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Mr. Kennedy : As is the case in so many of the debates throughout the process of this piece of legislation, from my own political standpoint, I feel that the hon. Gentleman's point could be best addressed by our being more integrated rather than less, as he would wish to argue. The whole logic of the European case is that, if we want to influence in a favourable way the outcomes and decisions taken at European level--

Mr. Spearing : By officials.

Mr. Kennedy : By officials at the moment, because all the institutions, again from a federal point of view, are not democratic enough. We are going a bit wider there, Mr. Morris, than perhaps we are allowed to in this set of arguments. My whole case would be--I will come to this in the specific context of the parts that we have been debating through the night--that, as a general rule, we are more likely to exert more influence by being more integrated, not by being more stand-offish or semi-detached or whatever phrase might be appropriate to characterise the hon. Gentleman's position.

Dr. Godman : The hon. Gentleman will know that I am not altogether hostile to federalism, but I should like to ask him how the cause of federalism in the European Community is advanced by the implementation of articles 103.3, 104c and 109c. To my mind, the implementation of those articles strengthens the central institutions which have at the moment enormous power, although far from federalist in structure.

6.30 am

Mr. Kennedy : The economists who informed and advised during the Maastricht neogitations were operating against two different backgrounds. One was a set of economic theories that said that countries will try to free-ride over any economic difficulties involving their currencies, that it would be a free-for-all which would bleed the centre, and that no centralised institution can withstand that. The other argument was that one would have to have excessive centralism and downward pressure on all member states.

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I appreciate that the hon. Member for Greenock and Port Glasgow (Dr. Godman) feels that there is too much downward pressure, but the achievements of the Maastricht process, if not the happiest of halfway houses, were more of a compromise than would have been the case if one considers the original Delors package, which preceded Maastricht.

Consider our currency union within the United Kingdom. The hon. Member for Tayside, North (Mr. Walker) and I have argued about the applicability of comparing our Union with that envisaged in the Maastricht treaty. Our currency union, for which the Government, the Treasury and the Bank of England are responsible, involves tight, centralised controls, not least over local spending and borrowing. I find it inconsistent that some hon. Members will happily vote for rate capping and all sorts of other controls of local government because of the single currency demands of our currency, yet the milder proposals for union in the treaty cause them such massive offence.

Mr. Bill Walker : The hon. Gentleman is as knowledgeable as I on the objectives of the Act of Union 1707, and the treaty signed at the time. He will know that the economic, monetary and political objectives of that Union were almost identical to the objectives proposed and written into the treaty. The clauses are different, but the objectives are clearly stated and almost identical. I therefore view the treaty as a centralising process --not federal at this stage--which will create much the same circumstances as in our Union with a single currency, a single Chancellor of the Exchequer and single borrowing requirement, all controlled from the centre. The Scots have complained about that for years. I am happy with it, and the hon. Member objects to, but I am not happy for that to be done in Europe.

Mr. Kennedy : The hour is late, and we are almost getting into Scottish political theology. I agree that we have a far too centralised constitutional settlement in the United Kingdom. In trying to draw a comparison between the 1707 Act and the events surrounding it and the Maastricht treaty, the hon. Gentleman overlooks something fundamental-- federalism. Whether that word is acceptable, or used in its proper context in this country--or at least in a context that will be understood by our Community partners--it is certainly used in other countries, notably Germany, essentially to mean decentralisation--and I must stress that.

Sir Teddy Taylor rose

Mr. Kennedy : Having lit the blue touch paper, I must give way to a Scot who represents another part of the Union.

Sir Teddy Taylor : While the hon. Member might be right in thinking that the Commission and the Council will be moderate and reasonable in applying the terms of article 104c, does he accept that the wording is such that it could be applied restrictively and oppressively? As we do not know what the Commission or the Council is doing, would not it be far safer to have wording that avoided repressive, restrictive policies, which would simply add to unemployment and misery?

Mr. Kennedy : The constitution of the old Soviet Union promised every freedom under the sun, and, in respect of

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Column 1131

Hong Kong, the Basic Law to which the Government of China have put their names guarantees all the things that all Members on both sides of the Committee would advocate. However, experience, suspicion, cynicism and canniness about the former Soviet Union, as well as the Hong Kong settlement to come, make us worry. Others may take a different view, but I do not regard those who operate at Brussels level in the same way as I regarded the old Soviet Government or as I regard the current administration of old men in China. I am more relaxed and more laid back in my interpretation of the words in this part of the article than the hon. Member for Southend, East (Sir T. Taylor).

This applies not least to paragraph 3, which provides that, if there is excessive Government expenditure, leading to an excessive deficit, other relevant factors, including the medium-term economic and budgetary position of the member state, will be taken into account. It seems to me that that is a helpful addition, rather than something about which we should be excessively suspicious or over which we should lose sleep. [Laughter.] My words are being laughed at out of context.

Underlying the economic and monetary union mechanism that is built into the treaty is the need, if we are to overcome the suspicions and hostilities that have been expressed by hon. Members on both sides of the Committee, for more building in of European institutions that are felt by the citizens they are intended to serve to be European. As has been seen in the context of other parts of the legislation--we shall return to this matter at later stages--this can be done only by providing a more democratic structure and adopting a much more federal approach. That is the means of addressing these anxieties in the same way as several of the more positive ideals and aspirations of some of us.

Mr. Wood rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put :--

The Committee divided : Ayes 239, Noes 29.

Division No. 207] [6.36 am

AYES

Adley, Robert

Ainsworth, Peter (East Surrey)

Aitken, Jonathan

Alexander, Richard

Amess, David

Ancram, Michael

Arbuthnot, James

Arnold, Jacques (Gravesham)

Arnold, Sir Thomas (Hazel Grv)

Ashby, David

Atkinson, Peter (Hexham)

Baker, Nicholas (Dorset North)

Baldry, Tony

Banks, Matthew (Southport)

Banks, Robert (Harrogate)

Bates, Michael

Batiste, Spencer

Beresford, Sir Paul

Blackburn, Dr John G.

Booth, Hartley

Boswell, Tim

Bottomley, Peter (Eltham)

Bottomley, Rt Hon Virginia

Bowden, Andrew

Bowis, John

Brandreth, Gyles

Brazier, Julian

Bright, Graham

Brooke, Rt Hon Peter

Brown, M. (Brigg & Cl'thorpes)

Browning, Mrs. Angela

Bruce, Ian (S Dorset)

Burns, Simon

Burt, Alistair

Butterfill, John

Carlisle, Kenneth (Lincoln)

Carrington, Matthew

Channon, Rt Hon Paul

Chapman, Sydney

Churchill, Mr

Clarke, Rt Hon Kenneth (Ruclif)

Clifton-Brown, Geoffrey

Coe, Sebastian

Colvin, Michael

Congdon, David

Conway, Derek

Coombs, Anthony (Wyre For'st)

Coombs, Simon (Swindon)

Cope, Rt Hon Sir John

Couchman, James

Curry, David (Skipton & Ripon)

Dafis, Cynog

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Column 1132

Davis, David (Boothferry)

Day, Stephen

Deva, Nirj Joseph

Devlin, Tim

Dorrell, Stephen

Douglas-Hamilton, Lord James

Dover, Den

Duncan, Alan

Dunn, Bob

Durant, Sir Anthony

Elletson, Harold

Emery, Rt Hon Sir Peter

Evans, David (Welwyn Hatfield)

Evans, Jonathan (Brecon)

Evans, Nigel (Ribble Valley)

Evans, Roger (Monmouth)

Evennett, David

Faber, David

Fabricant, Michael

Fenner, Dame Peggy

Field, Barry (Isle of Wight)

Fishburn, Dudley

Forsyth, Michael (Stirling)

Forth, Eric

Foster, Don (Bath)

Fox, Dr Liam (Woodspring)

Fox, Sir Marcus (Shipley)

Freeman, Roger

French, Douglas

Gale, Roger

Gallie, Phil

Garnier, Edward

Gillan, Cheryl

Goodlad, Rt Hon Alastair

Goodson-Wickes, Dr Charles

Gorst, John

Grant, Sir Anthony (Cambs SW)

Greenway, Harry (Ealing N)

Greenway, John (Ryedale)

Grylls, Sir Michael

Gummer, Rt Hon John Selwyn

Hague, William

Hamilton, Rt Hon Archie (Epsom)

Hamilton, Neil (Tatton)

Hanley, Jeremy

Hargreaves, Andrew

Harris, David

Haselhurst, Alan

Hawkins, Nick

Heald, Oliver

Heathcoat-Amory, David

Hill, James (Southampton Test)

Hogg, Rt Hon Douglas (G'tham)

Horam, John

Hordern, Rt Hon Sir Peter

Howarth, Alan (Strat'rd-on-A)

Howell, Rt Hon David (G'dford)

Hughes, Simon (Southwark)

Hunt, Rt Hon David (Wirral W)

Hunt, Sir John (Ravensbourne)

Hunter, Andrew

Jack, Michael

Johnson Smith, Sir Geoffrey

Johnston, Sir Russell

Jones, Gwilym (Cardiff N)

Jones, Ieuan Wyn (Ynys Mo n)

Jopling, Rt Hon Michael

Kellett-Bowman, Dame Elaine

Kennedy, Charles (Ross,C&S)

Key, Robert

Kilfedder, Sir James

Kirkhope, Timothy

Kirkwood, Archy

Knight, Mrs Angela (Erewash)

Knight, Greg (Derby N)

Knox, David

Kynoch, George (Kincardine)

Lait, Mrs Jacqui

Leigh, Edward

Lennox-Boyd, Mark

Lester, Jim (Broxtowe)

Lidington, David

Lightbown, David

Lilley, Rt Hon Peter

Llwyd, Elfyn

Luff, Peter

Lyell, Rt Hon Sir Nicholas

MacGregor, Rt Hon John

MacKay, Andrew

Maclean, David

McLoughlin, Patrick

Madel, David

Maitland, Lady Olga

Malone, Gerald

Mans, Keith

Marland, Paul

Marshall, John (Hendon S)

Marshall, Sir Michael (Arundel)

Martin, David (Portsmouth S)

Mawhinney, Dr Brian

Mellor, Rt Hon David

Merchant, Piers

Michie, Mrs Ray (Argyll Bute)

Milligan, Stephen

Mitchell, Sir David (Hants NW)

Monro, Sir Hector

Moss, Malcolm

Needham, Richard

Nelson, Anthony

Neubert, Sir Michael

Newton, Rt Hon Tony

Nicholls, Patrick

Nicholson, David (Taunton)

Nicholson, Emma (Devon West)

Norris, Steve

Onslow, Rt Hon Sir Cranley

Oppenheim, Phillip

Ottaway, Richard

Page, Richard

Paice, James

Patnick, Irvine

Patten, Rt Hon John

Pattie, Rt Hon Sir Geoffrey

Pickles, Eric

Porter, Barry (Wirral S)

Portillo, Rt Hon Michael

Powell, William (Corby)

Rathbone, Tim

Redwood, John

Renton, Rt Hon Tim

Richards, Rod

Riddick, Graham

Robathan, Andrew

Roberts, Rt Hon Sir Wyn

Robertson, Raymond (Ab'd'n S)

Robinson, Mark (Somerton)

Rowe, Andrew (Mid Kent)

Rumbold, Rt Hon Dame Angela

Ryder, Rt Hon Richard

Sackville, Tom

Sainsbury, Rt Hon Tim

Scott, Rt Hon Nicholas

Shaw, David (Dover)

Shaw, Sir Giles (Pudsey)

Shephard, Rt Hon Gillian

Shepherd, Colin (Hereford)

Smith, Tim (Beaconsfield)

Soames, Nicholas

Spencer, Sir Derek

Spicer, Sir James (W Dorset)

Spink, Dr Robert

Spring, Richard

Sproat, Iain

Stanley, Rt Hon Sir John

Stephen, Michael

Streeter, Gary

Sumberg, David

Sykes, John

Taylor, John M. (Solihull)

Temple-Morris, Peter

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