House of Commons Hansard Debates for 13 Feb 1995

Mr. Bruce: The hon. Gentleman is right. It is not just a matter of improving consumer performance. It would increase the dynamics of the marketplace. People will know the price and what it means. It will enable them to make rational economic decisions. Many of the arguments advanced against the single market are irrational or conveniently ignore the benefits that can be perceived by anybody who travels, not just abroad, but even around these islands. We can go to Scotland and use Scottish notes, to Ireland and use Irish notes. People understand the face value, which enables them to understand the transactions.

Mr. Marlow: Will the hon. Gentleman give way?

Mr. Bruce: No; I shall make a little more progress.

I shall return to some of those economic factors, but it is important that one takes on board the issue that I believe that the British people would be willing and able to tackle if they were given the chance to do so, and were treated in the responsible manner in which they are entitled to be treated.

People sometimes speak about sovereignty as though it were an absolute quality, a bit like virginity, which you can give once and never have again. It is nothing of the kind. It is something that every one of us, as individuals, in personal terms, compromises every day, because that is what life is about. It is about how one subordinates one's individuality. Even to have a conversation with someone, by definition, is a compromise: if one does not stop talking, one will never hear the reply, so there is no conversation.

Mr. Menzies Campbell: That happens in the House, too.

Mr. Bruce: My hon. Friend is perfectly right. One does not have to be a Member of the House for long to know that that is one of its major weaknesses.

Mr. Spearing: The hon. Gentleman is repeating an old saw, because obviously, in common life, one has to maintain a compromise, but we are discussing legislation. Does he agree that it would be illegal, and out of kilter with the treaties, for the House, or anyone, to propose any law that was contrary to the legislation and the requirements of the treaties, as they now are, and as they will be in future? Is not that a loss of sovereignty?

Mr. Bruce: Of course it is a loss of sovereignty, and we have already had an example of it in the House with the Merchant Shipping Act 1988, which is the first British Act of Parliament that was declared illegal because it contravened our treaty obligations under the treaties of Rome and Paris. However, it is a question of what one

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receives in return for that loss of sovereignty. It is not a matter of-- [Interruption.] The heckling from behind me completely misses the point that there is obviously no point in diluting one's sovereignty for no purpose, but where there is a purpose, where there is a benefit, where it enlarges and enriches in every sense--

Mr. Spearing: It is only speculation.

Mr. Bruce: We have been in the Common Market and in the Union for more than 20 years, and it is not speculation to say that we have achieved benefits. It may be a matter of opinion; one can quote some objective facts as well, and I did, but the hon. Gentleman did not choose to take account of them.

The reality, nevertheless, is that it is not an absolute matter; it is a matter of the balance and the judgment of the benefit that one obtains from sharing one's sovereignty with people with whom one has twice been to war in living memory. It is not unimportant to keep sight of that fact.

I often say to people who express a xenophobia, sometimes in disturbingly racist terms, saying that they do not wish to be kicked around by the Germans or the French and so on, that the Germans, the French and all the other member states of Europe will be there whatever we do. They will not go away. They have been there longer than we have. Most of us came from there, originally, or via that route--there was no other way to get to this country.

Given that that is the case, we need to appreciate that we have the opportunity to participate in institutions whereby we can influence what they do and ensure that they take some account of our interests. When we did not have those institutions, we finished up fighting one another into the ground on the bloodstained battlefields of Europe. Many of us regard that as well worth avoiding, and we should therefore aspire to play a much more positive role in those institutions.

The Prime Minister has got himself into a complete bind. I find it interesting that the obvious line from Conservative central office is that, if one is unfortunate enough to speak for the Government in some capacity on the issue, and one finds a microphone before one's nose or a camera in front of one's face, one should say, "I am totally in support of the Prime Minister's speech." There is no comprehensive coherence in the speech, and indeed the Minister who replied to the debate had some considerable difficulty proving otherwise.

Let us take the simplest argument. The Prime Minister said that Britain's position should be at the heart of Europe. That was his starting point, but he has now said that there is, in the context of the intergovernmental conference, no need to be concerned about any implications of constitutional change, and therefore no need for a referendum, because there will be no constitutional change as a result of the IGC. He will not accept it. No one believes a word of that, not least the Prime Minister.

We know one of two things. The Prime Minister will either capitulate on things such as the single currency, which he has opted out of helping to shape, which Britain should be at the centre of shaping, or he will try to use a veto, which will result in other member states saying, "We

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will not allow one member who has not taken part in the process to hold us back", and we shall simply be pushed to the sidelines. We shall suffer either from the consequences of a single currency from which we are excluded, the consequences of which will nevertheless affect us, or from having to sign up for it, having opted out of shaping it.

It is a matter of concern, not just to the United Kingdom, but to the whole of Europe, that the country that has the major financial centre in Europe, and which has a great deal to contribute to the operation of a single currency, including legitimate reservations about timing and adjustments that need to be taken into account, should be marginalised. It is not in our interest or Europe's interest.

It is high time that the Government recognised that it is our duty, never mind in our national interest, to be in there, trying to ensure that the shape of a single currency is one that takes clear understanding of Britain's knowledge, expertise and, yes, national interests. All those things are relevant to the other member states. If, some time in the near future, there is agreement among the French, the Germans, the Benelux countries, possibly Sweden and perhaps one or two other countries, that they will have a single currency, whether that agreement occurs in 1997-- which I think is unrealistic, and I am not sure that anyone seriously accepts that we shall be in that position then--or 1999 or 2001, the question then arises: will Britain opt in or opt out?

Those people who say that we need not sign up to a decision now have an obligation to tell us what options they envisage. If they believe that there is a realistic possibility of our saying that Britain will not be part of that European monetary union--because we want to take the decision to be outside it--we need an explanation of the way in which the City of London will develop, the way in which Britain's trade will develop, the way in which investment will develop, the way in which it will positively benefit the British economy and the alternative arrangements that we can or will make. Those people also need to explain how we shall benefit from losing out on the advantages that a single currency is designed to bring. Several assertions have been made-- for example, that it should help to benefit us in the cause of keeping inflation and interest rates down. I noticed some scepticism among the sceptics about the relevance of that.

Let us first note that although inflation in Britain may be relatively low at the moment, hardly anyone believes that it is under control. The figures that were issued today demonstrate that the upward pressure on inflation is becoming not insignificant. Three and a half per cent. is the underlying rate of inflation, which we expect to come through with substantial additional upward pressure in the system. In those circumstances, Ministers who give the impression that a miracle has happened and inflation is under control because we have managed to keep it low for a couple of years, should read the speeches of previous Conservative Chancellors of the Exchequer who have claimed economic miracles that did not last even until the following election.

We can all benefit from a single currency. Interest rates in this country have been historically, on average, 1.5 per cent. greater than those in Germany. If there is a single

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currency, there is a fair chance that interest rates will be lower in Germany and lower still, relatively speaking, here.

That is one of the advantages of a single currency. One reduces the pressure for speculation and consequently one does not need to have such high interest rates to maintain currency stability. The once-proud claim that Britain never devalued under a Conservative Government is no longer sustainable. Britain has secured the current recovery entirely on the back of a 15 per cent. devaluation of our currency. As a result of that devaluation, and the fact that we have no membership of any external arrangement at the moment, many people realise that the pressure on our currency is such that we are forced to maintain higher interest rates than would otherwise be the case. There are therefore real benefits of being part of a single currency.

I wish to comment on the economic implications of the comments of the hon. Member for Bexhill and Battle (Mr. Wardle), who, according to what I saw on the media at the weekend, implied that immigration policy was such that 15 million people were waiting to come into this country because we had ineffective immigration controls.

There is no question of the European Union's external immigration controls being lifted, but there is a desire to ensure genuine mobility of people and capital to effect the proper working of the single market. The hon. Member for Bexhill and Battle is deluded if he thinks that free movement in Europe will see people queueing to enter a Britain which has opted out of the single currency and the social chapter. I think it is much more likely that, if they can speak French or German, they will queue in Dover to cross the channel to reap the benefits of opting in. It is a preposterous argument.

Mr. Spearing: What about a referendum?

Mr. Bruce: I am confident that the British people will respond to the arguments in favour of a positive vision of Britain in Europe if they are presented in a grown-up and intelligent manner. At the moment, those arguments are not being presented with any leadership or vision. Our fundamental national interests are being sold down the river by a Government who are led by a Prime Minister with no vision--he is interested only in whether he will make it through the week. He is not willing to risk anything within his party--even if it means putting the nation's interests in second place. That disappoints and depresses me and the Liberal Democrats.

I have taken part in a great many debates in the House and it is not often that I see so much real debate about an issue which people clearly feel strongly about. Hon. Members have had the opportunity to express their views honestly with the gloves off. We should take the issue to the people, rather than conduct a rarefied debate which offers them a confused diet of misinformation, half-truths and misrepresentation.

A simple majority in the House can be achieved by winning a minority of the popular vote in circumstances where there has been no adequate consultation following a general election that has been fought on the basis of dozens of issues. The Liberal Democrats believe that a referendum is the only way to ensure that the issue is addressed in an adult fashion which gives everyone an opportunity to have their say.

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After proper debate, the British people will recognise that they are in Europe, that they want to be in Europe and that they would like their Government to play a much more positive role. Of course, we must fight to defend our interests in the same way as other countries do. But we will not do that by opting out, by letting others make the rules and then signing up afterwards to what they have shaped. That is not sensible democracy, diplomacy or politics, and it is a disaster for Britain's economic policy. That is why I commend the motion to the House.

7.52 pm

Sir Teddy Taylor (Southend, East): Although the hon. Member for Gordon (Mr. Bruce) is obviously living in daydream land, I will not reply to all the issues that he raised. Hon. Members' speeches tonight have been far too long and I will try to speak for only a few minutes.

If the hon. Gentleman sincerely believes that inflation and interest rates will suddenly decrease if we adopt a single currency, I ask him to read the speech by the Governor of the Bank of England. If we agree to convergence, there will be a flow of capital and it will cost a great deal of money. Once we have secured that magical convergence by dropping pound notes all over the place, how on earth will we maintain convergence? That will be very difficult. On immigration, I hope that the hon. Gentleman will wake up to reality; he must know the facts about the events in Brussels this afternoon. It is not simply a question of whether the residents of Germany and France will come to Britain; the problem is that, under Brussels's plans, if people gain access to Europe they will gain access to Britain also. People who wish to maintain good relations within the Union are concerned about that fact. I will not take up the time of the House debating it now, but I hope that the hon. Gentleman will wake up and read the speech by the Governor of the Bank of England, who knows something about the matter.

The Liberal Democrats have done us a service in enabling us to debate the referendum issue tonight. Although the motion is not terribly significant because it obviously does not cover the issue of a single currency, which was in the Maastricht treaty, and although it is unlikely that any progress will be made at the next conference, we are talking about a significant issue of principle.

It is a sad day for democracy when both the major parties issue a one-line Whip. Those conscientious Members of Parliament who are present know that a one-line Whip does not constitute a free vote; basically, it means a day off. Hon. Members are told, "Please don't come and talk about the issue, just go away." It is sickening that both the major parties have decided to apply a one-line Whip to an issue of this magnitude and significance.

I do not wish to politicise the issue, but it is scandalous that the Labour party decided, before the motion was even published, that its members did not need to attend for the debate. I do not wish to single out Labour Members. It is shocking and disgraceful that hon. Members are dragged here on three-line Whips to debate matters which are of no great significance, yet there is a desire that they should not debate a referendum over Europe.

I was pleased to have a cup of coffee with three Conservative Members of Parliament this morning. I asked what we should do about the Euro-issue and they

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answered, "Please stop talking." That is a dangerous attitude. Unless we think about the problem, talk about it and seek some solutions, we will not make any progress. Ministers are not dishonest, but both Labour and Conservative Front-Bench spokespeople become trapped and the public are deliberately misled. They become very angry when they discover that has occurred.

During the debate on the Single European Act, Ministers assured me time and again--I am sure in all sincerity--that everything would be all right. The news from Brussels this afternoon is that plans to ban all passport controls in European Union countries, including Britain, will be tabled by the Brussels Commission later this year. If we object to those plans, we will go to court and Ministers know that our chances of winning are very slim.

This is not an issue of little significance. We are talking about the removal of border controls which will apply not only to all residents of the EC, but to all people who visit the EC and to all of those who enter the EC at some time. I believe that, through no fault of their own, people have been misled about that issue.

They have also been misled over a single currency. There is great debate in the Conservative party which I am sure will result in a referendum on a single currency. A decision about a single currency will have the same significance as deciding whether to keep a Scottish £1 note. By that time, convergence will have taken place and we will be linked to the European currency. We will have to decide whether to have a coin bearing the Queen's head, or an ecu. The people have been misled time and again over agricultural policy. The Euro-enthusiasts--there are even one or two in the Labour party--have told us that the policy will be reformed. However, it gets worse all the time. Hon. Members will be aware that the budget this year will exceed the legal expenditure limits. People have been misled and they are very angry. We should all be concerned about certain tension points in society. People are concerned about corruption. The structure in Europe is riddled with corruption, waste and mismanagement. However, all we do is set up new Departments, organisations and consultancies. The people are helpless to do anything about that situation and that makes them very angry. The structure of the European institutions and policies invites fraud and corruption. We should be concerned about what is happening to Britain's poor. We often argue about who is to blame for poor people getting poorer. EC policies have a devastating effect on the poor. Hon. Members must recognise that value added tax is a tax on the poor.

Mr. Malcolm Bruce: The hon. Gentleman should not blame me.

Sir Teddy Taylor: I do blame him. I blame all hon. Members who voted for a system that does not allow VAT to be reduced. The hon. Gentleman is an expert on Europe and must know what is meant by the amended 6th directive and what we shall be obliged to do. We should worry also about young people. Hon. Members should go around the country and hear what they are saying. The people who are agitated about the

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EU are not the elderly but the young. The effect on our democracy should also cause concern. The public are growing terribly angry because there is nothing that they can do. This appalling paper, the Evening Standard , published an article today headed

"The law, not the mob, must prevail".

In it, the Home Secretary says that people should protest properly and legally, not break any laws, because that is our long-standing tradition. It was a long-standing tradition for people to protest and for something to be done.

Recently in Coventry, the funeral was held of the young lady crushed to death by a lorry because she wanted to protest against the export of live animals. Some people think that such protesters are silly, but they are not. They feel passionately, but there is nothing that they can achieve through the democratic system. They can write to their Members of Parliament--whether or not they are Liberal Democrats--about something that they think is important, but nothing can be done. Wait until 1 January 1996, when there will be terrible problems in the fishing industry. British fishermen are desperately angry, because everyone else seems to be breaking the law. There is also the issue of the different European courts--not just the Common Market court but the human rights court. The House should appreciate that the public are made angry that poll tax protesters who were sent to prison are to receive massive compensation. What are the thoughts of people who struggled to pay their tax? What about the drug dealers who are using technical points of law to argue retrospective action and then receive compensation?

Mr. Quentin Davies (Stamford and Spalding): Does my hon. Friend concede that the European Court of Human Rights has nothing to do with the European Union, which is the subject of this debate? We acceded to it in 1950, long before the European Community was ever thought of, and presumably we could resile from it now if we wished, without compromising our membership of the European Union. It is a complete red herring to introduce the European Court of Human Rights in a debate on the EU.

Sir Teddy Taylor: If my hon. Friend reads Hansard , he will find that I mentioned the Common Market court--the European Court of Justice-- and the European Court of Human Rights. My hon. Friend's remark does not help. If he walks through the streets of his constituency and talks to people, he will find that they are angry at the decisions of the European Court of Justice and of the European Court of Human Rights.

Let us take the other court. How do my hon. Friend's constituents feel when they discover that female Army officers who became pregnant are to receive substantial compensation, while female officers who decided against having children and suffered consequential distress--or who even had abortions and suffered psychological damage--are to receive nothing? My hon. Friend tends to make flippant remarks. He should wake up to the fact that the public are annoyed. When democracy is abolished, the same always happens--things happen in a rush, and that makes people angry.

The answer is a referendum. It is desperately important to give the public the chance to express their views on how to proceed. The tragedy is that almost everything has

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gone. Present policies are creating misery and substantial unemployment. Seeking public opinion is also important for the Conservative party, with which I used to be associated, which now forms the Government.

The Prime Minister is a decent, respectable and honourable person, but he has been placed in an impossible position. He has people banging and screaming at him from both sides. It is difficult to move without upsetting someone, making them angry or being asked silly questions. What can the Prime Minister do? If the public expressed their clear and concise view in a referendum, that would give the Prime Minister the authority to sort out the rebels on either side, and that would be the end of the internal debate.

The House should not think that that problem is only for the Conservative party. If Labour came to power, they would have exactly the same problems-- perhaps more. Although Conservative Members are able and colourful, Labour Members probably have more beliefs and are more passionate because of the way that they grew up. Therefore, a Labour Government would face greater problems. The divides are the same, but they care about people.

Today's debate is desperately important. We must wake up to the fact that there is a serious problem. The only way out is to give the people the chance to express their opinion on the question, "Do you want to carry on this way, or do you want to get out of it? Do you want a separate relationship, or do you want the EU developed as the Liberal Democrats would like?" Once that is done, the present debate will be over and the country can get on in a sensible and united way. The present division is damaging the Government and country, and greatly damaging our democracy.

8.5 pm

Mr. Austin Mitchell (Great Grimsby): It is a reflection of the state of public opinion that in today's debate, the Euro-enthusiasts are, broadly speaking, against a referendum, whereas the Euro-sceptics have argued passionately and strongly for one. The view advanced by the Euro- enthusiasts is that people are not worthy to make the fine, exalted judgments that those committed to Europe are qualified to make.

Mr. Malcolm Bruce: I did not suggest that.

Mr. Mitchell: The hon. Gentleman should not jeer yet because I wish to pay him a compliment.

The only consistency is to be found in the speech of the right hon. Member for Worthing (Sir T. Higgins), who opposes monetary union and a referendum- -which would be a means of blocking monetary union--and in the Liberal Democrat position. No party can be more enthusiastically, naively and foolishly pro-European. The Liberal Democrats are prepared to prostrate themselves before Europe as though it were a branch of the international Scout movement, yet they support a referendum. It does them credit, to say that the people must be consulted. Criticisms of the Liberal Democrat position are unfair, and I commend that party for tabling its motion and giving the House the opportunity to debate it.

I am in favour of a referendum, as the motion says. As honesty is the name of the game, I admit to taking that position partly because I believe that a referendum would defeat those aspects of progress towards European union

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to which I object. That apart, I still strongly support a referendum, not on every policy issue--which has been held out--but on basic constitutional issues, such as whether we should change to proportional representation, regional government, or Scottish and Welsh devolution. People have a right to a say on such issues, particularly on whether sovereignty--which sounds a technical word but means the people's ability to control the Government and make them accountable-- should be dismantled, shipped to Europe and abandoned. The people must be consulted on such a basic issue. We cannot give sovereignty away on their behalf.

All parties--even the Liberals--are split on Europe. It is childish and silly to pretend that we are united, and on that basis to push European matters through the House on the back of a three-line Whip. When the parties are disunited, a referendum is the only way of deciding. It is illegitimate to push through such proposals on a three-line Whip--using the discipline of the Whips, the lure of career, the quiet word that it will not enhance an hon. Members parliamentary career prospects to vote against the party line, and other covert means to secure a majority for Europe. We all know that such tactics are deployed, and we know they are wrong. It is imperative to allow people to speak because the only way to clarify the issue is through them. It is not the power of Parliament versus the power of the people. The power of the party is being used in a three-line Whip and that is illegitimate.

The sovereignty which we are being asked to give away is not ours to give; it belongs to the people not to us. Indeed, had the people been consulted right at the start of the whole venture on entry into Europe, when the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) promised the whole-hearted consent of the British people, and had they been consulted over Maastricht, we would not have faced such difficulties, which have undermined our relationship with Europe from the beginning. Decisions have been imposed on the people without them being consulted, which has been corrupting. The people have been dragged along grumbling, reluctantly and unenthusiastically behind the elite--the elite have constantly said that Europe was good for them--without getting their consent.

Mr. Spearing: Does my hon. Friend agree that that relationship is also not good for those who advocate a partnership--as they call it--in the Union, because the people of Britain have not been given the chance to say yes? Does he recall that the former Prime Minister, the right hon. Member for Old Bexley and Sidcup, to whom my hon. Friend referred, said that we would negotiate--no more and no less? He went into negotiations and none of the three treaties involved has received a mandate from the Government who put them through.

Mr. Mitchell: I agree with my hon. Friend. It has been corrupting. It has been destructive of democracy, and destructive of commitment to the institutions of this country to misuse them in such a fashion. Membership has been defended and advocated on what amounts to a litany of lies, half- truths and distortions.

The problem is that Euro-enthusiasm--commitment to Europe--is an elite preoccupation, an elite disease in this country. The elite middle class-- [Laughter.] My hon. Friend the Member for Durham, North (Mr. Radice) may laugh, but he is one of the proponents of that point of view. The middle-class, cosmopolitan elite, which feels

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itself to be European and international, has a vague contempt for the institutions and the people of the country, especially British industry and its workers who have never been quite good enough. The elite are well-off and in cushioned, insulated jobs so that they do not feel the same threats to jobs or food prices as do the people.

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

Mr. Mitchell: I welcome an elite point of view.

Mr. Radice: How does my hon. Friend square his view with the fact that the British trade union movement is in favour of being in the European Union and, indeed, in favour of Maastricht?

Mr. Mitchell: I said that it was an elite preoccupation. The leadership has been persuaded that doors will be open to them in Brussels which are closed in Downing street, and they have been persuaded, especially by the visit of Jacques Delors to their conference, that they may advance their cause through Europe. However, that enthusiasm is not felt by the mass of trade union members, which bears out my point.

This elite disease is highly infectious. It has infected large sections of the media. Europe is the lingua franca, one might say, of the media, especially among the pundits. They like a nice, distant position--say, Brussels--from which they can be contemptuous because it gives them a degree of distance from Britain.

Such an elite is characteristic, too, of political parties. The higher one goes up to the leadership of both main parties, the greater the degree of Euro-enthusiasm. It is stronger in the Cabinet than it is in the 1922 Committee. It is stronger in the 1922 Committee than it is in the rank and file Tory associations. However, the same is true of the Labour party. The further one goes down the pyramid, the lower the flame of the Euro- enthusiast candle burns and the more people know the consequences and the damage that is being done by the European institution and the more they feel resentful about not having been consulted about it.

That is why there is a constant need to deceive and trick people with a litany of lies into believing that damage is success; that failure is triumph; that we are getting our way in Europe; that the institution, which is so good for the elite, is also good for the people. We are told that we must be in there to shape the institution. We have been trying to reshape the common agricultural policy for 20 or 30 years, and what shape is it in now? We spend more money on it now than ever before. We are told that we cannot be left behind in Europe--the argument of the educationally subnormal lemming. We are told that we must be there in the rush over the cliff of monetary union.

We are told through an argument of fear and manipulation that if we do not go along, we shall be on our own and left out. What a terrifying vision of having to decide things for ourselves and not being able to run with the mob. We are told that we shall lose out--after all the damage that this institution has done so far. Given such arguments and the litany of lies and deceit, it is sad, indeed, barmy that the Labour party has not supported the Liberal Democrat motion on a three-line Whip because we could have defeated the Government and we could have supported the people. The argument is

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right in principle. We should not now appear cool on a referendum. My hon. Friend the Member for Gateshead, East (Ms Quin) mentioned a referendum or an election. An election is no substitute for a referendum on such an issue. In an election, a hundred issues or more are considered and it could never be focused on a single issue such as monetary union.

Since the instruments to improve the economy will be taken away from us, the Labour party especially should ask the people's opinion on monetary union before we agree to it in principle. I am happy that the Labour party is moving crabwise towards a referendum. It is right that we should do so. We will get there, but we could have got there a lot quicker if we had supported the motion.

A referendum on monetary union, is especially important because the monetary union argument is being urged forward as a way in which to build European unity without the consent of the people. This drive in Europe to build a stronger, central set of institutions is not legitimate, but inevitably comes from the bureaucracy and the people in power at the centre. They want to see the centre strengthened. However, most of the paths towards that unity are blocked. They cannot go down the path of getting the consent of the people, because in a referendum or in any other means of attaining consent, the people would refuse to give it. Indeed, the people came very close to refusing it in Denmark and France, where the yes and no votes were within two percentage points of each other. If the question did not receive the whole-hearted consent of the people, it could not therefore be put to them. Unity cannot be achieved by agreements among Governments because that builds a camel, rather like the European Union we have under Maastricht. We shall never achieve agreement among Governments on some effective democratic federal institution with a powerful centre.

Therefore, the democratic roads to union are closed to those aspiring to union. The only path left open is to try to build union through monetary union, which builds union from the top down; through economic forces without the consent of the people. It builds union in a way that no other set of nations have ever done before. Normally, nations achieve political union before monetary union. Monetary union is impossible--effectively-- without political union.

If we go down the path that Europe wants, we shall be imposing on the back of monetary union a central bank to operate the finances, a Committee of Ministers at the centre to manage the economic policies and there will have to be one economic policy and one interest rate. What is more, monetary union breaks the mainspring of a national economy on which the nation rests. It builds union

covertly--secretly--without the consent of the people. That is the agenda which is now at issue.

In this situation it is essential that people be consulted, because although the elite may find the damaging economic consequences tolerable-- because they are testimony to our enthusiasm for Europe: a step towards unity--and they are prepared to put up with them, the people, on whom the sacrifices and the economic dislocation will fall, must be allowed to give their consent first.

There is no way of building monetary union which is not damaging to the mass of the people, especially in this country. It is rather like the state of perfect virtue--we are all in favour of it, it sounds very nice, especially with

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regular brushing of teeth, motherhood and apple pie. But how do we get to the reign of perfect virtue? The same applies to monetary union: the process of getting there is so damaging that it rules out any benefits to be had from it.

The only way to achieve monetary union is to cross the exchange rate mechanism bridge, which means putting the nation's head back into the furnace which lost us 1.2 million jobs, most of them in manufacturing. That took place in the period after that tough, dynamic, abrasive Prime Minister of ours forced that poor, weak, wilting woman, his predecessor, into the ERM, consequently inflicting so much damage on the people of Britain.

Either we return to the ERM, which involves a gradual and irrevocable linking of currencies; or we attempt to go to monetary union overnight. If we do the latter, the stronger economies will inevitably rip apart the weaker ones. That was what happened in east Germany--although, heaven knows, it had the benefit of enormous aid from the west. Germany wanted to destroy east Germany's economic system the better to absorb it into that of dominant west Germany. These, then, are the choices: long-term ERM anorexia or instant east Germany. They are the only two ways of reaching monetary union. May we impose either alternative on the British people? Do we not have an obligation to tell them what is likely to happen--in my view, what is certain to eventuate--and to ask them whether they want it? The British people already have experience of the ERM. The elite Euro-enthusiasts remained enthusiastic about the exchange rate mechanism right to the bitter end--right to the day when George Soros, who has done more good for the people of this country and for its economy than the past three Chancellors combined, forced us out of the ERM in such humiliating circumstances.

People have also seen the benefits that have attended our being forced out. If they looked at Italy, they could see even more such benefits. The Italian economy has done much better than ours. Not only was its devaluation greater, but the Italians had the astute idea of destroying confidence and devaluing the lire still further by sending so many of their politicians to gaol. I commend that idea to the Prime Minister; his party looks as though it needs the same treatment in some respects.

In any case, the consequences for Italy of leaving the exchange rate mechanism and devaluing were that it has been able to turn a hefty balance of payments deficit into a massive balance of payments surplus in just over two years. Fiat is now in profit, and Italian manufacturing and exports are doing well.

Mr. Fabricant: I have some sympathy with the hon. Gentleman's argument, but surely he is not suggesting that devaluation is the panacea-- or is Labour party policy still the same as it was in the 1970s?

Mr. Mitchell: I am saying that one cannot make the maintenance of an externally determined exchange rate the be-all and end-all of economic policy in a democracy. To do so, one must sacrifice every other instrument of management to maintain the exchange rate at a particular level. That applies whether a country enters with its currency overvalued or at a competitive rate, because circumstances change and exchange rates have to change with them; if they do not, they strangle the economy.

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The fact that our exchange rate was so overvalued and maintained by high interest rates for so long crucified British manufacturing industry, which recovered only when the process was stopped. The Euro-enthusiasts did not tell us that that would happen. They complained when it did, but until it did, they--particularly the Liberals-- urged us to move to the narrower bands. I remember the right hon. Member for Berwick-upon-Tweed (Mr. Beith) leading huge mobs up and down Whitehall shouting, "Narrower bands now." The popular response was immense.

I shall conclude soon, Mr. Deputy Speaker, as I can tell from the way that you are leaning forward how passionately interested you are in what I am saying.

Monetary union may never happen. The European Union may have enough sense to avoid it, but if it does happen we shall hear the usual bleat from our Euro-enthusiasts, "We can't be left behind; we must be in there to shape this monstrosity."

That is the prospectus of what we might give away, which is why the people must be consulted. In monetary union, we would give away our ability to run our economy in our own way for the purposes of our people--not for the purposes of the wealthy or of the central bankers with their mystique of stable prices, which exist only in graveyards. It is for our people that we have to retain the ability to control our interest rates, exchange rates, money supply, borrowing and public sector deficit or surplus. The only way we can manage the economy for our people is by having a Government who are accountable to them and whom they feel they can throw out.

The ultimate argument for this motion tonight is that the House must consider what the people want. The people are fed up with being deceived and bamboozled and with not being consulted. They are fed up with having Europe imposed on them willy-nilly. They have shown at the polls that they want to vote on and be consulted about this issue. I ask the House to think of the alienation that will result if, once again, we impose on them the panacea of Euro-medicine--higher unemployment, more massive deflation and so on. The people tell the pollsters repeatedly that they want to be consulted. We in this House cannot take a decision, split and divided over Europe as the parties are. Let the people speak.

8.27 pm

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