House of Commons Hansard Debates for 21 Jun 1995

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it is really the parliament of the European Union, making decisions on directives, regulations and legislation, which impact all across Europe.

The Council of Ministers does not operate according to the norms and values of an official decision-making body such as a parliament, with the openness that goes with it. The final vote taken at meetings of the Council of Ministers and the position of our country have begun to be reported only recently. But there was a very long battle before that minor advance was achieved. We are still not given details on amendments and how debates in the Council of Ministers are developed.

The Euro-sceptic view is strong when it points out those many shortcomings: the great lack of openness, the problem--often expressed--over qualified majority voting and doubt over who has the say in decisions. We have a weak Parliament, and some have tried to turn the nonsense of a notion of subsidiarity--a philosophical and social doctrine--into a constitutional and legal provision, yet there are no grounds for doing so.

The question, therefore, that the Euro-sceptics ask us is, with all those weaknesses, what should we do? Should we, as some Euro-sceptics have said, come out in such circumstances if that is necessary just to stop further development, or should we go in to seek democratic change, to overcome those great difficulties?

The position of the Euro-fanatics has its weaknesses and strengths as well. When they encourage us down a bureaucratic, centralised road, with creeping competences that cannot be clawed back because power is passed to the Commission and to the Council of Ministers, they are seriously wrong. They look for central banks that will not be democratically controlled and they stress subsidiarity as some way of clawing back authority when, as has been suggested, subsidiarity is meaningless. If subsidiarity was to be given meaning at future intergovernmental conferences and if it enabled distinctions to be drawn between European Union and national matters, it would become a form of federalism. Subsidiarity is a type of federalism that is frightened to speak its name. We should be prepared to speak in the name of federalism on occasion.

The strength of the Euro-fanatic lies in talk about integration, mutual self-dependence and a political framework in which peoples can be drawn together to make decisions and be allowed to extend and mix. In such divided circumstances, we should look for the best in the Euro-sceptic argument and the best in the Euro-fanatic argument and build a different position--not a compromise. I am frightened that my party is assuming some sort of compromise between the two views. What would the synthesis be? The strength of the Euro-sceptic argument would overcome the economic, social and democratic shortcomings, but from a Euro-fanatic viewpoint, it could be done in the framework of an economic European Union. I grant that, in doing that, the points that have been made about the treaty--read what is in the treaty--add to the Euro-sceptic argument and must be taken on board. If we talk in that way, we are talking about a new treaty and a new constitution for the European Union. People should be prepared to grasp the high ground and argue for it.

I am reminded of Britain in the 19th century, when it lacked many democratic controls. Chartism argued for extension of the franchise for social and economic

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reasons, so that betterment would come for working people. In the late 20th century, the argument for developing Europe should be based on arguing for democratic extensions--not by requiring the vote, because it is usually available, but so that the vote does something and it elects parliaments with power in different areas. Parliaments should have all the power in formal decision making. Matters for the European Union should be decided by the European Parliament. National matters--many more matters could be determined nationally--should be decided by national parliaments.

We could be establishing democratic principles as part of a programme towards full social democratic federalism in the House in the meantime. For instance, the Select Committee on European Legislation, of which I am a member, is attempting to scrutinise what takes place in Europe, but there are problems about the avenues of authority that it has. In deciding and debating European matters, nobody is able to concentrate on Europe and conduct investigations such as those carried out by other Select Committees, because the responsibility is spread between agriculture, transport, foreign affairs and so on. The House should give the European Legislation Select Committee authority to carry out such functions.

European Standing Committees A and B check material out. The House should learn some of the lessons of those Committees and take some of their work on board, and enable the questioning sessions in those Committee sittings to take place on the Floor of the House before debates such as this.

8.7 pm

Mr. John Wilkinson (Ruislip-Northwood): I hope that the House will forgive me and will understand if I do not follow the remarks of the hon. Member for Derbyshire, North-East (Mr. Barnes). I turn my attention to the hon. Member for Perth and Kinross (Ms Cunningham), who is now absent, whose speech added distinction to the debate. The hon. Lady made a maiden speech of rare quality. In particular, I admired her generosity of spirit in paying tribute to the late Sir Nicky Fairbairn. How much we have missed one of his interventions on this occasion in the bland remarks of my right hon. Friend the Foreign Secretary.

There were moments of real insight in the comments of the hon. Member for Perth and Kinross. She accused the Conservative party of harking back. In matters of European affairs, I fear that may be true of the mainstream of the Conservative party and of our Government. It was well exemplified in the extraordinary speech of my hon. Friend the Member for Derbyshire, South (Mrs. Currie), whose mind-set--the term repeatedly used by my right hon. Friend the Secretary of State--was fixed in the era of Churchill, Schuman, Monnet, de Gasperi and Adenauer--the founding fathers of what is now the European Union. The world has moved on since then, and when my hon. Friend went on to criticise patriotism I could only imagine that she must be very remote from the electorate, who are bemused and wonder how a party, our own party, can seem to care more about European matters than about the everyday preoccupations of earning a living, securing and keeping a job, maintaining a house, making mortgage payments and sending a child to

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school--activities totally remote from the abstract themes of high European policy to which we devote so much attention.

There was another moment of insight in the speech of the hon. Member for Perth and Kinross when she emphasised the paradox of a Conservative party whose rhetoric professes unionist credentials but the effect of whose policies in favour of closer European integration inexorably militates against the unity of our own kingdom. I was somewhat amused to see the large number of official papers held to be relevant to the debate. Such a plethora of paper is a feature of all matters relating to the European Union. I feel that our people are being bored into submission. There is a feeling that they are powerless against the process of ever closer European union. The sense of powerlessness and frustration is building up and will eventually become a dangerous feature of our democratic politics unless we adapt our policies to accommodate our people's apprehensions.

It is not as though the issues were complicated; they are perfectly plain. One does not need to be an economic wizard, or even to have the intellectual gifts of the right hon. Member for Llanelli (Mr. Davies), who spoke so well on the subject, to realise that if we were to give up our own pound sterling and through membership of an economic and monetary union participate in a single currency, our country would no longer be an independent sovereign state. We would not set our own interest rates. We would not have our own reserves. Inevitably, we would be forced into much closer integration of indirect taxation, and we would have lost the features that make us a nation and make us distinctive.

If that is what people wish, if that is the majority will, I will go along with it, but until that will is democratically expressed I shall fight the prospect with all the strength of my being. I do not believe that we have the right to take away our people's birthright: it is for them to decide-- that is why my hon. Friends and I have campaigned so vigorously for a referendum. My hon. Friend the Member for Derbyshire, South was rather scathing about the electorate and their opinions, but our duty is to serve the electorate. It is as simple as that. It is because we appear not to serve them well that we lose by-elections and are so poorly placed in the polls. If there were a fundamental choice between liberty and the hypothetical greater prosperity that it is claimed that membership of EMU and participation in a single currency would bring, the risk to our democratic liberties would be such that, even if that prosperity were certain, it would not necessarily be worth gaining. If there were a choice between liberty and prosperity I would always choose freedom--every time-- and so would our people, as they have done ever since the Norman conquest.

There probably will be an inner core of countries which will create a single currency around the deutschmark. They could call it a shilling or whatever they liked, but to me it would be all the more reason for our country to stand aside. Whenever there has been a predominant power on the continent we have sought to create a balance. We have looked to the wider world and tried to create coalitions of power and influence to offset that dominant power. There have been times when it must have been tempting to join the predominant power, and

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when we could have done so--1940 might have been one of those times--but at great cost we have always thought that our liberty was more important.

I do not think that the issues are complicated--far from it. Our Government should declare now where they stand in principle on the question of a single currency. In my judgment this is not an issue on which there can be equivocation: it is a matter of principle. Our people long for our party to display principle, to demonstrate decision and not to imply that procrastination is a political virtue. I do not believe that by putting off awkward decisions our party will gain electoral credibility and be better placed to win a general election. But if our party said that we would always put Britain first, that we would seek to regain powers and competencies that we ought never to have lost, that we would make British law supreme again rather than being inferior to European law, and that we would regain control over fishing and agriculture, we should again become a party that was authentically Conservative and, I believe, worthy of re- election. Above all, it would become worthy of the aspirations and traditional aims and objectives of the British people.

8.16 pm

Mr. Denis MacShane (Rotherham): It is a pleasure to follow the hon. Member for Ruislip-Northwood (Mr. Wilkinson), and I join in his praise for the maiden speech of the hon. Member for Perth and Kinross (Ms Cunningham). In a calm, rational and courteous way, the hon. Gentleman put the Europhobe position without the ranting that we heard earlier. None the less, his argument is pernicious and dangerous and it would be a disaster if this country were to follow him.

I am pro-European because I want to reclaim sovereignty for our people. In political philosophy, it is the people who are sovereign--not the House of Commons. We have heard much today about the importance of the House of Commons, about the centrality of its representative nature and about its debates. Yet look at us: out of 650 Members of Parliament, fewer than 20 are here to debate the issue. I want to see sovereignty reclaimed for the British people, and I believe that that is best done by working in co- operation with our partners both in Europe and in a wider world.

I strongly oppose the new and rising tide of isolationism which the Europhobes so perfectly represent. I was horrified at the humiliation suffered by the Prime Minister yesterday. I suppose that I might have taken some political pleasure in that humiliation, but never in the 20th century has a multinational company shown such contempt and disregard for a British Prime Minister. I support the idea of dismantling the Brent Spar on land rather than sinking it, but it is a strange state of affairs when a handful of Trotskyist ecologists in Germany can so frighten Shell that it dictates a change to what a British Prime Minister has decided to do. The Prime Minister defended Shell's original decision here on Monday, and defended it even more strongly at 3.15 yesterday afternoon; yet by 4.30 he was the most humiliated Prime Minister this country has had this century. As a British citizen, I find that deplorable.

Mr. Austin Mitchell (Great Grimsby): The Prime Minister was wrong.

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Mr. MacShane: It is not a question of the Prime Minister being wrong, although his decision was wrong. The plain fact is that our Government are so isolated and so wrong in much of their approach to Europe that they have no understanding of the new forces and powers that are sweeping Europe.

We must look, for example, at France where 20 per cent. of the vote in the recent presidential elections went to the extreme right led by Jean-Marie Le Pen's National Front, and to Philippe de Villiers' party. What unites the extreme right is an absolute hatred of and hostility to Europe. And whom do we see as Philippe de Villiers' companion in the recent European parliamentary elections but Sir James Goldsmith, who is bankrolling the Europhobe isolationist right in our country?

A rising tide of anti-European isolationist filth is poisoning European politics and someone must provide the leadership to lift the debate out of the swamp into which it has sunk. The hon. Member for Harlow (Mr. Hayes) talked yesterday about the dogs barking while the caravan moves on; I only wish that it was indeed moving on, but it is stuck still in the sand. To paraphrase Chesterton, the European ideal has not been tried and found wanting--it has been found difficult and left untried.

In Conservative Members' comments about Switzerland I detected an invitation to make a little specialist contribution, but I resisted it. I have to say that I have no sense at all of Germany, France, Italy or Sweden becoming any less German, French, Italian or Swedish as a result of their membership and active participation in the European Union.

I would like the debate to be widened and taken into the country. I have said in this House that I am not opposed to a referendum on the basic question of our membership of the European Union. I draw hon. Members' attention to the very interesting survey contained in a report in the Sunday Times last Sunday which showed that if we give people the chance to discuss the issues free from the poisonous filth that we see now in the Murdoch press and in the Daily Mail , for example, they will take a rational--not united, but rational--decision in favour of Europe.

To the pro-Europeans on the Conservative Benches, I would say that the Government--through the opt-outs obtained at Maastricht--have excluded the working people of this country from any sense of a stake in Europe. The Prime Minister took a fateful turn when he put the interests of his party before the interests of the nation. And not much good it did him, as we have seen from speeches from Conservative Members this evening.

If we do not put economic and social issues at the forefront of the debate and policy of Europe, we may well be lost, and we shall not claim any more sovereignty back for this country. I am glad to see that business in the shape of the recent CBI report at least is taking the lead. The Prime Minister believes that he obtained an opt-out from the social charter, but every day the Financial Times reports that more British companies are agreeing to European works councils.

My hon. Friend the Member for Livingston (Mr. Cook) made it clear in his speech that the Labour party's position on European monetary union is that it must be based on the economic convergence criteria. The failure of the Kingsdown report and other important contributions to the debate is that they do not mention the central problem of

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unemployment. The hon. Member for Stafford (Mr. Cash) thought that I was alluding to past history in my earlier remarks on this subject, but it is in the history of the Conservative Government since 1979 that our unemployment shot way above European averages before we joined the ERM, and certainly before there was any question of the single European currency.

The question of the single European currency has now been put back to 1999, and I fear that it may be soon entering the Greek calends because the massive social ill of unemployment is now dominating all policy-making minds in France, Germany and other countries--except, alas, in this country. I was attracted by those who talked about the possibility of free voting on this issue. I put it to my right hon. and hon. Friends on the Opposition Front Bench that when we take power we should look at how we consult Members of Parliament and also the country at large on Europe.

If we wish to reclaim our sovereignty, we must share power. If we want to be effective again and to rise up in the ranks of world powers instead of declining on every available index, we must do so in partnership and co- operation and through shared sovereignty with our friends and democratic allies in the rest of Europe.

8.26 pm

Mr. David Lidington (Aylesbury): I share the views of the hon. Member for Rotherham (Mr. Macshane) in one respect only--the priority he rightly attached to the importance throughout western Europe of tackling the stubbornly high levels of unemployment. For that reason, I rather regret the fact that so much ministerial and official time and energy is having to be spent in preparing for the IGC in 1996--which I believe is premature--rather than in concentrating on the priorities of tackling unemployment on the one hand and dealing with the urgent necessity of enlarging the European Union into eastern and central Europe in a way that accommodates greater diversity on the other.

When we look at the patterns of employment in western Europe, we see more than the straightforward results of an economic cycle and a deep world recession. We are seeing much more fundamental shifts in the global economy. I believe that there is a risk that western Europe today is behaving like 18th century Venice--still trading, but trading off a reputation and wealth built up by former generations while ignoring at our own peril developments in economic organisations in other parts of the world. In the case of the serene city, those developments quickly overwhelmed both its wealth and reputation.

Listening to Opposition Members, I find myself not surprised, but startled by their insistence on the importance of the issue of unemployment in Europe which is contrasted with their stubborn advocacy of measures which seem purpose-built to add to, rather than reduce, those levels of unemployment. Labour spokesmen advocate the sort of labour market regulations through the European social chapter which damaged the British economy in the 1960s and 1970s. Those regulations are damaging western European economies today. I sometimes wish that the Opposition Members who rightly remind us of the misery and degradation that unemployment causes the men and women who

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experience it would also look at the experience of countries such as France and Germany. Their Governments not only advocated but implemented enthusiastically the social and economic policies that Opposition Members now wish to see imposed upon the British people, whether at a national or European level.

Mr. MacShane: Will the hon. Member give way on that point?

Mr. Lidington: I will not give way, because time is short and other colleagues wish to speak.

Opposition Members say that they want the unemployment rate to be reduced, but that is belied by their uncritical acceptance of a European single currency. Whatever the advantages that may be argued by the most ardent advocates of a single currency, it is surely inevitable that acceding to membership of a European currency system would involve giving up national control of both fiscal and monetary policies. That would make it virtually impossible for a British or other national Government in that system to balance economic policy at a time when national economic circumstances diverged from those of other European national economies.

I would like to see the Governments of the member states, the European Commission and the European Parliament devote the energies that are being expended on the IGC towards the completion of the single market. It is clear from the steel and aviation industries that there are still many gaps in that market. I should like to see them devote time and energy to continuing to resist the dangerous trend towards global protectionism, because in that way Governments and the Commission would offer the best possible service to the peoples whom they exist to represent.

I have already argued that the second priority for the European Union is to provide for enlargement to the east in such a way as to accommodate the greater diversity which such enlargement would bring. I listened carefully to the attack of the hon. Member for Rotherham (Mr. MacShane) on examples of isolationist political trends in various western European countries. I certainly agreed with some of his analysis and criticisms of those trends, but I fear that the great federal leap forward which he and some of his colleagues have advocated would almost certainly have the reverse effect from that intended. It would tend to heighten the trend towards isolation and extreme nationalism. If Europe is to develop further, it must do so in a way that goes with the grain of national loyalty and national affection. It should not try to pretend that those loyalties and feelings are no longer of any account.

The hon. Member for Livingston (Mr. Cook) offered a false antithesis when he implied that the choice for the United Kingdom was either to roll over in the face of whatever was argued by our partners, or else to get out. The purpose of British membership of the European Union is to sustain and advance the national interests of the United Kingdom. That is what our Government have done at meetings of the Council and what they are trying to do in the reflections group, and at the forthcoming IGC.

We need enlargement to the east. It is vital to strengthen the free markets and democratic institutions of those east European countries in order to ease local political and economic strains, which, otherwise, would have a serious impact on us in western Europe. That enlargement will work only if it is accompanied by a

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reform of the common agricultural policy, the European Community budget and the decision-taking structure of the community. Although there is some coherence and logic in the arguments of those who say that the decision-taking arrangements should be set in a more federal direction, that would definitely be harmful. The French and Danish referendum results and German concerns over the deutschmark reveal a widening gap between the vision of the self-styled political elite of the Community and the wishes of the peoples they represent. If we want greater understanding and co-operation, Europe must evolve in a way that respects national political realities.

My hon. Friend, and neighbour, the Member for Wycombe (Mr. Whitney) talked about the political dimension of the European Union. I agree with him about that dimension, but it should be primarily intergovernmental and not supranational in character. It would lose none of its worth if it developed along those lines.

When we consider the gap between the so-called political elite and European public opinion, we find that Labour Members of the European Parliament, without exception, are voting at Strasbourg to abolish the intergovernmental arrangements governing home affairs and foreign policy. They have instead placed those areas of policy within a supranational legal and institutional framework. I can think of no better recipe for future tension and division.

Whether we call the Europe that we want a Europe of variable geometry, a Europe a la carte, or a multi-speed Europe, the term is less relevant than the reality of a Europe that develops in line with the diverse wishes of the diverse nations that make it up. I believe that my hon. Friend the Minister, through the reflections group, is seeking to shift the European Union towards that end, and in doing so, he will have my support.

8.35 pm

Mr. Austin Mitchell (Great Grimsby): I join those other hon. Members who have complimented the hon. Member for Perth and Kinross (Ms Cunningham) on the quality of her maiden speech, which was outstanding.

I should now like to turn my attention immediately to the issue of the single currency, because so much of the rest of the argument about Europe invokes history, theology, high idealism or total nonsense--all evident in the debate. We have gone over all those other arguments many times, but the single currency is now the single dominant central issue. It has been the central subject of most of the documents that have been published in the past year, as Europe has been squeezed to meet convergence criteria, which have prolonged deflation in most of the European economies. It is the central issue in all those documents that have flooded in, containing recommendations for the IGC next year. I thought that the IGC would be a kind of 3,000 mile service, but it has turned out to be a total reconstruction of the car. People are sending in huge manuals on how to do just that. The single currency is central to that.

The single currency is also central to the Maastricht treaty, because it attempts to use the exchange rate--the single currency--as a means of political union. That is the other way round from the way in which everyone else has developed; people have achieved political union first and a single currency has followed. In Europe, we propose

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to build unity through a single currency. The idea is to establish that single currency, then the institutions. That is supposed to build unity, but it will be a disastrous way of doing so. The single currency is also the central issue in the outpouring of documents on monetary union. In the past few weeks, we have had the Commission's report and the Kingsdown report on that subject. I am frankly horrified that someone who was Governor of the Bank of England could write a report that reveals so little knowledge of the role of the exchange rate. What do they know of economics who only banking know? People who come to review that report in the future will say that Lord Kingsdown's contribution to monetary union is much the same as his former deputy, Mr. Pennant-Rea's, to banking. Such is the quality of his report. The CBI has also published a report on monetary union.

The common thread throughout all those reports is the argument that the wonderful people who gave us the ERM and recommended it to us, are now recommending monetary union. The authors of those reports seem to have forgotten the disastrous consequences of the ERM. They seem to believe that if a proposal comes from Europe it must automatically be a good thing. All those reports are characterised by a well-developed lemming mentality--if everyone else rushes over the cliff, we must join them. It is essential that we all go over that cliff together. That is the economics and politics of lemmings. There has been no consideration. No one has done any research on, or developed any economic analysis of the effects of a single currency. That is a huge gap in our knowledge because, as far as I can see, the economic consequences will be disastrous.

First, one obviously cannot put two economies at different levels of productivity, investment, economic growth, training, skills and strength, together in a single currency without ripping the weaker economy apart. That is the inevitable consequence. The introduction of a single currency, in a Europe as diverse as this, will produce disaster for the weaker economies, one of which is ours.

Secondly, one cannot have monetary union without a massive machinery of redistribution because, if a country cannot take changes on the exchange rate, it must have direct subsidy to condition the consequences in unemployment and industrial distress. No one is proposing a machinery for redistribution to cushion those consequences.

The McDougall report, in the 1970s, recommended that between 7.5 per cent. and 10 per cent. of Europe's gross national product would have to be used in redistribution if we were going to have a single currency. That was before Spain, Portugal and Greece joined the European Union. It would now have to be much bigger. There would have to be redistribution of a proportion similar to the amount that West Germany redistributed to East Germany to cushion the consequences of their monetary union. One can do that within a nation state, as they did in Germany. In Europe, who will pay for it? The Germans certainly will not. Where will the money come from? So what redistribution is there?

Thirdly, obviously we must reconstruct the exchange rate mechanism bridge-- put our head back into the furnace--to get to monetary union in the first place. There is no other way there. The Commission's document speaks of an approach known as "the immediate big

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bang". Well, merger of currencies immediately would certainly be a big bang, and a horrible, crashing, grinding of gears.

The only way to do it is to reconstitute the ERM. That means that every country, especially us--it is more crucial for us because we do more trade outside Europe--would have to have its economic policy dominated by the need to keep the exchange rate at an externally determined level. In other words, interest rates and everything else would have to be sacrificed to that, whatever the damage to the economy.

These are the arguments against a single currency. A single market does not need it--it is not necessary in the North American Free Trade Area, for instance--but, if there is a single currency unit, it follows automatically that those who are outside it would have to be forced into some type of ERM straitjacket to prevent what the others will then call "competitive devaluations". So it will apply to everyone, in or out, and one cannot devise a structure as powerful as that.

All that springs from the folly of trying to use the exchange rate for political purposes. It cannot be said often enough that the exchange rate is simply a market-clearing mechanism. In an ever-changing world, the exchange rate needs to change too. One cannot fix it in that fashion without damage to the economy. It is nonsense to say, as the Commission does, that we cannot control our own destinies. Of course we can. We can control our own destinies by managing the exchange rate through interest rates, by taking shocks on the exchange rate rather than in terms of unemployment and industrial closure.

The exchange rate is what connects us to the rate of inflation or deflation of other economies. It is therefore a crucial instrument of management. We cannot give it up, and especially the Labour party cannot give it up, if we are going to reduce the level of unemployment and regenerate the economy.

The exchange rate sets the terms of our competitiveness with other countries. British industry needs a sustained competitive exchange rate, so demand can be channelled to production in this country instead of to exports. It gives industry the prospect of long-term growth in which it will invest, to grow. British industry needs to be profitable. For that, it needs a competitive exchange rate. We shall not achieve expansion without that. We cannot rebuild the British economy without that.

In conclusion, it is obvious that monetary union "ain't gonna happen"-- certainly not Europe-wide. If a single currency does happen, it can only happen in Germany plus a few acolytes such as Austria, and perhaps the Netherlands; a small group of currencies. The question is, will France go in? Obviously, President Chirac cannot have it both ways; he cannot have the franc fort and reduce unemployment. The question that the French must confront is, can Chirac continue to maintain the crucifying effect on the economy of the franc fort or will the French electorate rebel, turn to the right and produce the growth of fascism that we have witnessed in the past few years?

I doubt that France can make it. If France does not make it, the adventure never gets off the ground. If it does get off the ground, our position is obviously to stay

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outside and profit from their disadvantage. We shall benefit from the self-produced, do-it-yourself disaster that those countries will inflict on themselves if the single currency does go ahead, because the consequences will be disastrous. That is the sensible strategy for this country to maintain.

8.44 pm

Mr. Nigel Forman (Carshalton and Wallington): I am glad to have the opportunity to take part in an interesting debate, which has demonstrated, among other things, the way in which both main political parties are now acting on the European issue as though it were more of a straitjacket than a creator of opportunities. That merely emphasises something that I have known for a long time, as someone who has been involved in the European issue at least since the late 1960s--that the two main political parties no longer adequately mobilise or reflect the main currents of argument on these issues, and in the later 1990s that may well have its effect on the cleavages in British politics.

The main argument that I wish to make tonight, which is more short-term, is to emphasise the growing extent of common ground between this country and our key partners in the European Union. To give a few examples, we agree with the French about the need for an effective common defence and security policy, which is based on an international, not a supranational, method of operation.

We also join the French in emphasising the paramount importance of the Council of Ministers and a relatively restricted role for the European Parliament, so there is a good deal of common ground with the French in those facts alone.

We agree with the Germans about the importance of the subsidiarity principle and between us and them we were largely responsible for getting article 3(b) into the Maastricht treaty. One has only to read annex II of the report of the Council of Ministers on the functioning of the treaty on European Union, Cm. 2866, which was mentioned earlier, to be aware of the way in which competences are already rightly being repatriated to the national authorities and away from the supranational level where it is not appropriate, according to the subsidiarity principle that they should be exercised.

Equally, we agree with the Germans about the importance of observing all the convergence criteria attached to progress towards economic and monetary union, and about the attractions of enlarging the European Union to include the new democracies of central and eastern Europe, whose cultural and historical antecedents qualify them every bit as much as London, Paris or Berlin to belong firmly in the European family.

Indeed, we have a common interest, with all the other large member states of the European Union, in ensuring that the process of institutional reform, which is bound to accompany the forthcoming intergovernmental conference, gives relatively greater weight to the wishes of the larger member states, with the larger economies and the larger populations, compared with the smaller member states, which have so often formed effective, and to some extent unrepresentative, alliances with the Commission and the European Parliament against the interests of countries such as Britain, France and Germany.

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The same principle applies with regard to the European Court of Justice, which I happen to believe, as a firm European, has got slightly out of hand and now finds itself in a position in which, relatively speaking, it is unchecked, whether by political or popular factors. Unless this issue is tackled as well, we shall find ourselves being taken towards further and deeper integration of a type that our peoples perhaps would not support and without the political consent that is a necessary prerequisite for all these developments.

I believe that the intergovernmental conference, due to start in spring 1996, should be an occasion for consolidation in the European Union-- something closer to the 3,000 mile service than the general overhaul to which the hon. Member for Great Grimsby (Mr. Mitchell) referred.

I believe that, in the run-up to that conference, all the member states should concentrate on how best to implement the new hybrid institutional structure, which is what the European Union now is, and what has emerged from the Maastricht treaty. This means that we should urge our partners to redouble their efforts to reform the common agricultural policy so that it can be afforded within an enlarged European Union. We must make no mistake about it: it could not be afforded on the present basis were the European Union to be enlarged to 18 or 20 members.

It is also important to tackle the issues of Euro-fraud and non-compliance with European legislation because they undermine consent and trust in the arrangements, and, if allowed to continue, breed cynicism. We must also take forward the intergovernmental policies, which form the new pillars of common security policy and common approaches to law and order, migration and terrorism. On those points I agree with my hon. Friend the Member for Aylesbury (Mr. Lidington).

Above all, we should try to improve our own performance and the policy outcomes in the European Union decision-making process. We must defend the use of the national veto when vital national interests are involved in those areas of European Union policy not covered by qualified majority voting. At the same time, we must learn how to achieve more European solutions in the areas which are covered by qualified majority voting and which also coincide with our own national interests.

One of the Library research papers, which is relevant background to the debate, shows that over the brief period covered in the paper--October 1993 to March 1994--Britain and Germany were each outvoted on eight occasions on issues of qualified majority voting, whereas France was outvoted on only three occasions and Italy on only two. There is a moral in that tale: we need to work even harder and more effectively to ensure that the European Union interests and outcomes coincide with our national interests and objectives. To do that, we must practise a deliberate policy of placing our best people in European institutions--a point that has not been made this evening. We must also try to have a disproportionate influence on the first draft of vital documents. This is exactly the lesson that the Italians and French--involved in the two examples that I have given--have learnt very effectively.

When we approach such matters, we must understand the Community method. As my hon. Friend the Minister will know, that method involves essentially saying, "Yes,

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but" rather than "No, unless". We would not have to adopt the latter approach--the "No, unless" approach--so often were we more successful in practising the former approach, which is the essence of the Community method.

The two propositions are linked. We must understand that the successful operators within the Community--I speak with some experience as I went to the College of Europe years ago and have lived with Europe ever since--are those who know almost instinctively how to operate the politics of coalition-building case by case and issue by issue. That is painstaking and necessary, and it is the best way forward.

One sphere in which the pay-off for greater success in the Community method would soon become apparent would be that of the preparations for European monetary union, which have been at the heart of much of our debate today. Our sensible influence has been diminished by our image in the eyes of our partners as a potential free rider or a semi-detached participant. As a result, our sound reservations and policy principles are too easily dismissed or ignored by our partners. Examples of that attitude include the wisdom of a lengthy stage 3(a)--irrevocably locked exchange rates. Such a policy is completely daft--anyone who has studied it knows that it would be a recipe for disaster. Another such example is the credibility of the no- bail-out rule in article 104(b), which is critical to the success of the venture.

Another example involves the supervisory implications of monetary union for the financial services sector across Europe--the extent to which we can leave the central bank in charge of supervision as well as the control of inflation. Another such example is the practical improbability of any European central bank being able simultaneously to achieve lower inflation for the European Union as a whole, external stability for the European currency vis-a-vis the dollar and the yen, and monetary conditions appropriate for the whole of the single monetary area.

All those points are too easily dismissed or ignored by our partners. They are more likely to be dismissed or ignored if we do not build our European credentials in the way that I have suggested. Her Majesty's Government's policy in the run-up to the next intergovernmental conference is broadly on the right lines. We want to sustain our pressure for a more globally competitive European economy. We must continue to strive for sensible institutional reform. We must ensure that we understand the value and effectiveness of following a genuine Community method.

8.55 pm

Mr. Andrew Mackinlay (Thurrock): I am pleased to follow the hon. Member for Carshalton and Wallington (Mr. Forman), and I was interested to hear what he said in his thoughtful contribution. Before the hon. Member for Wycombe Wanderers leaves the Chamber, I want to refer to something that he said earlier--I shall come to that in a moment.

An awful lot of claptrap is talked about the European Union in this place. The suggestion that Labour's policy is for federalism is tommy-rot. Nobody in the mainstream of our political parties would suggest that we could move to a federal state of Europe. That needs to be stated, despite what people might say for electioneering purposes.

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The importance of the social chapter is also exaggerated on both sides of the argument. Some of my colleagues in the Labour party, in this place and outside, think that it is the greatest thing since sliced bread and will be a wonderful breakthrough for working people. I think that it is important, but its importance can be exaggerated. Some people, including the present Prime Minister, say that we shall not sign up to the social chapter, and that he has secured a cast- iron guarantee that we shall never do so. That is rubbish--as we know, such matters are being pursued through the courts and the European courts and, gradually, much of the social chapter is entering our statute book by stealth. In the long term, the so-called opt-out is not worth the paper it is written on. With these two examples, I wanted to show that things are sometimes grossly exaggerated in this place, and must be put into perspective. I hinted that the hon. Member for Wycombe (Mr. Whitney) should return. I was interested to hear what he had to say about Lady Thatcher--it is amazing how people rewrite history. Madam Thatcher signed the Single European Act, which, in my reckoning, was an important benchmark--a threshold. Once it was signed, much was surrendered.

I am not too uncomfortable about the Single European Act, but to suggest that it was anything other than a major move in terms of European integration is to deny history. For Lady Thatcher to try to pretend otherwise is disappointing from somebody who held high office. Those who complain about European integration must tell Lady Thatcher that she is to blame. Margaret Thatcher has played a part in European integration.

I notice that the hon. Member for Wycombe used to be a Minister at the Foreign Office. The problem is that Foreign Office Ministers do not properly acquaint this place or the British people with the ramifications of what is happening. I have recently come to learn that the endemic problem within the Foreign Office is one of appeasement towards British interests. The Foreign Office does not dish out the cards from the top of the pack. That has happened over Europe and over many other policies.

That is happening now in relation to one part of the European Community that is under the stewardship of the Minister of State, the hon. Member for Boothferry (Mr. Davis). I refer to Gibraltar. It is claptrap to suggest that there is total free mobility within the European Union. Freedom of movement does not exist with regard to Gibraltar, and the Minister is not doing anything about that. People from Wycombe, Thurrock, Huntingdon, Livingston and elsewhere are being frustrated from travelling through Spain to Gibraltar, and I want to know what is happening about that situation. Those difficulties are symbolic of the nonsense that is put about regarding free movement within the European Union and the suggestion that somehow we have a robust Foreign Minister. We do not. The Government are not protecting and promoting British interests.

I turn now to our current position within the European Union, and look ahead to 1996 and the intergovernmental conference. I think that the British people are broadly content with where we are in terms of European

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integration. They do not share the nightmare view that somehow we are about to lose our 1,000 years of sovereignty, but they do want to see some consolidation.

I think that the electorates of western Europe also want to see that consolidation. They have had about as much integration as they can digest: to that extent, I agree with the thrust of the speech by the hon. Member for Aylesbury (Mr. Lidington).

The IGC must reassure British and other electorates--many of which agreed, in referendums, to sign the Maastricht treaty only by some very narrow majorities--that there will be a bedding down and a period of consolidation for a decade or 20 years. I agree with the hon. Member for Aylesbury that the IGC should also allow the states of central Europe--particularly the Visegrad countries--the opportunity of early admission into the European Union.

I had the privilege of visiting Poland recently, and I was profoundly moved by the importance that the Polish people attach to joining the European Union. As an aside, I think it is wicked that, for nearly half a century, the west told the countries of eastern Europe, "Look over the wall and see how wonderful capitalism and democracy is." If one had believed the propaganda, one would have thought that in the west the sun always shone and the rain never fell. What happened? Communism collapsed, the wall came down, and when the central and eastern European countries asked to join the clubs, we said no.

The other club to which I shall refer quickly is the North Atlantic Treaty Organisation--although it is not the subject of this debate. Membership of NATO is vital for Poland and the other Visegrad countries. It is an important symbol, along with EU membership, of their emerging and developing democracies, of which they are justifiably very proud. The IGC must find a way of granting political membership of the European Union to the Visegrad countries as soon as possible. If the price we pay for that is that issues such as monetary union will be kicked into touch, then so be it --in fact, that might be a helpful spin-off; although I do not suggest that that should be the primary intention.

It is vital that those countries are given the opportunity of political membership of the European Union, even if there is a long transitional period. After all, the United Kingdom and Spain had transitional periods. Given the circumstances of the countries of central Europe, I do not see why they cannot be given a transitional period, albeit of some length-- perhaps a decade or more--with built-in stages. When each of those stages was achieved, they could then participate in certain defined areas of decision-making. The shibboleth of membership of the European Union is very important to those countries.

It is also a moral issue. In this place some 54 years ago, Winston Churchill said:

"The gratitude of every home in our island, in the empire and indeed throughout the world--except in the abodes of the guilty--goes out to the Airmen who, undaunted by the odds, unwearied in their constant challenge of mortal danger, are changing the tide of the war by their prowess and devotion. Never before in the field of human conflict was so much owed by so many to so few".

Some 17 per cent. of the "few" were Polish pilots and many others were Czechs. It may sound old-fashioned, but I think that is rather important. They fought for their freedom, their democracy and their membership of western Europe, and that is yet to be realised.

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