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6.47 pm
Mr. Tim Renton (Mid-Sussex): I also wish to congratulate my right hon. and learned Friend the Chancellor of the Exchequer on his robust speech this afternoon, which went into the details of the advantages and real disadvantages of joining economic and monetary union.
I am one of those who feel that it would, at this early stage, be totally crazy to throw away our option to participate in forming the terms of economic and monetary union, whether or not we join. In saying that, I wish to point out to Opposition Members, who seem to think that there are no interested, positive Europeans on the Conservative Benches, that I am the fourth Back Bencher now to speak along those lines. We are not all Sir Buftons who have been wheeled out to make those comments: we do so because we believe in them solemnly. I believe that a large majority of the Conservative party also believes in them, although among the exceptions is my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont)--an old friend of mine, who is unfortunately absent from his place--who takes a different view. I think that he is wrong, and that he is in the minority. The other Conservative Back Benchers who have spoken so far represent the sensible, positive majority.
Mr. Denis MacShane (Rotherham):
Will the right hon. Gentleman give way?
Mr. Renton:
I have no time to give way.
Like my right hon. Friend the Member for Witney (Mr. Hurd), I have concerns about the single currency, but I feel strongly about the subject because I look back in history. I remember well that, twice at the beginning of my political life, under Macmillan, we made approaches to join the single market, some seven or eight years after it had been founded, and we were rejected by de Gaulle.
In consequence, by the time we joined in 1972, many of the rules had already been decided, including those of the common agricultural policy. We have been arguing and fighting against those rules that were decided before we joined, and paying for them ever since. That is precisely what we do not want to happen on this new, extremely important occasion.
My right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) suggested that it would be good if some of us came forward with one or two positive ideas
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Given that there is likely to be a referendum on the subject at some point after the next general election, it would be sensible of the Treasury to ask the Bank of England to produce a booklet spelling out fairly the advantages and disadvantages of EMU, to be distributed to every household in the country before the next election. Only the Bank of England can do that, because it is not politically driven.
Our constituents need to know the facts. Of course, a large amount of hypothesis is still involved, because we do not know what will happen after 1999, but they should have an objective summary of the current situation produced by a respected body such as the Bank of England. I hope that my right hon. Friend the Chief Secretary, who is on the Front Bench at the moment, will take note of that and pursue the idea.
My right hon. Friend the Member for Guildford (Mr. Howell), for whose financial knowledge I have a great deal of respect, hinted that he did not think that we could join in the first wave. If we do not, there can be no certainty that we could join in the second wave after 2002. We cannot take that for granted, for the simple reason that, if we met the criteria, our application would have to be decided by qualified majority voting at ECOFIN, and there would have to be unanimity on the rate of conversion between sterling and the euro.
Despite the remarks of my right hon. Friend the Member for Kingston upon Thames, it is possible that, by that stage, the Korean and Japanese companies that are currently investing heavily in this country--the House should remember that, in recent months, Korean and Japanese investment in our manufacturing industry has run at a staggering $1 billion a month and in some months has reached £1 billion a month--might decide that, with us out of EMU but EMU working on the continent, they should put their new plant in Leipzig, Marseilles or Barcelona rather than here.
It would be perfectly understandable if some of the countries in EMU decided that it was going along very well without us and that that would be a real reason for trying to keep the British and other countries out, just as de Gaulle did in the 1960s. We cannot take for granted our ability to get in on the second wave.
That leads on to the question whether we can have a truly effective single market--we all agree that that is necessary--without a single currency throughout that single market. We are understandably pleased with the results of the devaluation of sterling a few years ago, just as the Italians are pleased with the results of the devaluation of the lira. It has had a huge improving effect on our trade figures. The converse of that is the chagrin of the French and Germans, who do not want it to happen again, because it had a bad effect on their trade figures. It is possible to argue that every member of a true single market must be within a single currency to stop competitive devaluations that fundamentally change the terms of trade.
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One does not like to say it too publicly, but the unpleasant obverse of the coin is that, whatever the formal rules, members of EMU are likely in the long run to bend the practice and observation of the rules of the single market to the disadvantage of those members of the European Union that are not in EMU. That point was made by Sir Iain Vallance, the chairman of British Telecom, in the recent publication of the Philip Morris Institute, "Is the Single Market working?" He said:
I noted the comments of the hon. Member for North Durham (Mr. Radice). I end by quoting the conclusion of an article that appeared in The Daily Telegraph today--a sometimes anti-European paper:
Mr. Denzil Davies (Llanelli):
I thought for a fleeting moment during the debate that we had all become Euro-sceptics on the single currency--the right hon. Member for Witney (Mr. Hurd) did not know whether we should join; the Chancellor of the Exchequer did not know whether we should join; the shadow Chancellor did not know whether we should join. For a moment, I thought that perhaps we were winning the argument. Then I listened to the reasonable and rational tones of the right hon. Member for Mid-Sussex (Mr. Renton) and the uncharacteristically strident tones of my hon. Friend the Member for North Durham (Mr. Radice).
Mr. Radice:
"Passionate" is the word.
I came back to earth and realised that the Euro-coalition in the House was alive and strong. [Hon. Members: "Hear, hear."] We all know what will happen after the next election: whichever party wins--I expect it to be the Labour party--the Euro-coalition in the House will use every hook and crook, every stratagem and every fear to try to get Britain over the top and into the single currency in the first wave. I have participated in debates in the House on this subject since 1972. I hear the noises of assent all round me as the Euro-coalition bellows from time to time. They are feeling a little confident this evening.
Because there is an election coming, the Government are peddling the line--especially on the so-called stability pact and the convergence criteria--that we cannot rule out the single currency because we, the Brits, have to be in there negotiating in Brussels or Dublin, or wherever it might be. We cannot really trust those foreigners, say the Government, because, if we are not there, those
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If we are concerned about fudging, I ask myself, why do we not support the Germans? The poor Germans are on their own in wanting a super-strong stability pact to prevent fudging. Apparently, however, we are not supporting the Germans. Apparently we are sitting with the other fudgers--the French, the Italians, the Belgians, the Greeks and the Spanish. Apparently we are against fudging--but we are not dogmatic about it.
The Italian fudge is elegant and tasty, as one would expect. The Italians have created something that they call a Euro-tax, which is a forced loan that will be repaid after 1 January 1999 with credits against income tax bills. The Italians, I suspect, are using the fact that there will not be a stability pact on national debt, and they will convert budget deficits--to get the deficit below 3 per cent.--into a national debt, which can be above 60 per cent. after 1 January 1999 because there are no sanctions on national debt. The French are not quite so good as the Italians, but we know what the French have been doing as well.
I am not sure whether the Chancellor of the Exchequer comes to all this with clean hands, either. If one opens the Red Book these days, it is sticky all over with fudge. Of course, it is not Italian fudge, but good honest British fudge. What is the private finance initiative but a fudge to try to avoid the public sector borrowing requirement? The Treasury has been very clever about the sale of the Army's surplus property, which cannot be said to be a privatisation. If it was a privatisation, the money would not show up in the European system of accounts, and we would not be able to get borrowing down to 3 per cent. We are fudging as well.
The real fudge is not in Brussels or Dublin, but here, as the Government and the Opposition try by every means to avoid a debate on the matter until after the general election. Labour Members should not be surprised that the Tory party wants to keep down public borrowing and, indeed, is prepared ultimately to allow fines against countries that transgress.
However, some of us--perhaps there are not many of us left--are worried. We represent constituencies where the income per head is much lower than the average, even for Britain; where the unemployment rate is higher; where the percentage of families on benefits increases all the time and where fewer people bring in money from employment; and where public expenditure, sadly, is a very high percentage of the wealth and income. Frankly, those of us who still worry about these things worry that the shadow Chancellor, my right hon. Friend the Member for Dunfermline, East (Mr. Brown), is, as we saw today, as keen as the Chancellor on the stability pact and all the paraphernalia of fines and reducing borrowing below 3 per cent.
Some unkind people who have made a textual study of my right hon. Friend's speeches in the past six months might say that he would be sitting with the Germans if it came to a decision on the stability pact. But the coalition
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The convergence criteria and the stability pact will be paid for, and there will be a price to be paid for the fines--if they ever come--and a price to be paid for avoiding the fines by reducing public expenditure. As I have said in the House before, the price will be paid by the poor, the unemployed and the disabled, and by the gradual dismantling in Britain and western Europe of the welfare state. There was a time when one could expect growth in the economy to reduce deficits. That was a long time ago, and the central bank will not allow that any more. Herbert Hoover is alive and well. The central bank will make sure that growth will be choked to prevent unemployment from falling too rapidly.
Growth cannot help us, but of course we could increase income tax. We could pay for the convergence criteria by putting up income tax for the comfortable 40 per cent. But we cannot do that--the consensus will not allow it. My hon. Friend the Member for North Durham had a go at newspapers, and perhaps I will as well. The chattering classes who write for pseudo-radical newspapers such as The Guardian and The Observer and who live at the bottom of the think tanks that proliferate everywhere are all for the single currency, but they earn good salaries and do not want to pay for it. In the triangular tug-of-war involving the central bank, the chattering classes and the welfare state, the poor, frankly, do not stand a chance.
"Some form of supranational monetary discipline may be necessary to realise the full benefits of the single market."
I do not think that the European Union is at a critical stage. Progress on EMU and enlargement will be made in future, but it will be slow and tricky, and there will be quite a few changes of course. Sometimes, the only ones who seem to be in a crisis on the issue are us--the Members of Parliament at Westminster--aided and abetted by a generally anti-European press.
"At Maastricht, John Major gained an invaluable breathing space that enables us to take part in the formation of EMU without yet deciding whether we wish to join, a negotiating position that we painfully lacked with the CAP. What we must do is use that advantage to the full. We owe it to the electorate."
It is pure chance that the author of that article is me.
6.56 pm
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