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6.48 pm
Sir Michael Spicer (South Worcestershire): One reason why the hon. Member for The Wrekin(Mr. Grocott) may have lost his seat in 1979 was that, far from the country being at peace with itself, it was on the brink of almost catastrophic civil strife. The pastoral view of the past that he is trying to put before the House is utter tripe and nonsense.
I am very glad to follow my hon. Friend the Member for New Forest (Sir P. McNair-Wilson), who happens to be my mother's Member of Parliament, and I wish to put it on record that she--like, I am sure, everyone else--thinks that he is a most magnificent Member of Parliament, and she keeps on reminding him what a model Member of Parliament should be.
I wish to focus on two references in the Gracious Speech. First, it states:
One of my reasons why I find it hard to come to terms with Sir James Goldsmith's ideas are his views on protectionism. Conversely, I suppose, it was the attack in my book, "Challenge of the East," on his protectionist views and his associated federalist European views, at least when he writes in French, which has presumably prompted him to do me the honour of putting up a candidate against me.
Mr. Andrew Mackinlay (Thurrock):
That will hurt.
Sir Michael Spicer:
I do not think that it will hurt much, because so far most of the people who have approached me would have voted Liberal or Labour, so it is splitting the dustbin vote, which is no bad thing. I voted 37 times against the Maastricht treaty and over recent years I have voted for a referendum every time I had the opportunity to do so.
I should like to deal with Sir James Goldsmith's arguments at face value. In particular, he argues that the combination of cheap labour and ready access to capital makes it impossible to trade on open terms with the emerging countries of the far east. That argument recurs and emerges in all parts of the House.
Sir James argues as a result of that thesis that we must build a massive wall around ourselves and that, in the case of Europe, that should be accompanied by a common European currency involving rigidly managed exchange rates. My hon. Friend the Member for Harrow, East(Mr. Dykes) nods. He obviously agrees and will perhaps join in the debate in a moment. Since, in Sir James Goldsmith's view, the far east is not the only enemy--the United States being the other one--he believes that for good measure Europe should have a single foreign policy and, to go with it, a single defence policy.
The hon. Member for Stockton, North (Mr. Cook) said that he was horrified on a visit to the United States to see what a successful defence industry that country has. I do not share his conclusions on that. If our greatest ally is effective in NATO in providing for its own defence needs and, in combination, for ours, that is good and not bad. One of my worries about the implication drawn by the hon. Member for Stockton, North and Sir James Goldsmith--that we should try to set up some sort of European army, is that a paper army--for political reasons does not make military sense. The sensible solution is genuine bilateral co-operation between countries that have something to offer each other within the alliance.
I was pleased to see that the Defence Research Administration at Malvern in my constituency does a great deal of genuine bilateral work with the French. That makes enormous sense and it is highly significant, because to a large extent DRA Malvern is involved with air defence, that a British flight of aircraft flew down the Champs Elysees on Bastille day. The idea that we can somehow throw over our alliance with the United States or that we should be concerned about the strength of the American defence force, as the hon. Member for Stockton, North was, is alarming. It is one of the disturbing features in the whole European debate.
I shall now return to the issue of protectionism. Leaving aside the fact that exports from the west to the east have risen in recent years much faster than in the other direction, that 90 per cent. of western investment is within western countries and that our consumers benefit enormously from competitive eastern imports, it is plain that shutting out China would be potentially catastrophic to world peace.
I understand that, at the turn of the century, China will be importing an amount of oil equivalent to the entire North sea production at its peak, and that will have to be paid for in some way. Therefore, the idea of shutting out China as a country with which we should trade is potentially extremely dangerous and could result in China either doing dirty deals with, for example, the Iraqis and the Iranians, perhaps by selling them nuclear weaponry in return for oil, or engaging in some sort of military adventure on its borders to try to create lebensraum on which to try to feed itself. The only alternative is to trade with China.
Leaving even that aside, and the fact that the third world needs to export to survive and that Britain needs free trade to flourish, let us take the protectionist argument head on. The question is, how can countries of Europe make themselves more competitive in the face of massive competition from America and the far east? The answer is the opposite of building walls around ourselves. The tide of economics will cause the first breach in the wall and will sweep it away. That happened to Soviet protectionism, and once it collapsed it left an economic
wasteland. The same would happen to us if we were to build trade walls around ourselves only to have them breached by the force of economic circumstances.
What is more, the World Trade Organisation exists to make sure that there shall not be a wall around Europe. Far from building walls, we should break down existing trade barriers and face the challenge head on on the open seas where British traders fare best. That has two consequences in the context of Europe.
First, we need to reverse the process by which costs to industry are increasing day by day because industry has to pay for more non-productive administrative burdens that have been created by further centralisation and standardisation in Europe. Far from further economic integration in Europe being the answer, European nations must be allowed to benefit from the ancient and well tested laws of comparative advantage. From an economic point of view alone, we must reverse the process of European federalisation.
That is partly a process of saying no to further efforts in the direction of further federalisation--for example, at next month's conference which begins in Dublin--although as the third report of the Select Committee on Foreign Affairs which was published in July made plain, that will be easier said than done.
Secondly, we must clearly abandon any attempt to join a single currency; this requires the re-election of a Conservative Government, who will never join a single currency, not least because they would not wish to activate the referendum that they have promised and which Labour has not.
Thirdly, we must renegotiate the position in the European Union to ensure that our laws, not those of the European Court of Justice, are sovereign. That means dealing with such complicated, but important, issues as "direct applicability", the acquis communautaire, the court's ability to make laws and the sovereign status of those laws.
Once we have re-established that Britain is in charge of her affairs in Europe in terms of protectionism, the question is what should be done next. The simple answer, in terms of the challenge of the east, is that Britain should radically slow down and, I hope, reduce the increasing burdens on her commerce and industry. The average tax take by the so-called tiger countries of the east is around 15 per cent. of gross domestic product. Here the latest comparable figure is 42 per cent. That is the real burden on industry, not labour costs, which in most manufacturing industries have fallen to between 5 and 10 per cent. of total costs.
In Britain, the problems of the explosive demands on state expenditure, which lie at the root of the problem, have been addressed by the Government much earlier than they have in other European countries. For instance, since we took office, the proportion of properly funded occupational pension schemes has risen from 40 per cent. to some 65 per cent. of total pensions. Despite that, the absolute figure for state pensions has risen from around £9 billion a year when we took office to more than£30 billion a year, much faster than the inflation rate.
Throughout the west, as the population grows older and as the demands for pensions, health care and social services explode, the national debt-to-GDP ratio is in
danger of spiralling completely out of control. A recent study by the American Congress has suggested that, with present policies, the debt to GDP ratio in the United States will rise from the present level of 3 per cent. to around 300 per cent. in 20 or 30 years' time.
To fund such a level, it would be necessary to take three times everyone's income every year in tax. In the United States, the calculation assumes a dependency population in 20 years' time of around 36 per cent. In Britain, the dependency population at that time will be around 50 per cent, rising from the present level of about 20 per cent., so only half the population will be working to support the rest.
"My Government will promote the further global liberalisation of trade, in particular at the Ministerial meeting of the World Trade Organisation, and will continue to work for transatlantic free trade in this context."
Secondly, it states:
"Fiscal policy will continue to be set to bring the public sector borrowing requirement back towards balance over the medium term. My Government will reduce further the share of national income taken by the public sector."
First, let me address the excellent sentiments on free trade and an outward-looking liberal Europe--liberal in the 19th-century commercial sense. Sir James Goldsmith will not like that.
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