Previous Section Home Page

Mr. Blair: I shall conclude this passage and then give way to the right hon. Gentleman.

The Prime Minister has been unable to agree with either of those two Cabinet Ministers. If he is re-elected, can the Prime Minister say whether a single currency will be a possibility in the next Parliament, assuming that the economic conditions are right? It must logically follow from signing the Maastricht treaty that the answer to that

Column 1057

question is yes. But what is the Prime Minister's answer? Is it a possibility or not? He cannot say. Let me put another question. [Interruption.]

Several hon. Members rose --

Madam Speaker: Order. The right hon. Gentleman has said that he will give way later. Hon. Members should not persist.

Mr. Blair: Conservative Members say that this is not a quiz, but it is precisely to hold the Prime Minister to account that we called this debate. Anyone would think that I was asking the Prime Minister to do something quite extraordinary. I am merely asking him to agree with his Chancellor. We have a situation, do we not, where I as the Leader of the Opposition can agree with his Chancellor, but he cannot get up and agree with him.

The fourth question is that if the economic conditions were right, would the Prime Minister be in favour of persuading the country that it was right to join a single currency? He must be able to answer that.

Mr. Michael Fabricant (Mid-Staffordshire): Would you?

Mr. Blair: I say yes to that. Is the Prime Minister able to answer the question? With all due respect, that is the position of his Chancellor. That is what the Chancellor said in his speech a couple of weeks ago.

Finally, let me ask the Prime Minister whether he can agree with this statement:

"Some observers hope--and others fear--that economic and monetary union as set out in the Maastricht Treaty will be a step in the direction of a federal Europe . . . I believe that such hopes or fears are unrealistic."

Can the Prime Minister agree with that? I can; can he? Shall I tell the House the author of that statement? It was the Prime Minister. That is the position to which he has reduced the Government. I find it odd that he cannot agree with his Chancellor, I find it strange that he cannot agree with his Secretary of State for Employment and I find it unbelievable that he cannot agree with himself.

The Prime Minister says that he cannot decide this constitutional issue now. But the point is that he decided it then. He was prepared to say expressly that it was not a step to a federal Europe. Now, of course, he cannot say. The truth is that this issue of constitutional principle is being postponed not because of circumstances that the Cabinet cannot foresee. The issue as a matter of principle is there: it is being postponed because the Cabinet cannot agree on it. Members of the Cabinet do not have open minds on the issue. They are not sitting round the Cabinet table wondering about the answer. They have the answer: it is just that there are two different answers for the different factions in the Cabinet.

Sir Peter Hordern: If the Maastricht criteria were met in full, would the right hon. Gentleman sign up to a single currency?

Mr. Blair: If the economic conditions are satisfied, the economic conditions that we have set out for real economic convergence; and if people can be persuaded on the necessary political consent--those are the two conditions--then I say yes. I also say that there is no constitutional barrier to joining. The question is whether

Column 1058

that is the position of the Prime Minister. When the Prime Minister speaks, perhaps the right hon. Member for Horsham (Sir P. Hordern) will put the same question to him and see whether he can get a straight answer.

On this point I totally agree with the former Chancellor. He said the other day, and I think that he is right, that the issue of constitutional principle can and should be decided now. If, in truth, there is a constitutional barrier, such a decision makes a dramatic difference to our future foreign and economic policy. Not merely does it render void--indeed, in some sense deceitful--our participation in all the formulation of the institutions for monetary union, but it means that the whole of our future relations with Europe, the United States and others would change. We should prepare for that change now. It would be appalling to drift into a decision that there was, in fact, an insuperable constitutional barrier, without thinking through the consequences of that.

Let me take that one step further.

Mr. Lamont: Will the right hon. Gentleman give way?

Mr. Blair: No.

The Chancellor recently made a speech on the single currency, and spoke about its potential benefits.

Mr. Lamont rose --

Madam Speaker: Order. The right hon. Gentleman is a long-standing Member of the House and he knows that when another Member will not give way, he should not persist. I must ask him to remain in his seat for a while until the right hon. Member for Sedgefield is prepared to give way.

Mr. Blair: If I have time, I shall give way in a moment. Recently the Chancellor gave a speech about the potential benefits of the single currency. Could the Secretary of State for Employment make such a speech? Would he make such a speech? Of course not. Has he made such a speech? Of course not. Have the Chief Secretary, the Secretary of State for Wales, the Secretary of State for Social Security or the Home Secretary made such a speech? They are not people postponing the decision on a single currency; they are merely postponing the fight over which side wins. That is not in the interests of Britain.

Think for a moment that the Government were re-elected. Can anyone imagine the negotiations during the next Parliament and the state of our discussions with other countries in the run-up to monetary union? It does not bear thinking about. One day, our European colleagues may meet the Chancellor; the next day, the Chief Secretary; the day after that, the Secretary of State for the Environment followed by the Secretary of State for Employment. They would need not more interpreters but more psychoanalysts.

Precisely the same problems beset our attitude to the intergovernmental conference. The Government are driven, once again, to raise the phantoms and bogeys of a federal Europe. In fact, there is little support for co- opting the intergovernmental pillar on defence, for example, into the treaty. There is support, of course, for extending the role of the Western European Union. The IGC needs to make progress on closer co-operation on foreign policy and defence. We have long urged that the role of the WEU should be reinforced as the defence component of the

Column 1059

European Union and as the European pillar of NATO. The WEU Heads of State and Government might meet at a WEU summit in parallel with the European Council. Those bodies could be strengthened. We do not favour a European army, but we can see a case for greater use of co-operation between European forces. That would be a modest but worthwhile step.

No one wants, or is suggesting that the Commission should run defence policy or that we should give up the national veto. There will, however, need to be change, primarily because of enlargement. A body of 20 members or even 15 is plainly different and requires a different form of decision making from a body of 12 or fewer. The Prime Minister said on the Frost programme that he would oppose and not countenance any extension of qualified majority voting. [Hon. Members:-- "Hear, hear."] I note the cry from the troops behind him. With all due respect, such a stand is absolutely foolish and not in Britain's interests. [Hon. Members:-- "Oh."] Let me give hon. Members an example. On trade or the common agricultural policy, qualified majority voting is plainly in Britain's interests; we do not want small countries to be able to block change that is in our commercial interests. Sir Leon Brittan made that very point the other day. A sensible policy would be to approach such issues, piece by piece, on their merits.

Perhaps most absurd of all was the attack launched on me the other day in an early-day motion signed by 100 Tory Members. They launched it because I am in agreement, on some issues, with Mr. Santer, the European Union President. Who is responsible for Mr. Santer? [Hon. Members:-- "You are."] I am, apparently. Next time, we may be responsible for the appointment of that President, but the Prime Minister was responsible this time. And why? For all the usual reasons. Mr. Dehaene was proposed, but he was then pilloried as someone who would impose a united states of Europe upon us. The Government panicked and opposed him. Mr. Santer stepped forward and was sold to us on the basis that he was something completely different. Literally within 48 hours, he was saying that his views were indistinguishable from those of Mr. Dehaene.

Is it any surprise that in those circumstances our credibility in Europe is close to zero, or our influence minimal? A Danish diplomat was apparently recently quoted as saying:

"When we saw Hurd last time, he could hardly say anything." Or, according to Geoffrey Howe--Lord Howe, I should say--writing in the Financial Times :

"The ratchet effect of Euroscepticism now risks doing huge damage to British interests. For too many months, the debate on Europe within the Conservative party has been shifting destructively in the direction of disengagement and isolation."

That is the view from all around.

Of course, there are differences over Europe in every party. In a sense, it would be a poor reflection on our democracy if there were not because these are questions of fundamental importance. It is right that politicians do not treat them lightly or regard them merely as matters of party, but the view of the Government must be clear. There may and will be debate as to what the policy should be, but there must be a policy. There is only one choice--to be at the heart of Europe or to be in retreat from it. Both are coherent positions, but they take the country in different directions. What is unacceptable is to have no direction at all.

Column 1060

In truth, the Government can have unity without clarity or clarity without unity, but they cannot any longer have both. Now is the time to decide. This decision is too vital to be pushed aside. In that I agree with the Thatcherites and the sceptics. The danger is that their view of Britain in Europe will prevail if it is not challenged. I challenge it, and I challenge it at its fundamental point. Recently, in a robust assertion, the Employment Secretary talked of what he called the defeatism of those who saw Britain's future as lying in closer co-operation in Europe. I say that, on the contrary, what is defeatist is to believe that Britain's identity is so fragile, its character so weak and its will so unimpressive that we cannot co-operate in Europe without destroying ourselves as a nation. I reject that view, and I say that this country should be and can be a leader of nations in Europe. That is its destiny. It should be leading in Europe and it can lead in Europe, but only under a different Government.

4.17 pm

The Prime Minister (Mr. John Major): I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: "this House rejects the policy of Her Majesty's Opposition towards Europe, which would destroy United Kingdom jobs, erode the United Kingdom's competitiveness in world markets, place new bureaucratic burdens on business and industry, destroy the veto and diminish the role of Europe's nation states and their national parliaments." In the 20-odd years since we joined the European Community, as it then was, our membership has always been controversial, so I welcome this debate to set out what our policy is, what the choices are and what those choices may mean for this country in the future. None of those choices is easy, none of them is without risks and none is without opportunities, but the belief that those choices are simple, and the belief that those choices can be made without a detailed examination of all their implications for living standards in this country, is not something that I accept. I shall deal with those choices in detail when I come to the question of a single currency later in my speech, as I promise the House I shall most surely do.

Some hon. Members on both sides of the House have always been instinctively hostile to our membership of the European Union. Others are uncritical supporters of the European Union, but most of us in this House--I believe on both sides of the House--believe that we are right to be in the European Union and that it is overwhelmingly in our national economic interest to be so but that we should be cautious about the way in which it evolves in the future. That is my belief and that is the Government's position.

Over recent years, the benefits of the European Union have tended to be taken for granted and many of the negative aspects of the Union have been highlighted. The result has been that the debate over recent years has become more sour and public opinion has become more hostile than once it was to our membership of the Union.

I think that there are essentially three reasons why public opinion has moved in that direction. The first is that people fear, not only here, but out in the country, that some aspects of the Community have changed from the Community that we originally joined. Secondly, they resent in many cases what my right hon. Friend the Foreign Secretary has referred to as

Column 1061

"the nooks and crannies interference"

of the European Union. But, above all, many people fear the direction in which they believe the European Union may go in future. I do not believe that we would be wise to ignore those fears--I shall address them directly in a few moments--but I think that, to put them in a proper context, it is worth recollecting precisely why we joined the European Union in the first place. We joined it because it was in our national interest to join it. It was not idealism or romanticism and it was not just because it seemed an appropriate thing to do at the time. It was a hard-headed decision to join because we saw that membership meant jobs, investment, prosperity and potentially greater influence and would make a contribution to peace right the way across western Europe.

Mr. Donald Anderson (Swansea, East): Will the Prime Minister give way?

The Prime Minister: If the hon. Gentleman will forgive me, I shall make a little progress first.

The United Kingdom is perhaps more dependent on trade than any other large industrial economy. The European Union is the world's largest trading bloc. We trade far beyond it, of course. We have interests in every part of the world, and they are growing interests. We are not dependent on the European Union, but it is a very large slice of our trade and very important to us. We are the world's fifth largest importer and exporter and the Union now takes more than one half of our visible exports. The single market was fought for by a Conservative Government leading in Europe to change the nature of Europe from the heart of Europe.

The choice that the right hon. Member for Sedgefield (Mr. Blair) gave us on the future of Europe was only a partial choice about being at the centre. Being at the centre does not mean automatically agreeing with what everybody says. Being at the centre means fighting to move the European Union in the direction that we believe is right for this Parliament, as we did with the single market, as we did with enlargement, as we did with reform of the common agricultural policy, as we did with subsidiarity and deregulation and as we did with much else.

The single market offers huge opportunities to this country and we are taking them, in car exports, at record levels--

Several hon. Members rose --

The Prime Minister: In a few moments I shall give way to the hon. Member for Swansea, East (Mr. Anderson).

We are taking those opportunities in record earnings from financial and business services, in record levels of inward investment, which have led to more than 600,000 well-paid jobs in the past 16 years that we would not have had but for our membership of the European Union, and in record business and increasing business for the City of London. Nine out of every 10 European cross-border equity deals now go through London. Even the Deutsche bank has moved its foreign investment banking to London from Frankfurt.

Column 1062

Most important of all--a point often overlooked, but it ought not to be by a nation such as ours--the European Union, together with the NATO alliance, has delivered a prize without precedent to those of us in western Europe: 50 years of peace across Europe; the western democracies working together in world affairs to maximise their influence, and war between them made utterly unthinkable. They are huge benefits.

Mr. Donald Anderson: Accepting all that, does the Prime Minister agree that we did not join a static Europe, a Europe which will stand still? We joined a dynamic Europe and the choice for us is either to be part of that dynamism or to be moved into a second category, a second division. Is the Prime Minister prepared, by his negativism, to contemplate that for our country?

The Prime Minister: The hon. Gentleman could not have been listening. Of course it is not static. If we thought that it were static, we would not have been seeking enlargement. If we thought that it was static, we would not have promoted the single market. If we thought that it was static, we would not have changed the position on subsidiarity, deregulation and much else. If we thought that it was static, we would not be promoting the matters in the intergovernmental conference, which I shall come to in just a moment. The question is not whether it is static but what sort of Europe we wish to build in the future.

Dr. John Reid (Motherwell, North): Will the Prime Minister give way?

The Prime Minister: Let me refer-- [Hon. Members:-- "Give way."] I propose to give way. If hon. Members will give me the opportunity to continue, I will make a little more progress. There will be occasions when hon. Members will wish to intervene on substantive matters. The often unspoken fear of many people--we should address it honestly and clearly and examine it--is that Europe might develop into a super-state, an overarching Government with no national veto, no control over our own borders, prescriptive decisions, a single currency imposed and the nation state retreating to a wholly subordinate role. That fear exists out there in the British nation, and we should recognise the fact that it exists.

I am sure that in Europe there are a few people who have ambitions for that sort of European Union; rather more people do not have any such ambitions for it. I for one would find such a Europe wholly unacceptable for this country. I do not believe that it is remotely likely, but, if that were to be the future, it would not be a future that would be suitable for this country.

In 10 months' time, the intergovernmental conference will formally begin. The preparatory work begins earlier, but, in 10 months the conference itself will begin. Frankly, it is too early. It is too soon after the Maastricht treaty, and Governments right across Europe themselves know that it is too soon. The fact that it is too soon reinforces my view that there will be no majority for ambitious plans for centralisation in the intergovernmental conference. There will be no such plans because such schemes would not be ratified not just by the Government but by other Governments across Europe.

Dr. Reid: Does the Prime Minister agree that the timing of the IGC, whether it is too soon or too late, does not alter the fundamental question that he has refused six times to answer in past weeks and as late as yesterday,

Column 1063

when he said that he would answer it today? Does he agree with his Chancellor that a single currency is not a threat to our nation state? Will the right hon. Gentleman now take the opportunity to agree fully with his own Chancellor or to dissociate himself from that statement, but, for God's sake, go one way or the other and show some leadership?

The Prime Minister: I indicated a moment ago to the hon. Gentleman that I shall refer at length to a single currency, and I will deal with those issues in my own way at that time.

Europe's pre-eminent task for the coming years will be further enlargement of the European Union--enlargement to bring in the countries of central and then eastern Europe, and to bring in Cyprus and Malta. I believe that that is desirable to spread the benefits not just of the free market further across eastern Europe but of security further across eastern Europe, and to discharge what I believe most people in this country would regard as our historic obligation to the people of central Europe who, in many cases, have suffered so much in the past half century.

That enlargement is now agreed. It is agreed overwhelmingly because of British pressure for that enlargement. What everyone recognises across the European Union is that a Union of 20 or more states--we can now foresee the date when there may be up to 25 or 27 members of the European Union--is bound to be more flexible and less prescriptive than the original tenets of the European Community when it began with a handful of nations. Unbending centralisation will simply not be feasible in a wider Union, and many of the fears that people have about it will be seen to be fantasy fears as the European Union develops.

Mr. William Cash (Stafford): My right hon. Friend refers to unbending centralisation. He is, of course, aware that the Maastricht treaty contains detailed recommendations--indeed, a legal requirement--for a central bank. What could be more centralising than that? If my right hon. Friend rejects centralisation, why does he not therefore make it crystal clear in principle now that he objects not only to a central bank but to the single currency that goes with it?

The Prime Minister: The hon. Gentleman knows of the position in the Maastricht treaty regarding a central bank. He knows that we have the option to decide whether to join a single currency at a later stage. As I said to the hon. Member for Motherwell, North (Dr. Reid), I shall deal with that matter in a few moments.

I shall speak first about the intergovernmental conference, which will begin in just a few months' time. I do not believe that it will make huge changes in Europe. No one can be absolutely certain what our partners will bring forward, but I doubt whether any serious significant changes will be proposed.

However, the conference can and should usefully improve the way in which Europe operates, and we shall present a range of our ideas at the conference. We shall suggest ways of developing the common foreign and security policy, and ways of stepping up the fight against organised crime and terrorism. We shall set out ways of achieving a stronger role for national Parliaments, and more subsidiarity. We shall build on the steps agreed at the Essen summit to crack down on fraud.

Column 1064

Under qualified majority voting, a larger say should be given to the larger states, and we shall set out our plans for that. At the intergovernmental conference we shall also seek to reinforce the democratic authority of the Council of Ministers. For reasons that will become apparent as my speech proceeds, we shall not accept the end of the national veto, or significant constitutional change that would impact adversely on the House.

We shall argue that foreign, security and home affairs must continue to be agreed between sovereign Governments, and must not be collapsed into Community competence. On that basis they can, and in many ways they should, be expanded to the benefit of countries and people throughout the European Union.

Reform of the common agricultural policy is bound to feature, but not at the IGC, for it is not a matter for treaty revision. But it will inevitably happen before enlargement proceeds, because the present CAP is unsustainable as we move towards a larger EU. Europe does not have just one agenda, as hon. Members sometimes seem to assume. There is not one agenda set by others that this country must blindly follow or reject. That is the choice that the right hon. Member for Sedgefield tried to put before people, but it is a false choice. We have the opportunity to set out how we think the Community will develop, and there are areas in which the United Kingdom has led and will lead in future.

The right hon. Gentleman touched briefly on one central matter--the question of defence. The Western European Union, of which 10 European Union states are full members, is both NATO's European pillar and the vehicle for European defence co-operation. The intergovernmental conference will review that arrangement and we shall make our own proposals. I have written today to the European Heads of Government about the way in which we might develop those ideas at the intergovernmental conference, and I have placed a memorandum in the Library.

The approach that we propose is both practical and

intergovernmental. Some points are incontrovertible: NATO has been the most successful defensive alliance in history, it must remain the bedrock of Europe's security and its capabilities should not be duplicated. However, we also need a stronger Western European Union so that European countries can take on their proper share of the burden and act effectively in situations in which the United States may not wish to be involved.

Our proposals fall into three parts. First, we must define the tasks that European countries could realistically take on themselves. The defence of member states and major combat operations will of course remain the task of NATO, but the WEU should be able to deal with lesser crises. It should be able to engage in support operations and handle embargo or sanctions enforcement, and it should be equipped for humanitarian operations of the kind seen in Rwanda, and for rescue missions such as the evacuations that we have twice undertaken in Yemen. [Interruption.] Hon. Members want to know how the European Union will develop; they should listen and find out. Secondly, new arrangements are needed to mobilise European collective capabilities. A separate European force would be wasteful, and might diminish NATO. NATO has proposed that we draw on, rather than duplicate, its own capabilities. We agree that that should

Column 1065

be achieved through the concept of combined joint task forces, which NATO developed last year. NATO's resources would then be available on a separable--not separate--basis wherever that was necessary.

Thirdly, we need to take high-level decisions of policy and military action involving western European countries at summit level. That would keep co- operation on an intergovernmental basis, and not on the basis of Community competence.

Sir Nicholas Bonsor (Upminster): I am sure that the House would welcome closer alliances within Europe and closer collaboration in terms of Bosnia-style operations and in the development of our high-technological defence industry in projects such as the European fighter aircraft and the future large aircraft. Will my right hon. Friend allay the fears of hon. Members on both sides of the House that the Western European Union may be integrated into the European Union? Can he assure us that that will not occur, and that the Government's capability to run our defences independently when required will be maintained?

The Prime Minister: I can give my hon. Friend both those assurances. It is necessary to co-operate on an intergovernmental basis, and it will operate on an intergovernmental basis. There is no question of the WEU being integrated within Community competence. It is precisely to make sure that that is the case that we have set out the proposals for greater co- operation, and that is the way in which, intergovernmentally, the Community will develop, not just in defence but on a range of other matters as well. That is the right way for European co-operation to develop.

Let me now turn directly, and at length, to a single currency. I say at the outset that I still believe that Europe would have been wiser in its own interests to proceed first with a parallel currency--a common currency-- which could have circulated alongside national currencies. It would have had the advantage of being market driven and, in my view, would have been far more likely to deliver worthwhile economic convergence. I believe that it was not wise not to proceed on that route. I still believe that Europe may find itself being forced to return to that route as it faces up to the necessity of economic convergence--which, when one comes to seek it, will not be easily obtained across Europe even among a small number of nations-- and when it faces up also to the sheer technical difficulties of introducing a single currency. But we will see what Europe decides as it approaches the possibility of a single currency.

As far as a single currency is concerned, I reiterate today what I have made clear before. Britain will not join a single currency in 1996 or 1997 and, frankly, I increasingly doubt whether anybody will be ready to do so. Europe is not ready for it, and the sooner that is universally recognised, the better. I see no chance whatsoever that the economic conditions set at Maastricht, or the other economic conditions which are also necessary, will be met, and I see no one suggesting that they should be weakened at present.

Quite apart from the other arguments, the economic conditions are absolutely crucial to the success of a single currency. If a single currency were used to bind together artificially countries which were not marching in step economically, the strains upon the economies of Europe

Column 1066

would be immense and unsustainable. I have been making that clear since 1990, and I am glad that the Opposition have finally caught up. That is relevant. [Interruption.] I was saying that while the Leader of the Opposition was still saying that he did not want to be in Europe. Those economic points are relevant-- [Interruption.]

Madam Speaker: Order. The Prime Minister is on his feet. He knows that hon. Members are attempting to intervene and I am sure that, if he feels so inclined, he will give way, but it is up to him. He does not need help or indications from Opposition Members.

The Prime Minister: That is relevant because there are huge differences between the European economies. Italy, Sweden and Belgium have Government debts that are at or above their annual national income, whereas in Britain, Germany and France the ratio is only half that. Unemployment is 24 per cent. in Spain, 15 per cent. in Ireland and 12 per cent. in France, whereas it is 9 per cent. in Germany, 8.5 per cent. in Britain and 7 per cent. in the Netherlands. There are also big differences in labour market flexibility, which may leave some countries poorly placed to respond to the shocks that would inevitably occur in a single currency in future.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley) rose --

The Prime Minister: I will give way in a moment.

There is a large body of opinion across Europe that believes that a single currency could proceed around the turn of the century. Clearly, all 15 members of the European Union could not join such a single currency around the turn of the century--there is no chance of the economics being right-- but a core group of countries could conceivably be ready to go ahead then, a small group of nations that, economically speaking, could include the United Kingdom.

If that core went ahead, it would radically change the nature of the whole European Union. At this stage, no one can safely predict what that would mean for those within the core and, equally important, what it would mean for the majority of members of the European Union, who would remain in the Union but beyond that core number of nations.

Mr. Iain Duncan Smith (Chingford): My right hon. Friend clearly laid out where the real problems in the convergence criteria lie, should people try to move down those roads without following them correctly. Furthermore, he pointed out that those are essentially good management techniques. Surely the key factor is that the real problem lies in establishing a timetable that makes people drive to a point that they might not have arrived at naturally. Does he agree that at the 1996-97 intergovernmental conference we should do our level best to take out the timetable mechanism completely and to leave it so that countries may or may not converge?

The Prime Minister: My hon. Friend is entirely right that the timetable is arbitrary but, under the provisions of the Maastricht treaty, the economic criteria set out in the treaty supersede the timetable. If those are not met in 1999, 2009 or 2019, the provisions of the Maastricht

Column 1067

treaty are such that no one would proceed. That is not merely the view in this country--it would certainly be the view of the Bundesbank or others.

Mr. Lamont: Does my right hon. Friend agree with Mr. Paul Volcker, the former chairman of the American Federal Reserve Board, and my right hon. Friend Lord Lawson of Blaby that monetary union inevitably means political union, or does he agree with the Chancellor of the Exchequer that it is possible to envisage monetary union without political union?

The Prime Minister: No, I do not-- [Interruption.] With one important qualification: I believe that it is possible to move forward to monetary union without necessarily moving forward to political union, but the qualification depends on the nature and style of monetary union and I will deal with that in a moment. If the core went ahead, it would need to determine very carefully what that would mean for the rest of the European Union. To consider whether we should join that core at some future date means that we should consider the practical implications of joining it and, equally important, the practical implications of not joining and letting other nations go ahead without us.

Let me set out in detail what those implications might be, because I believe that both this House and the British nation concerned in that argument beyond this House need to know the practical implications of what going into the Union or staying out of it would mean for them, their political institutions and their economic future.

Mr. Tony Benn (Chesterfield) rose --

The Prime Minister: First, I shall give way to the right hon. Gentleman.

Mr. Benn: I listened carefully to the Prime Minister's arguments about the possible effect on the Union of two tiers, but has he turned his mind to the effect on the domestic democracy of Britain if two fundamental principles that have existed over many centuries are broken: first, that there is a route through the ballot box for electors to choose the policies and laws under which they are governed and, secondly, that no Parliament can bind its successor? If the right to tax, borrow and set interest rates is transferred out of this country, we face the serious danger that people will lose confidence in the ballot box as an instrument for remedying the problems that confront them.

The Prime Minister: It is an interesting illustration of the unity on the Opposition Benches to have had that point put to me by the right hon. Gentleman.

On his first point about a two-tier Europe and its implications, I think that, with respect to the right hon. Gentleman, he oversimplifies the position of the two tiers. What we are seeing develop--it is not new but has been developing for some time and will accelerate--is not just a first and second tier but a much more flexible European Union that does not base itself simply on one tier or two tiers but is wholly flexible across a range of subjects. That is bound to become more necessary as the Community gets bigger. Frankly, it is both unrealistic and impractical to imagine that 15 nations--soon to be 19 and, within a decade or so, up to 27--will operate inflexibly on the basis of rules determined entirely centrally. That simply will not happen in the future.

Column 1068

Let me consider what it would mean if we were to decide that we were to go into a single currency at some future stage. If we were to join, we would need to lock exchange rates with other members; agree what the single currency should be--perhaps the ecu; and possibly abolish the pound and the Scottish and Northern Ireland pounds. I say "possibly" because--

Mr. Brian H. Donohoe (Cunninghame, South): Oh no, no; you cannot do that.

Next Section

  Home Page