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Mr. Dennis Skinner (Bolsover): Name one.

Mr. Davis: Toyota.

Mr. Skinner: When Toyota was welcomed into Derbyshire, hon. Members on both sides of the House claimed credit for this, that and the other council attracting that company to the county. I made it clear to the Speaker and to the House on that occasion that I did not welcome Toyota because it would finish up with a single union deal that would result in a lack of union membership. I have been proved right.

It has resulted also in thousands of car workers losing their jobs elsewhere. The Minister must face the fact that he is dealing with a motion from the same Liberal party that in November 1992 allowed the Government to escape. They were on their knees. The Prime Minister was

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looking around for allies, and "Paddy Backdown" saved him that night and allowed the Government to continue in office.

Mr. Davis: I must admit that there have been times in my ministerial career when I have wished that the hon. Member for Bolsover (Mr. Skinner) was a Member of the European Parliament rather than this Parliament, but today is not one of those days. I am glad to hear that the hon. Gentleman is not interested in jobs for his constituents.

Mr. Skinner: I was not talking about my constituency. The Minister does not even know what he is talking about.

Mr. Michael Fabricant (Mid-Staffordshire): On that very point, is the Minister aware that, only two days ago, Toyota announced the employment of an additional 1,300 people, many of whom will come from the constituency of Bolsover?

Mr. Davis: My hon. Friend makes my point very well.

Mr. Andrew Mackinlay (Thurrock): Is the Minister going to mention the referendum?

Mr. Davis: Indeed.

There are other areas where acting together has enhanced our influence in the world. Above all, it provided the collective strength for success in trade negotiations with other big players such as the United States and Japan. That strength clinched us the Uruguay round deal in 1993, which was a real breakthrough in trade liberalisation, opening countless doors for British business. Not everything is right with Europe--far from it--but, unlike the Opposition parties, who seem to accept everything in Europe uncritically, we recognise that fact. I make the odd exception for some Opposition Members. We have to do two things. First, we must set out our vision of the European Union and secondly, we need to develop a detailed approach to the particular issues facing Europe today. We have a clear view of how we want to see Europe developing over the coming months and year. The Prime Minister set out our views eloquently in his Leiden speech.

Mr. Donald Anderson: How can the Government claim to be at the heart of Europe if, in advance of the intergovernmental conference, they have said, "No, no, no, no," to the issues to be debated?

Mr. Davis: Perhaps the hon. Gentleman should wait and hear precisely the point that I am about to develop.

The Prime Minister set out our views eloquently in his Leiden speech. We want a Europe that does not impose undue conformity, but one that encourages flexibility; a Europe capable of including more than 20 nation states. We want a Europe that is built by nation states, not designed to supersede them; a Commission that is the servant of the Community, not its master; a European Parliament with a defined role which is complementary to national parliaments, not in competition with them. That

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is why subsidiarity is important. It means that the Community and its institutions work with the grain of history, with the grain of national interest, not against it.

Mr. Marlow: I am very pleased to read that my hon. Friend is on the threshold of becoming a member of the Cabinet, because I think that he would make a very good Cabinet Minister. It is the rule with Cabinet Ministers that they all have their own particular spin on the European issue, especially the single European currency. Would it be possible, to use the Prime Minister's words, to be part of EMU and, at the same time, to have flexibility?

Mr. Davis: I wonder whether my hon. Friend was complimenting me when he said that he thought I was on the threshold of the Cabinet. It is not necessarily clear. Also, I am not entirely clear what my hon. Friend means by flexibility within EMU. Does he mean within monetary union?

Mr. Marlow: My hon. Friend says that the Prime Minister says that the sort of Europe we want is one in which nation states have flexibility. Would that degree of flexibility be consistent with Britain participating in economic and monetary union?

Mr. Davis: That is the classical hypothetical question, which, as the Prime Minister has said, since my hon. Friend is referring to his words, will not be addressed in this Parliament and quite possibly will not be addressed in the next Parliament.

Dame Elaine Kellett-Bowman (Lancaster): Did my hon. Friend have the pleasure of hearing the disagreement between Labour Members on the 1 o'clock news, during which Mike Elliott, the Labour spokesman in the European Parliament, appeared to be recommending a common immigration policy and the hon. Member for Blackburn (Mr. Straw) immediately slapped him down and disowned him, and said that Mr. Elliott misunderstood the situation? Can anybody enlighten us about where Labour stands on this very important subject?

Mr. Davis: If my hon. Friend will wait--

Mr. Mackinlay: When are you going to mention a referendum?

Mr. Davis: If all hon. Members will wait, I shall come to that issue.

We want a Europe that is outward-looking. Enlargement to the east will underpin stability, prosperity and democracy in central Europe. [Interruption.] I note that those on the Front Bench below the Gangway do not think this important, but it is one of the key issues that will dictate the peace of our generation and of subsequent generations. We need to open our markets to our neighbours to the east, and to others around the world. That is because importing their goods is the best way of exporting stability; and exporting our goods is the best way of modernising their economies.

We want a Europe which the ordinary people of Britain can understand and feel comfortable with. That Europe is built on a Conservative vision. It is a Europe committed to free trade and fair competition: a Europe flexible enough and robust enough to encompass the nations to the east. We want a Europe that can advance by co-operation to achieve shared objectives and shared aims.

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As the Labour party is making so much fuss, I might add that the Conservative party needs no lecturing about Britain's interest in a successful Europe. I shall take no lectures from Labour Members, given that their leader, in his 1983 election address, called for Britain to pull out of the European Union.

While he was performing somersaults, we pressed hard and successfully for the single European market. We won the argument for bringing our continent together by enlarging the European Union. We helped the EU to throw its weight behind free trade in the agreement on Gatt. Our efforts have helped to bring the EU's spending under better control. We enshrined, for the first time, the principle of subsidiarity in the Community's work, and we set the Community on the long road to reform of the common agricultural policy.

Mr. Dykes: Does my hon. Friend agree that one of the striking features of the creation of the single market was the fact that Britain was in the forefront of advancing those policies and, quite rightly, of insisting on the use of majority voting? That was the only way to get through the decisions necessary for harmonisation of the single market. Should not the same mechanism apply to other main areas of decision making?

Mr. Davis: The first half of my hon. Friend's comments was correct. That was precisely why Margaret Thatcher supported the idea of allowing QMV --to push past the protectionist road blocks in the way of a single market. My hon. Friend will find that I return to his second point in a moment.

These achievements have been of major benefit, not only to Britain but to Europe, too. Our domestic debate often shrouds those successes in fog, but when the fog clears, we shall see that most of the significant landmarks of this age will have our fingerprints on them.

These successes have been won by a mixture of hard graft, tenacity and skilful negotiation, and by confidence in ourselves and in our case. They have meant digging in and taking some flak--the right hon. Member for Yeovil should understand that. There may be occasions when we need to do so again: that is not the end of the world. It is called negotiation. It is what all Governments do, and what the British people expect of their Government. Negotiation means arguing hard for our point of view and building alliances where we can. It does not mean biting our tongues for fear that others may disagree with us.

Against this background, let us look at the substance of the Liberal Democrat motion. The 1996 IGC is at the crux of that motion, so it may help if I start by setting out the likely timetable. A study group of representatives of Foreign Ministers will prepare the ground for the IGC. I shall represent the Foreign Secretary. Spain will chair the group's first meeting in Messina on 2 June, and we expect it to meet regularly throughout the second half of this year.

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The group will have before it reports from the Council, the European Parliament and the Commission. Others are, of course, free to put their views to the study group. I hope that Committees of this House will do so--

Mr. Mackinlay: Are you going to mention a referendum?

Mr. Davis: We expect the study group to report to the Madrid European Council in December, which in turn may well convene the IGC, to start early in 1996 under the Italian presidency.

The evidence of past IGCs is that mastery of complexity is a key to success in the negotiations, as our Prime Minister has demonstrated. We shall therefore review carefully all the various policy options within our objectives between now and the IGC.

It is a paradox that we are debating vital issues on such an irrelevant motion, albeit a paradox and an irrelevance only too characteristic of the Liberal party. The motion calls for a "referendum before any substantial alteration of the present constitutional settlement between the European Union and its Member States."

Such a substantial change would require the assent of every member state, and it would not get it.

I shall quote what my right hon. Friend the Prime Minister had to say during "Breakfast with Frost" in January:

"I do not believe anything is going to happen in that conference that would remotely justify a referendum, I do not think it is going to deal with constitutional matters . . . if anything that involved significant constitutional change were raised in the 1996 Intergovernmental Conference, we, the British, would not accept it, so the question of a referendum would not arise."

Sir Norman Fowler (Sutton Coldfield): I accept what my hon. Friend has said about the IGC, but would he accept that different factors apply to a single currency? Will he confirm that the option of a referendum on any decision on a single currency remains open to the Government?

Mr. Davis: I was quoting my right hon. Friend the Prime Minister, and I shall continue to do so. He said on another occasion--this is 1994--

"I made it clear that I did not rule out a referendum. One will have to wait and see precisely what the circumstances are. I think it is wise to wait and see precisely what those circumstances are. I have indicated that in certain circumstances it might be appropriate to have a referendum, and if they are, we will."--[ Official Report , 12 December 1994; Vol. 251, c. 620.]

Mr. Menzies Campbell (Fife, North-East): If the Minister is so concerned about paradox, perhaps he will explain to the House the paradox between the views of the Chancellor of the Exchequer about a single European currency and those of the Chief Secretary to the Treasury.

Mr. Davis: I shall put an alternative paradox to the hon. and learned Gentleman. During the Maastricht debate, the leader of the Liberal party, the man who is proposing the case that is set out in the motion, said that he did not support the opt-out on European monetary union. Had that opt-out not been available, the question would not have been capable of arising. I hardly think that that is an easy paradox.

Mr. Barry Legg (Milton Keynes, South-West): I am interested in my hon. Friend's references to the comments

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of my right hon. Friend the Prime Minister during his interview with David Frost. In the interview, on 8 January, my right hon. Friend went on:

"I would certainly keep open the option of a referendum in 1996. But the only reason for anybody offering a referendum on the IGC in 1996 would be if they were prepared to accept constitutional change in the negotiations."

My right hon. Friend then listed examples of constitutional change. Among them was a

"firm commitment to a single currency."

Will my hon. Friend confirm that the Government still stand by what was said in the Frost interview--that the option of a referendum is still open on a single currency, and that the Government regard a single currency as a matter of constitutional change?

Mr. Davis: It is a pretty easy question when a Minister of State is asked whether he agrees with the Prime Minister. I think that that is the case still-- [Interruption.] It bears on what the Liberals are up to. How is it that, in the midst of the real debate on Europe, they can find such a non-motion on a non-issue? I suppose that the answer lies in the point made by my hon. Friend.

Mr. Mackinlay: Will the Minister give way?

Mr. Davis: I shall do so shortly.

My right hon. Friend the Prime Minister said that anyone offering a referendum would do so only if he were prepared to accept such constitutional change. That is what the Liberals want. They want a great leap forward to a federal future. That is not what we want, and we are not negotiating for that. It is not what the British people want. The irony is that the Liberals want a referendum to save themselves from themselves.

The Liberal Democrats' unthinking federalism is not just limited to constitutional reform. They would renounce our opt-out on the social chapter. They would increase the cost and burdens on business. Jacques Delors said that the opt-out on the social chapter would make the United Kingdom an investors' paradise. The Liberal Democrats' policies would have precisely the opposite effect. There is little doubt how the British people would react to such a portfolio of policies. It would be less a referendum than a rejection slip--and rightly so. The Government's targets for 1996 do not include that at all.

Mr. Mackinlay: We heard from the hon. Member for Milton Keynes, South-West (Mr. Legg) and the right hon. Member for Saffron Walden-- [Hon. Members:-- "Sutton Coldfield"]--(Sir N. Fowler). Sorry--scout jamboree 1957. The Minister was challenged to clarify whether the Prime Minister's utterances earlier this year are still operational. We listened carefully to what he said; he said, "I think so". That really will not do. Can the Minister assure us that, when a Minister replies this evening, the position of the Prime Minister will be clarified, as to whether the promise of a referendum is still on the cards, in the circumstances outlined by the hon. Member for Milton Keynes, South-West? Can we have that clarification this evening?

Mr. Davis: I read to the House the words of the Prime Minister in December 1994. Those words still apply.

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I have never heard my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) referred to before as the hon. Member for the scout jamboree 1957.

The Government's targets for 1996 include entrenching the role of the nation state, through better balanced weighting of qualified majority voting, through developing subsidiarity, through enhancing the role of the national Parliaments.

On qualified majority voting, we need a system that better reflects the population levels of the member states. There is a growing recognition throughout the Union that the existing arrangements are undemocratic. Why should each Belgian vote in the Council represent 2 million people, while ours represents 6 million?

We have made good progress on subsidiarity. In 1990, there were 185 new legislative initiatives. Last year, there were just 47. All new Commission proposals must pass tough subsidiarity tests. The extensive programme of repealing and amending existing legislation is progressing well. We are considering how the process can be moved further in the right direction in 1996.

Mr. Simon Hughes (Southwark and Bermondsey): I am concerned that the Minister may not mention referendums at all unless we pursue him a bit and prompt him to give us some answers. I want to ask him the constitutional question.

Given that it may be the case that having a common European currency is of such importance that we may, according to the Government, have a referendum, and the Government are not quite sure, does the Minister accept on behalf of the Government that if--as is inevitably part of the European constitution--powers are handed over from this place to a European decision -making body, it is better that they are handed over with the assent of the people by vote rather than by a decision made, behind closed doors, by representatives of Ministers, who currently take the decisions regularly to transfer powers from this country to Europe as a whole? Is it better that the people decide or that Ministers decide? That is the constitutional question, irrespective of whether we are applying to the single currency or any other specific agenda item this year, next year or over the next decade.

Mr. Davis: The hon. Gentleman's memory is becoming incredibly short. That is why my right hon. Friend the Prime Minister said: "I made it clear that I did not rule out a referendum."--[ Official Report , 12 December 1994; Vol. 251, c. 620.]

My right hon. Friend the Prime Minister said in his speech at Leiden last September:

"People will continue to see national Parliaments as their democratic focus. It is national parliamentary democracy that confers legitimacy on the European Council".

This House, probably more than any other in the European Union, knows how important it is that Ministers in the Council are accountable to their national Parliaments. But we should also be looking at ways to ensure that we can involve parliaments more directly in the Community process. We want the voices of national Parliaments to be heard clearly in the democratic functioning of the Union.

Mr. Charles Kennedy (Ross, Cromarty and Skye): May I follow the Minister's earlier comments about the referendum to their logical conclusion? The more

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slavishly he sticks to the text of the Prime Minister's various speeches, which hinted at different things in different places, the more confused he seems to become.

The Minister described today's debate as something of an irrelevance, saying that the referendum issue would not come up. It would not come up because the Government would not accept any package at the intergovernmental conference that they considered to be of constitutional import. Is the hon. Gentleman saying that, if the Government do not get their way, and there are constitutional implications, the referendum will be off the agenda on grounds of irrelevance? What would the Government do in such circumstances? Would they leave open the option of exiting from the European Union on the present membership basis?

Mr. Davis: The hon. Gentleman pretends to be the Liberals' spokesman on Europe, but he does not realise that we have a veto on treaty changes. That is the point with which we embarked on this issue, and it brings me neatly to what I want to say next. We shall always push Europe in a decentralised, intergovernmental direction, which is the opposite of the thrust of Liberal Democrat policy.

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

Mr. Davis: In a moment.

If the Liberal party were in power--which is, admittedly, a scenario imaginable only in a world of fantasy politics--it would deliver a European policy unequivocally federalist in tone, strategy and content: a policy that, directly and indirectly, would funnel power away from the nation state and towards supranational institutions. Let us look at one or two of the Liberal party's policies. Let us consider its policies on national vetoes and sovereignty. The Liberals have made a number of attempts-- including some today--to confuse the issue on the question of the national veto; so let me quote from a speech made by the leader of the Liberal party in Torquay little more than a year ago, in December 1993. I am sure that the right hon. Gentleman remembers it well. He said:

"We want to see the European Parliament catch up with the Council of Ministers in power, with equal law-making rights over more issues. And we want the Ministers to make decisions in public without single nation vetoes."

Nothing could be clearer. Now, however, the Liberals try to cover up what they know is an unpopular policy. They talk of a double majority--a mechanism that would make little difference.

Mr. Ashdown: We are used to the present Government saying contradictory things, but the Minister cannot say two contradictory things in the space of five minutes. A few moments ago, he told us that he wanted the veto to take into account populations in Europe. The double veto is designed to do precisely that. Do we take it that the Minister is rejecting the idea, or that he is accepting it? So far, he has said both within five minutes.

Mr. Davis: That was another wonderful demonstration of the Liberal party's ignorance. One option relates to qualified majority voting, to which the veto, by definition, does not apply; the other relates to circumstances in which the common consent of all nations is necessary, to which

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the veto does apply. One involves majority voting, while the other involves the veto. They are clearly very different.

Mr. Spearing: At the beginning of his speech, the right hon. Member for Yeovil (Mr. Ashdown) referred eloquently to matters relating to the will of the people. If qualified majority voting operates--as it does--in regard to all matters relating to agriculture and fisheries, and if the Liberals wish to extend it, it may be impossible to execute the will of the people, the will of the Government or the will of our Parliament.

Does the Minister agree that a veto is not a veto if the treaty compels the taking of action by common accord--and thus, an obligation to take action, which no one can prevent, although it may be possible to prevent a specific method of implementing it?

Mr. Davis: As ever, the hon. Gentleman's facts are correct. The veto is, however, the only way in which the Government can, and always do, exercise their rights on behalf of the people.

Mr. Cash: Does my hon. Friend agree that one of the main reasons for a referendum on this issue is that, in the Maastricht treaty, we did not veto economic and monetary union and a single currency? Parliament was whipped through on this issue. The Government were unable to arrive at a satisfactory conclusion, and that has put the British people in this mess and in the confusion that has followed. Therefore, it follows that the matter must be referred back to the people to allow them to make up their minds.

Mr. Davis: No, I do not agree with my hon. Friend. He was referring to a single European currency, which was the point of the opt-out. We shall return to Parliament with that point in future.

Mr. Dykes: These are important points, and we must be clear on them. Would my hon. Friend crystallise this matter again? We expect the other member states to come up with proposals for the further steps under Maastricht at the intergovernmental conference which will involve constitutional change and certification of the move to a single currency. Is my hon. Friend saying that the Government will formally veto those suggestions?

Mr. Davis: I am saying that we will maintain our stance against centralising measures at the intergovernmental conference. We will block them if they come up.

Several hon. Members rose --

Mr. Davis: I should like to make some progress.

The Liberal Democrat party has tried to cover its line on vetoes. We have already heard about the rather strange notion of the double majority and Liberals talk about vetoes on executive decisions as if legislation did not matter. The Government want to entrench the position of the nation state, and the Liberal Democrats want to undermine it. When we press a little we discover why that is the case.

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Perhaps the House would like to know where the right hon. Member for Yeovil stands on the issue of the United Kingdom's sovereignty. Speaking in, I think, the Maastricht debate, the right hon. Gentleman said:

"I do not believe that the nation state is anything other than a relatively recent historical invention. I do not believe that it will always remain . . . throughout this decade and the next century the importance of the notion of the nation state will decline, . . . At the same time, advanced democracies will witness the rise in the importance of community and regional identity and supranational institutions."--[ Official Report , 20 May 1992; Vol.208, c. 292.] There we have the view of the Liberal party. [Hon. Members:-- "Hear, hear."]. Liberal Democrat Members obviously agree.

On "The Frost Programme" in May 1994, the right hon. Gentleman was more succinct. [Interruption.] In that case, this is probably appropriate. He simply said:

"I don't believe in the sovereignty of Parliament."

It would be astonishing for a junior Member to say that, let alone the leader of a once great party which he has reduced to an irrelevant splinter group.

Liberal Democrats know that these policies are unpopular, and that is why they obfuscate and equivocate over them. They try to conceal unpopular policies behind the populist gambit of the referendum. Liberal Democrat policies are not just unpopular: they are wrong. Liberals are transfixed by an outmoded and increasingly irrelevant commitment to full-blooded federalism. That that commitment is outmoded is not just my opinion, because it was reiterated by the Prime Minister of France only a month or two ago. When he was asked, "Should Europe move towards a federal system?", he answered: "Its time has passed: an enlarged Europe comprising a greater number of states could not be federal."

The Liberals are not just out of touch in Britain: they are out of touch in Europe too. The motion is relevant only if Liberal policies were to be carried out, which is a notion based not just on a hypothesis but on a virtual impossibility.

Labour is little better. Like the Liberals, Labour Front-Bench spokesmen blindly accept whatever is in vogue in Brussels. We know, because they failed to hide it during the European elections, that they would negotiate away our veto. We also know, because the right hon. Member for Sedgefield (Mr. Blair) has told us, that Labour would blindly opt for the single currency. Labour Members never cease to remind us that they would join the social chapter at the first available opportunity. What a choice to put before the British people in a referendum. That is not a question the Labour party wants to be asked, let alone to answer. That is not the price it wants to pay for staying in the European Union.

The changes would not take long to enact--just a few simple signatures on a few simple documents and the next Labour Government, or even a Lib-Lab Government, would be the last British Government who were responsible to this House and the people of the United Kingdom who sent us here. That is a proposition that the British people will never support and it is why they will back the Conservative party and the Prime Minister not in a referendum, but at the next general election.

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