House of Commons Hansard Debates for 1 Mar 1995

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prey to the vagaries of currency speculation. There are undoubted advantages in avoiding that through fixing exchange rates. Monetary union would impose major restrictions upon the use of macro-economic policy instruments. Without offsetting policies, that would give rise to increasing unemployment in less competitive regions. With monetary union, each country ceases to be able to change the price of its currency and has less control over its monetary policy. With monetary union, a worsening in a member country's competitive position inexorably gives rise to growing unemployment unless there are offsetting interventionist policies. Within existing "nation state" monetary unions there is substantial Government intervention, such as active regional and industrial programmes and redistributive budgets. Such intervention helps to offset the impact on weaker regions of the fact that they cannot price themselves back into competitiveness by devaluing their "currency" since those regions do not have a currency of their own. Intervention may be passive, through benefit payments from the centre offsetting lost income, or positive, through regional aid provision. Effectively, what happens through that process is a redistribution of income from more to less prosperous regions.

National Governments typically appropriate and spend about 40 per cent. of national income to enable redistribution of income to poorer citizens and regions to take place. The equivalent European Union budget is just over 1 per cent. of EU countries' national incomes. Of course, the remaining national state budgets mean that a literal comparison stressing the 40:1 ratio of national to European budgets is not valid. But even taking account of that fact, the authoritative 1977 MacDougall study recommended a budget of 5 to 7 per cent. at a European level.

The Governor of the Bank of England, Eddie George, pointed out in his speech last month that fiscal transfers from west to east Germany after the monetary union that followed reunification amounted to 4 per cent. of all German GDP. That represents the equivalent of a budget three times the present European one.

The implications seem clear to me. Monetary union should be supported only if there is a much larger centralised European budget--perhaps four times its present size--and/or other automatic redistributive mechanisms, as well as highly interventionist regional and industrial policies.

However, it is not desirable to shift member states' resources to the central European Union level without its thorough

democratisation. That means much greater power for the European Parliament over the Commission and the Council of Ministers and also, crucially, over the European central bank. The policy, legally enshrined in the Maastricht treaty, of a European bank independent of democratic control and dedicated almost exclusively to price stability must be reversed at the next IGC. It is economically disastrous and politically dangerous.

Putting monetary integration first is putting the cart before the horse. For managed exchange rates and, ultimately, monetary union to be feasible, let alone desirable, requires convergence in the real economies of member states. As my right hon. Friend the Leader of the Opposition and the shadow spokesman on foreign affairs, my hon. Friend the Member for Livingston (Mr. Cook)

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said, we do not want convergence in the rate of inflation and in interest rates alone. That would be unsatisfactory and unacceptable. The right-wing monetarist policy of convergence by recession and by squeezing out demand should be totally rejected.

Monetary union can proceed only on the basis of real convergence in growth, balance of trade and employment levels. If it is argued that those criteria are utopian, it must be pointed out that they are no less so than monetary union pursued without them. Above all, without a much larger European Union budget, monetary union is not worth having. The prospect of raising member states' contributions to about four times their present level may not be practical politics, especially for us, because Britain is one of the largest net contributors.

Monetary union is also probably incompatible with enlargement. At present our taxpayers are subsidising the citizens of Ireland, Greece, Portugal and Spain as the main recipient countries--although I have no quarrel with that process. The three new members will be net contributors, but if enlargement includes Hungary, Poland and the Czech and Slovak Republics--indeed, the Prime Minister said that the EU could eventually include up to 25 nations-- there will be real problems in imposing monetary union, because of the large size of the European budget that will be necessary.

To survive and to succeed, Europe needs to break from its current monetarist trajectory and adopt the socialist themes of full employment, economic equity, democracy and decentralisation. To achieve those aims, we need a change of Government. The Tories have no credibility in Europe. Under the Conservative Government, Britain is acting like a death's head at the feast. The Tories' miserable stance of grudging mean-mindedness towards Europe means that we cannot influence the debate. To influence it, we must be part of the European family, and our partners must feel that we are part of it. That is the only way to shift European policy.

In conclusion, if we do not change our policy, monetary union may take place, even if only for some countries--but if it does, it will happen on the wrong terms and for the wrong reasons. As has happened consistently on Europe, Britain will be left outside until the multinationals, the unelected bankers and the deregulated financiers progressively corner us into joining a monetary union on their terms, rather than on terms that might favour our people.

Sir Patrick Cormack: On a point of order, Madam Deputy Speaker. Can you advise me whether the rules of the House have changed? Is one now allowed to read every word of a speech?

Madam Deputy Speaker (Dame Janet Fookes): Strictly not. The Chair is fairly tolerant, but perhaps I ought to restate the rule that, according to "Erskine May", it is not in order for Members, apart from Front Benchers, to read a speech, although recourse may be had to fairly copious notes.

Mr. Stuart Bell (Middlesbrough): On a point of order, Madam Deputy Speaker. As we have had one point of order, may I raise another? The Prime Minister said that our European election manifesto stated that we were against the veto. My hon. Friend the Member for Neath

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(Mr. Hain) has already mentioned that. [Hon. Members:-- "That is not a point of order."] It is a point of order, because I wish the Chair to get the Prime Minister to come to the House and withdraw that statement--

Madam Deputy Speaker: Order. I can deal with that now. It is not a point of order, because the Chair is not responsible for the content of speeches.

6.25 pm

Sir Norman Fowler (Sutton Coldfield): I should dearly like to follow what my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) said about the press in the latter part of his speech, but I shall not be drawn down that road, because the most extraordinary feature of the debate is the fact that the Labour party should have had the nerve to table such a motion and to call for leadership on Europe.

Had the motion been tabled by the Liberal Democrats I might have had some time for it, because at least they have been

consistent--consistently wrong, in my view, in pressing for a centralised Europe, but at least they have stuck to their guns. But who can take the Labour party seriously on Europe?

When I entered the House in 1970, Labour voted against going into the European Community, as my hon. Friend the Member for Staffordshire, South (Sir P. Cormack) will remember. In 1975, half the Labour Cabinet voted to come out and the other half voted to stay in. By 1981, the anti-European tide was running so strongly that most of the able figures in the Labour party left it to form their own party. In 1983, less than 12 years ago, Labour pledged that, if that party were elected, it would withdraw from the Community altogether. That is the leadership that Labour Members are talking about. If I led a party that had those credentials, I should go a bit easy on lecturing anyone on European policy.

Of course, the Labour party now tries to rationalise the issue. The smart- suited public relations men and women who now speak for the new Labour party say with a wink and a nudge that it is the older Labour Members who hold that view. "What can one expect of those poor old codgers?" they ask.

Mr. Thomas Graham (Renfrew, West and Inverclyde) rose --

Sir Norman Fowler: I mean no personal--

Mr. Graham rose --

Sir Norman Fowler: I shall not give way, but at least I have woken up the debate a bit after the speech by the hon. Member for Neath (Mr. Hain).

My right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) was absolutely correct about the Labour party. It was not only the older members who opposed our entry and said that we should come out of the European Community; the present Leader of the Opposition made a specific comment in his election manifesto in 1983, and I do not think the Labour party will be able to challenge this quotation:

"We'll negotiate withdrawal from the EEC which has drained our natural resources and destroyed jobs."

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The same message came from the hon. Member for Livingston (Mr. Cook), who now speaks for the Labour party on foreign affairs, and from the deputy leader of the Labour party, the right hon. Member for Kingston upon Hull, East (Mr. Prescott).

The very last set of people from whom I will take lectures on European policy are the members of the Labour party.

My right hon. Friend the Prime Minister was entirely right in saying that the debate today is about the kind of Europe we want. It is not about whether we are in or out of Europe, but about the kind of Europe that we want to fashion. Where does the Labour party stand after its debates on whether we should be in or out and the incredible political hokey cokey it has been doing in past years? It has ended by supporting a federal Europe, with more and more laws being made in Brussels.

The Labour party's support for the social chapter is a prime example of that. There is no clearer division between the parties than on that issue. This party wants decisions on labour regulations left to individual nation states, and preferably to individual companies. We believe that European- wide laws of the kind envisaged in Brussels will add to industrial costs and unemployment, and will make European companies less competitive around the world. That is why Conservative Members welcome so much the opt-out which was negotiated successfully by the Prime Minister. I cannot think of any Tory who supports Labour's attitudes in that area.

The Prime Minister was again right in saying that being at the centre of Europe does not necessarily mean agreeing with everything that comes out of Brussels. I do not agree with my right hon. Friend the Member for Old Bexley and Sidcup who said that at no stage have the Government sought to set out positive themes in Europe. One need only think of the single market and all that the Government did with regard to that to recognise that that is simply an untrue statement of the Government's position.

It would be a mistake--here I agree with the Leader of the Opposition--to believe that every issue of policy on Europe can be decided by the normal process of party politics, and I speak as someone who, in my time, was more party political than most. We must recognise that, on some issues, all political parties--certainly the Opposition parties--contain different views but that nevertheless there are profoundly important decisions to be taken.

In my view, a single currency is one of those decisions. It is also my view that, if and when that decision is required, it would be best reached by a public referendum. I very much welcome the fact that my right hon. Friend the Prime Minister has so clearly kept our options open on having a referendum. If I were Prime Minister, I would have reservations about promising a referendum on Europe; frequently, the case against a referendum is put by his opponents on the European issue.

For all that, it would be a profound mistake to reject the case for a referendum on the grounds of guilt by association. I cannot be the only person who supports our continued membership of the European Community while believing that an overwhelming case has now grown for giving the public an opportunity to vote. A single currency, and the single European bank which goes with it, raises obvious questions of the deepest political and economic differences. No party is at one on the issue, and

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the right hon. Member for Bethnal Green and Stepney (Mr. Shore) made that completely clear in terms of the Labour party. No party is at one, and no one knows in what circumstances a decision will be asked for.

A referendum would allow industry and business to put their views, and would also allow the public to decide. A recent BBC programme on the subject of a referendum showed that the arguments can be clearly presented. It is patronising to believe that the public cannot understand the argument on the subject.

In 1991, I committed the ultimate unsceptical act of defeating my hon. Friend the Member for Stafford (Mr. Cash) for the chairmanship of the Conservative party European committee. Let me make it clear that I am not prepared to change my position now that I have been liberated from officially explaining the Government's policy. I entirely support my right hon. Friend the Prime Minister's European policy, and he was entirely right to keep our options open on a single currency as an act of policy.

I would say to those on both Front Benches that I do not believe that it is remotely possible for the single currency issue to be settled in cross- party deals between Front-Bench Members at Westminster. It is an issue of such importance that it deserves to be settled after a campaign of public debate which a referendum would allow.

6.34 pm

Mr. Geoffrey Hoon (Ashfield): The Prime Minister today appeared to set out his commitment to a multi-speed and multi-layered Europe. He seemed to argue that that was both inevitable and possible to achieve. That may reflect the current state of thinking in the Conservative party, but we must ask ourselves whether it is realistic.

The assumption underlying the idea of a multi-speed Europe is that different countries will proceed at different speeds towards European integration in different subject areas. That seemed to be what the Prime Minister meant before the European elections last year, when he talked about Europe being

"multi-track, multi-speed, multi-layered".

He went on, however, to give the game away by saying:

"It is a Conservative idea in line with the mood of people everywhere".

I doubt whether that mood extends far beyond No. 10 Downing street, and I also doubt whether it commands widespread support among the deeply divided Conservative Back Benchers. It is an idea to paper over the present political cracks in the Conservative party on questions to do with Europe.

Why should I be so doubtful about that? Simply because, at Maastricht, the Conservative Government negotiated an opt-out for the UK in respect of both economic and political union, as well as in relation to the social chapter. It is necessary to look at the effects of that opt-out, specifically in relation to the social chapter, on the legal and constitutional coherence of the European Union.

The opt-out allows the other 14 member states to make laws by majority vote in respect of social chapter subjects; those laws are binding on every member state, with the exception of the United Kingdom. It will leave UK citizens in a different legal position on precisely the same facts from citizens of other member states. Those citizens

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might well be working on standard form contracts. Yet the European Court of Justice must try to resolve legal and constitutional issues against the background of a different legal test according to whether a member state has accepted the social chapter.

That builds a legal incoherence into the responsibilities of what is in effect the supreme court of justice for the European Union. It is difficult to imagine--even in relation to the social chapter--how the Court of Justice could apply one set of rules to 14 member states and a quite different set to the remaining member state, the UK; yet that analogy will have to apply if we are to proceed along the Prime Minister's route towards a multi-layered Europe.

That will inevitably mean that there will be different legal standards in different subject areas according to the particular subject and the number of member states that have proceeded towards greater European integration. I do not believe that the Prime Minister believes that, and it seems to me to be no more than a device to try to unite--for the moment--the Conservative party. There is little doubt that the Prime Minister was opposed to the idea of a two-speed Europe relatively recently. In November 1990, he said:

"I don't want a two-speed Europe. I think a two-speed Europe is unequivocally bad for Europe."

In October 1992, the Prime Minister said:

"No fast track, no slow track, no one left behind".

That was his constant theme when referring to the European Union. The Foreign Secretary has made exactly the same criticism of the idea of a two- speed Europe. How is it possible to equate that clear objection to a two- speed Europe with the concept of a multi-speed Europe about which we now hear consistently from Cabinet members? It is unclear how that division can be breached, and it is unclear how the Prime Minister can resolve the differences in the Cabinet on these questions.

The Chancellor has said:

"We shall have to ask ourselves about the dangers that could be involved in assuming a marginal role in Europe. It would be a serious mistake to exclude Britain from the major decisions concerning economic and monetary union."

On the contrary, the Prime Minister said that it was necessary for Britain to stand out and for the Chancellor to set out new conditions before we could accept the principle of economic and monetary union. He appeared to repeat the view that there were further conditions, over and above those contained in the Maastricht treaty, in his speech today. Yet, given the opportunity, the Chancellor significantly failed to respond to the invitation to set out the conditions when the country expected him to do so. Instead, he delivered a thinly disguised polemic in favour of a single currency, arguing that it was not a threat to the nation state. It is impossible to see how that view can be reconciled to the views of the Chief Secretary, who said that he would "hesitate for an eternity" before voting for a single currency.

That is an uncertainty at the heart of Britain's Government--an uncertainty that is deeply damaging to this country's best interests at a time when our economy is ever more closely integrated in the European Union. Our future economic prosperity does not depend simply

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on the prosperity of businesses in the United Kingdom but must inevitably depend on the performance of the European economy as a whole. That is why we must have a British Government who clearly accept the principle of a single currency. Only then can they argue the case in the European Union positively. Only by accepting the principle can we influence the nature and conditions of the development of a single currency. The Prime Minister appeared to refer to the style of a single currency in his speech. We can influence whatever he means by the style of that currency only if we accept the principle and argue Britain's case as it develops. A practical example of the Government's failure to negotiate effectively on our behalf must be the position of the City of London. The Prime Minister talked about protecting the City as a centre of European financial activity, which it clearly is. As such, it must be the obvious place for the location of a European central bank, yet we are unlikely to be given that considerable political favour while the Government's position on the single currency is so unclear and ambiguous.

The European Monetary Institute is the central bank in embryo and it is already located in Frankfurt, which has long nurtured ambitions to become the financial capital of Europe. The attitude of our Government is assisting in that process.

Sir Archibald Hamilton (Epsom and Ewell): Will the hon. Gentleman give way?

Mr. Hoon: No. I am sorry, but I have only 10 minutes.

That is why it is necessary for a British Government to be at the heart of Europe, but to influence the nature and development of the debate. Unless we do so, we will simply end up on the outside of a single currency. We will have had no control over its development. It will be difficult to see then how Conservative Members will be able to argue that Britain is an attractive place for third-country investors. How many companies will want to invest in the United Kingdom if we are on the outside of a single currency that involves the major countries of the continent of Europe? That is why the Labour party argues for the convergence of the real economic performance of the member states as a vital precondition of moves towards economic and monetary union. That is why we said last year in our European election manifesto--a manifesto that was overwhelmingly endorsed by the people who voted in those elections--that

"Convergence must be based on improving levels of growth and employment, and not just on monetary objectives alone".

That is why that progress towards economic and monetary union inevitably involves not only institutional questions, as the Prime Minister seemed to concede, but constitutional questions. That is why it is important that the Economic and Finance Council is democratically accountable and is developed as the political counterpart of a European central bank. We would expect that bank and ECOFIN to report to the European Parliament and to national Parliaments. In the United Kingdom, we would expect Treasury Ministers to report regularly to the House of Commons on the work of ECOFIN and the European central bank, and to a proposed European Grand Committee.

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We do not agree with the Prime Minister's charge that we simply accept all that comes from Europe. We want a developed European institutional solution to the changes that we believe are in principle necessary to bring about a single European currency. Clearly, different developments are likely in relation to that currency. Before 1996, we will discuss which countries can move to that idea. Secondly, we will discuss which countries will be ready before 1999 and whether there will be a majority. There is a clear danger that, unless we participate in that process, we will simply stand aside and watch the development of a deutschmark zone--a currency based on the deutschmark over which we will have no control or influence. I do not think that any hon. Member would be prepared to agree that Britain should accept the decision of the Bundesbank on a de facto Euro-mark or single currency based on the deutschmark. That is why Britain must play its full role--

Madam Deputy Speaker: Order. I call Sir Archibald Hamilton. 6.44 pm

Sir Archibald Hamilton (Epsom and Ewell): It is a sign of the diversity of the debate that I find myself agreeing more with the right hon. Member for Bethnal Green and Stepney (Mr. Shore) than with my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath). Euro- sceptic that I am, I feel that far too much power has already been transferred to Brussels. Everyone in Britain, and increasingly everyone in Europe, is concerned by the lack of accountability of the Euro-institutions and about the fact that, as the right hon. Member for Bethnal Green and Stepney said, our democratic institutions are very weak. I have to differ with him, however, in that he wants to withdraw from Europe, but I do not think that we should consider that option.

My right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) has suggested withdrawal. When I discussed it with him, he pointed out that if we joined some sort of free trade area we would have to be consulted on any measure taken by Europe. That would not be enough. Let us think of the objections that the French put forward to the import of Japanese-made cars from the north-east of England. If we had merely been asked to consult on such a measure, rather than negotiate from within the European Union, we would have had difficulty in getting that decision overturned. France demonstrates very protectionist instincts all the time and we have to be in a position to combat them. Even if that were not the case, if we were not part of the European Union there would always be a perception that goods produced in this country might be excluded from Europe. In those circumstances, inward investment would be very much less than it is at present.

I am proud to be a sponsor of the excellent pamphlet that I have here entitled, "A Europe of Nations". It is remarkable for its endorsement by Members of Parliament from 28 centre-right parties in 20 different countries. I would not pretend that Europe is suddenly swinging to a Euro- sceptic stand, but this pamphlet is a good start--an embryo of a different attitude towards the institutions of Europe and a view that the nation state will have a much greater role. It is encouraging that it is not British

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Conservatives alone who are becoming alarmed about the powers that are being assumed by the Commission and the European Court. It is typical of the Labour party that, having swung from one extreme to the other on Europe--it once took the view that we should come out--it should start to embrace Euro-federalism when wiser heads throughout Europe are having second thoughts, but then the right hon. Member for Sedgefield (Mr. Blair) is a past master at bad timing. We only have to look at the extraordinary debate that he has created over clause IV to realise that. It has produced extraordinary left wingers in the Labour party, who have come crawling out of the woodwork to praise nationalisation, when most of us thought that the issue was dead. When we consider movements throughout the world, with the collapse of the Soviet Union, it is remarkable for anyone in this country to advocate nationalisation. Such policies are followed only in communist China and Cuba--I do not know whether they are communist in North Korea. The issue has even split the Labour luvvies--some of them who are failed playwrights seem to think that nationalisation is a good idea.

Madam Deputy Speaker: Order. I am sorry to interrupt the right hon. Gentleman, but he seems to be straying rather wide of the general topic.

Sir Archibald Hamilton: My comments have a European dimension because no European parties or countries advocate nationalisation at present, and I find it unbelievable that the Labour party raises that issue. I admit that I follow the advice of the hon. Member for Jarrow (Mr. Dixon), who told the Leader of the Opposition that the issue should not have been raised in the first place.

I welcome the Prime Minister's analysis of a single currency. He referred in his speech to the "core" of nations that might join a single currency. Everything would depend on the number of countries that joined a single currency at that point. As my right hon. Friend the Member for Guildford (Mr. Howell) said, a minority of member countries may decide to do so. It would depend on how many countries joined as to whether a single currency would even survive. If it embraces the vast majority of countries in Europe, as some of those countries' economies subsequently deconverge, even if they converged when they joined, that will produce massive strains. Hon. Members have already referred to migration and the need for significant fiscal transfers across Europe.

Mr. John Butcher (Coventry, South-West): Does my right hon. Friend agree that the Conservative party has been handed the most wonderful gift this evening? We have been told that the Labour party is committed to a single currency. Opinion is rapidly changing in the City of London among more informed industrialists. We now know that hundreds of thousands of jobs would have to be shed in this country to meet the convergence criteria necessary to join a single currency. Cannot we now say, honestly and legitimately, that the Labour party is adopting a policy of high unemployment?

Sir Archibald Hamilton: That would be consistent with many other Labour policies, such as a minimum wage and the social chapter, which would deprive this country of a large number of jobs.

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The ultimate question, when considering the effects of migration as people move from areas of high unemployment to areas where they could get jobs, is whether the people of Europe feel more European than, say, the French. There is no great evidence, for instance, that the French feel so European that they are prepared to take a broad- minded view towards Polish workers in the ferry industry. They might be equally intolerant of poverty-stricken Italians coming up from Naples to work on the ferries. Europe cannot be compared to America, which takes a much more tolerant view of its people migrating from one side of the country to the other. The difficulties in Europe would be far greater.

What is needed is a wholesale repatriation of policies that concern purely domestic matters. There is a growing agitation in the country that Europe is interfering in far too many matters for which it does not have a mandate. Foremost among those should be the common agricultural policy. There is no doubt that if we want the Visegrad countries to join Europe, the CAP must be completely overhauled. However, we are limited in our ability to overhaul it further as long as it is held by the Commission. It should be repatriated in stages, the CAP budget should be reduced, and the cohesion fund should ultimately be phased out.

The European Commission must be reduced to what it should be--a civil service to carry out the wishes of the Council of Ministers. The European Court, to which my right hon. Friend the Member for Guildford alluded, must stop making laws on the hoof.

Finally, the motion before us has been carefully drafted by the Opposition to seduce my hon. Friends on the Euro-sceptic wing of the party into supporting a Labour party motion. But, let us face it, that Labour party is even more divided than we are on Europe. It is committed to the social chapter, which will increase costs and make many of our industries uncompetitive. It cannot quite make up its mind how quickly it would go into a single currency, but it would certainly be quicker than we would be prepared to go. We have now had a great argument about majority voting, but there is no doubt in my mind that we would see a massive extension of majority voting if Labour ever came to power.

So I ask my hon. Friends--I am sad that there are not more present who are on the right of the party--to oppose this cynical measure root and branch, or they will fall into the trap that has been carefully laid for them by the Leader of the Opposition and support a party whose vision of Europe is the antithesis of everything which the Euro-sceptics, including me, stand for. I should like to see my hon. Friends back in the fold of the Conservative party tonight and I hope that they will support the Government in the Division Lobby. 6.54 pm

Mr. Jimmy Hood (Clydesdale): I welcome this debate and the opportunity to take part in it. I have listened to most of the debate and two speeches were outstanding. I mean no disrespect to any of my right hon. and hon. Friends, or to Conservative Members, but the speech by my right hon. Friend the Leader of the Opposition was the best that I have heard from him and I compliment him on it. I may do the right hon. Member for Old Bexley and

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Sidcup (Sir E. Heath) harm if I say that his speech was another exceptional contribution to the debate. I judged it by the responses that he had from some of his colleagues behind him and I was reminded where the Opposition are, as opposed to where the enemy is. His speech was enlightening and well worthy of the debate.

Tonight's debate is about government. It is about government of the European Union, but we should not overlook the fact that it is also about government of the United Kingdom. It is about national interests and sovereignty. This country is suffering because of indecisive government. The Prime Minister is a prisoner within his own Cabinet and party. Any Government should go that extra mile for their country, but, far from doing that, they do not want to leave the starting blocks. To judge by some of the comments that I heard this afternoon, some of them do not even want to move forward from the starting block but would rather run backwards.

In my capacity as Chairman of the European Legislation Select Committee, I have a chance to meet colleagues who represent their Governments in other member states. I have just returned from COSAC, the Conference of European Affairs Committees, in Paris this week. Those who listened to the Prime Minister in the Frost interview recently will have had the impression that the intergovernmental conference in 1996 will be a status quo conference, but that is not the view of other member states. Hon. Members had better understand that they will not sit back and allow Europe to stagnate because of the domestic problems of one member state.

My Select Committee has just started its inquiry into the IGC and hopes to report before the end of the summer. I suspect--I may be wrong and the Prime Minister and Foreign Secretary may disagree--that the discussion of the 1996 IGC will cause great problems for the Prime Minister, and I honestly do not believe that he has any intention of going to that conference before a general election. I welcome the notion of a general election in the summer of 1997, but I doubt whether we shall have one. I say to my hon. Friends and to my party in the country, whenever I get a chance to do so, that we must prepare for a cut and run general election. I believe that the Government dare not go to the IGC as divided as they are; no doubt there will be some pasting together.

The former chairman of the Conservative party, the right hon. Member for Sutton Coldfield (Sir N. Fowler), spoke about the Labour party coming and ebbing with its opinion on Europe. I remember him going to join his family and then coming back into the Government and then going back to join his family. He has done some ebbing in his time.

Mr. David Faber (Westbury): Cheap.

Mr. Hood: I do not think that it is cheap at all. If the right hon. Gentleman wants to criticise the Labour party, he should look in before he looks out.

On the single currency, I have to tell some Conservative Members that when they voted for the Single European Act, they should not have been surprised that the single currency was coming further down the line. When I hear the Chancellor of the Exchequer trying to say that there could be monetary union without political union, I think that he either discredits himself if he believes it, or he discredits the House if he expects us to believe it, because I suggest that it is nonsense.

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When the Prime Minister talks about enlargement of the European Union, as he did today, he talks about a super 25 or 27 membership in 10 or 15 years. Does he really believe that? The right hon. Member for Old Bexley and Sidcup said the same thing today. Are we being realistic when we say that?

It is impossible to say that one wants to maintain one's veto, double the size of the Union and leave every small country with a veto and also to say, as did the right hon. Member for Epsom and Ewell (Sir A. Hamilton), that one wants changes in the common agricultural policy. If anyone in the House tonight believes that we can change the CAP without getting rid of the veto or introducing qualified majority voting, they are kidding themselves. I do not think that those people are kidding themselves because, at the end of the day, we are all professionals. It is worse than that. They are kidding the public, and they are kidding the electorate. Of course it is impossible to reform the CAP without qualified majority voting. If the Prime Minister says that he wants to double the size of the Union and retain the veto, he argues the incredible.

At Question Time today, the Minister of State at the Foreign Office, the hon. Member for Boothferry (Mr. Davis), mentioned the French initiative on Cyprus. Cyprus was promised that it would be allowed to apply to join the Union this year, but that has now been put off until 1997 after the IGC, as has been suggested by the French. In my opinion, the fact that our Government voted for that, when they are part of that guaranteeing power, has let down the people of Cyprus. I do not accept that that is the right thing to do. They were not doing enough to get Cyprus into the Union.

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd): I do not know what the hon. Gentleman is talking about. At Corfu, it was agreed by everyone that, for the first time, Cyprus and Malta would be part of the next wave of enlargement. No date was set. It is now in prospect--it may be agreed next week--that there should be an undertaking for the first time. I support that. It is a very big step forward, and the Government of the Republic of Cyprus warmly welcome it. I do not know what the hon. Gentleman is on about.

Mr. Hood: I shall help the Foreign Secretary out. [Interruption.] In a recent Council of Foreign Ministers, there was a 14 to one vote about the position in Cyprus, when the Greeks voted against the proposal to leave the consideration of Cyprus until after the 1996 IGC. We know that moves are afoot to postpone that even longer, into 1997. We are walking away from our responsibility to Cyprus when we repeatedly put it off, as we have done.

I am not opposed to the principle of referendums. They are part of a democratic process. However, I think that my right hon. Friend the Leader of the Opposition said today that, before one has referendums, one should have leadership. It is nonsense to talk about referendums when any changes are two years away. I have been persuaded away from that point of view.

The only referendum that the Union needs, and the only referendum that the nation needs, is a general election. The sooner that that general election takes place--the sooner we have a Government who will go into Europe and represent the best interests of the people, not the interests of the domestic party--the better.

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