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Mr. Lewis: He anticipated the right hon. Gentleman's comments.
Sir Edward Heath: He saw into my mind, which is easy for everyone to do.
The Chancellor is absolutely right to stand firm on the single currency. However, my difference with him--it is not really with him, but with the governmental line--is that nothing is being done to explain to the people what the pros and cons of the single currency are. There is complete confusion between a single currency and a common currency. Citizens write to me asking, "What is this all about a common currency and a single currency?" Nothing is being done to carry on proper public discussion about the issue.
All those who oppose the single currency get free coverage in a hostile press, which is largely owned by foreigners. On the other side, nothing is done. I learned
only recently that we contributed to the work done by the Commission, which Ministers approved, explaining the pros and cons of the single currency. Like every other country, we have contributed to that work. Every other country has used the results, but our Government are not allowing them to be given to people in this country. That is disgraceful. We have contributed, but we are not allowing the discussion that should be carried on, and the Government must look at that point. [Interruption.] The chairman of the Conservative Back-Bench finance committee, my hon. Friend the Member for Bridlington (Mr. Townend), could arrange such a discussion if he wanted to instead of sitting there, grinning and laughing the whole time.
Mr. Dykes:
Does my right hon. Friend know that in Germany, every passenger on the German railway system receives a bulky pamphlet explaining the pros and cons of the single currency system? Why should we not have something like that here?
Sir Edward Heath:
My hon. Friend will have to ask the Prime Minister and the Government; I am no longer responsible. Such discussion should take place. There is so much grumbling about the money that is passed to the European Union, yet we then refuse to accept what is being offered for discussion among people in a free democracy. As I have said, that is deplorable.
There is another point that I want to make about the European Union which is to the Chancellor's good. I had produced for me last night the latest available figures showing the extent to which we are benefiting economically from the European Union. In 1973, when I took Britain into the European Community, it took only 36 per cent. of our exports. In 1995, the last full year, the EU took 58.2 per cent. of our exports. That is the jump which resulted from our joining the European Community. In 1995, the EU accounted for 56 per cent. of UK imports of goods and 48.2 per cent. of invisibles. In 1995, we had a deficit on trade in goods of £11.6 billion. That comprised a deficit of £4.2 billion with the EU and of £7.4 billion with the rest of the world. All that points to the extent to which we benefit economically from the EU.
In 1994, the latest year for which figures are available, 33 per cent. of UK companies' direct investment overseas was in the European Union and 54 per cent. of overseas investment in UK companies was from the 15 countries of the EU. That shows the amount of inward investment that we received. The worrying thing about that is that it means that we no longer continue to run many of our companies, which instead are controlled by overseas countries, particularly the United States.
I have some other interesting facts. In 1994, 80 million Germans bought £17.7 billion-worth of British goods, but 240 million Americans bought only £16.9 billion-worth. The average German spent three times as much as the average American. Holland, with only 15 million people, took £9.7 billion-worth of exports from us--more than the Asian countries, China, Indonesia and the Philippines together. We sold more to Sweden than to the whole of Latin America from Mexico to Cape Horn. The Irish Republic alone, or Belgium and Luxembourg together, were better customers than Canada, Australia, New Zealand and South Africa put together.
That flies in the face of everything that we hear from the Euro-sceptics--one of whom, the right hon. Member for Bethnal Green and Stepney (Mr. Shore), I see sitting in the corner on the Opposition Benches--and shows exactly how much we are involved with the European Union and how foolish we would be to endanger that relationship in any way.
One other subject on which I want to touch concerns the question that has now become prominent in party politics on both sides of the House--morality. That is now being combined with religious beliefs. That is mistaken. It has not been in the British tradition--although it has been in some European countries--to have parties either named or dominated by a particular religious belief. There is a saying that a Member owes his constituents not only his energy but his judgment. It is up to us to give our judgment about those matters.
To say that one party is the Christian party is, first, not true, but, secondly, Britain now has a mixed population in which there are Hindus, Buddhists and Muslims, and I suspect that some of my constituents are atheists. That may also be true elsewhere. Therefore, we should abandon the idea of proclaiming that our policies are the policies because of a particular religious belief. That is really the responsibility of archbishops and cardinals. They not only can but should do it and it is up to the individual citizen, not us, to decide what he believes and which belief he wants to join.
I hope that we may continue our political life on the road that we have always followed and which has always been demonstrated in the House. There are those who want to come to Prayers at the beginning of the day and those who do not. That is a matter for them. It would be a great mistake if we put forward our policies on the basis of a particular faith and its morality.
I commend the Chancellor on what he has done and I hope that he will be successful, but, in addition, I want to point out the need for a much wider approach in the rapid development of modern technology. I say rapid because there are so many examples of where we have missed the bus. We now have the channel tunnel. It always receives unnecessarily bad reports in the press. However, we do not have a fast link. We have been discussing that for eight years.
When I go through the tunnel, there is a fast link on the other side down to Nice or wherever I want to go. I went on it up to Lille a little while ago and one can travel on it to Copenhagen. But in this country there is nothing. One comes through the tunnel and slows down. Having travelled at 175 mph across the French plains with their beautiful agricultural land, one travels on this side at 35 to 45 mph. Moreover, the horrifying stink and rubbish on this side is deplorable and disgusting. Who is responsible for clearing that away under the new system I do not know, but one does not want to see it oneself, let alone allow one's visitors to see it. That is indicative of the times.
We had the same problem when we decided to decimalise our currency. We started discussing that in 1846 and it was carried through by a Labour Government in 1966. By that time, the rest of the world had already done it. When we did do it, we did it the wrong way, because we decimalised the pound with the result that
inflation was given a tremendous push. Had we decimalised on 10 shillings, like the Australians and New Zealanders, we would have missed that enormous push.
We refused to go into Europe in 1950, when the European Coal and Steel Community was founded. It took us 22 years to get in and by that time so much had already been decided. Again, we missed the boat. We cannot afford to go on like that in modern history. Above all, we cannot afford it on the single currency. The decision will have to be taken, but we must be ready to take it. There is no point in my hon. Friend the Member for Bridlington shaking his head in disagreement. I am sorry that the chairman of one of our major committees should believe that one should be unprepared for one of the most important decisions that we have to make. We must be prepared for it. That involves not only the Bank of England, but the Government. If people in the Treasury are still living in 1945, they must be removed and proper Treasury officials appointed. We do not want to be living in that age. It is time that we took some action and dealt with the matter.
Mr. Malcolm Bruce (Gordon):
It is always a pleasure to follow the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), who has an individual style. Years of experience mean that he is no longer beholden to the Whips or the Government, and what he has to say is all the more refreshing for that. That contrasts sharply with the exchange at the beginning of the debate, when extravagant claims were made about the total wisdom on one side and the total lack of it on the other, when, as always, the truth is always somewhere in between.
As we are debating the economy, it is relevant just to pick out the strands that the Government have highlighted in the Queen's Speech. They are right about the issues, and there is some agreement about the policies, but not necessarily about their delivery. The speech says that firm financial policies are essential to secure sustained economic growth, and continues:
The result is that there can and should be agreement about the need for financial discipline and the need for strict inflation policies--and the need to deliver on those policies. I welcome the Chancellor's announcement of today, not because people like to pay for higher interest rates but because of the recognition that it was necessary to take action.
Just to put the record straight: when the Chancellor announced a reduction of a quarter per cent. on 6 June, we said at the time that we thought the move was misjudged and that it failed correctly to read the pressures building up in the economy. We said that it would have to be reversed. Now the Chancellor has been forced to acknowledge that he was wrong, and he has had to adjust the rate accordingly. The signs are that next week's inflation report from the Bank of England will argue that
the Government are still not on course to hit their inflation targets, so the Chancellor may have to increase rates yet again.
All this reinforces the case for removing day-to-day interest rate decisions from politicians, who are under pressure before elections to do things for electoral advantage in the short term--things that may damage the performance of the economy in the medium to long term. That is the classic way of reaching wrong decisions.
The right hon. Member for Dunfermline, East (Mr. Brown) quoted interest rates from a number of European countries, saying that they were significantly lower than the United Kingdom's. One factor that he did not point out was that all those countries have an independent central bank, which is a significant reason for interest rates being lower there than here. It remains, however, the united view of both main parties that they have no intention of setting up an independent central bank, even though the Maastricht treaty requires one whether or not we join European monetary union. [Interruption.]
I hear mutterings from below the Gangway to the effect that the Governor and the Bank of England have been wrong in the past. That misses the point. There will always be differences of opinion on short-term judgments; we cannot say now who is right and who is wrong about what will happen in two years' time. The fact remains that, although bankers can make errors of judgment on the basis of their economic analyses, they remain economic analyses. They are not politically based.
"Fiscal policy will continue to be set to bring the public sector borrowing requirement back towards balance over the medium term."
That is a greatly watered-down version of what used to be the Government's objective, which was to achieve a balance, full stop.
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