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4.14 pm
Mr. Quentin Davies (Stamford and Spalding): We have just heard the most extraordinary speech from the hon. Member for North Warwickshire (Mr. O'Brien). Not only is he apparently incapable of giving a straight answer to any question, but he could not even tell the House whether he stood by his own words in the Chamber a year ago.
The British people cannot possibly be tempted to put the government of this country in the hands of politicians who conduct themselves in that way. I have never heard a less inviting prospectus for any candidate for the government of Britain than the hon. Gentleman's speech. Such indecisiveness and mealy-mouthed ambiguity are the hallmark of so many speeches that we hear from the Labour Front Bench.
It comes a bit rich from Labour Front Benchers to deliver homilies in favour of the European Union and the European single market, when we know perfectly well that had the British people elected Labour to power in the 1980s--in their wisdom, the British people did not do so--we would not have been part of the European Union. There never would have been a single market. Even the present Leader of the Opposition, the right hon. Member for Sedgefield (Mr. Blair), fought the 1983 election on a programme of getting out of the European Community, as it then was.
I must not use unparliamentary language, but there must be real doubts in the minds of the British people about the sincerity of a great many statements made by Labour Front Benchers. It is clear that the Labour party's new-found enthusiasm for the European Union and the single market is just part of the parcel--of a purely
cynical attempt to gain power at any expense, and to change Labour's marketing strategy to embrace the whole range of Conservative policies, because those policies have so obviously worked and carry the confidence of the country.
The only way in which the Labour party can hope to form a Government again is by trying to persuade the electorate that it has adopted our policies and is capable of implementing them. That is a thoroughly implausible proposition, and the hon. Gentleman's speech today gives little confidence that the Labour party would be capable of pursuing any consistent line of policy on any subject, if ever it came to power.
The decisions of Conservative Governments at the relevant time, to enter the European Community, as it then was, in the 1970s, to establish the Single European Act, which set the framework for the single market in the 1980s, and to sign up to the Maastricht treaty in the 1990s, have been magnificently vindicated by events. Britain has gained enormously from the single market.
I have not yet seen any trade figures for the whole of 1996, but the figures for 1995 showed that our exports to the rest of the single market increased by 18 per cent. In the first year of the single market's full operation in1993-94, our exports had risen by 11 per cent.--vastly more than our trade as a whole.
When I go round businesses in my constituency in Lincolnshire, as I do almost every Friday, I see how many small and medium-size businesses, especially in manufacturing, food processing and food wholesaling, are for the first time selling across the water, particularly in the Benelux countries and often in France and Germany. If Britain has had a fine economic record over the past several years, the single market has played a major part.
The single currency is a highly emotive issue. Therefore, it is extremely difficult to debate the subject rationally either in the House or elsewhere. I regret that, as it will be necessary for the British people to take a careful, cool and rational decision in a referendum--which is what we have promised them--on this important matter. A single currency clearly has considerable benefits for trade, business, the development of a single market and travellers. Those facts are not in dispute. However, the essence of the whole monetary union programme is that we would give up the option of devaluing in the future and commit ourselves indefinitely not to run fiscal deficits above the level of excess deficits as defined in the treaty--it may be 3 per cent. or perhaps 2 per cent. under a stability pact.
I understand that some people do not want to give up those freedoms. Others believe that it would be splendid to resist those temptations--it would be rather like an addict giving up heroin, which would be locked away permanently. We shall have that argument in the next Parliament, I hope in a cool and a detached manner. The British electorate will have to evaluate the considerable economic stakes very carefully when the time comes. It will be important to listen to the voice of business: to those who are responsible for their companies' fortunes and who take decisions about investment patterns that will determine our prosperity and employment opportunities.
Mr. Nigel Spearing (Newham, South):
In dealing with these matters in a calm and rational manner, the hon. Gentleman achieves what most hon. Members can
Mr. Davies:
If I may return the compliment, the hon. Gentleman has always played a particularly distinguished role in discussions on this subject in the House. I always enjoy debating the matter with him. I have never known him to turn up to a Committee without first doing his homework--and one cannot say that with confidence about many hon. Members. If it is possible to say that I shall regret the departure of a Labour Member of Parliament, I shall regret the fact that the hon. Gentleman will not be participating in future debates on this subject.
I refer to public and private investment--and I think that my answer will not surprise the hon. Gentleman. There is all the difference in the world between investment undertaken in the public sector and that undertaken in the private sector. Public sector investment is not necessarily undertaken according to commercial and economic criteria. The resources used for investment in the public sector are drawn compulsorily from the public through taxation--no one has any choice in the matter. In the private sector, if one wants to invest, one must persuade one's shareholders, lenders or other stakeholders to provide the money. There is a natural discipline that is absent from the public sector.
It follows that it is potentially dangerous to allow Governments to spend large amounts and to call it investment expenditure. If we allow the private sector to undertake commercial investments of the kind that the hon. Gentleman mentioned, in London transport or in any other field, we may be certain that those investments will be justified according to economic criteria. If they are not, the financial markets will not make the money available. There is a real conceptual distinction and a sensible discipline that is reflected in the way in which we have always taken public spending--whether as investment or consumption--into account in the public sector borrowing requirement. I believe that Eurostat will do the same for the purposes of calculating public expenditure under the convergence criteria.
I am sorry that the hon. Member for Newham, South (Mr. Spearing) referred to my reference to the fiscal deficit rule as merely part of the convergence criteria. It is, of course, one of the essential convergence criteria, but the obligation permanently to maintain fiscal discipline is at the very essence of monetary union. It is necessary to underwrite the stability of monetary union. It is extremely
important. We shall argue on future occasions whether it represents a net gain or a net loss to economies to give up that particular freedom.
Mr. Spearing:
Will the hon. Gentleman give way?
Mr. Davies:
No. I know that the hon. Gentleman would like to catch your eye, Madam Speaker, later in the debate to pursue these important matters.
Before I leave monetary union, it is important to emphasise that although it implies constraints on Governments' borrowings, absolutely no constraint is implied at all on what Governments can spend or tax. By definition, as the deficit is limited, if Governments wish to spend, they will have to raise the current revenue to finance that spending. To some of us, that is a great gain not only for the economy, economic stability and sound finance, but for democratic accountability, because Governments will not be able to return to the habits of the 1970s, when the Labour Government made entirely irresponsible spending promises to the electorate, and delivered them not merely by increasing taxation--heaven knows they did that, and by more than enough--but by borrowing and running the public sector borrowing requirement up to more than 12 per cent. of gross domestic product. That was a scandalous level. We now hear self-righteous speeches from both sides of the House, denouncing the Italians for running an irresponsible public deficit that is half the level that the Labour party had in the 1970s.
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