House of Commons Hansard Debates for 16 May 1994

Sir Peter Hordern (Horsham) : The hon. Member for Rotherham (Mr. MacShane) made a most eloquent speech. He made it within a week of arriving in the House, which I must tell him is somewhat unusual. He spoke gratifyingly about his predecessors, who are of great historical interest in some instances, such as Tom Paine and Wentworth. I rather think that the hon. Gentleman favours Tom Paine rather than Wentworth.

The hon. Gentleman spoke movingly about his more immediate predecessors, Jimmy Boyce and Brian O'Malley. There are some in the House who will remember Brian O'Malley with affection. Indeed, we remember them both with affection and because they remind us, if we needed any reminder, of the course of human mortality in this place. The hon. Gentleman is most welcome. We all enjoyed his speech and we hope to hear him on many such occasions, although perhaps he will not get quite such an easy ride in future.

The debate allows us to take stock of our position in the European Union before the intergovernmental conference in two years' time. The debate is welcome for that. As my right hon. Friend the Member for Guildford (Mr. Howell) said, there is a substantial majority in the House for Britain being at the heart of Europe. I am sure that that is the position. It is the case also that Europe cannot afford to ignore the rest of the world. It must be more aware of its relationship with other countries than perhaps it has been so far. The impression given over recent years is that it is concerned only with its internal identity. It has appeared to have been trying to fashion a political identity and has not been sufficiently aware of the opportunities and the penalties that might ensue unless we take account of the competitive position that arises from other countries. The European Union as a whole must be aware of that position. We have been a member of the European Union for 20 years. In contrast with the right hon. Member for Bethnal Green and Stepney (Mr. Shore), who I know has been opposed to our membership of the Union throughout that time, as have one or two of my hon. Friends, I say that our membership over that period means that we have inevitably fashioned ourselves as a fully-fledged member of that Union, especially in a commercial sense. It is absurd to contemplate damaging our economic future by pulling out of the Union, as some hon. Members wish to do.

If we were to take that course, we would be damaged. There is no question about that. We would not have seen

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the flow of inward investment from Japan and the United States on the scale that has been apparent if we had not been members of the European Union. Much more importantly, we would not have seen that investment if they had thought that we would not last as members of the union. If we pulled out, we would be sidelined and ignored in all discussions within the European Union. That would surely be the result if we showed that we were reluctant to play our part. We should ask ourselves why it is that all the EFTA countries, which have the benefit of association with the European Union, are so anxious to become fully fledged members. They wish, of course, to have some say in those matters that affect them and in their economic well-being. They all believe that they must have some say in all the economic, trade and environmental issues in which they are so closely involved.

Some people are putting about another option. They argue that the course of our European trade has been damaging to us. They say that we have a deficit on our balance of trade with Europe and that if we had concentrated rather more on the far east, all would have been very much better. I do not know why it should be our self-appointed role to tell business men where they should do their trade. We can take it, however, that they will pursue their business wherever it is to their best advantage to do so.

We need a firm industrial base, which the United Kingdom is now much too small to provide for itself. We have seen increasingly over the past few years--I am sure that we shall continue to do so in future--the international division of labour. To believe that we could form a large enough industrial base on our own is absurd. It is foolish to play down the significance of the European market. The European Union has 6.5 per cent. of the world's population and generates 25 per cent. of global economic output. The EU's total output has risen by 30 per cent. since 1980, that increase being almost as large as China's total gross domestic product in 1990. Those who are enthusiastic about our trade and interest in the far east, which we can commend and hope to go for, must not ignore the substantial importance of the European Union for our business and jobs.

In a business sense, we are up to the neck and beyond in Europe. That was the position long before the single market started. British business has been breaking into Europe, finding new markets and establishing commercial links. If we examine the pattern of commercial development, we find British firms both large and small enmeshed within the European Union. What would happen if we had associated status ? Only today, negotiations are taking place between British Airways and Air France on the basis that British Airways should be allowed to land at Orly airport. Imagine for one moment what our position would be if we had associate status. We would have no negotiating power with the French or any other country that tried to trade against our interests. Important European institutions, such as the Commission on Competition, are essential for our economic well-being.

Mr. Jenkin : I thoroughly agree with the thrust of my right hon. Friend's argument. A great many people who have been critical of the Maastricht treaty and the way in which the European Union is now operating would not,

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however, advocate leaving the European Community. As my right hon. Friend has said, we would regard that as totally counter-productive.

Sir Peter Hordern : I am sure that that is true.

We must be aware of the fact that other countries have perfectly legitimate points of view and a perfectly legitimate way of carrying out their own objectives. The thought that we could lecture them into adopting some other form of activity or try to persuade them to go against what they deem to be their own interests is ridiculous. We must, of course, always stick up for our own national interests, but we must at least be aware that other countries believe that they have their own national interests too.

One of the reasons why I am so much in favour of the European Union is that we need a large single market. We tend to think of that market in terms of manufactured goods only, but we must also think about it in terms of services, in particular financial services. We have an decided advantage in the City, which is one of three global centres. As most of the savings in the European Union are in the form of bonds and as savings in this country and the United States are mostly in the form of equities, we have an unrivalled opportunity to sell financial services. We should be able to harness capital to the cause of the European single market.

One day, once the infrastructure is in place, eastern Europe will provide an industrial and commercial renaissance. We need to be at the centre of Europe to ensure that that happens. That will not happen, however, unless those countries are able to export their goods and services to us. There is far too much talk of welcoming those countries to democracy, free trade and enterprise while at the same time barriers are being raised against their exported goods and services. Such a policy is neither legitimate nor fair, and we must change it.

We must always be on the side of free trade and open markets and opposed to protection. The brute force of the economic facts of life will ensure that happens because otherwise unemployment will increase as companies throughout the European Union start to invest elsewhere. For some years, many German firms have invested in the United Kingdom because they say, quite frankly, that they cannot produce their goods at home competitively because of their wage rates and other expenses. One cannot protect employment by passing laws that place too high a burden on companies' costs. We must argue against that and demonstrate our case from within the European Union.

Of course there are objectionable sides to the Union--for example, its flood of regulations, fraud and waste, especially in the common agricultural policy. We must strengthen the European Parliament, as the Maastricht treaty provides, to deal with those problems. Some of the opponents of Maastricht are even against giving the European Parliament additional powers to combat fraud and waste within the CAP. They would rather that that fraud and waste continued than give additional powers to the European Parliament to allow it to question the Commission about the causes of such fraud and waste. Surely that is carrying opposition to an absurd degree.

We have an opportunity to start from first principles in contemplating the IGC in two years' time. Let us suppose that the treaty of Rome had never been signed. It would have been better to have had the single market without

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tariff barriers. We should not imagine, however, that we could ever persuade the French about the virtues of the free market, as Cobden, on his own, once persuaded Napoleon III in 1860. The single market exists and so do some of the health and safety regulations and the social chapter, from which we have an opt-out.

Such opt-outs may be the pattern of the future. We already have an opt-out from the single currency. If France, Germany and Holland meet the conditions laid down by Maastricht, I see no reason why, if they decide to do so, they may not have a single currency of their own. There is nothing in the treaty to prevent them from doing so. It would be up to business and industry to decide whether they wish to deal in the ecu or to continue to deal in sterling or any other currency. For many years, the oil industry has carried out its business in exactly the same way by dealing in the United States dollar. There is nothing strange about that. We can afford to be entirely neutral on the matter.

We should not say, however, that it would be wrong for those other countries to form a single currency if they wished to do so. In any event, we would be unable to stop such a decision. Such decisions should be part of a gradual, evolutionary process based on the idea that our business and industry should be able to deal in a single currency--for example, the ecu- -if they find it convenient. That also means that we cannot disclaim all responsibility for what happens to sterling, as some people would do. Some people believe that it was a great mistake to join the exchange rate mechanism. They believe that the solution is to allow sterling to fall to a level at which full employment could be guaranteed. When we had a strong pound linked to the gold standard we were able to attract funds from all over the world and the same was true with Bretton Woods. In those days, we always had low interest rates. I must remind those who believe that a falling pound is the answer to our economic problems that, goodness knows, we have had one for long enough. It did not appear to have all the advantages that people would like to claim for it. If we returned to such a policy we would have much higher interest rates.

Whether we have a single currency in Europe or anything else, the sensible thing to do is never to say never. We must always allow evolution to take place. We must see how things work out in the future. There is something very unattractive about us lecturing European countries about how they should run their affairs. To do so to the extent that we damage our own interests is absurd. We may not always agree with other European countries, which have different traditions and different interests, but as a predominantly trading nation, we simply cannot afford to be anywhere but at the centre of Europe. We cannot afford to be isolated. That does not mean that we must have a federal Europe but if we believe, as we must, that trade and investment will provide the engine of growth and the prosperity that we need, it is essential for us to be at the centre to remove the barriers that may stand in the way of such trade. For centuries we have been at war with our European neighbours. The peace is new and very fragile. We need to be at the centre to act as much as we can in harmony with other countries. We must always act with common sense. That is the spirit in which we should conduct negotiations at the IGC.

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5.57 pm

Mr. Denzil Davies (Llanelli) : I also congratulate my hon. Friend the Member for Rotherham (Mr. MacShane) on his remarkable and excellent maiden speech. Those congratulations are tinged with some envy because he showed the kind of confidence that some of us have taken 20 years to acquire--perhaps we have yet to acquire it. I am sure that he will represent the people of Rotherham with skill and diligence in the years to come.

It is a pleasure to congratulate my hon. Friend the Member for Rotherham but the debate also takes place in the sad aftermath of the death of John Smith. John and I came to the House in 1970. We both had the honour to serve in the 1974 Labour Government--he served in a number of Departments and I served at the Treasury. He was a good and revered friend and a formidable leader of my party. We did not agree about everything. He was a Scot and I a Welshman. I sometimes used to tease him that perhaps there were too many blessed Scots in the parliamentary Labour party. He sometimes showed a certain amount of impatience with the looseness and prolixity of language which the Welsh sometimes employ when discussing political matters, but at least we agreed about devolution. We differed on the Common Market--the European Union, as it is now called. He believed in it when it was not fashionable to do so in my party. He also believed in the European ideal.

It is now, apparently, fashionable in my party to believe in the European Union--I do not know about the European ideal. Not only do we believe in it, but we adhere to almost every facet of it--the social chapter, the autonomous central bank, a single currency, the entrenchment of a rather monetarist economic policy in the Maastricht treaty. Sadly, in voting for the Maastricht treaty, we seem to have voted to abandon that commitment to full employment for which I always thought that my party stood. All I can hope is that fashion will change again and given the speed with which my party has ditched old beliefs and acquired new fashions in the past 10 years, that may happen.

The European Union is a strange beast. As it trundles along towards the ever-closer union of European peoples, that higher state of fusion which the Europeans apparently want, it devours democracy as it goes. Step by step, politics is taken out of politics because, as more and more of the functions of a democratic nation state are transferred, as they are being, to the Union, they are usually transferred into non-democratic organisations, to non-elected institutions, to a type of glorified Euro- quango.

Democratic choice in the present Union--perhaps we can change it for the future--is gradually and irrevocably diminished. Elections become more and more about personalities and trivialities. The treaties, the directives, the case law, the European Court--the whole of the acquis communautaire, as I think we should call it in one short phrase--is entrenched. It is a constitution, a massive written constitution--we hear so much from people who say that Britain does not have a written constitution and should have one--that is entrenched in the sense that not even a single nation state can change it.

I believe that the constitution of the United States can be changed with a two thirds--perhaps three quarters--majority of the two Houses of Congress but this constitution cannot be changed by a single nation state or

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by two or three nation states. It now needs 12 nation states to agree to change the fundamental constitution of the acquis communautaire. They all have to agree.

Mr. Burns : I think that I am correct in saying that, to change the constitution of the United States, two thirds of the states must vote for a change.

Mr. Davies : That may well be so, but at least there is a mechanism. It is not an easy mechanism and it has been used only once or twice, perhaps only once. Here, we have an entrenched constitution that cannot be changed by Britain or by any one of the 12 member states without the consent and agreement of the other 12. Before long, if the referendums in the four applicant states result in a yes vote, 16 nation states will be needed to change the constitution. After a while, no doubt, if other nations came in, it will be 20. That is not a recipe for democracy. I believe that the more nation states come in, the less democratic--if that is possible--the European Union will become, because the possibilities for change will become fewer and fewer. In that situation, the entrenched bureaucracies of the European Union will take over and make the decisions, because the democratic bodies will not be able to vote for change.

That unchanging acquis communautaire is a comfortable mode for the political class, for the bureaucrats who follow it, for the diplomatic corps and the range and army of hangers-on and followers of the European Union. It is convenient, it provides gainful employment, it is a type of superior welfare state for the political class and those people around them. Elections come and go. The electorate can change little because they cannot change the acquis communautaire. Indeed, one cannot even touch it and if one criticises it too much one is described as all sorts of things-- possibly even a racist, as we heard from Jacques Delors. The vested interests are happy because that cannot be changed.

The elections to the European Parliament were mentioned earlier. I hope that my team wins and no doubt there are other members of other parties in the House who hope that their team will win. It is only natural. Frankly, however, an objective elector does not become involved in the day-to-day minutiae of politics. For an objective elector, does it matter whether the Conservative party, the Labour party or the Liberal party--or all three parties--subscribe totally to the acquis communautaire ? None of us can change it ; neither can the European Parliament. Does it really matter who is elected, from that point of view ? Obviously, we want to impose a defeat on the Government and I hope that we do so, but does it really matter to someone who is not involved in politics ? Does it matter who is elected to the European Parliament ? It has very few powers and it must keep its hands off the entrenched constitution.

The Minister mentioned the 20 million unemployed people in Europe. Those 20 million people, unlike the political class, are not within the pale--they are outside it. I believe that the European Union has little to offer them and that, sadly, the 20 million will increase, even if recession recedes in Germany and France. Renewed growth in Germany and France will mean a reorganisation of their industrial base, which will create more unemployment.

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What does the European Union have to offer those unemployed people ? Bits of paper, commissions, committees, unelected assemblies that go back and forward to Brussels. The real levers of economic and industrial power, which lay within the nation states, are being transferred to the European Union, which cannot act. We are losing the very levers of power that we on the left used to believe enabled us to do something about unemployment. Instead of them, we have received an entrenched economic structure in the Maastricht treaty, to which the old European left would have taken considerable objection. The modern European left, apparently, has accepted and absorbed, and been delighted to take on board, that new economic system.

When there is a British general election, I usually try to write my own short manifesto. I try to write about industrial policy and economic policy. I found it very difficult last time to write about industrial policy because I could not check the treaty of Rome. I suspect that, next time, the words about economic policy will be few and we shall have to fill our sentences with cliche s and statements of little substance.

The British electorate are not stupid. They have to choose between the people who aspire to be emperor at the next election. Given the context and framework of the treaty of Maastricht and the European Union, I suspect that the electorate will recognise that the emperor has no clothes. That may be why only 30 per cent. turned out in the last European elections. I suspect that not many more will turn out this time.

The right hon. Member for Old Bexley and Sidcup (Sir E. Heath) still lives in a world of economic blocks. Having lost the old ones, he is looking for new ones. Apparently, India is to be a new economic block. We shall leave him in that world. The Union was conceived as an impregnable economic block in a world of large economic groupings. Inside its walls, the people of western Europe would be secure from the rantings of the bear to the east and from salesmen that sometimes descended on Europe from Asia and America. Those hordes of vulgar commercial travellers from Osaka or Chicago would be kept out of the new Europe and the whole entity would be secure and safe. I have news for the right hon. Member for Old Bexley and Sidcup : the world has changed. We now live in a global rather than regional world, although that may sound like an "Irishism". The pillars on which the European Union was founded have been buffeted by external economic forces beyond the control of the political class within the pale.

Throughout the 1970s, one talked of economies of scale. What has happened to those ? We hear little about them today in the steel or car industries. Over the past 10 to 15 years, a massive revolution has taken place in manufacturing. I would not say that small is beautiful but, provided that a company has the right skills and technology, it can compete whatever its size. We no longer live in a world of large economic blocks and economies of scale. In terms of the production of goods, we live in a world of decentralisation. The Minister mentioned GATT, of which we hear little these days. The Uruguay round was extremely important. What price regional economic pacts when one has GATT ? The right hon. Member for Horsham (Sir P. Hordern)

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mentioned services. GATT has not gone quite that far yet, but it is certainly moving in that direction. If we look at manufacturing in terms of GATT, we find a global, rather than regional, economic world. Part of my argument is that the world is passing those regional economic blocks by.

Mr. Forman : I agree with what the right hon. Gentleman said about the new global realities. In the context of his remarks on GATT, does he accept that the regional groupings--whether the European Community, the Cairns group or the North American Free Trade Agreement--provided the levers by which people could get at least some of what they sought ?

Mr. Davies : I would not say that they provided the levers, but I entirely accept that, if countries band together and agree a negotiating stance, they are in a stronger position. We are now moving towards a global economic world, especially if a world trading organisation is set up. It therefore makes no sense for the dinosaur of the EC to try to create an ever-increasing union of European peoples, because economic factors outside will have an effect. The European Union can be compared to IBM a few years ago. IBM was the classic dinosaur--it grew in the 1960s and early 1970s but then failed to compete because it was out of date and smaller companies in Japan and especially the United States beat it. It is now trying to restructure and compete again. Likewise, the European Union as conceived is out of date. Who knows ? Perhaps it will do an IBM. I do not really believe that it will, because the political class within the pale has no real incentive fundamentally to reform and become radical. I suspect that 1996 will be more of the same, as the beast trundles on, seeking a higher state of fusion of the European peoples. I hope that a radical restructuring takes place. If not, we should remember that, once we achieve fusion, fission happens soon after.

6.15 pm

Sir Teddy Taylor (Southend, East) : The right hon. Member for Llanelli (Mr. Davies) worried me when he said that he did not know what to put into his election manifesto. Knowing him to be a truthful person, it has been plaguing me. As he is a kind and Christian gentleman, he could say that, if elected, he would be kind to children and animals, but, sadly, one cannot even say that now. A letter that I received this morning from the Minister of State, Ministry of Agriculture, Fisheries and Food said that, even if we were concerned about the foul cruelty of animals being transported to Europe and all hon. Members voted against it, we could do nothing. A legal reassessment has been made of article 36 and, although the Government thought that they might be able to do something, sadly, they can do nothing. All that the right hon. Member for Llanelli can say is that he will be kind to children and animals, in so far as the EC will permit.

I have listened to many dull, light and uninspiring maiden speeches, but the hon. Member for Rotherham (Mr. MacShane) made a confident and exciting speech. I hope that we shall have the privilege of hearing him on many occasions. What he said about John Smith was right. I went to university with John at the same time as my young wife went to school with his young wife. He was one of the few to emerge from the House with honesty, consistency and integrity. We should all pay tribute to him as we admire and applaud those virtues.

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What worried me about the hon. Member for Rotherham--I do not seek to criticise a maiden speech--was that, in a dramatic part of his speech, he held up an exciting pamphlet produced by Philippe de Villiers and said that that terrible man, who is either a fascist or a communist, wanted to protect European trade from trade outside the Community. As a socialist who believes in liberty and the freedom of people, he said that he could never have anything to do with that. It struck me how right the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) was. Basically, we must tell people the truth about the EC rather than give interpretations, arguments or visions, and I hope that the Government can do something about that.

Had the hon. Member for Rotherham, who is obviously talented, been told that the EC was one of the filthiest protectionist rackets in the world and that two firms in Southend had been put out of business because of protectionist measures introduced by the EC six weeks ago, he would have known more. That is not a criticism of him. People simply do not know.

In this brief speech I appeal to the Government to tell people the facts about a few matters. People can then make a reassessment and will probably appreciate Government policy more than they do. The only economic truth that we can say now is that Britain is doing better than other member states of the EC. Unfortunately, we can do nothing about that because the main reason for it is that we were chucked out of the exchange rate mechanism.

I urge the Government to abandon their policy of make-believe and optimism, and tell people the facts. First, people should be told how much being in the EC costs the average Scottish and English family. The information that I have received from the Government is that we are £32 a week worse off. Of course, there is the question of extra unemployment. If we forget about the unemployment, it seems that the cost is £32 a week. The Foreign Secretary kindly wrote to me to say that the cost of the common agricultural policy to the average family was an extra £28 a week. The cost of our contributions works out at £4 a week, so we can say to people in Canvey Island and elsewhere that the cost to them is £32 a week. That is factual and clear, and people should be told.

Secondly, people need to know the facts about our trade with the EC. I have read articles by Prime Ministers and Cabinet Ministers in which they have said that one half or three quarters or two thirds of our trade is with the EC, but the Government must tell people the facts. My understanding is--I am subject to correction--that, since we joined the EC, we have had a trade deficit of £100,000 million, or £2,000 per person. The Government simply have to tell people whether that is the case. There is nothing worse in the world than seeing politicians on the screen arguing about what they think about things. We must tell people the facts, and let them draw conclusions from them.

Thirdly, if the European Court makes decisions which have serious consequences for this country, the Government simply must tell people. As an hon. Member who has been here for a long time--probably too long--I find it almost embarrassing that when something fundamental happens in Europe, it is almost impossible to find out about it.

Take, for example, the recent and rather embarrassing court decision that an Army officer who became pregnant could, apparently, get up to £300,000 in compensation.

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That was acutely embarrassing, because soldiers who had lost two legs while serving in the Army were getting about one fifth of that sum. People said that that was terrible, silly and odd. Even my hon. Friend the Member for Castle Point (Dr. Spink) said that it was terrible. Unfortunately, there is nothing that we can do about it. The crucial thing is that we should be told what is happening. My understanding is that, since that decision was made a short time ago, the Government have agreed to hand over a total of £7 million to women in that position, and I am told there is a lot more money to come. It is appalling, because it basically upsets the former pattern whereby there was a limit of £11,000 on compensation. That has now gone out of the window.

Why should not people be told ? The Minister is certainly one of the decent guys, and he is a straightforward man. I ask him : why cannot people be told what is going on ?

Let me refer to a situation in Southend-on-Sea. I do not know whether any hon. Members represent areas which have experimented with something called privatisation, but we have led the field in that in Southend with our cleansing department. It has been a great success. Costs are very low, workers are happy, and the standard of cleansing is high. Unfortunately, the EC has said that the Government have applied something called the acquired rights directive wrongly and, therefore, someone must pay.

Apparently, when a firm is taken over, one must guarantee jobs, wages and working conditions. However, the Government were told by their top legal advisers--there are many of them--that they should not worry, because the directive did not apply to local authorities or to health authorities. Southend, which is a very good council, went ahead with privatisation. It has now found to its horror that the Government were wrong.

Mr. Brian Wilson (Cunninghame, North) : The hon. Gentleman will know that the directive applies to Britain only because a good Labour Government signed up to it in 1977, and his party has spent 14 years trying to avoid its legal responsibilities. If we had never had that good Labour Government to sign it, the directive might not have applied.

Sir Teddy Taylor : The hon. Gentleman is right. The directive came through at the end of the Labour Government. Labour and Conservative Governments were told by the legal experts that it did not apply to local councils and health authorities, but now it does. What will happen ? The Government must tell me, because someone has to pay compensation. Lots of money must be paid, as every worker who was not taken on and did not have his job guaranteed and every worker who joined and had his wages reduced or his conditions not met must be compensated. The Trades Union Congress--a wonderful organisation which looks after the interests of workers--has initiated 500 claims. I should like to find out how much this will cost and who will pay. I am trying to find out.

Mr. Wilson rose

Sir Teddy Taylor : I have said that the hon. Gentleman was right--he is always right. The hon. Gentleman should listen to this. Basically, someone has to pay. Employers in Southend are worried about it and are asking whether they have to

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pay. In addition, employees are asking from whom they should claim. I say that the TUC will look after them because the EC has sorted it out. We want to know who will pay, and how much. That is the kind of thing which the Government must tell us.

Those who deliver papers are called newspaper boys. I do not know whether any other hon. Member present has his papers delivered, but it is a way to make sure that one gets the paper bright and early in the morning. I have said in public meetings that newspaper boys should not worry because the Government would sort it out so that they would not lose their jobs. I have found to my horror that that is not happening at all.

The Government apparently got what they called a four-year exemption, and something called the European Parliament then said that it would have to take out that British opt-out. It seems that, under something called the Maastricht treaty--most right hon. and hon. Members voted for the treaty, but I did not as I was rather suspicious of it--if the European Parliament wants to change it, it cannot do so unless there is unanimous agreement among Ministers. This is happening all the time, and nobody notices. I wish that I had noticed that. If I was as clever as other hon. Members, I would read the treaties and find out.

It seems that we are in a terrible position. The newspaper boys in Southend, despite all the assurances given to them by the Conservative party, seem likely to lose their jobs unless we stop the directive ; and, apparently, we cannot do that because it would require a majority vote.

These are important and complicated matters which people such as myself, as well as Ministers, do not understand. The Government should tell us what is going on, and I hope that they will.

Dr. Robert Spink (Castle Point) : Before my hon. Friend gets away from presenting the facts, may I say that he has concentrated so far on the deficit side. Will he also address the benefit side ? We know that newspaper boys are important, but they are not the be-all and end-all. Has not the greatest benefit of our membership of the EC been that we have had peace, strength and democracy for 45 years ? Is not that a great benefit which is worth paying for ? Will not my hon. Friend seek to strengthen our trading links with Europe ? I accept that we must resist federalism and political union.

Sir Teddy Taylor : That is what worries me. The Conservative party says to newspaper boys that it will sort out the problem, and then the newspaper boys find that, when things go wrong, Conservative Members say that they do not matter so much, and they talk about peace.

My hon. Friend is a talented, sincere and upright man--so I am told. He talks about peace. He should read the treaty of Rome. I know that he is very young and that he was not here at the time the treaty was signed, but the only thing that the treaty said we could not deal with in the EC was defence. Defence was guaranteed by something called NATO, which is a splendid organisation because the Americans are involved in it.

On the matter of trade, I hope that my hon. Friend will ask--he will not get an answer if he tables the question, as they have now stopped such things--what our deficit with the EC has been since we joined.

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I do not want to waste time, as I want to talk about Southend. If the Government were willing to listen to talk about the damage done to Southend-on-Sea by the EC, they would be horrified. First, Southend has a lot of unemployment--14.5 per cent. Despite that, the Conservatives did quite well in the local elections because people were hopeful for the future. We lost only one seat--and I did not like us losing that seat.

The Government said that they were aware of the level of unemployment and that they would give the Southend area assisted area status. I am not a great one for subsidy, but local people said that it was a great idea. They said that other people thought that it was good, and they wanted it also. The Government politely explained to me that they were very sorry but under the rules they had to go to Brussels before they could give their money. They said, however, that it should be okay.

So they went to the bloke in charge called Van Miert. He saw the long list, and, before he even looked at it, he said that it was too long and that the Government had to cut off 10 per cent. Southend, unfortunately, was in the bottom 10 per cent. He had not looked at the name Southend, nor had he considered it. I went to the Government and said, "Surely he cannot do this. There was not a meeting, nor was there a committee." They said, "Sadly, no. Mr. Van Miert decides." He decided that Southend had lost, and we felt upset about that. I have asked the Government whether there was anything they could do. They have said, "Sorry, too bad." The Government were very nice and said that they would put Southend forward for a Euro- grant. Mr. Millan, another Commissioner, apparently said that London had bigger problems, so we could not get a grant.

MK Electric, an excellent firm in every respect, employs many people in Southend and Essex. I met the firm's directors last week. They are horrified because we are to have something called the Euro-plug. They said that it is terrible--it will destroy jobs. They also told me that people in England and Scotland will have to spend an extra £1,000 on their house, first, on taking out the plugs ; secondly, on taking out the sockets ; and, thirdly, not on replacing the wiring but on making changes to it. Those three things will cost each householder about £1,000.

The employers' organisation had a meeting and said that it was absolute rubbish--they did not want it. Unfortunately, the Commissioners told them that the EC will do it anyway ; if the organisation does not put forward a plan, it will go through. PMS is one of the nicest firms on God's earth. A chap called Paul Beverley runs it. He is a super-duper business man. He employs 200 people from my constituency. Last year, he exported £8 million worth of goods. If the Government want to increase exports, they should think about that. Is not £8 million of exports great ?

What has happened to Paul Beverley ? Six weeks ago, he received a note saying that the European Council had decided to slash trade with China. I asked why. The Minister, who is a brave man and a super guy, voted against the decision because it was rubbish. However, the decision went through. PMS imports lots of furry toys--they are lovely toys of a high quality-- from jointly owned factories in China and then exports them. It employs many other firms. It has been told to cut its business to one quarter of what it was. That is terrible. What can the firm do ? It has proceeded--I know that hon. Members will not understand this--by way of a complicated processs known as letters of credit. That means that firms pay money for goods to be delivered later.

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They have paid out lots of money but they cannot get the goods in. They have asked what they can do about it. I am afraid that the answer is nothing at all.

A super firm called Hi-Tech is a big employer in Southend. It is a good, upright firm. It pays big wages and it is a good employer. It looks after people well. It sent me a fax today saying that, unfortunately, it had been affected in the same way. It explained that it has 50,000 items waiting in the ports, which is in excess of its annual allocation. The company has paid for the items, but they cannot come in. That is not funny. It is appalling when firms, which are fighting in a competitive world, employing people, exporting and making profits, are banged on the head by stupid Euro -rules. One might ask why the rules are coming in. Apparently they are coming in because some countries in Europe had restrictions and some, such as ours, did not, and it was decided to have harmonised restrictions. Rules are put through by majority vote--with Britain voting against them--and we are now in the soup.

We are suffering a great deal. If we examine the facts properly, people will realise that the whole of Britain has suffered immensely. The people have suffered most of all. I am sure that the hon. Member for Rotherham, whose speech I enjoyed, will think about what the EC has done to the poor people of Britain. They are the ones who have suffered the most. It is the poor who suffer from outrageously high prices for food. It does not matter so much to me because I can afford to buy food ; it does not worry me. Poor families suffer most of all.

We have the appalling value added tax. It is the most cruel and nasty tax which hits the poorest people hardest of all. The hon. Gentleman will be aware that, under the tax-free test, we are obliged to extend VAT to almost everything. The poor are suffering and jobs are suffering. The saddest thing of all is that, despite all the talk about how we would have expansion, growth and development, Europe is a very sick place, with mass unemployment and massive borrowing. We must ask ourselves what on earth we will do about it. It is crucial to abandon all this silly talk about sitting around the table and reforming the organisation. It will not happen. Year after year, we kid ourselves that reform is coming. We are told every year that the common agricultural policy is changing and that things will get better. Ministers say that expenditure will be cut. I wrote a letter asking whether expenditure would be cut, and the Minister wrote back saying that it would not be cut ; it would increase by less than it was going to increase before.

The plain fact is that there is no way that we can control the constant increase in the authority of Brussels. It goes on and on every day. There is no way that we can curb it--the example of the common agricultural policy is there for all to see--and there is no way that we can secure jobs in the EC. We must ask ourselves what on earth we will do about it. The crucial thing to do is, first, to tell people the truth. The Government must tell people the costs, tell them about the trade, tell them all the facts, not propaganda, and tell them the figures.

Secondly, we must give people a voice. To be honest, nothing has been more shameful in the history of our democracy than the fact that vast areas of freedom, liberty and sovereignty have been passed over to outside bodies without consulting the people. It is wrong in principle, it is

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contrary to democracy and it is contrary to all that people in the Labour party and the Conservative party should stand for. I therefore hope that the hon. Member for Rotherham, who made a great speech today--it was one of the best and most talented speeches that I have heard--will think, just as other new Members have, about democracy, his rights and the rights of the people of Rotherham to influence things and ensure that things happen as they want them to. The sad fact is that as they look ahead to elections, whether European or national, many of them will wonder what on earth is the point if the same things happen, no matter who they vote for. 6.35 pm

Mr. Charles Kennedy (Ross, Cromarty and Skye) : I cannot hope to compete with the hon. Member for Southend, East (Sir T. Taylor) in terms of touching every popular strand that is going. I made notes as he went through them--from pregnant women to local authorities, newspapers boys and electricians, and ended up with furry toys. None the less, the hon. Gentleman's points were important--he made them consistently.

At the end of my speech, I shall come back to the point on which the hon. Gentleman finished because a criticism that is often made of those in his party who come from his direction in this argument is that they do not set out what would be their alternative. Simply setting out the option of a referendum--I think that is what he was hinting at--or some sort of better level of consultation than he feels we have had is not enough. There was a referendum in 1975 which made the position clear. The hon. Gentleman does not seem to have lived with the consequences of that. I therefore think that he must go a bit further and be clear on what he would do, given the consequences of a future referendum.

Like other hon. Members, I refer to the fact that this debate takes place in the long and dark shadow of the death of John Smith. Within the village that is Westminster on occasions such as this, the House will appreciate that Scottish Members feel something of a close-knit family right across the parties, whether we sit for Scottish constituencies or represent seats elsewhere, as the hon. Member for Southend, East, who once sat for a Scottish constituency, does. In paying tribute to the late John Smith, and as I represent a highland constituency, I pay a particularly warm tribute to the affection and strong sense of Celtic being that he felt in being a west highlander. He was born in Dalmally and was then brought up and educated in the earlier part of his life in Ardrishaig. Indeed, I am delighted that my hon. Friend the Member for Argyll and Bute (Mrs. Michie), in whose constituency both of those communities are located, is beside me.

As well as absent friends, I welcome, if not a parliamentary friend in the strict sense, none the less a first-time contributor to the proceedings of the House today--the new hon. Member for Rotherham (Mr. MacShane). I very much endorse all the warm sentiments that have been expressed about the excellence, fluency and force of his speech. I congratulate him on it. Given the sudden death of the Leader of the Opposition, it has been noted that the debate this afternoon has proceeded in a slightly less partisan and slightly more measured context.

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Noting the documents which have been issued to accompany the debate, I was amused to see the covering letter of 29 July from the Prime Minister on Downing street paper to Mr. Delors enclosing the Government's White Paper on growth, competitiveness and employment in the European community, which was part of the discussions going towards the summit at the end of last year. In that letter, the Prime Minister, in a characteristically friendly and personal fashion, added a handwritten note to Mr. Delors saying :

"I hope your back is recovering--I do sympathise!"

I do not know whether the Prime Minister has been suffering from a bad back, but as that was written on 29 July, I think that it possibly refers to the knives that were sicking out of it--most of which came from his side of the House. Indeed, most of the hon. Members whose fingerprints were on those daggers I can see before me this afternoon.

The Minister of State, in opening the debate, spoke about competitiveness and unemployment. There must be no doubt in anybody's mind that, with 19 million people unemployed across the member states of the European Union, that must be the No. 1 political priority. The broad thrust of the Commission's White Paper that was tabled for the Brussels summit is welcome not least because it dwells on the need for a Europewide recovery plan to tackle the problem. Although we have our differences in the House about economic policy and the approach to take, we must never lose sight of the fact that we are inextricably bolted to a European Union-wide economic unit. It is on that level that much can be done to tackle the glaring social and economic problems generated by the appalling levels of unemployment across the Community. In particular, the Liberal Democrats would argue for the need to generate new public and private investments, not least in cross-border infrastructure projects.

The hon. Member for Gateshead, East (Ms Quin), speaking from the Opposition Front Bench, referred to the channel tunnel and the rail links on either side of it. In a sad way, they are almost a physical embodiment of all that is wrong with Europe : they are moving at a faster speed on a better quality track on one side of the English channel but at a slower speed on a poorer quality track on our side. That is something of a metaphor for all that is wrong with too many aspects of Europe, not just the approach, but rail links on either side of the channel tunnel.

Mr. Giles Radice (Durham, North) : It is not wrong with Europe.

Mr. Kennedy : The hon. Gentleman says that it is not wrong with Europe, but wrong with us. I would very much subscribe to the construction that he puts on it.

Secondly, looking back to the end of the second world war, or one aspect of it, as we will be in a week or two, surely the far-sightedness of that period in the Marshall plan, which was introduced to deal with the debris of much of the European continent, could and should be emulated now by the developed economies of western Europe--as it was known before the collapse of the Berlin wall--to help the countries of central and eastern Europe to upgrade and improve their economies and, we hope, reach the stage where they, too, can accede and become full members of a wider and deeper European Union. It would be in this

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country's economic interests if that happened, as we would benefit from the increased trade and increased flow of goods, material and people.

Thirdly, we should increase investment in science and innovation generally. That means giving greater priority in this country as well as increasing the pressure at European level towards a greater emphasis on scientific development and education and skill training generally. Fourthly, we should try to establish common guidelines for training throughout the European Union, again helping the free passage of labour across the existing member states of the Union. Fifthly, on the economic side, we should look for ways to give further incentives to employers to recruit new employees. Perhaps some aspects of the benefit system could be transferred directly to employers to encourage them. All those things should be considered. In the economic context, I shall make a couple of brief points from the vantage point of the highlands and islands of Scotland. The Government's document that accompanies the debate makes it clear that, along with Northern Ireland and Merseyside, the highlands and islands of Scotland have qualified for objective 1 status--and very welcome it is too.

Mr. Dafydd Wigley (Caernarfon) : Lucky you are, too.

Mr. Kennedy : The hon. Gentleman, who represents a Welsh constituency, says, "Lucky you are, too." We appreciate that fact. I am sure that the right hon. Member for Strangford (Mr. Taylor), who represents a Northern Ireland constituency, would agree with me and the chief executive of Highlands and Islands Enterprise that the whole point of getting objective 1 status is to get out of objective 1 status ; that objective 1 status in itself is a reflection of comparative or relative poverty within the existing European Union ; that it is not something to open the champagne about ; and that it is not a status that we want to hold on to. We want to use it as a springboard to ensure that we never have to go back to that status again.

When the Minister replies, perhaps he will address the concerns of the highlands and islands--I do not know about other places where objective 1 status has a role to play--that the advent of objective 1 funding from Europe is being used by the Treasury, or in this case by its instrument, the Scottish Office, merely as a way of reducing the other expenditure that would otherwise be devoted by central Government. In other words, the all- important additionality principle is being diluted and undermined simply by reducing existing roads budgets or other forms of infrastructure budgets. They are being reduced and additionality, through objective 1 funding, is coming in to take its place. That is not supposed to be the way in which it works. It is supposed to be genuinely new money additional to the needs of the area, and additional to the provision that would otherwise be made.

Also looking at the economy of the Scottish highlands and islands, I particularly stress to the Minister the very real problems facing--he mentioned it in his speech--the protection of fisheries. I draw his attention to a distinct but discrete aspect of fisheries : the fish farming industry. After tourism, it has become the second single largest employer in many of the most fragile communities across the highlands and islands. It is been a great success story and one that we pay tribute too.

However, the activities of Norway in dumping excess salmon on the European Union markets has distorted the

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