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which the Opposition give an unqualified welcome. It is something for which we have long called. We feel that we have much in common with the four applicant countries, with their strong social democratic tradition and their belief, like us, that Europe needs a strong social dimension as well as a strong economic one. I shall ask the Minister one or two questions about enlargement, and especially about the agreement reached at Ioannina--the famous Ioannina compromise. I recently wrote to the Prime Minister to question what he said in the House about the agreement. The right hon. Gentleman said that it was "justiciable" in the European Court of Justice. I am sure that the Minister knows that in the European Parliament recently the Commission President, Jacques Delors, said that the agreement at Ioannina was a political declaration but not a legal text.

Does the Prime Minister still adhere to his belief that the agreement is justiciable ? I tried to raise the matter with the Minister in Committee last week during a discussion on enlargement, but my question was not answered. I would welcome an answer today. I should like the Minister to comment on a claim that was made to me by one of the Labour Members of the European Parliament about a statement by the Secretary General of the Council to a meeting of the Foreign Affairs and Security Committee of the European Parliament a week ago. He described what would happen, once the Ioannina compromise was supposed to be working--that would come into play when between 23 and 26 votes were against a Council decision--when four countries besides Britain were part of a so-called blocking minority of 23 votes.

According to the Secretary General, it would be necessary for all the countries concerned to say specifically that they wanted to use the Ioannina compromise. Therefore, it would not be enough for Britain to say that, since a certain number of votes were against a proposal, the compromise should be automatically invoked. He also said that, should one of the countries opposed to the decision withdraw its opposition in the spirit of unity, matters would simply proceed, despite the fact that our Government might want to invoke the compromise, without any hindrance. Will the Minister comment on that ?

It is clear from a parliamentary answer to one of my hon. Friends that the Government's assurances on social issues are simply oral and that there is nothing in writing. We strongly believe that nothing has been achieved other than a restatement of what was already the case. The Government may say that certain issues will not come before the Council because they will not be taken under the health and safety heading.

Many countries would agree with us, however, that many of the social directives proposed in Brussels are related to health and safety--for example, the vexed directive on working time and the directive on the protection of young workers. A strong case can be made for saying that working inordinately long hours harms health and safety. The Government have made a completely false assumption that health and safety has nothing to do with those important issues. The Labour party strongly believes that we should play a positive, central role in Europe. That is the best way in which British interests can be safeguarded and British people can be given a good deal from the European Union. The Opposition also believe that that is the best way for Europe to make progress.

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I should like to illustrate that argument by referring to four policy areas where the kind of policies that we are putting forward would be good for Britain and good for Europe. On the economy, we welcome many of the proposals contained in the Delors White Paper, although we would have preferred the stronger version that was originally available. We believe that a great deal could be achieved through co-operation on infrastructure projects that would help to create jobs. For example, funding should be given to provide direct rail links between the channel tunnel and all the regions and nations of this country. Such links are long overdue.

I am sure that my hon. Friends could refer to numerous public transport schemes that deserve funding in their areas, and if I may be permitted to cite one from my part of the country, the completion of the Tyne and Wear metro integrated transport system would be greatly welcomed. I say "integrated", although, unfortunately, integration has been lost because of bus deregulation and other measures.

Many important environmental projects should be encouraged through such co- operation and the Opposition's idea of public-private partnerships. We should also like regional funds to be put to much more effective use ; so often they have swollen the coffers of the Exchequer without providing proper additional benefit to the regions concerned. After all, the regional funds of the European Union were originally designed to offer such benefit.

We also believe that more co-operation on research and development is important. We regret the rather negative attitude that has been adopted to the European Community's framework programmes. Those programmes should be extended and better targeted.

We also, importantly, believe that our industry needs equal treatment in the European Union. Whether we are speaking about our old industries such as steel, shipbuilding or coal, where we believe that we have lost out unfairly in the European context, or about research and development and new industries, we need measures that ensure that we are not disadvantaged by the support that other countries may give.

That is also important for exports. When I used to take a special interest in that subject from the Opposition Front Bench, I was worried that we had a far more niggardly attitude to such aspects as export credit guarantees than many of our European competitors. It seems to me that the Government are expressing a vain hope when they say, as they often do, that they will cut down support and hope that everyone else will follow suit. I do not believe that that is a sensible way to approach industry in the European Union. One must obtain agreement on a common level of support so that progress can be made.

Mr. Fabricant : Perhaps the hon. Lady knows that I was greatly involved in exporting before I came to this place. Does she accept that, since the Budget and the previous Budget, the Export Credits Guarantee Department now offers terms at least equal to those of HERMES in Germany ?

Ms Quin : I accept that there were some modest measures to support exports, but, for many years, there were many discrepancies in the terms of the support that we were offering. How many exports were lost in the

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interval ? I am speaking about a number of years ago. I think that that weakened our economy at a difficult time for us.

On other aspects of the economy, we note that today the European Commission is still giving a rather unfavourable forecast of British economic growth. We believe that the policies that have been pursued have weakened our economy and our industrial base, in spite of our great natural advantages of oil, coal and gas. A great deal more needs to be done if the economy is to recover.

The second area to which I shall refer is social and employment matters. I say strongly that the Labour party believes that the European Union is not simply a market or a free trade area : it has been a market with a social dimension from the beginning. It is obvious that a social dimension has been built into the European Coal and Steel Community treaty, the treaty of Rome and subsequent treaties. Therefore, it is not credible for the Government in the 1990s to try to remove the social dimension of the European Union on the spurious ground of subsidiarity. That simply will not work, and it explains why we are so marginalised and isolated on that issue.

Mr. William Cash (Stafford) : The hon. Lady suggested that the Government might oppose the progress that she would advocate towards greater social cohesion on the ground that we might be marginalised or that it might be spurious to do so. Has she considered the fact that the jobs of the people of this country depend emphatically on our being competitive, and that the only way in which we can be competitive in global markets is by having wage costs that are comparable with those throughout the world ?

Ms Quin : I do not accept the hon. Gentleman's argument for a minute. Perhaps, in replying, I can refer to inward investment, which I know exercises the attention of hon. Members on both sides of the House. If one considers inward investment and the reasons for it, one will see that low wages have practically nothing to do with the inward investment that has taken place in recent years.

I refer the House yet again to the evidence that was given by Nissan to the Employment Select Committee during its study on inward investment in which Nissan said clearly that the social chapter, far from presenting it with a threat, caused no difficulty to the company because it already had terms and conditions that exceeded those of the social chapter. Indeed, it was interesting that the management of Nissan, in their evidence, said that they thought that the low-wage, low-skill approach to the economy was the road to economic disaster.

Mr. Graham Riddick (Colne Valley) : Will the hon. Lady explain why the United States, which has a low-tax, deregulated, free-market economy, has managed to create 30 million new jobs in the past 20 years, whereas the European Community, whose economy has gone in the opposite, more regulated direction over the same period, has managed to create only 5 million new jobs, most of which are in the public sector ?

Ms Quin : I stoutly maintain that no facile correlation exists between low pay and poor conditions and high employment. For example, the Government have spent

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much time advertising in German and Swiss newspapers about the virtues of a low-wage economy, yet Switzerland, in particular, has an unemployment rate of only 4 per cent.

Sir Teddy Taylor : Switzerland is not in the European Community.

Ms Quin : That is irrelevant to my argument. I said that there was no correlation between low wages and poor employment conditions and the level of unemployment. Employment terms and conditions in Switzerland are much better than those in this country. Austria, which is applying to join the European Union--it hopes to join shortly and I trust that the referendum there will be successful--also has low unemployment, yet it is extremely keen on the social chapter of the Maastricht treaty. The hon. Member for Southend, East (Sir Teddy Taylor) should bear that in mind.

Sir Teddy Taylor : Does the hon. Lady appreciate that she has hit the nail on the head ? It is not low or high wages but membership of the EC which causes the burdens, high costs and unemployment that the people of Europe are now suffering.

Ms Quin : The hon. Gentleman has a strange view of the universe. The record of the past 20 or 30 years shows that the countries in the European Union with the lowest wages and poorest working conditions have not had particularly high unemployment ; the contrary has been the case. If deregulation is such a success, why was this country, after 10 years of that medicine, the first to go into recession ? Several hon. Members rose

Ms Quin : Many hon. Members now want to intervene, but I have already said enough to show that no simple correlation exists between poor wages and poor conditions and high unemployment. I feel confident about that.

Listening to Conservative Members, one would think that inward investment would never go to countries with good employment conditions or high wage and non-wage costs. In the past couple of weeks, I have noticed that the South Koreans are to assemble cars in Europe. The plant where they hope to produce up to 30,000 vehicles a year is in Germany. That is another matter that should be borne in mind.

Mr. Bernard Jenkin (Colchester, North) : Will the hon. Lady give way ?

Ms Quin : I have already given way several times.

The growing inequalities in Britain under this Government are outside the general trend in the European Union and we want that to be reversed. Such inequalities are morally wrong but also economically indefensible and Britain is paying the price for the fallacy that poor wages and bad conditions are linked to economic efficiency. Plenty of evidence shows that that is not so.

Mr. Simon Burns (Chelmsford) : Will the hon. Lady give way ?

Ms Quin : I may give way a little later.

On the social dimension, we also regret that the Government have consistently blocked a range of directives which we think would have helped British people at work, and which would have been very much in their interests. I could mention several of them, but in particular there was the information and consultation of

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workers in multinational companies, the directive on parental leave and the directives on giving employment rights to part-time and full-time workers.

Let me say clearly that we not against flexibility. We believe that flexibility is an important aspect of employment, but we do not want flexibility to be a lifetime penalty of lost benefits and poor pension and holiday entitlement. We would like flexible part-time work to be an opportunity, not a penalty.

Mr. Burns : The hon. Lady will accept that a significant amount of inward investment has come to different parts of the country during the last decade or so. During her speech, she has given a number of reasons which were not the cause of that inward investment. Would she be kind enough to tell the House why she thinks those companies decided to invest in this country ?

Ms Quin : There are several reasons, such as the availability of labour and of certain skills. As for Japanese investment, the fact that we speak English is an advantage because of all the commercial contact which Japan has had during the past 30 years with the United States. It was obvious that the Japanese would look to Britain, and we welcome them to areas such as mine in the north-east. I willingly concede that companies have received grants from the Government and from other sources.

It is also fair to say that there is some concern among would-be inward investors, particularly because the two opt-outs which the Government have negotiated mean that we seem to be semi-detached in a European context. Perhaps it is for that reason that the rate of investment into the United Kingdom has slowed somewhat, and we have seen efforts by some companies-- particularly by the Japanese, but also by the South Koreans, as I mentioned just now--to invest in other countries.

To a certain extent, those companies may feel that they do not want to put all their eggs in one basket, which I can understand ; but there is also a feeling--borne out in an Ernst and Young report on inward investment--that our semi-isolation in the European Union is a factor weighing in the minds of inward investors. The Government ought to take that into account.

Mr. Jenkin : Will the hon. Lady give way ?

Ms Quin : I have given way several times, and I will not give way again. I know that many of my hon. Friends want to speak.

Mr. Jenkin : It relates to the hon. Lady's point.

Ms Quin : This will be the last intervention I take.

Mr. Jenkin : I am grateful to the hon. Lady. Why is unemployment so much worse in so many other EC countries than in ours, and why is the EC as a whole an unemployment black spot compared with developed countries throughout the world ?

Ms Quin : Given that unemployment in Britain has been consistently higher than in other European Union countries during the time the Government have been in power, the hon. Gentleman should perhaps direct that question to the Government. We must look at different countries in different ways. For example, Germany has had specific problems recently which it has tackled with tremendous courage. It is interesting that the European Commission is now painting a brighter picture for Germany in the future.

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[ Hon. Members-- : "What about France ?"] Recent predictions are rather more favourable for France than they are for Britain. [ Hon. Members :-- "No".] Yes, according to the lunchtime news today. The third area I should like to mention is the environment. The Labour party feels positively about European environmental initiatives and we believe that it is an important area for us to co- operate on in the future. The subject was, to a certain extent, debated fully last week, and I commend to the House the excellent speech by my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith), who talked about Labour's policies and attitude towards European environmental issues.

Perhaps at this stage I should respond to something that the Minister said about the question of subsidiarity. We believe that the Government's view of subsidiarity is entirely false. They seem to see it as a simple choice between taking decisions in Brussels and taking decisions in Westminster and Whitehall. Labour believes that subsidiarity means taking decisions at the lowest most appropriate level--that could mean the local level, regional level, national level or European level, or even the United Nations level, depending on the issue which is being discussed and which is under consideration. We note from the report "Developments in the European Community : July-December 1993" that the Government's claim a few months ago that they had managed to scrap certain European environmental directives on the ground of subsidiarity is completely false ; it is clear from the report that those directives have not been scrapped. I am glad that they have not been scrapped. We are not against them being revised if that means even better standards for Europe's citizens as a whole.

Sometimes the Government try to convince us that they are defending British interests by raising the Union Jack. I do not want to see the Union Jack raised alone on dirty beaches around our coasts. I want to see the Union Jack alongside the blue flag of environmental approval from the European Community, which would at last signify that we had complied with the commitments that the Government entered into when they signed certain European environmental directives. It is a scandal that many years later we are still far away from fulfilling those obligations.

As for the environment, we also believe that there is tremendous scope for job creation in energy efficiency. Perhaps I can echo the complaints made by my hon. Friends about the way in which the Government recently scuppered the Bill of the right hon. Member for Berwick-upon-Tweed (Mr. Beith). We believe that such measures have job creation potential, and it is something that should be looked at seriously. There are also opportunities for our industry in helping to clean up the, sadly, heavily polluted economies of central and eastern Europe. Those economies have tremendous problems and they need our help both in aid and in trade.

Finally, I turn to the fourth element on which I believe we have positive proposals to put forward--decentralisation in the European Union. I have already talked about our views on subsidiarity. We believe in regionalisation and decentralisation. We find it rather strange that the Government sometimes complain of bureaucratic centralism in the European Union when bureaucratic centralism seems to be the recipe that they have been keen to give to the people of Britain over the past 15 years.

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Mr. Winnick : Does my hon. Friend agree that on decentralisation--I have been following what she is saying--it is absolutely essential that all member countries in the Community should have a commitment to democracy ? Therefore, does she share my apprehension at the Minister's complacent remarks about the inclusion of fascist Ministers in Italy-- [Interruption.] Tory Members who are heckling will undoubtedly next year savour celebrating the end of the war against fascism. If that is true, why are they so complacent about the presence of fascist Ministers in the Italian Government ?

Ms Quin : I agree with my hon. Friend. I should have liked a more fulsome apology from the Minister to my hon. Friend's intervention earlier in the debate.

We want to see a more open and more democratic European Union. I think my hon. Friend will agree when I say that we believe that the contribution of the four new members to the process will be important. We hope, although we do not expect, that the Government will support those four new countries in their desire for greater openness in the proceedings of the Council of Ministers and, indeed, in their great concern to ensure proper freedom of information throughout the European Union.

The Labour party has a positive agenda on the four areas that I have mentioned. We do not believe that everything in the Euro-garden is rosy. We also have ideas for change, whether they be on the common agricultural policy, an increased battle against fraud or an increased European awareness of problems to do with racism. One of the proposals in our European document is for a European Commissioner with a specific remit for racial equality. The European Union has done a great deal for women's rights, but there is a great deal that could be achieved, particularly for ethnic minorities and the various groups in the European Union.

I have tried to make my speech positive. I believe that the Labour party has a positive programme to put forward. There is a great deal about the Government's approach that we reject. I conclude by quoting from the very fine tribute to John Smith that was made by Michael Foot in The Observer yesterday, in which he said that he had hoped that John Smith would be here

"to play a full, magnanimous part in the Europe he had helped to create".

I hope that that will inspire many of us in the months and years to come.

4.30 pm

Sir Edward Heath (Old Bexley and Sidcup) : I gladly agree with the hon. Member for Gateshead, East (Ms Quin), the Opposition spokesman, on her last remark. It is sad at this particular time that John Smith is no longer with us. He was always absolutely clear headed about the European Community and the European Union and developed all his views in accordance with it. During the campaign--if he had been taking part--I believe that he would have given a very important lead to the people of this country and would have secured the support of his party for it.

The debate is important, in part because we are at the beginning of a campaign for the election of our European Members of Parliament, but also because we are now hearing from Government sources that the Government are preparing, apparently, a wide mass of proposals to put forward at the 1996 conference. It is therefore good that we

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are able to express our views before the European election, and also, if I may say so, that the Government recognise that they could not be more wrong if they think that they will change the European Union into a free trade area, which was their former idea. The quicker they learn that the better.

The debate gives an opportunity for mentioning a few home truths. I do not want the Government to go through the same humiliating performance that we saw when they recently tried to change the voting system in the European Union. Nothing was more humiliating as far as our country was concerned, and it has done us immense harm. It did so in part because at the same time it emerged from sources--said to be in Downing street--that if the Prime Minister did not get everything that he wanted in 1996, we were out.

I was in the United States at the time that that was published, and the Americans said to me, "But what on earth can your people be thinking of ? You do not matter outside the Union. We are not interested in you outside the Union." I heard exactly the same from the far east. It was then stated that of course there was no such intention. But the damage was done. People ask, "What are you playing at ?" They think that those who make such suggestions are out of their minds ; and on that I agree.

When it comes to the importance of the election, I hope that all hon. Members will urge the people of this country to vote, as that is essential. Ever since I have been connected with European interests in the political way, which is now nearly 50 years, I have always been told by the Europeans,"We want you to show us how to create the European democracy. You have the oldest Parliament among us. You have the mother of Parliaments. You have the experience and the expertise, and it is your lead and guidance that we want." And we failed them completely.

At the previous European election 33 per cent. of the people voted--the lowest percentage in the European Union. What is there to be proud of in that as a country, a Parliament or a party ? That is why I hope that we can urge our people to use their European vote. We cannot say that the attendance for the debate is a good example of the keenness of the House to debate European matters. We must try to persuade people to vote, and for that an explanation is required. Over the past 15 years the people of this country have been given no explanation of what is going on in the European Community. [Hon Members : "What about your White Paper ?"] My White Paper was extremely good and greatly appreciated at the time. [Interruption.] Perhaps we could have some manners. Good manners were certainly not displayed during the speech by the hon. Member for Gateshead, East (Ms Quin).

The trouble with Maastricht was that the Government took it for granted that because a large majority sent the Prime Minister to Maastricht and because he won the general election and got the Second Reading on the Bill, everything was straightforward. But it was not and people now require a full explanation of what is happening, what we are doing, why we are doing it and how it benefits them. Over the past 15 years the Government have not said a good word about the Community. People have had no information about the money coming to us--more than £9 billion in the past seven years for regional development and other purposes--nor have they been told that we get a larger share than any other member of the European Union.

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Mr. Peter Shore (Bethnal Green and Stepney) : Will the right hon. Gentleman give way ?

Sir Edward Heath : I am sorry, I shall not give way. Madam Speaker has asked that everybody be brief. I shall be as brief as I can and I hope that the right hon. Gentleman will be called.

When for 15 years nothing is put forward with the weight of Government backing and official information what can people do except read the nonsense in the deplorable gutter press ? Last weekend an American said to me, "How has your press got into this state ? It is incredible. We had always thought that the British press at any rate was truthful and that it dealt with important matters. But now nothing appears in many papers about what is going on in the union unless it is a matter at which they can throw mud." That puts the task on us and especially on the Government and their information services to explain everything that is happening.

We have rightly heard a great deal about the social order, the economy and wages in the Union and about the action being taken on those issues. This country went into the depression much earlier than others and we have come out of it somewhat earlier than others. That is the economic truth. Germany has the highest wages in the Union and was the most successful. But it then had unification and took on 18 million people who had had 50 years of communism and an entirely out-of-date industrial set-up that was falling to pieces. To a large extent those people were less skilled than people in the rest of western Europe and they naturally wanted to take quick advantage of joining western Germany.

Perhaps people can today criticise Chancellor Kohl for going for immediate unification, but I do not think that he could possibly have done anything else. The Front-Bench idea of a royal commission to examine it for 15 years and committees to look at the individual recommendations bore no resemblance to reality. Chancellor Kohl had no alternative. However, the ratio of the East German mark to the West German mark was misguided. If they had stuck to their original proposal of a ratio of 3 :1 they would not now have so many problems. But I have no doubt at all that the Germans will master it : the signs are already showing.

We are told that the answer is to push down wages. One of my hon. Friends said that that is the only answer. What is the logical conclusion ? It is that to compete in the Pacific, one must reduce wages to the level of the People's Republic of China. Who would accept that ? No one--not for a moment. One way to compete is by forcing wages down wherever possible. Another is to improve one's management and technology--and that is the alternative that we should be working on, for all that we are worth. The Government ought to give that objective every possible financial support.

The problem will become greater because much of the People's Republic of China has technology newer than that of this country. When China invests, it insists on the latest technology, from countries that have the latest technology. That is the real problem facing this country. We shall not get anywhere returning to the dogma of the old diehards in my party from whom we thought that we had moved away, who earned us such a bad name in the 1920s by their lack of support for workers and pressing wages down as hard as they could. That is past. If that is emphasised in my party, it will be disastrous for it when the next test comes. I have

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no doubt about that. Let us concentrate on better management and improved technology. That is the only chance that we have of competing.

Other countries in the Union will do that. Once the Germans get through this spell, they will do that as much as any country. The Japanese come to the United Kingdom because they can pay higher wages and get results. They have been doing that successfully for the past 20 years, but they will not continue if Britain is outside the Union--not for a moment.

Some countries inside the Union believe that the French and Germans will separate, but that will not happen. Their interests are too close. They have learnt their lesson. We have seen that not only in terms of their economies but in defence and foreign policy, in which the French and Germans are drawing closer and closer together. The idea that one can permanently separate foreign policy, defence, and economic and financial matters does not bear examination. What can be achieved in foreign affairs and defence depends on one's economy and finances.

If one does not have the economy and the finance right, one cannot do the other things. To say that it is an achievement to separate them bears no relation to reality. The other member states know that and will go on their own quiet way, merging things together. Once again, we shall be on the fringe.

What nonsense it would be to imagine that we could separate those three aspects in this country, with finance and the economy being looked after at Westminster ; foreign policy in Liverpool, because it has always been outward-looking and has a view across the Atlantic ; and defence in Edinburgh, because the Scots will get a war quicker than anybody. Those aspects are bound to come together, and we shall not achieve anything by trying to slow that process.

As to the single currency, my right hon. Friend the Prime Minister said that he would not hold a general referendum but that perhaps we should have one on a single currency when the time comes. That is a fascinating idea. If the other members of the Union said that they had decided on a single currency, we would have to say that we made an undertaking to hold a referendum. The issue of whether sterling entered a single currency would be campaigned on in public for four or six weeks. What would happen to sterling during that time ? Look what happened in a couple of hours on Black Wednesday. What would happen during four to six weeks' campaigning on whether or not to join a single currency ? It is fantastic and unbelievable that anyone could even consider such a thing possible. That would again bring us into disrepute.

More and more, other members of the Union are saying, "They want to be on the outside, and we can let them be on the outside." They take less and less notice of anything that we put forward. I hope that my right hon. Friend the Foreign Secretary and other members of our Front Bench realise that.

Four new members of the Union have been approved. I met a large number of people in Europe over the past week and I know that those four countries were the angriest about the attempt to change the voting. They said, "We are joining, and now you are trying single-handed to monopolise the voting." The Foreign Office did not even discover whether there was any support for that change. What a Foreign Office. What a policy--to try to do something like that without knowing whether or not one could get it through.

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On Thursday, I was in Aachen for the awarding of the Charlemagne prize to the Norwegian Prime Minister and had a great opportunity to learn the views of others. The President of Germany made his farewell speech there. Also present were Prime Ministers, Foreign Ministers and nearly 20 ambassadors. There was no Minister from the British Foreign Office present, no British ambassador from Bonn--not even a clerk from the British Foreign Office. Do not other Union states draw the conclusion that we are not interested in what happens in Europe and in the Union ? Of course they do, and they act accordingly. Those may seem simple matters but they are important when people are working together in a union. Over the years, I have seen countries growing closer and closer in all their activities.

After the collapse of the Soviet empire, President Bush said that we would have a one-power world and that it would be a peaceful world. Worryingly, we have seen instead a world more stricken by strife than anything since the end of the second world war. The one world power tried to deliver what it thought were the goods, and failed. It failed over Yugoslavia, where the United States was not prepared to put troops on the ground to bring about any other solution. It failed over Somalia, where it withdrew its troops, and in other activities. The USA is taking less of a place.

It is not a one-power world now. Russia is still a power. We saw the way that the election moved, and we hear what the Russians have to say. When I was in Moscow the week before Easter, I spoke to business men, politicians and diplomats. They said, "We like the British Government's know-how approach, of saying that they will show us how they do it and that we can follow it if we like." I saw some of the schemes being undertaken. But those business men, politicians and diplomats said, "However, we will not have anyone tell us what we must do. Anyone who tries will be in difficulty."

Therefore, there is Russia, which is a military power that is also tying up individual parts of the new Russia. There is the People's Republic of China with a population of 1.25 billion people and 12.5 per cent. growth each year. When the American Secretary of State went to China and threatened to remove the most-favoured nation clause unless it did as the United States required in respect of human rights, China said, "Kindly go away," and the Secretary of State left with nothing. China too is a modern power.

More and more American business men say, "You cannot try to tie human rights to other matters when countries have different civilisations, histories, religions and political systems. By all means try to influence them in respect of human rights, but do not try to force them with threats, when it is a power of that size and importance."

Japan is the fourth power of great importance. Economically, it leads the world. It may have difficulty keeping Prime Ministers--I was going to say that Japan is not unique in that, but I will not say anything at all. Japan's achievements are remarkable, and it will continue being ahead in technology and to tie up with the People's Republic of China.

The sixth possible power is India. Often, we do not realise how much is happening in India today from the point of view of its economic development and political influence in Asia.

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The fifth power, which already exists, is the European Union. If we are to play any part in the world and in those six powers, it will be in the European Union. If we go outside it or move on the fringe of it, we shall have no effect on the rest of the world powers. That is a new situation, since the collapse of the Soviet Union. We have been very slow to realise the way that the world powers are developing. If we do not appreciate that, we shall be left behind.

Let me say to my hon. Friend the Minister and his right hon. Friends that it is vital for us to carry out the task that the Prime Minister originally identified. He said that we should be at the heart of Europe. We cannot be at the heart of Europe if we are not prepared to take part in its heartbeats : that is the humble truth. That is what we must do, and do whole-heartedly. Instead of constantly explaining why we are not going to do things, and trying to do less and less--which does not benefit the people of this country anyway--we must show that we want to make the utmost contribution that we can to the European Union. When we can show the world that, the world will respect us again and we shall have influence in our own continent.

That is the task. The Government are responsible for carrying it out, and I want to see it carried out fully.

4.50 pm

Mr. Peter Shore (Bethnal Green and Stepney) : The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) painted a very wide canvas. I found myself in considerable agreement with part of what he said ; but, as is so often the case, his judgments struck me as being continually distorted, first, by his barely concealed

anti-Americanism and, secondly, by his enthusiasm for Europe, which goes far beyond any serious sensible balance of advantage and disadvantage.

I was going to intervene on a simple point, which itself illustrates the point that I have just made. The right hon. Gentleman pointed out that we are recipients of money from the European regional fund. That is true, and if we tot up the sums received over 10 years or so we will find that they add up to a substantial amount. But the right hon. Gentleman knows-- probably better than anyone else--the extent of our net contribution to Europe. After allowing for all the money that we receive for the regions and from any other funds, and for the rebate negotiated so bitterly by the right hon. Gentleman's successor as Prime Minister, we find that every year an average of some £1.5 billion to £2 billion is paid by this country for the so-called privilege of being a member of the European Community. That is a fact.

Another fact of--I think--much graver importance is that, over the past 10 years, the balance of our manufacturing industry trade with Europe has totalled the appalling figure of nearly £90 billion ; or, rather, minus £90 billion. Before we joined the European Community, we had a slightly positive balance with Europe. I am prepared to allow for a great deal of difference on how we judge the overall enterprise of Europe, but no one in his senses who looked at the facts objectively could pretend that we have not had to bear grievous burdens and heavy handicaps as a result of our membership of the Community. I see that I have the continuous dissent of the right hon. Member for Old Bexley and Sidcup ; that does not surprise me. Let me turn to the subject of the debate. The Minister reminded us that on 1 November 1993 the European Union

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--the creature and creation of the Maastricht treaty--came into effect. On that day, at a stroke, every person in Britain, and every citizen of the other 11 states in the European Community, suddenly found himself acquiring citizenship of the European Union. I am sure that that came as a great surprise to those people--those who knew what was going on, that is.

I must tell the House that there were no wild scenes of enjoyment and public rejoicing in the streets of Stepney and Bethnal Green on 1 November 1993. Because I am fair-minded, I should add that there were no acts of overt hostility, such as a public burning of the treaty. Neither event took place--I think because the British people are now just about soggy, fed up and bored stiff with all that has been going on. As the right hon. Member for Old Bexley and Sidcup rightly complained, over the past two or three years very little has been explained to them about what is implied in--and, indeed, what is in--the Maastricht treaty, and how it will affect them. There has been a total failure to communicate. I say that from my side of the argument, but I am sure that the right hon. Gentleman would say the same from his side.

The failure to communicate is a great pity, but it does not mean that things are not happening ; they are. Notwithstanding reassurances from Ministers, the great engine of federalism is still driving ahead in the European Union. Two processes are involved : first, the various mechanisms and timetables set out in the Maastricht treaty, and, secondly the preparations for the 1996 intergovernmental conference, which have already started. Stage 2 of economic and monetary union began on 1 January 1994. The European Monetary Institute--the precursor of the European bank--has been established, and the Government have complied with their obligations under stage 2 of EMU by forwarding to the Commission the progress report on the plans made by the British Government to conform with the convergence criteria laid down in the Maastricht treaty. Based on the November 1993 Red Book, fiscal projections over the next five years show that the United Kingdom's public sector borrowing requirement will conveniently fall to 2.75 per cent. of gross domestic product in 1996-97, and to 1.5 per cent. of GDP in 1997-98. Both are well within the 3 per cent. of GDP demanded by the Maastricht treaty.

The Government, of course, will say that that is pure coincidence--that their basic aim all along was to get the PSBR down, irrespective of how the economy was progressing as a whole and irrespective of unemployment levels.

Interest rates and inflation rates are also down to the levels that would meet the obligations of moving from stage 2 to stage 3 of economic and monetary union. Only our absence from the exchange rate mechanism disqualifies the United Kingdom from making an application in three years' time. We all remember the Prime Minister's encouraging words in his article in The Economist last autumn, when he said that--what were the words he used ?--joining the ERM was "not on the horizon" or that "not in the foreseeable future" would he contemplate such a move. He is keeping his options open, however. Despite the setback to the ERM when the franc was forced out of its 2.5 per cent. band last year, and the subsequent introduction of a new 15 per cent. band within the ERM, exchange rate policies on the continent have remained firmly linked to the deutschmark at the old

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