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3.39 pm
Mr. John Redwood (Wokingham): I hope that the Foreign Secretary listened carefully to the magnificent speech of the right hon. Member for Llanelli (Mr. Davies). I gathered from the Foreign Secretary's remarks that he had not understood or appreciated the force and common sense of the speech of my right hon. Friend the Member for Horsham (Mr. Maude), but I hope he will take seriously the strongly worded pleas of his right hon. Friend.
The right hon. Gentleman speaks for many people in this country who want to co-operate with our European partners, want to be friends with them, want to trade with them, want good relationships with them and want to encourage peace and prosperity across the continent, but do not believe that the right way of doing that is to surrender more powers of independent self-government to the Brussels bureaucracy.
Members on the Government and Liberal Democrat Benches have said that some dirty deal has been done between the Conservative party and Mr. Paul Sykes, so I should like to put the record straight. I phoned him, having heard the remarks of the Leader of the Opposition and read the excellent speech by the shadow Foreign Secretary setting out the Conservative party's new policy, confronted as we are with a possible fait accompli from the Government at the time of the signing of the treaty of Nice in a few months.
I explained the policy to Mr. Sykes. I am pleased to tell the House that, this morning, he phoned me back. He told me that he had reflected on what I had said and on the speech, which he had read; that he thought that the referendum guarantee now offered by the Conservative party in the form of words used by my right hon. Friends was fine by him; and that, on that basis, he was seeking to rejoin the Conservative party.
There was no deal as far as I am aware. There was certainly no request for money. That is the decision of an independent man who has taken a great interest in the issue, who did not like the Conservative party's policy under its previous leader, the previous Prime Minister, and who now backs the leader of the Conservative party in his latest policy.
The Government are so worried and desperate about it that it was, I understand, one of the big issues, if not the most important issue, on the agenda of the political Cabinet today. Can Members believe it? With the health service in crisis, with schools not responding in the way in which we would like, with stealth taxes everywhere and with a massive meltdown in Government popularity, Ministers spend Cabinet time debating Mr. Paul Sykes and his relationship with the Conservative party.
I suspect that the reason why Ministers did that is their fear that hundreds of thousands of people who either stayed at home or supported the Referendum party in 1997 are now persuaded by the leader of the Conservative
party that they can trust him with their vote at the next election. That is what they are worried about. That is why they are now trying to make those entirely false allegations about the relationship between the party and a potential new recruit, and the basis on which that friendship has been rebuilt.
Mr. Ian Taylor: My right hon. Friend has clarified wisely that no deal was done. Like many other people, Mr. Paul Sykes is free to apply for membership of the Conservative party. Given his record, I strongly hope that we will not accept that application. Given the views that he has expressed both in the Democracy Movement and before the last general election, I hope that the Conservative party--including Conservative Front Benchers--will wisely distance itself from him.
Mr. Redwood: I think that that is a point for the chairman of the Conservative party rather than for me, but all I can tell my hon. Friend is that Mr. Sykes told me clearly today that he supported the Conservative party's policy on that sensitive and important issue. That is good enough for me. We will see what follows.
The big issue that is at stake is: are we going to have an honest and open debate about these mighty matters? They include our relationship with our partners in Europe, whether we wish to abolish the pound and whether we are moving on from that to common taxation with our partners, to a common army and to all the other trappings that are debated on the continent, but denied here by the British Government.
The one thing that I disagreed with in the speech of my right hon. Friend the Member for Horsham (Mr. Maude), the Opposition spokesman, was his kind remarks to both the Secretary of State for Northern Ireland and the Foreign Secretary. He said that the Secretary of State for Northern Ireland for once had done the right thing, come out and said that he wanted an open debate on the euro.
I, too, read those newspaper comments, but I should like my right hon. Friend to know that I immediately wrote to the Secretary of State for Northern Ireland saying that I was delighted by his conversion on the road to Damascus to the need for open debate on that crucial issue and that I would be happy to debate the matter with him any time, any place, on any radio show or any television show--whatever he liked to name. If my right hon. Friend wishes to volunteer some other senior Conservative who takes a particular interest in these matters, I am sure that that person will be willing to take up the challenge, but I regret to tell the House that, so far, I have had no reply. I have the nagging doubt that the Secretary of State for Northern Ireland has no serious interest in debating the matter whatever.
Over the past five years, when I have taken an interest in the abolition of the pound, I have offered to debate the matter with Labour spokesmen when they were in opposition and with Ministers in the past three years that they have been in government. I regret to tell the House that no single official spokesman for the Labour party, either when in opposition or in government, has been prepared to come forward and to debate it with me.
I have managed to debate with some very pleasant Labour Back Benchers. We have had good debates about whether we should go for the euro, but none of those Labour Back Benchers ever supported the official line of
the Opposition or Government whom they purported to represent. They usually wanted to go a lot further and a lot faster than the official Opposition before the election, or the Government now. It is obvious, as we will see from today's debate, that the Labour party is split every which way on those crucial issues and that the Cabinet is scared stiff about coming out and debating them.The Secretary of State for Northern Ireland would be better dubbed the grim briefer. He seems to be the man who wishes to scythe his way through half the Government--through half his colleagues--because they do not happen to agree with him on the issue. He clearly wants to scythe the pound down and go into the euro as soon as possible, but I have a word of advice for the Foreign Secretary. He might feel that he is on the side of the grim briefer today and is not being briefed against by him, but, come reshuffle time, we may find out the real plot: the grim briefer is not happy enough in Northern Ireland and wants to be Chancellor of the Exchequer and Foreign Secretary at the same time. I suspect that he will regard the Foreign Secretary as the more vulnerable of the two. We might see a bit of grim briefing against the Foreign Secretary from the Secretary of State for Northern Ireland when we get nearer the time of the Prime Minister making decisions about shuffling his rather stale, under-performing team.
I was not entirely happy with the support that was offered to the Foreign Secretary. My right hon. Friend the Member for Horsham was very generous. He said that he thought that the Foreign Secretary had attempted to make out a case for the euro. It was a small and slender case. One had to be very careful in listening to hear it.
As I understood it, three points were made. First, the Foreign Secretary said that we had to join the euro to trade with Europe. What complete nonsense. As he himself said elsewhere in his speech and on many other occasions, we trade a lot with our continental partners already. There is no danger of that trade disappearing whether we join the euro or not. It will take place. It has taken place for many years when we have not shared the same currency. There is no suggestion that our massive trade, particularly in invisibles and investment, with the United States is at risk because we are not seeking to apply to the Federal Reserve bank to abolish the pound in favour of the dollar. There is no rule that says that we must share a currency with people to trade with them.
Secondly, the Foreign Secretary said that the great advantage of joining the euro would be that we had greater transparency; we would know which things were dearer in Britain, to put it in more sensible language, and which things were cheaper. It is already crystal clear. Let us take a case in point. It is obvious to all observers that, for a long time, cars have been a lot dearer in Britain than in many continental markets. We do not need to change currencies to discover that. Which magazine, newspapers and television do it regularly. Customers know it. Some go to Belgium to buy a car because they have worked it out for themselves. We do not need to change currencies to have greater price transparency.
What we do know is that the Government, who lecture us on rip-off Britain and who say that it is all the fault of the private sector, are the biggest rip-off artists of the lot. What we have is not so much rip-off Britain by the private sector as a rip-off Government sticking our petrol prices
up through the roof, so that they are much more expensive than those on the continent. That is just one example of the damage that they do.Therefore, the Foreign Secretary should be careful. Perhaps he wanted to land the Chancellor in it by referring to price differentials, but, clearly, the biggest price differential is caused by the Chancellor. We can see that without changing currencies. We would like a Chancellor who cut tax, not one who abolished the pound, just so that it was even more obvious to the Foreign Secretary--if not to the rest of us--that things were dearer here than over there.
Thirdly, the Foreign Secretary said that joining the euro would reduce transaction costs. He should ask for a briefing on what has happened so far to banking charges within the eurozone, because, as he will find, it makes rather disappointing reading. Banking charges are rather high in the eurozone. The abolition of the foreign exchange element of the transaction still leaves banks wishing to charge for moving money around the eurozone, and those charges are rather uncompetitive. That is part of the reason why, to date, so few businesses on the continent have chosen to undertake transactions in euros. Businesses are mainly waiting until they have to undertake them when the final changeover occurs.
Therefore, we have a Government who--with the exception of those three pathetic arguments produced by the Foreign Secretary--will not engage on the issue, or appear on radio or television to engage on it. They are trying to destroy the pound by stealth, but will not come out and argue their case.
I imagine that, if Ministers ever get round to coming out with the case, they would say, for example, that abolishing the pound will increase currency stability. I ask the Foreign Secretary and the Chancellor to consider the experience of the euro against the dollar compared with the experience of the pound against the dollar. They will see that, had we been in the euro or linked to it so far, far from having more currency stability against the dollar bloc and the yen bloc--which are two huge trading blocs for us--we would have had more currency volatility. They must do an analysis of all the transactions undertaken by British business if they wish to come to a bottom line on the stability point.
The second really big point that the Government will probably produce--I have heard it made by some Labour Back Benchers who are less shy than Ministers--is that, if we join the euro, it would mean cheaper mortgages. They seem to have ignored the point that long-term interest rates in Britain are lower than long-term interest rates in countries such as Germany, and to have ignored the bitter experience that we had in the late 1980s and early 1990s, when all the major parties recommended linking to the deutschmark, and when, far from having cheaper mortgages, we had punitively expensive mortgages.
The Government should also remember that rates in the eurozone can go down as well as up. They are currently going up, and may eventually overtake rates in the United Kingdom, because the economies have not yet come together.
The biggest set of errors in the Government's approach to this debate has of course come over the draft treaty of Nice. We are always treated to the same nonsense from
the Government whenever they are negotiating a treaty. First, they say that there is not a negotiation or a treaty. When it becomes quite obvious that there is one and we receive drafts of the treaty and hear the speeches of continental politicians--who, in good faith, are driving ahead to create a political union or state on the continent--the Government say, "You do not want to believe what you read in the drafts. The Commission does not usually get its way. The Foreign Minister of Germany does not know what he is talking about, and the Prime Minister of France must be ignored. You must not believe anything that those people say." That really is not good enough, and it is an insult to our partners.I think that we owe it to our partners for Britain to set out clearly--now, in this debate, or in a piece of professional spin by the Secretary of State for Northern Ireland if that is the only way in which the Government can operate--where we stand on these crucial issues in the current draft Nice treaty.
Has the Foreign Secretary read draft clause 93, which clearly states that, in a large number of areas, the Commission and, I think, France and Germany wish to move rapidly towards common taxation? Is he aware that, on the continent, they believe that having common taxation imposed from Brussels is a necessary part of completing the single currency and the single market project?
On the continent, they really do believe that we need a savings or withholding tax to be fair across the whole integrated monetary area. They really do believe that that should be the first truly European tax, imposed on more things than it is imposed on in Britain and at a standard high rate. They also believe that it should be collected by the European Union and granted back to countries according to a formula settled by the European Union.
On the continent, they really do believe that the tax breaks offered to business in countries such as the Republic of Ireland and the United Kingdom are unfair competitive practices, and that they should be eliminated, preferably by agreement, but perhaps eventually by treaty change and against our will.
On the continent, they really do believe that we need extra taxation on energy, on top of the massive taxation that our Chancellor has already imposed on things such as petrol. They really do believe that the Union needs to collect much more tax, because the Union needs to distribute more money around the area of the Union to compensate for the single interest rate and the single exchange rate that one gets with the euro.
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