House of Commons Hansard Debates for 21 Jun 1995

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

Mr. Cook: Of course. I presume that the hon. Member was present at the meeting last week, and perhaps he will tell us some more about it now.

Mr. Cash: Will the hon. Gentleman concede that, although many of us are in favour of the idea of a referendum, when the referendum was proposed in 1975 after we had signed the original treaty, it would obviously have created a crisis if the Labour party's policy with regard to a referendum had been seen in its true light?

Mr. Cook: The Labour party gave the people of Britain the opportunity to make a choice. We understood that they were promised such an opportunity in 1970, when we were told that the country would enter the European Community only with the full-hearted consent of the British people. It was left to a subsequent Labour Government to provide the opportunity for the people to give that full-hearted consent. The hon. Gentleman keeps ignoring the fact that they gave that full-hearted consent in a referendum.

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I am disappointed that the Foreign Secretary gave us no insight into how the Prime Minister responded when he was invited to create a crisis with the other members of the European Union. Let me remind the right hon. Gentleman and his colleagues with what organisation they will be seeking to cause that crisis. It is the continent that receives the majority of our visible exports. When I referred to that at Question Time last week, I was howled down by certain Conservative Members, who said, "No!" In case they were correct, and in a spirit of humility, as I might have been wrong, I took the opportunity of checking the figures.

In 1994, 57.1 per cent. of Britain's industrial exports and visible exports went to the other member states of the European Union. It was fractionally more than in 1993. Those are the countries with which Conservative members want to create a crisis. What possible rationale is there in seeking to create a crisis with the people who buy the majority of our exports?

Mr. Duncan Smith: I am sure that the hon. Gentleman would not wish to mislead the House. He will therefore want to correct his statement, as he has been carefully selective. He should be discussing the totality of British exports, including invisibles. He should therefore admit that we do no more than 43.6 per cent. of our total trade with Europe, including invisibles. Will he comment on the fact that he has been selective, and should not invisibles--which are highly profitable and employs many people- -also be included?

Mr. Cook: The hon. Gentleman has raised a genuine issue. I would have more respect for what he said had he responded to that problem by saying that we should be seeking to open up the single market in financial services and insurance services to address the under-performance of the invisibles. To return to the hon. Gentleman's point, first, he is wrong. The figures from the Library say that the figure is 48.3 per cent., including invisibles. Secondly, what an extraordinarily cavalier attitude it is to say, "Does it matter, because it is only 48.3 per cent. of total exports?" There is another reason why Europe is so important to us. Conservative Members are fond of quoting inward investment to Britain as a triumph for the Government. If they really want to take any credit for inward investment in Britain, or any real interest in that investment, it is about time they recognised why it comes to Britain.

I am fortunate in representing a constituency that is still a very large manufacturing area: 40 per cent. of the work force--double the national average--work in manufacturing. My constituency has attracted major investment. Most Japanese electronic firms are represented in my constituency.

Mr. David Martin (Portsmouth, South): Under which Government?

Mr. Cook: Under both Governments. The hon. Gentleman should think through the logic of his intervention.

Many American companies are also there. Those companies did not come to Scotland for the Scottish or even the British market. They did not come to Livingston because of the intrinsic beauty of new town architecture or the quality of our weather. They came to Livingston

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and to Britain because they wanted access to the market of Europe, and nothing would put in doubt that investment more than any doubt over our future in Europe.

There was a time when the Conservative party claimed to be the party of industry. The divisions among Conservative Members and the voices being expressed from within their party are causing dismay to industrialists. The Foreign Secretary referred to this week's statement from the CBI, which urges the Government to re-establish their credibility as a negotiating partner in the European Union. This week, the author of that report says:

"I know, through my dealings with colleagues in other member states, that the UK is losing credibility as a negotiating partner in the European Union. Political divisions over Europe and the hyperbolic statements which result have often been misguided and are deeply damaging. The splits make it harder to do business and harm our economic interests."

If Conservative Members take a different view, they should perhaps ask themselves why four other countries have, within the period that we are debating, signed up to the EU. Those four countries understood perfectly well that their market was inside the European Union, and that, if they want to influence the terms under which they trade in the EU, they have to play a full part in it. None of them imagined that they were surrendering sovereignty when they signed up; nor do we.

Mr. Jenkin: Is it not important to keep this in proportion? May I point out that Switzerland has increased its trade with the EU faster than Britain has during its period of membership? Switzerland has also maintained a stable currency. It is an efficient country, and it provides a good standard of living for its people. Life outside the EU need not necessarily mean death. In any case, few Conservative Members are advocating leaving the European Union. We advocate redefining our relationship with it so that it is more in our interests.

Mr. Robin Cook: I understand from press reports that the hon. Gentleman was present at the meeting in question when creating a crisis with other EU members was discussed. Certainly that is one way of redefining a relationship.

Of course, there will always be a place--in Europe and the world--for a small nation with a modest manufacturing base, such as Switzerland, looking for niche markets. Anyone who wants to go out to the public and say that Britain can survive on the basis of Switzerland's economy will get a loud raspberry in return from anybody who understands the facts of industry.

Sir Peter Tapsell: The hon. Gentleman is putting up a number of amusing Aunt Sallies, only to knock them down. Having been present at the meeting, may I tell the hon. Gentleman that no one suggested to the Prime Minister that we should provoke a crisis with Europe; and that no one, to my knowledge, in the Fresh Start group wants to do anything of the kind. What we want to do, as my hon. Friend the Member for Colchester, North (Mr. Jenkin) has just said, is to maintain our access to the single European market without getting mixed up in a lot of socialist bureaucracy of the central European kind.

Mr. Cook: I ought to let more Conservative Members intervene. The hon. Gentleman has clearly demonstrated that what they want, simply and solely, is an agenda for those at the top of business, with no agenda to help the

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people who work in business. It is hardly surprising, therefore, that the hon. Gentleman's colleagues in the Fresh Start group may not yet have created a crisis in Europe, but they have most certainly created one in the Conservative party.

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury): As one who was not at that meeting, may I tell the hon. Gentleman that it is no good standing at the Dispatch Box smugly pretending that all is sweetness and light in the Labour party? If he thinks it is, he has only to look at some of his right hon. and hon. Friends behind him and ask them what their views on Europe are.

Mr. Cook rose --

Mr. Denis MacShane (Rotherham): Speak for England!

Mr. Cook: I should be in deep difficulties with my constituents if I spoke for England. I assure the hon. Gentleman that it would greatly enhance the quality of these debates if we could look at our hon. Friends behind us instead of at Conservative Members opposite us--

Sir Teddy Taylor (Southend, East) rose --

Mr. Cook: I have not yet answered the previous point.

I speak for Labour party policy--particularly, for the Labour party policy document that went through conference in 1993 without a single nem. con.

Sir Teddy Taylor: In the course of his Library researches, did the hon. Gentleman find out--many of us would like to know--why, before we joined the EU, we had a positive balance of trade, whereas since we joined we have built up a total accumulated deficit of £100,000 million--the equivalent of £2,000 per head of the British population? Moreover, did the hon. Gentleman's researches explain to him what has happened to Sweden and Norway since their respective referendums?

Mr. Cook: The hon. Gentleman really should do more research into the trade figures. If he did, he would discover that, until 1980, we had a surplus in manufacturing exports with the whole of the world, that we did not have a deficit with the rest of the world before then, and that, since 1980, as a result of the collapse of manufacturing industry, and this Government, there was no surplus in any year until 1994. If he would like to go up and down the country and draw that to the attention of the electorate, I would be thoroughly pleased, and so would every Labour candidate in Britain.

I shall now address our real position.

Mr. Duncan Smith: Answer the question.

Mr. Cook: I have answered the hon. Gentleman's question. Our position is that we do not, as Conservative Members like to fantasise, support a federal Europe or any super-state in Europe. We are not in favour of joining a European Union in which we have to surrender sovereignty. We favour a European Union that is a free association of independent member states, not surrendering sovereignty but sharing our common interests.

I must say to the Foreign Secretary that his idea--that the position that he was outlining is more central to the Europe of the 1990s--is totally at variance with the experience of

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his own negotiator at the previous meeting, who found that he was outnumbered by 14 to 1. Some of his hon. Friends seem to prefer that isolation. The problem is that isolation is a poor place from which to negotiate the best deal for Britain. Hon. Members would know that if they read the document produced by the Department of Trade and Industry only last year, which spelt out that officials of Britain feel marginalised in negotiations within Brussels, precisely because of the negative attitude taken by Ministers.

There is, of course, a wider issue in this debate--the world is shrinking. Trade is expanding at double the rate of output. Financial flows across the exchange markets every day now clock up 20 times the amount required to finance any one day's trade. What makes that movement irreversible is the change in the telecommunications industry, which has meant that industries around the world are interlocked. It is now possible to transmit the entire "Encyclopedia Britannica" around the world in three seconds--and the Tory manifesto in a nanosecond.

That creates a real challenge for politicians. We have to grapple with two separate realities. On the one hand, there is a powerful, rich sense of identity with the nation of our people. It is a sense of identity that is deeply creative, which Labour Members totally respect, because that sense of national identity is one of the strong bases of the social solidarity that we hold dear. We will take no lectures on the importance of national identity from people who have done more to break up social solidarity in Britain than any previous Government this century.

The challenge for responsible politicians is how one reconciles that powerful sense of national identity with the requirement to create international structures that regulate economic relations and resolve the opportunity for friction between nations. That is the central challenge facing us.

Conservative Members refuse to face that challenge. They are retreating into the rhetoric and mind-set of an 18th-century nation state. I do not say the 19th century, as the 19th century would be too modern. At least in the 19th century Britain understood that it could not be isolated from the world.

Conservative Members are failing to grasp the logic of their own position. As I understand it, Conservative Members on the Front Bench and the Back Benches are united on one item for the intergovernmental conference: enlarge the European Union and bring in other countries of central and eastern Europe. We are entirely at one with them on that. I believe that western Europe at present has a very important mission: to embrace the new democratic countries of Europe and bring them into the family of democratic nations. We would then be able to underwrite those democratic structures and firmly anchor them into a structure of human rights, so that we never again see them slip back into totalitarianism.

If Conservative Members are sincere and genuinely want to see the European Union expanded to bring in all the countries of central and eastern Europe, they cannot continue to say that there must be no change to the EU's institutions. Those institutions were designed when there were six member states. We cannot expect those same institutions to work without change when we have a European Union with over 20 members.

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Mr. Dykes: I am grateful to the hon. Gentleman for allowing me to intervene, especially at such an interesting part of his speech. Does he agree that the Government are definitely sincere about the proposals to which he has referred, given all the evidence, but are facing increasingly dotty xenophobia and a manic dislike of socialism in Christian Democratic Germany, for instance, by some Conservative Back-Bench Members? I fear that that will become worse.

Therefore, rather like other principal countries of the Union where there are no significant differences over European policy between the major parties, why is it not possible for the Opposition to respond more positively to the idea of free votes in future in the House, where there is a large built-in majority for European development? That would, of course, need co-operation from the Opposition. Why cannot they be more constructive in that way, especially if the Government were, interestingly, able in future to offer some abandonment of controversial legislation such as British Rail privatisation?

Mr. Cook: My right hon. Friend the Member for Bishop Auckland (Mr. Foster) might like to retire at this stage with the hon. Gentleman to tie down the deal that he was offering. If the offer were on the table--that we can halt the privatisation of British Rail in exchange for a free vote on Europe--it would be one that we would happily entertain.

A free vote would, of course, have to cut both ways. Conservative Members would have to recognise the importance of such a free vote. If the hon. Gentleman is suggesting that, in certain circumstances, he and his colleagues might be tempted into the Opposition Lobby, we shall happily take away the suggestion and reflect upon it. We could happily do so when I and some of my hon. Friends leave the Chamber to attend a meeting in nine minutes' time.

I shall finish the point that I was making about enlargement. The Foreign Secretary knows the truth of what I have just said. In any event, we can test him on it. The demand from the Government Back Benches, including the Fresh Start group, is that he should veto any extension of qualified majority voting. Would he do that? Would he give us an undertaking that he would veto--

Sir Teddy Taylor: No.

Mr. Robin Cook: I know that the hon. Gentleman aspires to be Foreign Secretary, but it is perhaps unfair for him to answer for the Foreign Secretary. However, he voices the thought that is in all our minds. The answer is no, because the Foreign Secretary is far too sensible to take such a course. He knows that it was the Conservative Government under the previous Prime Minister, who agreed to the last major expansion of QMV when she signed up to the single market. I watched the former Prime Minister with interest when she was being interviewed about these matters. She appeared to give the impression that she felt that she had been cheated when she signed the agreement. She thought it was an agreement with Singapore. No one had told her that the end user would be the European Commission. Let us turn to another area where the Foreign Secretary is under pressure. The right hon. Gentleman is being pressed to veto an extension of the European Parliament's role. I can understand why Conservative Members are anxious to avoid any extension of its role. After all, they

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have great difficulty in getting elected to the European Parliament. I shall not ask the Foreign Secretary if he will veto any extension of that Parliament.

I shall ask the right hon. Gentleman another question. What conceivable British interest would be served by stopping the European Parliament scrutinising the agriculture budget? At present, the European Parliament can have powers of scrutiny only over the non-compulsory section of the budget. That excludes the agriculture budget. What possible purpose is served in Britain's interests by stopping the European Parliament from being able to ask questions and to vote on that budget?

Reference has been made to fraud. Fraud stems from the common agricultural policy. Despite the promises given before Christmas, fraud is increasing. More cases of fraud were recorded in the first nine months of last year than in the whole of 1993. Why not also make that something that is open to scrutiny, vote and judgment in the European Parliament?

May I offer one word of warning to those on both sides of the debate? Looking ahead to the next 12 months, I can see that our debates on Europe will be dominated by the issues before the intergovernmental conference. Those issues are, of course, highly technical. They take us into orbit among remote and lonely planets of the institutions of the European Union. If we, on either side of the debate, really want to connect the debate about Europe with the public, we must debate Europe in terms that relate to the lives of the public.

I would entirely accept the challenge that the Foreign Secretary threw down to us. One of the ways in which Europe can affect the public's lives is the way in which it can provide them with working rights at the place of work-- and yes, I confirm entirely, as the Foreign Secretary said, that the Labour party is fully committed to the social chapter, and that one of our first steps will be to sign up to it. To suggest that that position makes Labour isolated in Europe is extraordinary, given that the Government are the only one who have not signed it, and that four new countries have joined it within the past six months.

Mr. John Carlisle (Luton, North): Will the hon. Gentleman give way?

Mr. Cook: I shall give way for the last time.

Mr. Carlisle: In the earlier part of the hon. Gentleman's speech, he proudly boasted that American companies were coming into his constituency of Livingston because they wanted access to Europe. May I remind him that an American company came into my constituency because it wanted access to Europe, and that it came to Britain rather than to another European country because we had not signed up to the social chapter? Had it gone to another European country, it would have suffered the iniquities that the chapter has brought. It came to Britain for that very reason. Should the hon. Gentleman get into power, that company may desert us, and his American investment would go away from these shores for ever.

Mr. Cook: On that point, I shall be guided by the Labour Member of Parliament who will replace the hon. Gentleman as the representative of his constituency by the time we come to power. I regularly meet American and

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Japanese companies in my constituency. Not one of them would have the slightest problem with living within any minimum wage that this party may propose; nor do the companies that trade internationally have the same difficulty over the social chapter that Conservative Members appear to have, which is why three companies have signed up to a works council, and all of them, at the same time, withdrew their donations to the Tory party.

Sir Richard Body (Holland with Boston): Will the hon. Gentleman give way?

Mr. Cook: No. I have given way for the last time. With respect to the hon. Gentleman, I have been generous in giving way, and I said before that that would be the last time that I gave way.

The fundamental difference between the Front-Bench teams of both parties is that we fully reject the idea that one can achieve competitiveness in the new global economy by lowering wages and lowering conditions. People in China will work for 10p an hour. Not even Conservative Members would advocate that we pay 10p an hour in Britain. [Hon. Members:-- "They would."] I say to my hon. Friends that Conservative Members would never agree to work for 10p an hour themselves. We will never successfully compete by doing the job cheaper. We will compete only by doing it better, and that means higher skills and higher technology.

The reality is that Conservative Members are limbering up to fight the next election as the nationalist party of Britain. Indeed, some of them see that as the solution to their difficulties. It would be not a solution to their difficulties but the start of their problem, because a nationalist party would have difficulty relating to the new world.

What the electorate out there want is a Government who can relate to the real world, who can build alliances in the real world, who can find common ground with their trading partners, who can give people opportunity in the global economy and the full opportunity to take the benefit of the globalisation of the economy, not a Government who will isolate Britain behind the new great wall of opt-outs and vetoes.

If Conservative Members really want to conspire to offer that choice to the people of Britain at the next election, I warn them that I shall be happy to accept it. We shall offer them a Government prepared to face a new century, because they understand that new century and will work with it; we shall be happy to fight an election against a party that would prefer to retreat into the 18th century. I have no doubt which century the electorate will choose.

Several hon. Members rose --

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): Order. I remind hon. Members that Back-Bench speeches are limited to 10 minutes. 4.59 pm

Mr. David Howell (Guildford): With his usual courage and integrity, my right hon. Friend the Foreign Secretary struggled to draw from the sea of documents listed on the Order Paper--the vast output of bumf that seems to have flowed from every European institution--an awareness of positive developments in the European Union. I agree with him that some of those developments are very

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positive, and that we are unwise to see everything in black, negative terms: we should not conclude that all that happens in Europe is against our interests.

I shall deal in a moment with the matters that do worry me. First, however, let us consider the European scene today, just before the Cannes summit. The French Government are changing some of their views. Their position is contradictory, of course, in that they remain deeply committed to merging their currency with the deutschmark and regaining control of their monetary destiny--or so they say; I do not think that they will--while also remaining healthily sceptical about the centralising tendency of some Community institutions.

Like us, the French are arguing for positive measures that reassert the strength and power of the Council of Ministers over the Commission--which, notwithstanding denials, seems to be bursting with unseemly ambitions in diverse areas where its competencies do not lie, and moving in directions in which, according to treaty, it should not move. The French want the assertion of national Parliaments over the European Parliament. I assume that every good Member of this Parliament would support their aim to enable national Parliaments to call the European Union to account in regard to decisions taken in our name.

It would be stupid of us to reject those positive developments, and to say that nothing is going our way. Of course France and Germany want to remain close; of course President Chirac went first to Bonn, because the oldest and fiercest memory in the breasts of the French tells them that never again must they be overrun by their colossal neighbour. We understand that; no British man or woman could want France and Germany to be other than friends. The French attitude is changing, however, and I think that it is changing in a healthy way--in line with some of the ideas that my right hon. Friends the Foreign Secretary and the Prime Minister, and others, have struggled to put across in recent years.

I do not know whether it was fair of me to detect in the speech of the hon. Member for Livingston (Mr. Cook) definite signs that the Labour party, too, is moving--although I do not want to raise the hopes of the right hon. Member for Bethnal Green and Stepney (Mr. Shore). I detect a change in certain pronouncements.

It was less noticeable today: although the hon. Member for Livingston always makes an enjoyable speech, his speeches are rather like a Chinese meal in that, when we read them later, nothing much can be extracted from them. The Labour leader, however, seems to be striking a far more cautious note than was struck by the mad centralism of the past, and the dotty commitment to everything coming out of Brussels.

Who knows? It is better that one should be saved. Labour has moved in so many other areas; indeed, listening to Labour leaders describe their policies nowadays is like reading the labels on bottles of homeopathic drugs. We note all the ingredients that the Labour party no longer contains. It is no longer in favour of nationalisation, for instance; it is no longer going to sting the rich.

Perhaps, even, the Labour party is no longer committed to dotty centralisation in social policy, and the vast redistribution of funds proposed, with excessive zeal and

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enthusiasm, by the Brussels Commission. We live in hope: there have been positive developments which should be built on. My right hon. Friend has done marvels, and will continue to do so; I have complete confidence in him.

Nevertheless, when I look at some of the documents listed on the Order Paper, I feel far less confident. As we have reduced our debates to mere soundbites--I know that that is nothing to do with the Chair, but the ruling has resulted in all the action going upstairs to the Committee Rooms, so that we cannot have a proper debate in the Chamber--I shall concentrate on one issue: the Commission's Green Paper on the practical arrangements for the introduction of a single currency.

I do not know whether hon. Members have had a chance to read that vast, verbose and almost unintelligible document. When it was published, a big press conference was held in Brussels, led by the Commissioner concerned--a Frenchman, Mr. Yves-Thibault de Silguy--and the Belgian Finance Minister, Mr. Maystadt. They had some remarkable things to say, which filled me with apprehension. I speak as much as someone who has worked for European unity as someone who wants this country's interests to be upheld and protected.

The conference was told that a core number of countries would be committed to a single currency, and that some countries outside that number either would not be able to join because their convergence criteria were all over the place--Spain, for instance, and poor old Italy, with its vast debt-to- GNP ratio--or would refuse to join, like the impudent British, who insist on good convergence criteria and a good performing economy. Those countries would have the cheek to have competitive currencies, which would be very challenging to the core countries that had signed up for the single currency--whether they consisted only of Germany, Benelux and Austria, or included France. Those eminent Commissioners concluded that the answer was to raise tariffs or trade barriers against members of the European Union that were not part of the core currency. I ask my right hon. and hon. Friends to ponder that proposition. It goes like this: "We believe"--I do not believe it myself--"that a single market needs a single currency." I consider that a fallacy in itself. The argument continues: "Therefore, to create a single currency, we will destroy the single market. We will cut it up; we will divide it." That strikes me as not merely a divisive but an anti-European move. It is certainly anti the Europe for which, along with many of my hon. Friends, I have worked for two or three decades.

I know that some Conservative Members think that a single currency must be all right, because Europe is for it and everyone says that it is necessary for a single market; but I beg them to examine the technicalities of proposals that will divide that market, and to consider the advice of skilled people in the currency markets who know that the single currency is a recipe for colossal instability, vast arbitrage and huge volatility. Above all, as learned bankers are now saying every day, it is not even necessary: it is possible to run a very good single market without a single currency.

We are left with a feeling of slight despair. Many people in the country-- and, I suspect, many members of my party--are pro-Europe. We have always wanted to part of a good single market. We want it to be enlarged

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to bring the new democracies--and we note that that is not going too well: a good deal of rhetoric is in favour, but numerous obstacles are being put in the way.

We want a great single market, and to trade in that market. Instead, we see Europe either being dragged in the wrong direction, towards the "great leap forward"--the lunatic ideas of centralisation and uniformity that are technologically and constitutionally out of date--or being told that the alternative is to unravel the whole thing and walk away.

We are presented with a miserable choice. It is time, dare I say, that the- -I hope--not too muddled middle had a say. Most people in the country and, I suspect, most hon. Members on both sides of the House want us to be part of a good, strong single market involving some political authority at the centre, carefully delegated and circumscribed, and underpinning a highly effective Europe of nations--or, as President Chirac says, a Europe of united nations. That is what we want. It is time that that was articulated and that people had the right to get away from the mad extremes with which we are being presented. I know that my right hon. Friend will continue to fight for that aim, because that is the Europe with which Britain not only can live but of which we can be at the heart.

5.10 pm

Mr. Denzil Davies (Llanelli): Those of us from the Celtic fringes like to choose a text on which to hang our speeches. The trouble with debates on the common market, as it used to be called, is that there are so many documents. There are more texts than in the Old Testament. I have found two texts. I do not know whether 10 minutes is enough for a sermon on two texts, but I shall try.

The first text is in a communication dated 13 March 1995 from the Commission to the Council following the Essen council on employment. It says:

"Fighting unemployment is a paramount task of the Community." The next text comes from paragraph 6.9 of the development document of July to December 1994, which points out that 10 out of the 12 member states still have excess deficits on their Government budgets.

There could not be a starker contrast--a contradiction of Hegelian proportions. On the one hand, we are told that fighting unemployment is paramount but on the other we are told that all the countries, or 10 at least, are engaged in a massive deflationary exercise to reduce public expenditure and public debt to the 60 per cent. and 3 per cent. targets in the Maastricht treaty because they have to eliminate their excess deficits by 1999.

The drive to meet those criteria is one of the major reasons for the high unemployment in western Europe today and I fear that it is going get worse. Even a committee of the European Parliament--I do not usually use its documents--has apparently concluded that perhaps 11 million jobs will be lost in western Europe as a result of the drive to reduce Government expenditure and debt to meet the Maastricht criteria. That is before member states start to lock their currencies together irrevocably in the run-up to a single currency.

The unemployed, the poor and those on welfare will have to pay the highest price for this mad exercise to get a single currency and a centralised European state. As far

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as I can see, the political and bureaucratic elite in Europe does not care about that and believes, as Lenin would have said, that the end justifies the means.

The main purpose of a single currency is constitutional; obviously, there have been economic arguments one way or another but the main purpose is constitutional. It is a major plank in the creation of a centralised European state. Joining the single currency, which we have debated before so there is no need go over it again, would be a major constitutional change for Britain. We would hand power over monetary and exchange rate policy and, in effect, over public expenditure and fiscal policy from a democratically elected Government to undemocratic European institutions.

A single currency could involve a major constitutional change within the United Kingdom. The Prime Minister was in Wales a few weeks ago. I am sure that he is very sincere about this but he apparently believes that a rather modest Welsh assembly would, with the Scottish Parliament, lead to the break-up of the United Kingdom. If we sign up to a single currency, many people in Wales--I can speak only for Wales but it will be even more true in Scotland--will ask why they should belong to the smaller Union when they can belong directly to a larger Union. They look across the sea to Ireland. I read in a development document that the Irish do not have an excess deficit; they have negotiated it away. They do not have to reduce their debt and Government expenditure to the Maastricht criteria, whereas we in Wales, if I can be parochial, will have to strive to cut our welfare benefits and accept higher unemployment to meet the 3 per cent. target. That is not necessary across the Irish sea because Ireland has a direct seat in the Council of Ministers and can get away with it.

I do not share that view, but many people would. If the Prime Minister and the Conservative party are concerned about the United Kingdom, as I am sure they are, they should realise that the issue of a single currency could lead to major constitutional changes within this Union.

My hon. Friend the Member for Livingston (Mr. Cook) did not deal with the economic aspects of a single currency. I do not criticise him for that. Some of my right hon. and hon Friends have said that we are not really going to join. They accept the Maastricht criteria and a European bank but say that we will not join until there is real convergence. When I hear the word "real", I reach for a child's guide to metaphysics because I am never sure what the purpose of the use of that word is. Let us say that it does not mean inflation, unemployment or growth rates but GDP per head.

In parts of the south Wales valleys, GDP per head is about 60 per cent. of the European average. In Wales, it is about 70 per cent; in Northern Ireland, I suspect, about 70 per cent; in Scotland, a little higher. Is the Labour party, when it talks about real economic convergence, saying that we will not sign up to a single currency until the Rhondda and the other valleys have an average GDP per head of 100 per cent. of the European average? If that is what we are saying, fine. Let us put it in the Labour party manifesto so that we know exactly what we mean by real convergence. I suspect that the word "real" is being used in the same sense as the late Lord Joseph used it in talking about real jobs in 1979 and 1980. If we believe in real convergence, let us spell it out.

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The final escape is saying that it will not happen anyway. All those countries are striving with might and main and have signed a treaty to reduce deficits and set up an embryo European bank but it will not happen because the Germans do not want it. The German people may not want it, but who cares about them? The business and political leadership in Germany do not care about the German people. The leadership will want it because it will be an opportunity to keep down the value of the mark.

The hidden emphasis of German monetary policy has always been to ensure that the mark, as far as possible, was undervalued. Increasingly, the mark is becoming a sort of reserve currency. It will be in the interest of German business and industry to have a European single currency to ensure that it is undervalued and that their exports do not suffer. They will try to lock in other countries to prevent them from exercising economic sovereignty by devaluing their currencies. A clash will come between the hard core that wants go outside the treaty and impose restrictions and those who do not want to join the currency.

The vogue word in this debate has been mind-set. Frankly, it seems to me that the mind-set of most of the pro-marketeers is still that of the world of Monnet and Schuman. Some go back to the Congress of Vienna. When I read reports of the Council of Ministers, I think that if they had powdered wigs, they would not be very different from Ministers at the Congress of Vienna.

My hon. Friend the Member for Livingston talked of a global economy. Yes, we have a global economy with free trade, although the World Trade Organisation is having some difficulties. GATT has been around a long time. A regional economic pact is not necessary in a world with a global economy. The economic prizes will go not to large economic blocs but to the country that is able to change its economic policies quickly and has the flexibility, democratic credibility and legitimacy to change its policies quickly.

The centralised European state is a dinosaur. The best thing for Britain is not to go down the route of a single currency but to keep well away from it.

5.18 pm

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