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7.45 pm
Mr. Cash: Will my hon. Friend give way?
Mr. Jenkin: I want to be brief, but I will give way.
Mr. Cash: Will my hon. Friend add to his simple and graphic description the acquis communautaire, which produces a continuous ratchet effect? It is no more possible to revisit the occupied field than it is to revisit the existing legal norms that have been created by the Community. It is an irrevocable process, with no right of secession.
Mr. Jenkin: I agree. My hon. Friend has amplified the point that I was making.
It was all very well for the Prime Minister, before the general election, to write articles in The Sun declaring his affinity with a Europe of nations--presumably sovereign nations--involving our working in co-operation with our European partners. However little our European partners are now prepared to explain the consequences of signing the treaties as they have been signed, and however shy even Helmut Kohl now is about discussing the federal Europe, the fact is that that is the legal construction of the treaties.
The European Community may not yet be a state; but I have attended debates such as this often enough to hear hon. Members describe one policy after another, and one aspect of the Community after another, that suggest that it will be. If it has an executive in the form of the Commission, a legislature in the form of the Parliament and the Council of Ministers, a supreme court in the form of the European Court of Justice, a foreign policy and a nascent defence policy--if it is to have a currency, and if it has citizens and borders and passports and even a national anthem and a flag--it would seem that the European Community is taking on all the attributes of a state.
Plenty of people seem to be prepared--nudge nudge, wink wink, say no more--to proselytise privately about the creation of something akin to a European state. I consider it incumbent on the Government to make it clear at the outset of our debates that that is not their objective. I challenge them to say that with courage, because, if they are prepared to make the statement, much will flow from it.
I have a large amount of text with me, to which I was going to refer; but I shall put it aside, because I want to support strongly what was said by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) and the right hon. Member for Llanelli (Mr. Davies). I do not wish to wreck their careers in the Labour party, but the sentiments they expressed about the economic consequences of joining a monetary union are exactly the sentiments expressed by my right hon. Friend the Leader of the Opposition when he addressed the Confederation of British Industry a week or two ago.
During one of those two speeches, one of my hon. Friends who was sitting near me--but who has now left the Chamber, so hon. Members will have to speculate about who it was--lamented, "These debates are going to be just like Maastricht." Sadly, they probably will be in some respects, because many of the issues that were raised in the Maastricht debates have not been addressed.
In many other respects, however, they will not be like that. The treaties may not reflect the fact that the exchange rate mechanism has collapsed since the Maastricht treaty text was agreed, and the fact that many other economic events have occurred. For example, the unemployment rate in the European Union has continued to rise alarmingly. The treaties, sadly, are constructed as though nothing had happened.
What I wanted to say about the excellent speeches of the hon. Member for Merthyr Tydfil and Rhymney and the right hon. Member for Llanelli is that the issue of centralisation of decision-making applies as much to the policies that I was going to discuss as to the policies of economic decision-making. The European Union is actually about the centralisation of decision-making, in limited but ever-widening fields, especially in relation to economic and monetary union. It is about diluting the effects of democracy, and the requirement for consent on the outcome of those decisions.
Mr. Oliver Letwin (West Dorset):
Will my hon. Friend join me in a speculation prompted by the coruscating brilliance of the right hon. Member for Llanelli (Mr. Davies)? Might not the tendency that my hon. Friend is now describing so powerfully be carried to its ultimate conclusion, through the justiciability by the
Mr. Jenkin:
My hon. Friend is tempting me to explore the operation of the court, a topic that I set aside for today's debate, but he is right--the operation of the central bank is ultimately subject to the European Court of Justice.
The question that I shall explore, which is relevant to the European Court of Justice, is the question of consent and accountability. Ultimately, the institutions of the Community will respond in one way or another to the unrest that is likely to ensue from the removal of democratic accountability through the removal of powers from the national Governments.
Mr. John Bercow (Buckingham):
Does my hon. Friend agree that the proposed conduct of monetary policy by the European central bank will not only be economically damaging, but, more particularly, will conflict with the much-vaunted commitment of the European Union and the Amsterdam treaty to democratic principles? If the European central bank is to be prohibited from taking representations from national Governments about the conduct of that policy, and if national Governments are potentially subject to fines for seeking to make such representations, is that not the antithesis of democracy?
Mr. Jenkin:
I wholeheartedly agree with my hon. Friend. I am surprised that a number of the new Labour independent central bank freaks are not jumping up and asking, "Are you not in favour of independent central banks, and is not the Bundesbank a frightfully successful institution?"
The answer is that there is no such thing as a truly independent central bank. Even though the Bundesbank, for example, has a large measure of independence in the setting of interest rates and the governance of monetary policy, it is an institution that enjoys the wholehearted consent of the people of Germany. Indeed, they love their central bank probably more than any of their politicians, and they respect it more than any of their other institutions. To that extent, the Bundesbank as a central institution of the German constitution commands the consent of the German people.
We are asked to believe that the European central bank will command similar respect and admiration. If one asked the German people about the matter, which of course the German Chancellor has no intention of doing, they lament the fact that their deutschmark is to be taken over by the euro.
While the German people may accept that decision as inevitable at this stage of the proceedings, and while many other countries may even vote for it in referendums--it must be acknowledged that the issue may be decided in that way by this country--the problem is not the consent to that proposition, but the on-going consent on an annual basis to the way in which economic policy is determined.
Mr. Gill:
Has it occurred to my hon. Friend that the advocates of a single currency were advocating it some
Mr. Jenkin:
I shall deal with that point shortly. Crucial to the effects of the centralisation of economic policy and of interest rate setting is the fact that the same policy will be applied across all member states in the single currency area. That will lead to wide disparities in economic performance in different parts of the European Community.
It is not difficult to see why the Confederation of British Industry has been so strongly converted to the idea of a European currency, if it is looking no further ahead than the next five or 10 years. The CBI sees that Britain is now suffering the effects of growth that has been too strong, and therefore we have rising interest rates and a strong pound, amid weak European currencies. As the markets readjust their expectations for a weak euro, the CBI sees the prospect of monetary union bringing a reduction in the value of the United Kingdom currency prior to joining, followed by a massive reduction in nominal interest rates. That would be a bonanza for the British economy.
However, the CBI fails to understand that such a bonanza would be the beginning of a restructuring and reshaping of the British economy, the second half of which would be a massive recession and a massive fall-out as our economy adjusted to the economic circumstances of the rest of Europe.
It would be easy to get consent for the first part. No doubt the Chancellor of the Exchequer will hold out all the lollipops and carrots of the first part of our joining an economic and monetary union under such circumstances, but what will happen during the second part of the adjustment, when things get rough, unemployment starts to rise and the people who elect us to be responsible for economic policy in this country find that the politicians can do nothing but hold up their hands and say, "It is nothing to do with us--it is all now being decided by the European central bank"?
My expectation is that people who hold up their hands so lamely are unlikely to be re-elected. The people who would be elected under such circumstances would be those who said that we should never have joined that contraption in the first place. Unfortunately, we would be in a single currency, and it would be extremely difficult for us to conceive of circumstances in which we could leave it.
Members of the Committee know from experience how difficult it is to manage economies on a national basis, when we are all engaged in the process of the annual Budget statement, for example--the most important job that the House does--assessing what interest rates should be, what growth rates should be, what rates of employment are likely to follow, how much the Government should borrow, and how much they should tax.
That is a hard enough job. Imagine transferring those decisions and judgments to international institutions for all the member states, where we no longer share an affinity through language, culture and historic institutions, but are working through untried, untested, rather distant and unaccountable institutions. The average Brit or German would have only a vague idea of what those
institutions do, but even the people in them would find that they had to work in 15 languages and make up operating procedures as the single currency was bedded down. Imagine how hard it would be to run all those institutions with some measure of democratic consent.
Members of the Committee should try to imagine a housewife in Surrey switching on her radio one morning and listening to "Yesterday in the European Parliament", in which a spokesman from her party presents the budget statement to the European Parliament in Greek or German--in simultaneous translation, of course--and the Spanish Opposition leader, say, delivers a response. Would she feel as connected to the process of economic management as the British, German or French people feel to the economic decisions currently taken in their country? If one can believe that, one can believe in the possibility of a federal Europe.
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