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Mr. Michael Howard (Folkestone and Hythe): Paradise!
Mr. Cook: The right hon. and learned Gentleman may say "Paradise", but I do not expect what I have described to happen tonight. I fear that, if this debate runs true to form, we are doomed to a succession of speeches demonstrating the maximum division over our European policy from Opposition Members who, I suspect, would secretly prefer seeing the European summit to end in disarray that was bad for Europe to seeing an agreement that was good for Britain.
I do not really expect the Government to secure agreement from the Opposition on our European policy tonight. That would be too much to hope, given that the last Conservative Government could not secure agreement either. But, as long as the Conservative party insists on regarding Europe only as a threat, it will be unable to offer Britain a Government who can seize the opportunities of membership of the European Union.
Europe is our largest market, and buys half our exports. Europe's strength means that we have more clout in trade talks than Britain could ever have on its own--and the more we are seen to have influence in the capitals of Europe, the more respect Britain has in capitals throughout the world.
Mr. Michael Howard (Folkestone and Hythe):
This is a significant debate, and the Vienna summit will be a particularly significant summit.
It has become crystal clear in recent days, even to the most blinkered observer, that the European Union is at a crossroads. We now face pressure on all fronts to move towards the goal that the German Foreign Minister has declared to be his objective: a single European state. One currency, one tax policy, one employment policy, one defence policy, one legal area, one state.
There is a great march towards a single European state, and the British Government will have to respond to it. It is not something that the Government can fudge. This is the moment when the new Labour project collides with the real world. The time has come at last for the Government to stop talking about hard choices and start making some.
The omens are far from encouraging. At the recent summit in Portschach, the Prime Minister had an opportunity to say no; instead--in the words of an authoritative British source--he decided to go with the flow. If he continues to go with the flow in Vienna, it will be disastrous for Britain and disastrous for Europe.
The decisions made in Vienna during the Germany presidency in the first half of next year will set Europe's course for the early part of the next century.
This should constitute an historic opportunity to ensure that Europe responds to the needs and wishes of its peoples. With nearly 20 million people out of work across Europe, job creation should be the number one priority. With the institutions of Europe being seen as ever more remote from the people of Europe, genuine subsidiarity should be high on the agenda. With the countries of central and eastern Europe desperate to cement their political and economic freedoms by joining the European Union, the requirements of enlargement should inform every decision that Europe now makes.
By their actions in Vienna, Europe's leaders will be able to provide answers to some fundamental questions. Are we to have a Europe of nation states, or will the process of European integration continue indefinitely? Will we be part of an outward-looking, free-trade Europe, or part of a fortress Europe? Will Europe take the route of genuine subsidiarity, or will it move yet further from its citizens? Will it be a high-tax or a low-tax Europe, a competitive or an uncompetitive Europe, a job creator or a job destroyer?
Since their election, all too many of Europe's left-wing Governments have already provided the answers to those questions. The tragedy for Britain is that, so far, the British Government have been content to go with the flow. It is now time for British Ministers to tell the British public where they stand.
Britain is, after all, in an ideal position to take a principled stance. Ministers should know what policies are best for Europe, because they have seen them work in Britain. Ministers in a country that, during the last Parliament, witnessed stronger growth than took place in any other major European Union country should know which economic policies are required to foster prosperity, because they saw them work in practice. Ministers in a country that, by 1997, had a lower unemployment rate than any other major European Union country, and a higher proportion of the working-age population in work than any such country, should know what policies are required for job creation, because they saw them work in practice. Ministers representing a country whose citizens believe in co-operation and free trade, but who are proud of their nation and do not wish it to be submerged in a single European state, should know precisely when to call a halt to further integration.
The British Government should therefore be putting a case for British principles--British Conservative principles--the free market, low taxes and less interference from Brussels. Alas, they are not doing so. Indeed, they are not arguing for any principles at all. Time and again, they are content to nod through whatever suggestions are put before them by other countries. When it comes to proposals from Europe, new Labour just goes with the flow.
That process has continued long enough. It is time for the Government to be straight with the British public. Before Ministers travel to Vienna, there are at least six key areas on which they need to explain where they stand.
First, Europe's agenda on the harmonisation of taxes is becoming increasingly plain. Finance Ministers of the countries holding this European Union presidency and the next have made it clear that tax harmonisation follows
directly from the introduction of the single currency. The German Finance Minister has said that it is a primary objective of Bonn's EU presidency.
We are already aware of plans to harmonise corporate taxation. Now the Commission is preparing to publish suggestions for a common VAT regime. It has made it clear that, as an intermediate step, it wants to extend its scope and to review exemptions, which would clearly put the UK's zero rates at risk.
According to Commissioner de Silguy, that could "logically" lead to the introduction of VAT on food. The same commissioner has called for the extension of qualified majority voting on taxation issues. When asked recently whether harmonisation could include personal taxation, he replied, "Why not?"
At the very moment the Foreign Secretary was making reassuring noises to the Select Committee on Foreign Affairs on Tuesday morning, there was a call from Germany and France for the abolition of the veto on taxation.
Mr. Casale:
Will the right hon. and learned Gentleman make clear which type of tax he is objecting to--indirect taxes such as VAT, which are part and parcel of completing the single market and on which his Government introduced harmonisation to complete the single market; or direct taxation, which is not on the negotiating table now, or for the foreseeable future? Which is he talking about--indirect or direct taxes?
Mr. Howard:
If the hon. Gentleman wants to intervene, he should at least do me the courtesy of listening to the speech because, as I have said, those taxes are indeed on the agenda; Commissioner de Silguy has said so in recent days.
Mr. Robin Cook:
If the right hon. and learned Gentleman is objecting to VAT being, as he puts it, on the agenda, could he clear up what he said in the Cabinet in 1993, when the then Chancellor of the Exchequer agreed to harmonise VAT rates throughout Europe?
Mr. Howard:
The Foreign Secretary knows full well that it is country of origin-based VAT that is objectionable. That was effectively put off the agenda under the previous Government. It has come back on to the agenda under the present Government. That is what is objectionable and what the present Government's position is unclear about.
Mr. Cook:
I am very sorry: I do not know whether the right hon. and learned Gentleman was at the Cabinet the day it discussed that matter in 1993. The previous Government agreed that there would be a minimum standard rate of 15 per cent. throughout the European Union, and that there should be no more than two lower rates, of which the bottom one would be at least 5 per cent. That is the only agreement that has ever been made on harmonisation of tax rates in the history of the European Union. Did the right hon. and learned Gentleman object to it, and if he did not, would he please spare us this humbug?
Mr. Howard:
The right hon. Gentleman knows full well that that agreement did not in any sense put the zero
The Government claim that tax harmonisation is "not the way forward" and that
"no-one is proposing any change in VAT",
but when we examine the small print in their documents, we find that their commitment to resist tax harmonisation is limited to personal tax rates. There is no commitment to resist harmonisation of the range of taxation that does not fall within that narrowly defined category.
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