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Orme, Rt Hon Stanley

Paisley, Rev Ian

Parry, Robert

Patchett, Terry

Pendry, Tom

Pickthall, Colin

Pike, Peter L.

Pope, Greg

Powell, Ray (Ogmore)

Prentice, Ms Bridget (Lew'm E)

Prentice, Gordon (Pendle)

Prescott, John

Primarolo, Dawn

Purchase, Ken

Quin, Ms Joyce

Randall, Stuart

Raynsford, Nick

Redmond, Martin

Reid, Dr John

Richardson, Jo

Robertson, George (Hamilton)

Robinson, Geoffrey (Co'try NW)

Roche, Mrs. Barbara

Rogers, Allan

Rooker, Jeff

Rooney, Terry

Ross, Ernie (Dundee W)

Ross, William (E Londonderry)

Rowlands, Ted

Ruddock, Joan

Salmond, Alex

Sedgemore, Brian

Sheerman, Barry

Sheldon, Rt Hon Robert

Shore, Rt Hon Peter

Short, Clare

Simpson, Alan

Skinner, Dennis

Smith, Andrew (Oxford E)

Smith, C. (Isl'ton S & F'sbury)

Smith, Rt Hon John (M'kl'ds E)

Smith, Llew (Blaenau Gwent)

Smyth, Rev Martin (Belfast S)

Snape, Peter

Soley, Clive

Spearing, Nigel

Spellar, John

Steinberg, Gerry

Stevenson, George

Stott, Roger

Strang, Dr. Gavin

Straw, Jack

Taylor, Mrs Ann (Dewsbury)

Taylor, Rt Hon John D. (Strgfd)

Thompson, Jack (Wansbeck)

Tipping, Paddy

Trimble, David

Turner, Dennis

Vaz, Keith

Walker, Rt Hon Sir Harold

Walley, Joan

Wardell, Gareth (Gower)

Wareing, Robert N

Watson, Mike

Welsh, Andrew

Wicks, Malcolm

Williams, Rt Hon Alan (Sw'n W)

Williams, Alan W (Carmarthen)

Wilson, Brian

Winnick, David

Wise, Audrey

Worthington, Tony

Wray, Jimmy

Wright, Dr Tony

Tellers for the Noes :

Mr. Alan Meale and

Mr. Jon Owen Jones.

Question accordingly agreed to.

As amended, again considered.

Question again proposed , That the clause be read a Second time.

Mr. Austin Mitchell : Now that the Liberals have voted again as the party of open government, to do the dirty deed in the middle of the night, we can proceed apace into the night. I was saying before the interruption-- [Interruption.]

Madam Speaker : Order. Will hon. Members who are holding conversations be good enough to hold them outside the Chamber ? Hon. Members who are leaving will please do so now, and quickly : we have business to conduct.

Mr. Mitchell : As I was saying-- [Interruption.]

Madam Speaker : Order. Hon. Members who are leaving must do so quickly and quietly.

Mr. Mitchell : I was saying earlier that the Labour party had over the years developed and refined its position on monetary union and had made it clear that monetary union could be deeply damaging. As part of that process of developing our position on monetary union, we have made it absolutely clear that monetary union will be deeply damaging, even ruinous, for our economy unless two basic conditions are fulfilled. They are that there must be real convergence of the economy, which means convergence in terms of economic strength and power, and/or--it is not clear whether they are mutually exclusive, but it certainly needs to be

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accompanied with--a massive system of redistribution to help the weaker economies that are bound to be damaged and drained by the process of monetary union.

The scale of that redistribution will have to be massive because while we have a single currency and a nation state, a nation state redistributes, in terms of public spending, about 40 per cent. of its gross domestic product. Europe redistributes perhaps 1 per cent. of the GDP of Europe, and that is totally inadequate as a machinery for offsetting the divergences that will develop through monetary union. Even the McDougall committee in the 1970s recommended that the proportion of GDP should be increased to about 7.5 per cent., and that was before the entry of Spain, Portugal and Greece. So it considered that a much bigger process of redistribution had to occur if monetary union was not to be deeply damaging. If defence responsibilities are included, that figure would almost certainly be more than 10 per cent. If Spain, Portugal and Greece are included, more than 12.5 per cent. of Europe's GDP would need to be redistributed to offset the consequences of monetary union. The Labour conference and the Labour party's national executive could have added a third condition. It could have said that, to offset the consequences of monetary union, one would need total mobility of labour within the EEC so that labour, as well as capital, could move to where the jobs were. We have not got, in any sense, the sort of mobility that would allow British workers to go to Europe to find jobs as the economy declines and is drained by monetary union. Without those conditions, particularly the first two, it is inevitable that monetary union--the merger of two economies at different degrees of development and strength--will be ruinous for the weaker economy. It is not putting it too strongly to say that the weaker economy in that union would be ripped apart, just as if when one merges two drive rods the stronger one rips apart the weaker. We, as the weaker economy, would be ripped apart by the process. When setting out the conditions for and reservations about monetary union, the Labour party conference and the national executive were being fairly cautious. I personally believe that monetary union itself will be more than damaging ; it will ruin our economy, but be ultimately impossible. The currency is like the atmosphere around the planet--it sustains independent economic existence on that planet and cushions it from shocks from outside so they can be taken on the exchange rate, not jobs. If one drains the atmosphere, one drains away the element that cushions the planet from shocks and abrasions from outside, and the inflation or deflation of other planets--or economies.

The national executive says that monetary union is possible only on those two conditions. I say that monetary union, in itself, is impossible as there is no way of achieving it. Either one moves to monetary union quickly, which results in instant East Germany, with all the damaging consequences that have ensued, or one moves to monetary union slowly, which means moving back to the exchange rate mechanism. One has to have a convergence of currencies, which means a slow process of industrial anorexia for the weaker economy--ours. The quick process to monetary union is disastrous and immediately ruinous, the slow process is ruinous over the long term as it drains away the industrial economy. We know the

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consequences of the exchange rate mechanism because we have been there and been through the inevitable processes in that form of convergence.

Fox hunting is described as the unspeakable in pursuit of the uneatable. Those who pursue the mirage of monetary union are the uncomprehending in pursuit of the unobtainable. I do not see how my hon. Friend the Member for Oxford, East can say, "Never mind the words, feel the spirit--feel the surge to unity." Our supporters, voters and electors--the section of society that supports the Labour party--do not have the same Euro- enthusiasm as our Front-Bench team. By what will we ultimately be bound? We will be bound not by what my hon. Friend says is in the treaty or how he interprets it, but by the words of the treaty. In the words of the Rubaiyat, the Maastricht process writes,

"and, having writ,

Moves on : nor all thy Piety nor Wit

Shall lure it back to cancel half a Line,

Nor all thy Tears wash out a Word of it."

That is the position that we would be in if we agreed to that union. I share my hon. Friend's hopes and enthusiasm, but it is very unlikely that they will materialise.

Mr. Ken Livingstone (Brent, East) : Did my hon. Friend see the excellent article in yesterday's editioo the gold standard in the run-up to the first world war. That led to 5 per cent. of the British population emigrating because of its deflationary consequences. We are not just talking about tears ; after the best part of two years of being locked into the exchange rate mechanism, the majority of people in Britain would like to emigrate if they could.

Mr. Mitchell : My hon. Friend is perfectly right : that would be the consequence.

The general argument is clear. In the words of Aneurin Bevan, "Why look in a crystal ball when you can read the book?" The text is there and it is quite specific. That is why amendment No. 3 tries to set out more realistic terms of convergence.

The treaty is absolutely specific. The procedure for reporting on the British economy starts before we reach stage 2. According to the treaty, the reporting begins even before we reach stage 2. It starts by assessing

"the progress made with regard to economic and monetary convergence, particularly with regard to price stability and sound public finances, and the progress made with the implementation of Community law concerning the internal market."

It starts before stage 2 and it gets harder and tougher all the time. We end up with all the power of a rate-capped council to control its expenditure.

Article 104 is quite specific, and that is why we are attempting to soften it by our amendment. It states :

"the Council may decide to give notice to the Member State to take, within a specified time limit, measures for the deficit reduction which is judged necessary in order to remedy the situation The Council may decide to require the Member State concerned to publish additional information to invite the European Investment Bank to reconsider its lending policy to require the Member State to make non-interest-bearing deposits of an appropriate size with the Community".

It sets out the whole process of reporting, fining and censure. We should think what the very mention of a report, the very possibility of such criticism and censure will have on

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