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7.8 pm

Mr. John MacGregor (South Norfolk): I agree almost totally with what my right hon. Friend the Member for Witney (Mr. Hurd) said yesterday and what Lord Owen said in a debate in the other place last week. I shall not repeat all their points. Like them, I have always been a passionate and convinced supporter of British membership of the European Union, and I remain so.

At the first national conference at which I spoke when I was a student, I proposed a resolution urging the Government of the day to join the original six and become an original member of the treaty of Rome but, like my two colleagues, I do not therefore embrace the concept of the single currency--certainly not at this stage of European development.

My right hon. and learned Friend the Chancellor put the economic advantages and disadvantages of the single currency concisely and impeccably yesterday, and made it clear that he is genuinely waiting to decide. I agree entirely with his analysis; I differ from him only in that I am more strongly persuaded of the disadvantages. At this moment--I stress, at this moment--I am opposed to British membership of the first phase of the single currency. The time to judge that matter properly and definitively will come later. I do not know exactly when that will be. I know what the timetable is at the moment, but I recall many European negotiations where the clock has been stopped and the timetable has moved backwards.

My inclination at present is to look to the disadvantages because I believe that the pressures for the single currency are pushing us too far, too fast, both politically and economically. I fear that it may bear the seeds of itsown destruction--I follow a number of the commentsof my right hon. Friend the Member for Worthing(Sir T. Higgins). I speak not merely of the fudging of the criteria before entry--which many of us are now noticing is happening in other countries--but of the likely impossibility of holding to those criteria later, depending on who initially enters the single monetary union.

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Different economies are at substantially different levels of development and growth. There are different levels of inflation; different pressures on public expenditure and debt; different levels of, and pressures on, unemployment. The political pressures that some Governments may be unable to resist when holding to the criteria may mean that the criteria will be breached. Alternatively, there may have to be transfers of expenditure between different member states on a much greater scale than anything we have hitherto experienced. Real tensions could therefore build up if we move too far, too fast.

In the context of public expenditure, I want briefly to mention pensions. I share the concerns of many about the funding of our pensions in 10 to 20 years' time being in a much better state than those in most other European Union member states, with the possible exception of the Netherlands. I know that there are constraints--indeed sanctions--against the transfer of public expenditure from one country to another to fund the huge pension burden that many other member states will face in 10 to 15 years' time, but I was impressed by the Social Security Committee's report on the point. The response of the President of the European Commission was certainly not consoling.

We all know that, at a certain stage, pressures will become such that the pension burden may be funded from some central, European public expenditure pot or, indeed, from the central reserves. I am concerned about that, and think that we need much firmer sanctions and clear commitments to prevent it. There is also the problem of whether moving towards a single currency at this stage is compatible with the timetable of, and progress with the widening of, the EU, as well as a mass of other technical issues. For all those reasons, I am doubtful.

There is everything to be said for our participating fully and positively in the negotiations, as we have been doing. If the single currency goes ahead and breaks up, we would have made our case and be able to play a much more crucial part in putting the pieces together again. If it succeeds, against my expectations at the moment--I keep stressing that we do not know exactly what shape the final proposals for the single currency will be--and we decide to join later, which is an option that I am strongly in favour of keeping open, we will have helped to shape it.

I spent four years of my ministerial life negotiating on and trying to reform the common agricultural policy. I entirely agree with what my right hon. Friend the Member for City of London and Westminster, South (Mr. Brooke) said about that. If we had been in on the early discussions of the CAP, we would have had nothing like the problems that we have had subsequently.

If there is a two-speed Europe as a result of some member states going ahead with the single currency and our not doing so, we will participate in shaping the kind of problems that will arise from a two-speed Europe. In that respect, I share the views expressed by my right hon. Friends the Members for Witney and for Wokingham. I do not agree with my right hon. Friend the Member for Wokingham on a number of the points that he made, but I agree with him that we are not alone in Europe in the kind of developments that we want. Indeed, I am much impressed by the number of German and French business men who keep urging us to maintain our position on the social chapter because they agree with it.

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The position that I hold leads me, unlike some of my hon. Friends, to the view that we should in no way be shackling our Government in the present negotiations. I fear that some of the commitments and comments that have been made have had precisely that effect. I repeat that I genuinely believe that we cannot decide on a single currency now, because we do not know its final shape. I remain doubtful about whether we should join.

Above all, I should stress that to speak in this way is not to be a Euro-sceptic. To be cautious about a development that we genuinely think is taking place too far and too fast does not mean that we do not continue to want to be strong and committed members of the wider European Union. There is a world of difference between my position and those who are commonly described as Euro-sceptics.

I am glad that the Referendum party has been flushed out and forced to indicate what its question will be. It is quite clear from that question that it is advocating withdrawal from the European Union and joining a European free trade area of us and Switzerland--

Mr. Jessel: And Norway.

Mr. MacGregor: Perhaps Norway as well. That is a big deal for British business and the British economy. Some of my hon. Friends and others who carry on the debate in the media and elsewhere outside the House are being less than honest in making their points. In the final sentence of his speech yesterday, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) was honest; he faced up to the fact that the position that he holds will mean that, at some point, he will have to judge whether we should pull out of the European Union altogether. That was an honest position; I totally disagree with it, and profoundly do not join him on it.

For all the reasons that I have given, I believe that the Cabinet has got it right at the present time; it is right to suspend judgment until we see the final proposals; it is right to have a referendum if we decide to move ahead; and it is why the Cabinet should be supported.

7.14 pm

Mr. Nigel Spearing (Newham, South): It has been interesting to witness the degree of caution that has developed in the past few days' debates. From the right hon. Member for Witney (Mr. Hurd), who spoke yesterday from a foreign policy point of view, northwards to the right hon. Member for South Norfolk (Mr. MacGregor) and southwards to the right hon. Member for Worthing (Sir T. Higgins) on the south coast, Members who might otherwise have been desperate to increase political union inside the European Community are now being rather cautious. The cause of that might be some disagreement on what is meant by political union.

Yesterday, the Chancellor of the Exchequer made some extraordinary statements. As we all know, he is a man with a most attractive means of presentation. I do not know whether anyone has analysed the construction of his sentences, the choice of his vocabulary or the quality of his voice, but I suspect that their combination not infrequently makes the implausible sound plausible and the plausible sound well founded, when often that is not so. My exchange with the Foreign Secretary at the beginning of today's debate shows that the Chancellor's

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speech yesterday was a very good example of, from some people's point of view, his best, and from the point of view of the best parliamentary debates, his worst.

The Chancellor said:

I shall comment on that in two parts. The first concerns the European super-state and the political future.

The right hon. Member for South Norfolk mentioned reserves. The calculation of pension liability, on which we happen to be well off when others are not, could include currency reserves as a whole throughout the economic area of a single currency and even, I take it, reserves in banks and institutions. The uncertainties are great. Are they not also specifically political?

How can the Chancellor talk about there being no possibility of a super-state when there will be a super-currency and a super-bank? How can that in any way not be super-political as well? I put that as an unsustainable proposition, not just to the House but to anybody who may be listening. When it comes from the lips of the Chancellor of the Exchequer, it sounds reasonable, but it is totally unreasonable. I put it to the Minister who will be winding up the debate that he cannot sustain that proposition either.

The Chancellor went a bit further when he said:

Did the Chancellor of the Exchequer not know what our EU partners' intentions of were? Did he not ask the Foreign Secretary?

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