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Mr. Cash: My right hon. Friend says that he said no such thing, but he was extremely close to it. I was paraphrasing: I shall apologise slightly, although not too much. My right hon. Friend says that, as a Member of Parliament, he has the right to make these decisions, and that, effectively, the average Mr. Joe Public does not. Although we have an important responsibility to discharge, we should also listen to what is being said outside, and opinion polls on referendums are crystal clear.
In general elections, people are asked to vote Conservative or Labour. Do we think that they have examined every detail of our manifestos? The short answer is that, in deciding questions of this kind, people are capable of making up their own minds, and it is extremely patronising for us to suggest otherwise.
Mr. Toby Jessel (Twickenham): I remind my hon. Friend that referendums were held in Denmark, France, Ireland, Norway and Austria, among other countries. Surely it cannot be argued that the British are intrinsically more stupid than the Irish, the French, the Danes, the Norwegians and the Austrians?
Mr. Cash: I am extremely grateful to my hon. Friend. I could not have put it better. Of course, he is right. The Konrad Adenauer Siftung publishes a monthly paper called "German Comments". When the Danes said no on the first referendum, that paper published a carefully considered editorial which said that a dangerous situation was developing in Europe in that elections were being used as a form of protest.
Column 718I found that about as difficult to accept as I found the remarks a few days ago of, I think, Mr. Karl Lammers, who said that he thought monetary union was "the purest form of integration." I get a little edgy when I hear people talking about political systems and purity in the same breath. We should be careful about the language we use in that context.
On 5 December last year, a MORI opinion poll showed that 65 per cent. of the British people wanted a referendum. The issue of a single currency should be dealt with in a referendum before the intergovernmental conference. The Government on their own have no right or authority to make such a decision. I shall vote with the Liberal Democrats, although I do not agree with every word of their motion. However, I agree with the principle that underpins it. 6.48 pm
Mr. Donald Anderson (Swansea, East): It is a privilege to follow the last three speakers: the hon. Member for Stafford (Mr. Cash), and my right hon. Friends the Members for Chesterfield (Mr. Benn) and for Bethnal Green and Stepney (Mr. Shore). Their views are well known and consistent and they always seek to take the high ground. I felt rather challenged by my right hon. Friend the Member for Bethnal Green and Stepney, who said that one should not become involved in party points and details. When I heard that, I felt like scrapping half my speech.
The principles have been set out. I accept that the hon. Member for Stafford is against the European Union as it is and as it develops. Even if sacks of ecus were delivered personally by Mr. Santer to the hon. Gentleman's constituency, he would reject them because he sees the matter as political and relating to sovereignty. That is a road down which he does not wish to go. I confess that I detected a certain messianic quality in his speech--there was "conspiracy"; there was "deceit"; it was absolutist; we were being let down; it was almost a dolchstoss; they were not listening to us. It was almost, "Let the people speak and they will reject it."
I wonder how far the hon. Gentleman's populism and wish for a referendum would go. Is he willing to listen to the people on capital punishment? He may say that he is not. Is that patronising?
Mr. Sweeney: Surely there is a fundamental distinction between the two issues. One is a constitutional issue, which is irrevocable; the other is something that a subsequent Parliament could repeal or amend at will.
Mr. Anderson: Perhaps the distinction is not as clear-cut as the hon. Gentleman would wish. His point about capital punishment might be true, but what about devolution? If a Parliament were established in Scotland and an Assembly in Wales, is he suggesting that, in practice, it would be possible for any future Government to go back on that? Those changes would have generated their own vested interests in Scotland and Wales.
Does the hon. Gentleman want a referendum on devolution? My understanding is that his party does not. Indeed, Lady Thatcher, whom he admires so much, spoke strongly and voted against referendums for Scotland and Wales in the 1970s. There is always a danger that we might slide from looking at the issue from a point of principle to looking at it in whatever way happens to suit our particular views.
Column 719I concede immediately that in the 1970s I was critical of my Government's views on devolution. I and others grasped the idea of a referendum not necessarily because we had thought through the principle, but because at the time it seemed the best and last weapon that we could use. Although my party sees no case for a referendum on devolution now, there is a powerful case that needs to be argued. On balance, I would come down against a referendum on devolution. My point is that there is no easy dividing line--there is a continuum on that and on other issues. The hon. Member for Stafford tends to see everything in capital letters and in black and white, whereas many of us would prefer to step back a little and accept that there may be an argument for a referendum on a matter as fundamental as a single currency because of the effect it would have on a whole series of economic levers that might be taken away from us. However, that would apply when the rules of the game were being changed, and we would need to go back to seek a wider legitimacy than could be attained purely from the votes in this House. Of course the issue is not as simplistic as hon. Members have suggested.
Mr. Duncan Smith: The debate is getting caught up on the principle. There has been a great deal of debate on that and is all too airy-fairy. The key factor is that this place is effective only when there is a clear difference between the parties--for example, the Opposition oppose and the Government propose. Where there is no such difference, matters become rather difficult. That difference has disappeared on the matter of Europe. There may be certain issues in the middle of the debate, but nothing across the board. Surely that is the sector about which the hon. Gentleman might say there is some issue principle.
Mr. Anderson: The essential principle is that, although the great mass of our people are ready to criticise Europe in the particulars, they accept that our future lies in a closer relationship with the continent. They do not want to be part of a marginalised, off-shore island, despite the arguments that have been made. Where, in that continuum, come the various issues such as a single currency or immigration is a matter for judgment.
I am wary of many of the points that have been made, partly because I am concerned about the motives of some of the Liberal Democrats who introduced the motion. I well understand that they wish to be seen in the driving seat --at least, they want the headlines for today. However, on the question of accountability, it is a matter of record that the right hon. Member for Yeovil (Mr. Ashdown) produced his own views on a referendum out of a hat. They caused considerable surprise to the then Liberal Democrat spokesman on foreign affairs and also to the Liberal Democrat leader in the House of Lords. There was not much consultation--
Mr. Charles Kennedy: I must correct the hon. Gentleman on a point of fact. The motion states that we want a referendum if any major constitutional change is proposed. That is based on a policy document that has been through all the usual machinery and it was debated and approved at our party conference. It is not fair of the hon. Gentleman to suggest that the party has been
Column 720bounced; that is not so. As he knows, we do not always win the vote at the party conference, but we did manage to win on this issue.
Mr. Anderson: The point I made was that the fons et origo--the origin--of the Liberal Democrat change of policy resulted not from consultation but from a diktat by the party leader, which surprised many of those who claimed to be speaking on behalf of the party. My other doubt on the principle of referendums is that traditionally, with the exception of Switzerland, it has been a device used by right-wing or populist Governments--
Mr. Anderson: I shall deal with that comment in a moment. First, let us consider the Californian vote on the rights of immigrants. At the time of those referendums it will be the media moguls who will have an interest in, and an influence over, the result. Therefore, we must be wary about the accuracy of the picture a referendum might give of the views of the people at any one time. As the hon. Member for Gordon (Mr. Bruce) said, referendums have been used to cover up divisions. That was certainly the case with my party in the 1970s. Indeed, when there was an agreement to disagree, those who lost did not suddenly say that they had been convinced of the case; they kept up the fight.
If a referendum on a single currency went against the hon. Member for Northampton, North (Mr. Marlow) and others, they would not say, "The people have spoken, long live the people"; they would keep on fighting--and good luck to them. They disagree with a single currency on principle. It is absurd to suggest that somehow we can turn to the people and consult them like an oracle at Delphi and then say that now the people have spoken we can fold our tents because the decision has been made.
Mr. Marlow: If there were to be a referendum on a single currency and if the people were to say yes, they wanted a single currency and the massive loss of sovereignty that would go with that, that would be their decision and, as a democrat, I would have to accept that. However, above and beyond that, is not economic and monetary union irrevocable? If we were part of a single currency, would it ever be possible to come out of it, whatever I might feel?
Mr. Anderson: The hon. Gentleman and others who lost the referendum in 1975 have consistently fought against Europe since then, as has been their right. There is no finality in such arguments. There are objections of principle to referendums. For example, they are but a snapshot of public opinion at any one time. The view could alter in a month or so. There is no finality.
Mr. Forman: Does not history show that there is nothing irrevocable about any political decision, whether made by a Parliament or by the people through a referendum? Is that not a sobering realisation?
Mr. Anderson: Yes. Any future Parliament, whatever the technical and legal position, can, if it so wills, decide to withdraw. That is the reality of any decision. We should also consider the inflexibility that comes from referendums. A formula will be reached--perhaps, let us hypothesise for a moment, on a single currency--in 1997
Column 721or so. If, after negotiation, that formula and package deal is put to the people and the people go against it, what happens? Will it be renegotiated? One cannot negotiate with public opinion.
Denmark faced that problem when, by a small majority, it went against the package. People woke up to the danger of being marginalised. A second referendum had to take place, with a rather spurious inclusion of the Edinburgh package, and the Danish people changed their minds. Inevitably, inflexibility exists. One can negotiate only with a Government. One cannot negotiate with public opinion and have a series of referendums to see whether the result achieved was just about right. In any international negotiation, any national Government achieve the best package that they believe they can achieve at any one time.
As I have said, a referendum, in effect, solves nothing. There is no finality. People advancing both sides of the argument will continue to make their arguments. I agree with the three previous hon. Members who have spoken. The elites of Europe have gone far ahead of the public opinions of Europe--that is one of the great problems and real issues that must be faced. That was part of the problem at the time of Maastricht.
The people who negotiated in Brussels had not bothered to take into account the constraints imposed by public opinion. A number of them either nearly had a black eye, as in France, or had a black eye, as in Denmark. We must deal with that problem as Europeans.
Like the hon. Member for Stafford, I was involved in the French referendum. I suspect that we were on different sides at the time, but I hope that he will at least agree about this matter. I think that it was President Mitterand who said, at the time of the referendums, that the French always answer the wrong question. In that great debate in France, the Maastricht treaty was hardly mentioned. A great feeling of disillusion existed. The geography of the votes showed that people on the fringes of France felt that they were not being consulted. The farmers were against Brussels because of the agricultural policy, which was not an aspect of the Maastricht treaty.
A general feeling existed against immigrants. After the French referendum, it was reported in Le Monde that 85 per cent. of the people who voted no were against further immigration into France. The forces of stability, people who felt that they had been marginalised, and the alienated, voted at a time when they could--
Mr. Anderson: The point that I am making is that the questions posed in the Maastricht treaty were addressed by hardly anyone in that debate. Other people saw the referendum as a means of voting against President Mitterand. It was a vote against the President. Who can doubt that, in the previous referendum in 1979, part of the response of the people of Wales and Scotland was based on the unpopularity of the then Labour Government, rather than on a true appreciation of whether a case existed for or against devolution? All those other extraneous factors come into it. To pretend that we can have an instant democracy and that the question, "Maastricht or not?" can be put to, and decided by, the people is an illusion, because the answer will depend on who puts it, when it is put and how the question is put.
Column 722I accept that those are real difficulties. I very much accept the genuine point made by the hon. Member for Stafford and by my right hon. Friends the Member for Chesterfield and for Bethnal Green and Stepney that there must be ways of addressing the malaise in Europe. People at the helm in Europe must ask, so far as they can, how they relate to the real concerns of Europe. We must avoid the tirade in our popular press, where, alas, the diet over the years has been straight bananas and all the absurdities that arise. It never considers the big issues.
I am confident that the Prime Minister and his friends are doing the country a great disservice. They claim that we can be at the centre and at the heart of Europe, when all their policies seek to marginalise us. If we are to pull our weight in Europe, we must be seen as part of a team. We must be seen properly to understand the issues, fighting our corner, as others do. Europe, however, will neither stop nor go away. Even if the Government pretend, for internal party reasons, that they can muddy matters, and if they play the populist card because of the unhappy conjunction of the next election and the intergovernmental conference, they will do this country a great disservice.
We shall have to accommodate ourselves to that great market and that force on the continent. It will not change and we delude ourselves if we think it that will--self-delusion is the worst of all illusions and delusions--and if we pretend that we can, in isolation, somehow change that Europe, which, with all its faults, is dynamic and will move forward.
Mr. Ray Whitney (Wycombe): I hope that I will not appear too derogatory to the hon. Member for Swansea, East (Mr. Anderson) or to the House if I say that I have the feeling that we are participating in the umpteenth episode of a long-running soap opera, in which the themes, the arguments, the low audience ratings--judging by the attendance in the Gallery--and almost all the actors are the same. One does not speak in such debates only if one resigns from ministerial office or if one is promoted to one of the Front-Bench teams. The rest of us soldier on, putting our views.
If we are really honest, we must admit that the kaleidoscope of the normal displacement in the House has again been shaken up into a different form. It goes across the House and, sadly, across all the parties. We have the same position this evening, which has been achieved by the Liberal Democratic party, for its own reasons, with its motion. Those reasons have been analysed but the motion has produced another manifestation of weird alliances. They started after the Maastricht Bill was given a Second Reading. The cornerstone of the House's true position on Europe will be seen in that Second Reading debate, after which the Bill was given a massive and overwhelming majority--I think that 244 hon. Members were in favour of it.
Mr. Duncan Smith: My hon. Friend said that the only key test was the vote on Second Reading, but surely the point is that the Bill was discussed line by line in Committee and people then began to understand it. Surely the key point is what developed as a result.
Column 723House, led by the Labour party, started playing political games. It would say, "Why not? We are in politics to play games." That is fair enough. I accept that point to a degree, but that is the cause of the problem and the reason why my hon. Friend and other hon. Friends were able to have such an influence.
Night by night and on issue after issue, a motley collection of hon. Members traipsed into the Division Lobby--a collection of people who were united only in opposition to the Government and to each proposition--as the Committee worked its way painfully through consideration of the Maastricht Bill over 18 months, or over whatever time it took, but it seemed like 18 months.
Thus, those in the Labour party who professed to be in favour of the Maastricht treaty voted against it and the standard anti-Europeans in the Labour party happily voted against it. The Liberal party, which is very pro -European, also voted against it. [Hon. Members:-- "No, we did not."] There are two sections in my party--those who honestly and openly profess their opposition to Europe and those who say that they are in favour of Europe, but not a Europe that anyone else seems to recognise.
Mr. Denis MacShane (Rotherham): I was not a Member of Parliament during the debates on Maastricht and I clearly missed something, although I am getting a re-run now, for which I am deeply grateful. However, I followed the debate very closely from outside. The difference was that the Europe that the other 11, or the other 14, wanted was not that proposed by the Government. Of course, I was delighted that the two main Opposition parties, which, I think, were united on this issue, spoke for all of Europe while the Government spoke for a crazy, opted-out, marginalised version. [Interruption.] I speak for sensible Opposition Members.
Mr. Whitney: As the hon. Member acknowledges, he was not a Member of Parliament at the time. I shall not take him through all our debates, but the two main issues were matters of tactics. The fundamentals professed by members of the two main Front Benches are very clear. The performance which occurred night after night, and which I have described, gave rise to the trouble with which we are all now labouring.
Mr. Charles Kennedy: The hon. Gentleman has a reputation for fair- mindedness. I am sure that he would not want to mislead people, especially those who may have missed some of the grinding, delightful minutiae of the Maastricht process, which the occupant of the Chair probably remembers in far more vivid detail than any of us. The hon. Gentleman should confirm that, during votes on the 10 o'clock motions when we were debating the paving measure, we took a public pasting for supporting the Government but not for being prepared to go along with Labour's tactics. We supported the Conservatives in order to make progress in debates on the Maastricht treaty. The only issue on which we opposed them was the social chapter.
Mr. Whitney: If the hon. Gentleman is asking me to say that the Liberal Democrats' record is less black than that of the Labour party, I am happy to do so. However, this evening's paradox is due to the Liberals. The point that I tried very hard to point out to the leader of the
Column 724Liberal party, who is no longer in his seat, was outlined by the hon. Member for Swansea, East (Mr. Anderson). If referendums are of such great value and have such democratic validity--I shall not challenge the notion now but shall return to it briefly later-- they cannot be a way of picking and choosing.
I do not accept the distinction that some hon. Members have attempted to make in relation to capital punishment. If the Liberal party and other enthusiasts for referendums say that we must listen to the people, it is perfectly fair to ask where they draw the line. There has been an attempt narrowly to define what is constitutional and what is final, but it is pretty darn final if one is on the wrong end of a judgment of capital punishment. That is another demonstration of the paradoxes involved in debating European issues, and especially referendums.
Another paradox, which has been mentioned, is that many of the people who are now very keen on the referendum device are the very ones who defend and, I might almost say, prate about the sovereignty of Parliament. We witnessed a little exchange of this kind earlier involving my hon. Friend the Member for Stafford (Mr. Cash), who is not here at the moment.
My hon. Friend goes around talking all the time about the sanctity and sovereignty of Parliament but wants to use the demagogic device of the referendum, which at a stroke undermines the sovereignty of Parliament. His defence is that he faces terrible pressures, punishments and torture from the Whips. However, that does not seem to have stopped a number of my hon. Friends. One certainly gets the impression that my hon. Friend is optimistic that it is a lever that can be used to his advantage.
If only all the parties acted responsibly in the fundamental matter of our relationship with our European partners, we could have a free vote; but there could not be a free vote for one party and not for another. However, I am confident that, if there were a free vote, there would be no contest-- the vast majority of the House wants Britain at the heart of Europe. That has been proved again and again.
Mr. Fabricant: Many people would not argue that we want to be at the heart of Europe, but the question is, what sort of Europe? Are we talking about the free trading body that we thought we had joined or a European Union into which we fear we have fallen?
Mr. Whitney: We have to offer the people the sort of Europe with which the other 14 members would also live. It is not a great deal of use outlining a concept of Europe shared by one or two hon. Friends and perhaps 50 or 60 Opposition Members but not by our 14 partners. The European Union is a partnership. I should be happy to find the highest common denominator- -I might even say the lowest common denominator--that would join us to Europe while keeping in mind the fact that we should go a long way to safeguard the interests of Britain at the heart of Europe. I should like the issue tested on a free vote. Most hon. Members have studied the issues in detail and I believe that they would reach the conclusion that I have reached--Britain has to be at the heart of Europe. The minority view would be routed in such a test.
I claim to be a traditional Conservative but I do not wholly share the traditionally Conservative views expressed so elegantly and eloquently by my right hon. Friends the Members for Worthing (Sir T. Higgins) and
Column 725for Mid-Sussex (Mr. Renton), although I recognise the force of what they said. Any hon. Member who is tempted by the idea of a referendum should consider their remarks carefully. We are all familiar with the dangers of finding the right question, but how can one find a question that does justice to the complex issues? One could make it appear bogusly simple. For example, one could ask, "Are you in favour of Maastricht, yes or no?" In fact, that is a very complicated question.
It was not enough simply to have read the Maastricht treaty--as we are often reminded, even senior members of Government found it hard to find time to read it--because every other paragraph referred to the treaty of Rome, which one had to read, too. Are we seriously expecting the 50 million or so people in this country to read the treaty of Rome? That is not a patronising question; I am stating the facts.
Let us consider the views of the right hon. Member for Bethnal Green and Stepney (Mr. Shore), who is no longer here to give us his views, and those of the right hon. Member for Chesterfield (Mr. Benn). The noble Lord Wilson called a referendum not because he believed in the sanctity of a referendum, but as a practical device because of the embarrassing state of the Labour party in 1975. For people like me, the result was good. Two to one were in favour of Britain being in the European Community. Did that stop the right hon. Members for Bethnal Green and Stepney or for Chesterfield? Of course it did not. Would defeat stop some of my right hon. and hon. Friends? Of course it would not.
Examples have been quoted frequently of European countries with their own traditions of referendums. The hon. Member for Swansea, East pointed out that the voting in France was only tangentially related to Maastricht, and was much more related to other matters. It must be recognised that referendums are dangerous and can lead to demagoguery, and reference has been made to the issues in California. We could end up--not surprisingly-- with referendums on this and that which would be mutually conflicting. The question could be "Do you want to spend more on schools and health?", to which the answer would be yes. Another question could be "Do you want lower taxes?" Again, the answer would be yes.
Dr. Lynne Jones (Birmingham, Selly Oak): Does the hon. Gentleman accept that there is every difference between referendums on issues that he has just been talking about--as take place in California--and on constitutional issues that are irreversible by any future Government?
Mr. Whitney: I have covered that point, and I am sorry that the hon. Lady was not listening. There are distinctions, but there is not a clear line between one and the other and we must approach the issue of a referendum with great care.
By instinct, I have sympathy with my right hon. Friend the Member for Worthing. When we can get the right circumstances and some reasonably satisfactory answers to the problems to which I have referred--such as the nature of the question--there could be a tactical advantage in looking favourably at the possibility of a referendum. Damage has been done to the national attitude to Britain's membership of the European Union by a concerted campaign by so much of the media and by a small minority in this House. That minority has been
Column 726given the facilities of the media, and their voices have been magnified to give the impression that their views carry so much weight.
The media's fixation with straight bananas, the complete misrepresentation tonight from the right hon. Member for Bethnal Green and Stepney about the real significance of the fisheries dispute, the latest flurry on the common agriculture policy and--most recently--the matter of immigration are examples of what has happened. Immigration has nothing to do with the European Union. As has been said, the suggestion that 300 million residents of the European Union will start flooding into Britain is--if I may use the word--baloney. It is crucial that the people of this country are again brought to understand the massive benefit of Britain having a positive relationship with our continental partners. They voted for it by a majority of 2:1 in 1975, and the benefits and arguments for us being in Europe in 1995 and onwards are far greater than they were 20 years ago. It is up to those of us--from whatever party--who understand the issues to make sure that the people of this country understand that again, and that they turn away from the negative path down which they are being led by the media and by some Members of the House. 7.24 pm
Mr. Malcolm Bruce (Gordon): I shall place my remarks on the importance of a referendum in the context of monetary union. The issue-- despite speeches to the contrary--has gone beyond just being a party- political spat. We are in serious danger of permanently damaging Britain's long-term economic future because of the serious divisions within the Government. It is apparent that there are divisions in the Opposition which might be important if they were to be in government.
Our immediate problem, however, is that the conference next year will determine how this country will progress, and the Government are totally incapable of talking in public or in private in any coherent or comprehensible way about exactly what Britain's interests are, let alone how they will defend them.
It is apparent that any possibility of unity within the Government is totally shattered. The Cabinet is at war, and the party is lining up behind respective champions within the Cabinet. Nobody is talking in code or pulling punches, and the arguments are out in the open. The only real way in which the national interest can be resolved is for the debate to be addressed on the specifics and for us to allow people the freedom to develop arguments according to different points of view.
I wish to divert the suggestion that the Liberal Democrats are somehow being opportunistic in the motion. I see nothing wrong with a socialist or new Labour member being opposed--or committed--to the further development of the European Union. Similarly, I see nothing wrong with a Conservative who believes--or does not believe--that we should go further into the European Community. That is a perfectly legitimate
Column 727debate, and it should be let out of the constraints that it is currently under, because it is doing, and will do, the country considerable damage.
Mr. Forman: Is the hon. Gentleman implying that he and his party would strongly support and seek to deliver a genuinely free vote if some of the great issues of principle were to come before the House of Commons?
Mr. Bruce: We, as a party, have a free vote and we do not have the same constraints of the Whips system. On the particular point about the referendum, my hon. Friend the Member for Ross, Cromarty and Skye (Mr. Kennedy) stated our belief that it is in Britain's interests to help shape further integration within Europe, and we must be a part of that. We wish to have a referendum, and we would campaign to persuade people to say yes. Our objective would be to win. If we lost, however, having secured the principle of the consent of the people for a referendum, we clearly could not be seen to reject it, despite it being our party's intention. I hope that that is a clear answer to the hon. Gentleman. We mean what we say.
There should be genuine consultation, and we should listen to people. That is where the right hon. Member for Worthing (Sir T. Higgins) got into some difficulty. He argued the case for a representative Member of Parliament as if there was no such thing as party discipline and the Whips system. It is exactly because of that discipline that the Government are in such a mess.
Mr. Bruce: We are suggesting that there should be a referendum to present to the British people the significant constitutional changes, if they are agreed by the IGC, on the basis of whether they support the changes and Britain's involvement--yes or no. To go to the people in those circumstances and then to suggest that Parliament should disregard the result would be a hopelessly cynical exercise, and we would not propose it on that basis. We accept that we would abide by the decision.
Mr. Duncan Smith: The hon. Gentleman has been talking about the principle of referendums somehow deciding the great issues without all of the divisions which we have, and I take his point. I cannot quite understand how that runs with his party's motion, because the reference to "substantial alteration" is a key problem. We would have to have a big debate before we got anywhere near a referendum about what is substantial and what is not. Should not there be a tighter definition, such as "any alteration, change or decision"?
Mr. Bruce: The issues that we are discussing, such as monetary union, share much common ground. They are significant--the changes and the mechanisms that would be required to make a single currency work are, by any definition, significant. Significant changes are to be made and it would be up to the House to determine them. In our parliamentary democracy, if we are to introduce the doctrine of referendums, short of having a written constitution and many other reforms--which I may
Column 728support, but which we shall not see between now and next year--all that can be determined is that the issue should be determined in the House and put to the people.
Mr. Bruce: I am sorry, but I should like to make progress. We are discussing significant changes that have constitutional implications, which is where the Prime Minister has got himself into some degree of contradiction and confusion.
I shall put the fundamental economic issue into context--it sometimes goes by default, but it seems worth stressing. Since 1972, this country's trade with Europe has expanded dramatically. Exports to the other member states of the European Union increased between 1972 and 1993 from 33 per cent. of our total to 53 per cent. and, at the same time--
Mr. Bruce: No, I have already given way to the hon. Gentleman. At the same time, our imports have increased from 36 per cent. to 50 per cent. Our trade has expanded substantially and has moved slightly favourably. Those are significant figures.
The City of London clearly has an important role within Europe, and the impact of the development of a single currency will have considerable implications for the City of London. One of those implications has not been widely discussed. There is some debate on whether the development of a single currency would weaken the role of the City of London as a major international financial centre and whether Britain's participation in that would have a significant effect.
We have already sold the pass to some extent because we fought so hard for what the Prime Minister is so proud of, but many of us are ashamed of--his opt-out clause on monetary union. The Prime Minister has effectively ensured that Frankfurt has the opportunity to become the headquarters of any European central bank, should a single currency be decided on. That was not the likely outcome when the debate started three or four years ago.
I can speak with some small degree of authority as a member of the Select Committee on Trade and Industry. When we visited the financial centres of Europe to discuss the implications of the single market on financial markets and financial institutions we were told by numerous people in Frankfurt--including senior officials in the Deutsche bank--that the right place for the central bank for a single European currency was the City of London. We know that they have, to some extent, acted in accordance with that judgment.
Those in Frankfurt expected the British Government to fight for that and did not expect any of the other member states seriously to object to it. They said that if we were foolish enough to suggest that we were not willing to fight for that or did not regard it as a major pitch, they would be more than delighted to take the opportunity presented to them. That is exactly what has happened and what the British Government have done. The Government have already seriously damaged Britain's financial interests and the City of London's role.
Column 729The next stage that one must consider is that, if there were a single currency involving the major economies of Europe--with Britain exercising its right to opt out of that single currency--that might lead to, not necessarily the shift of influence from the City of London to Frankfurt, but the fragmentation of London's role as a market across several European financial centres. That would be to the severe detriment, not just of London, but Europe as a whole.
Mr. Bruce: The hon. Gentleman should allow me to complete my speech. I am not suggesting that there are no issues to be addressed. Nor did I claim to be speaking on behalf of the City of London; I was simply describing what I saw and heard, and the implications that it seemed legitimate to draw from that.
The other factor that arises out of our role as a trading nation is the benefit that a single currency could bring in a number of specific ways, one or two of which have already been mentioned. First, it would contribute to the reduction of transaction costs. I know that some people will say that that is not a significant factor for large companies, which are able, one way or another, to reduce costs by speculating on the markets to hedge their bets. They would be less able to do that if there were fewer markets in which to speculate. However, it has been estimated that the overall transaction costs of trade within the European Union is 0.4 per cent. of gross domestic product--not much short of the entire cost of the common agricultural policy. To suggest that that is not significant and to shrug off 0.4 per cent. of the largest market in the world is to forget that small percentages in European terms are large sums of money. We must ensure that we take advantage of them.
There is a much bigger advantage to be gained from the possible efficiency of a single currency: the dynamic that it creates in terms of encouraging trade, increasing trade efficiency and strengthening Europe's competitive edge over its trading partners across the world. It is estimated that that is possibly worth 10 to 15 per cent. of our GDP across Europe. It would be phenomenal if the truth turned out to be even a fraction of that.
Another factor that is forgotten when one talks about small transaction costs for large businesses is the large proportion of transaction costs for small businesses that are trying to export. In the House during debates on trade we continually bemoan the lack of performance, particularly by many of our smaller companies. There is no doubt that the uncertainty of exchange rates and the cost of exchanging is a deterrent for a small business that does not have the resources to absorb that risk and that operates on tight margins. The benefit to trade for small business is much greater than it is for big businesses which, in itself, is something that we should consider.
Mr. Dykes: Against that background, and without wishing to be unpatriotic, it is sobering to reflect that the pound sterling has lost 90 per cent. of its value against the deutschmark since the war. We would avoid those weaknesses in the future if there were still weaknesses in the British economy. Does the hon. Gentleman agree that one of the great advantages would be for consumers? We
Column 730talk about the elite, a central bank and the City of London, but it would be a great advantage for consumers to be able to tell immediately the price of consumer durables, services, products or goods--
I am sorry if my intervention is longer than I intended. It would be a great advantage for the consumer in any city, village or town in the European Union to be able to tell the price of a service or product.