; is that criticism likely to be administered during an election year?

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