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9.19 pm

Mr. David Davis (Haltemprice and Howden): I should start with an apology on behalf of my right hon. Friend the Leader of the Opposition. There are compelling reasons why he cannot be present for the winding-up speeches. I know that Government Front Benchers understand, as I hope does the rest of the House.

This has been an important and interesting debate. To use the words of the right hon. Member for Chesterfield (Mr. Benn), I, too, speak as a European. I found that I agreed with much of what he said, and I shall return to that. It is traditional in European debates that I embarrass my namesake, the right hon. Member for Llanelli (Mr. Davies), by complimenting his speeches. He made a particularly penetrating speech in this debate.

A number of formidable speeches and seven very confident maiden speeches were made. I am sure that if I said that I agreed with the speeches of the hon. Members for Harlow (Mr. Rammell), for Liverpool, Riverside (Ms Ellman), for North Tayside (Mr. Swinney), for Richmond Park (Dr. Tonge) and for Blackpool, North and Fleetwood (Mrs. Humble), I would damage their careers irrevocably, so I shall say simply that they variously gave confident, generous, amusing, articulate, earnest, and across the board, brave speeches. The European Union is an intimidating subject on which to make one's maiden speech. Since I did something similar a decade ago, I know just how they feel.

Two Conservative Members made maiden speeches in the debate. I thank my hon. Friend the Member for North Dorset (Mr. Walter) for paying a very nice tribute to Sir Nicholas Baker, who was in the Whips Office with me some years ago. He was a very good friend who, as my hon. Friend said, passed away during the election campaign. My hon. Friend gave a very clear, simple, insightful and thoughtful speech on the damage that the rigid framework of law would do to competitiveness in this country, a matter to which I shall return.

My hon. Friend the Member for Reigate (Mr. Blunt) is a friend from his previous capacity as a special adviser at the Foreign Office. He has crafted more of my words than I care to admit. He did a rather better job of delivering his words in his maiden speech than I sometimes did on his behalf. He gave a confident, erudite, expert and incisive speech, in which he did two notable things. First, he raised the treatment of his constituent, Mr. Reeve, by the Belgian police and judicial system. I hope that the Government will take that on board and act to help his constituent. I feel that natural justice demands that. Secondly, he made some insightful points about some of the detailed effects of the extension of qualified majority voting, especially in the environmental area. That needs a little more thought than has been given to it so far.

Of the formidable speeches, the one that stands out most in my mind was that of my right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley). He made a number of points to which I hope the Chief Secretary to the Treasury will be able to respond. He picked up a number of the points that will come up in negotiations in Amsterdam, particularly the need to make subsidiarity justiciable--a point that we drove home when we were in government. I hope that the new Government will continue to do so.

My right hon. Friend explained clearly the conundrum of the European Court of Justice--the supreme court--whose judgments can never be reversed. We had come up

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with fairly modest proposals for dealing with that, of which I have seen little since the change of Government. I should like to hear what will be done.

My right hon. Friend raised general fears about the massive extension of powers of the European Parliament through co-decision and the implications that that has for this Parliament's powers. He also dealt with the general question of extension of competence of the European Union, which also affects our national sovereignty.

Two other matters that were raised specifically require replies. One was the legal personality of the court, which was raised by my right hon. Friends the Leader of the Opposition and the Member for Tonbridge and Malling and by my hon. Friend the Member for Stone (Mr. Cash), who was significantly concerned about it.

The final issue that I hope the Chief Secretary will cover is quota hopping, which was mentioned by the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble) in her maiden speech, by the right hon. Member for Strangford (Mr. Taylor) and others.

Several hon. Members raised the most immediate issue facing the Union--the single currency. We face a stark and simple truth. We can see it and almost every economic commentator can see it, so why cannot the Government see the simple truth about the single currency? That truth is that economic and monetary union cannot start safely on 1 January 1999. A monetary union based on fudged criteria between countries whose economies show little genuine economic convergence would be the most disastrous economic mistake that Europe has made for many decades. I may tell--I nearly said my hon. Friend--my friend the hon. Member for North Durham (Mr. Radice) that that is not just the Euro-sceptics' view: it is shared by many eminent people with impeccable European credentials, who are greatly concerned about the future of the European structure. On that basis, we should treat the issue seriously.

For many months, the Conservatives have pointed out that there is little chance of sufficient convergence for EMU to start on time. We were the first to call for delay. Matters have now moved on and we have made a clear assessment of the events of the past few weeks. After the fiasco of the revaluation of the German gold reserves and the upheaval of the French elections, the only sensible conclusion is that monetary union cannot start safely on 1 January 1999.

I took especial note of the point made by my right hon. Friend the Member for Old Bexley and Sidcup(Sir E. Heath) when he said that the German revaluation was technically correct. However, as the Bundesbank itself pointed out, it was a single-year adjustment and convergence is supposed to be a permanent condition. Whichever way one looks at the revaluation, it is a case of creative accounting.

Monetary union matters to Britain. More than half of our trade in goods is with the European Union. Britain has a strong interest in a thriving European economy. British exporters will not be queuing up to thank their elected representatives if we fail to warn our European partners of the dangers of a monetary union based on fudged or inappropriate criteria. That is why we should send the clearest possible message that 1 January 1999 is no longer an option. It is all the more astonishing, therefore, that the Government continue to keep the 1 January 1999 option

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open. I hope that in the Government's eagerness to cosy up to their new friends in Europe, they do not allow their judgment of the situation to be clouded.

When the Bundesbank exposed the German Government's plans for revaluation of the gold reserves as a fudge too far, we took its side. Where were the Government at that crucial moment? When the French elections put a further spoke in the wheel, we made it clear that the start date could no longer be safely achieved. Where were the Government? The Government claim that they will offer strong leadership. On this issue, above all others, they must start to do so. The Government should make it clear that they will oppose any country that tries to enter EMU with figures based on creative accounting.

I shall turn now to the questions raised by Amsterdam. My right hon. Friend the Leader of the Opposition mentioned several areas in which we agree with the Government's aims and objectives. For example, he spoke eloquently of the importance of enlargement and the attendant reforms that we both believe to be necessary. Because I have limited time, I will focus on the areas that divide the Government and the Opposition. I am sure that that will be a relief for the Foreign Secretary.

The Prime Minister waltzed into Europe after the election, smiling and hailing a new era. A week ago in Noordwijk, he said:


as a strong player playing for a


    "radical shift in Europe's horizons".

At the weekend, in Malmo, he said that Europe "must modernise or die". New Labour, old slogans. What do those slogans mean? Will the Prime Minister try to prove to the Europeans that the European social model has failed? Will he persuade them overnight to lift the burdens that have damaged European industry so much in the past few years? Sadly, all the optimistic rhetoric is matched only by a gloomy reality. So far, the Government's commitments seem to be to end the British veto on industrial, regional and environmental policy and to sign up to the social chapter and the employment chapter. Their rhetoric says one thing; their actions say another.

It should come as no surprise that European socialist leaders have rejoiced at Labour's victory. Today, we are witnessing a new dawn of socialism across Europe, as the Foreign Secretary was the first to admit. Writing in the New Statesman on 6 September 1996, he said that a Labour Government would mean that, for the first time, there would be a socialist majority at the European Council. This would enable a socialist agenda to be pushed through, and he pretty much repeated that statement today. This new agenda is just the sort that many European leaders have been dreaming of--no wonder they threw a welcome party for Labour in Noordwijk last month. Now the French socialists have joined their ranks. Good news for socialists; bad news for prosperity.

Labour will sign the social chapter and is willing to give up the veto, but the incoherence of its position is demonstrated by the fact that it argues already with the social chapter's provisions. It is unsurprising that Commission officials are frustrated. They say, "If you pledge to sign the social chapter, you accept its measures," and they are right. We say, "Do not sign the social chapter and you will not have its measures forced upon you." We cannot have it both ways.

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We need to keep the veto. In the words of one commentator, "You cannot throw away your umbrella and hope it does not rain." My right hon. Friend the Leader of the Opposition negotiated our opt-out because it was in Britain's interests to do so. It may not have made us particularly popular in the eyes of some of our neighbours, but it was the right thing for Britain. We have reaped the vast rewards of flexibility and openness. We are not interested in saying, "We will play ball," and then complaining when the game gets too rough. That does not make sense.

We were told last month when the Prime Minister met European leaders in Holland that we could expect no new measures beyond those covered by majority voting within the social chapter. This month, we learnt of new measures just days after the Prime Minister's assurance. Last week, plans were revealed that businesses employing as few as 50 people must set up works councils to consult employees on company policy. In other words, there will be a massive extension of the already controversial works council directive, brought in under the social chapter. If implemented, the new proposals will sit heavily on the shoulders of small and medium-sized firms which already struggle with enough red tape.

How did the new Government react to the news? A Downing street spokesman confirmed that the Prime Minister would reject the proposal.


he said. That is all very reassuring, but inaccurate if one is acquainted with the reality. Labour is fully aware that much of the social chapter operates under qualified majority voting, but it is aware that once it signs up to it, its ability to pick and choose will be severely limited.

What is more, Labour knows full well that the European works council directive--which Commissioner Flynn now proposes to extend--was adopted under qualified majority voting, which means no Labour veto. The only way to prevent these proposals is by forming a blocking minority. Since most of the countries of Europe other than ourselves and Ireland already face the burden of similar legislation, I can see very little chance of defeating the proposal. Even if--in a fit of sympathy for a new Government--they were allowed to drop it this year, it will, like all other Commission proposals, be back on the table to be re-submitted next year and the year after that until it is written in the stone of European labour law. The measure will not be the last. We will see regulation after regulation destroying jobs in Britain, as has occurred in Europe.

Labour has long attempted to reassure nervous business men that the entrails of the social chapter are negotiable. The new Prime Minister was the first to spawn this line at the CBI conference in 1995. He said of the social chapter:


At the time, he was warned. My hon. Friend the Member for Vale of York (Miss McIntosh) quoted the response given by the director general of the Confederation of British Industry, Mr. Adair Turner, but it bears repetition. He said:


    "If you sign up to the Social Chapter you can't actually be sure that you will have your way, because some directives will be covered by qualified majority voting. There is however a way to

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    pick and choose and that is available for the Labour Party if it wants to have it as its policy. The way to pick and choose is actually not to sign up to the Social Chapter".

I offer the Government a piece of advice that has been given by a number of Opposition Members. It is not too late for them to change their mind. A U-turn is a small sacrifice to pay for the sake of jobs and prosperity. If jobs mean so much to the Government--I certainly believe them when they say that they do--they will do the honourable thing. The best way to pick and choose is not to sign. Outside the social chapter, they can pick and choose to their heart's content.

Earlier, someone shouted across the Chamber, "The majority." With its majority, the Labour party can carry any new law it wants. If it wishes, it can implement every piece of law in the social chapter through this Parliament. What the Government propose, however, is to take that right away from Parliament for ever--a point made cogently by my right hon. Friend the Member for Tonbridge and Malling and implicitly by the right hon. Member for Chesterfield, in his comments on the importance of the rights of Parliament and our national decisions in our national democracies.

The social chapter is not the sole case. Every risk that applies to the social chapter also applies to giving up the veto on industrial and regional policies. It looks as though the hard-won Conservative prosperity of the 1990s is set to be buried by a new socialist agenda of red tape and regulation. In the 1970s, Labour's disastrous economic record consisted of employment protection Acts that destroyed jobs, industrial policies that destroyed industries and regional policies that laid waste Britain's industrial regions. At least in 1979 this Parliament could sweep away the disastrous policies of the socialist 1970s. No future British Parliament could unilaterally correct the consequences of giving up our sovereignty in this way.

What the Government propose to give away in Amsterdam will give us the catastrophic policies of the 1970s, but made irreversibly in Brussels. Of course, that is the Prime Minister's pay-off to the unions, as the head of the European Trades Union Congress and, indeed, the head of the British TUC have now effectively admitted. Finally, we are about to discover the true meaning of new Labour--Conservative words and socialist consequences.

The contrast between Conservative and Labour on Europe is stark and sobering. We have a clear, modern vision of Europe as a partnership of nations with Britain co-operating closely with its continental neighbours, but firmly saying no to being part of the drive towards a European state. All Conservatives, without exception, share that strong determination to preserve our independence.

Labour, by contrast, is incoherent and muddled. One day, the Prime Minister swears that he will never be isolated in Europe, the next he says that he is proud to be isolated. One day, the Prime Minister pledges to be a friend of the EU by abandoning the national veto in numerous areas, the next he or his Ministers are threatening to use it. One day, he says that the proposals on the social chapter would benefit Britain, the next he is trying to reassure business men that he will oppose such proposals, omitting to admit that he could be outvoted.

Labour does not have a policy on Europe. It has a posture on Europe--a posture that changes from audience to audience. The sad truth is that Labour has bought a

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season ticket on the line of least resistance. It is a season ticket whose price will be paid by the people of Britain--a price that will be extremely high.

Conservative Governments have won the British budget rebate, the single currency opt-out and other brief victories by being tough, effective negotiators. By contrast, Labour is inexperienced and sometimes naive. The Prime Minister will go to Amsterdam alone among all the European Heads of Government in having already announced to the world the national surrenders that he intends to make without even a promise of anything in return.

Within six weeks of a general election victory, Labour has already proclaimed six surrenders: four surrenders of veto, submission to the social chapter and a European Union jurisdiction on employment. Once combined, those commitments will create an ever-open door for Brussels-driven labour law and over-regulation.

That is what the unions want and what has done most of the damage to jobs in Europe. It is a European employment time bomb, and it is only a matter of time before it goes off. The damage to British jobs and prosperity will be irrevocable; the damage to Britain's ability to compete will be permanent and savage; and the damage to Britain's sovereignty and standing will be for ever. No British Government should do that lightly.


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