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Mr. Purchase: Not the euro?

Sir Michael Spicer: No, not euro, although the euro is part of the issue. I refer to the treaty of Nice. I am not a clairvoyant, and much false mystique surrounds that treaty, but one or two clear points are beginning to emerge. It appears that, in several crucial areas, the veto will be thrown in. I shall name some, although I should be delighted if hon. Members got up to say that I was wrong. It is clear that the veto appears vulnerable in terms of our legal system--that is, corpus juris--the charter of rights and tax harmonisation, although the Government say something different in that regard. I shall return to that in a moment.

The flavour of the week--I want to ask the Minister a specific question about this--is that the regime involving a veto on centralised taxation to compensate countries that have suffered under the euro has already been agreed. My understanding is that that regime was agreed by Finance Ministers last week. If the Minister says that I am wrong, I should be delighted, but I suspect that he will not.

Mr. David Ruffley (Bury St. Edmunds): Not a prayer.

Sir Michael Spicer: Well, if the Minister would like to join in, this is the time to clear up a few things. I might be making wild, extreme and alarmist suggestions, but I suspect not, for the same reason that I voted 42--perhaps it was only 41--times against the Maastricht treaty.

I have always believed that under a single pricing system, which is what a single currency is, there is bound to be an imperfect market for labour across that market. That is bound to be the case because Portuguese people like living in Portugal--I do not blame them--Greek people like living in Greece and, on the whole, British people like living in Britain. There is, therefore, no such thing as a perfect market for labour. On the whole, Greek wages are paid in Greece and Portuguese wages are paid in Portugal. However, under the single currency, we have seen the emergence of a pricing system that is largely set by the fastest mover and which is, therefore, largely set by northern Europe, especially Germany.

Under such a system, it is not surprising that Greek people feel increasingly narked about the situation. It is very unpleasant to live in certain parts of Greece or Portugal or in southern Italy and to be paid Portuguese or southern Italian wages, but to have to pay German prices for everything. People will get a bit miffed about that, so a new idea has come up, as has been clear for years that it would: a compensatory taxation system for shifting resources from northern Europe to the southern parts of Europe. That is inevitable. In our debates on the Maastricht treaty, many of us spoke about that at length and, on many occasions, deep into the night. We tried to persuade our Government that a single currency would inevitably involve a new form of massive taxation, which would cripple and harm the industry and peoples of northern Europe. Such an arrangement would not help, because compensatory shifts of money, as we have seen in our own country, do not compensate for market forces as they are supposed to. Everyone becomes a loser in such circumstances.

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If the Government have agreed to a compensatory taxation regime, as I suspect they have--the Minister looks quite happy about my saying that--

Mr. Andrew Robathan (Blaby): He does not know.

Sir Michael Spicer: Well, at any rate, he is guessing that I am probably right.

If the Government have indeed agreed to such a regime, it comes as no surprise, but it certainly leaves a nasty taste in the mouth. I suspect that this will be a major feature of the giving away of the veto at Nice, and it is an enormous problem.

What is absolutely predictable--because it is built into the treaty--is that there will be more movements towards a federal state of Europe. As The Sunday Telegraph said at the weekend, victory will be defined by how little movement there is towards such a federal state; it will never be defined in terms of retrieval of powers. The acquis communautaire is safe, for the time being--until someone gets to grips with the treaty and shakes it out--but what I have predicted is inevitable. Anyone who argues somehow that the movement is not one way is being at best disingenuous and at worst deceptive.

Does my hon. Friend the Member for Blaby (Mr. Robathan) want me to give way?

Mr. Robathan: No.

Sir Michael Spicer: I am sorry; I thought that he did. I thought he looked anticipatory.

Mr. Bill Michie: He is fascinated.

Sir Michael Spicer: Those who think we are being forced to move towards a federalist Europe--those who believe that the euro has everything to do with a Government of Europe, and who worry about trends towards centralisation, loss of democracy and instability--must conclude that only one political institution in this country is capable, first, of calling a halt to those trends and, secondly, of retrieving some of the powers that have been lost in agriculture, fisheries and perhaps certain aspects of trade. Many people do not even realise that, despite all the talk of an alternative to the North American free trade agreement, that is impossible while the treaty of Rome remains in its present state.

The only party capable of dealing with all that is the Conservative party, and people are going to have to recognise the fact. I do not think even the sceptics in the Labour party--I hope that we are about to hear from one--really believe that it is possible to do more than slow down the process. On reflection, I can think of one or two Labour Members who believe that, but they shall be nameless: I will not blow their cover now. Anyway, they represent a very small minority. They are certainly not mainstream.

The Labour party is at best in the business of trying to tinker with the process and slow it down. Basically, Labour goes along with the setting up of a federal state, and we are coming very close to that. What Lord Denning called the onrush of a tidal wave down our rivers and estuaries--Roman and European law taking over from our own law--is virtually upon us. It has been tested in our courts: the Merchant Shipping Act 1988 started that, and

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it has continued apace. Anyone who thinks that what I have said is rubbish should look at what is currently emerging even from our own courts.

Labour will never save the country from itself. Only the Conservative party can do that, which means--I say this with some feeling--not only accepting that we must call a halt, but accepting the need for retrieval of powers and, ultimately, renegotiation of the treaty. Were I interested in a federal state of Europe, I would go home and keep quiet because most of it is in place. The dynamics are there. The acquis communautaire will sort a lot of that out. The Court will sort a lot of it out. The Court settles cases in terms of a move towards a federal Europe. It has never judged a case's merits other than in terms of a move towards a federalist system because it has to--the acquis communautaire tells it to. That is the basis on which it makes its judgments, so, if left to itself, the process will carry on apace.

If I wanted that, the best solution would be to sit tight and to wait for it to happen. To some extent, the intergovernmental conferences are just becoming confirmatory procedures for a process that is going on apace.

That issue and that of the economy are two vital concerns not only of Parliament but of the country. I am convinced that my right hon. and hon. Friends will be able to draw the country's attention to the enormity of the dangers that are inherent in what is going on in Europe--dangers to economic well-being through high taxation and high regulation and to freedoms of democracy. The country will inevitably look to the Conservative party to save us from both those dangers.

5.46 pm

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney): The hon. Member for West Worcestershire (Sir M. Spicer) said that he had followed my right hon. Friend the Member for Alyn and Deeside (Mr. Jones) on a number of occasions and that he had heard a fairly familiar story. Over the years, I have followed the hon. Gentleman on a few occasions and many aspects of his speech today were fairly familiar, too, particularly the European aspect and the wonderful, rosy, competitive capitalism that he espouses--the belief that it has been a wonderfully economically efficient arrangement.

I remind the hon. Gentleman that the constituency and communities from which I come and represent were the subject of capitalist experiments on at least two occasions in one century. The first put 65 per cent. of the people in my community out of work. That was neither social justice nor, for that matter, economic efficiency. It was not democracy or freedom.

The second time that such experiments were tried on us was during a prolonged period in the 1980s. There was a difference, but the fundamentals were still the same, as were the consequences: prolonged periods of economic inactivity for far too many people. Far too many people in my community were idle in the 1980s.

I charge the previous Administration not with meanness but with profligacy. Rightly, the difference between the 1930s and the 1980s was that in the 1980s welfare benefits were available. The consequence of the hon. Gentleman's rosy competitive capitalism at that time was burgeoning benefit costs to pay for idleness. That has been my communities' experience of the capitalism that he preaches.

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The hon. Gentleman came out with a nice epithet--that socialism is incompatible with investment. Capitalism is incompatible with social justice and economic efficiency. In fact, it leads to high unemployment and idleness, which are economically inefficient and socially unjust.

Sadly, I will not be with the hon. Gentleman for future debates on European Community Bills because I have decided to stand down. Therefore, this is my last opportunity to take part in a Queen's Speech debate. Like him, I noticed the absence of a European Community Bill in the Queen's Speech. I suspect that Nice will produce such a Bill, but it will be introduced not in the current Session but in the next one. Therefore, I shall miss the opportunity of debating long into the night with him. I do not know what my record on Maastricht is, but I think that I, too, had a pretty good voting record over that period.

I have had the privilege of serving in the House for 33 years. For nearly 30 years, I represented the constituency of Merthyr Tydfil, which in 1983 became Merthyr Tydfil and Rhymney. Over the past century, I am only the fourth Member to represent Merthyr Tydfil. Since 1929, I am only the third Member to represent Rhymney, my two predecessors being Aneurin Bevan and Michael Foot.

We have just been celebrating the centenary of the election of Keir Hardie. It is pity that the right hon. Member for Ross, Skye and Inverness, West (Mr. Kennedy) has left the Chamber. Had he been present, I would have confessed that in October 1900 Keir Hardie won--as the second Member in a two-Member seat--because of a rather informal Lib-Lab pact.

If he were in the Chamber, I would also have reminded the Leader of the Opposition of the experience of the Conservative candidate in the 1900 election, who did not turn up in time to submit his nomination papers. The principal reason for that was not a lack of courage but the fact that he did not seem to know where Merthyr Tydfil was. He thought that he was taking a train to the constituency, but did not realise until he was outside Middlesbrough that he was going in the wrong direction. However, I am sure that Conservative central office has improved its efficiency at least in submitting papers on time.

More than one hon. Member has dipped into "The Ashdown Diaries". I confess that I have dipped into them, too, but only very briefly. If the diaries are accurate in reporting his remarks, my right hon. Friend the Prime Minister seemed rather wistfully to wish that the type of Lib-Lab alliance that started at the beginning of the 20th century had survived, so that the progressive forces in British politics could have remained in the majority. I would advise him that that alliance did not survive because the then Liberal party was completely incapable of expressing the needs and wishes of the working people of the constituencies that I and so many other hon. Members have represented. That party's policies were incompatible with the nature and needs of the working people and the working class of that day, as they have been for most of the past century.

I believe that it was an academic who said that what the Liberal party could not do was to express the politics of the dignity of working people. I think that nothing gives greater dignity to working people than a decent job.

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I therefore note with special appreciation the opening words of the Queen's Speech--that the Government's central economic objective is

I have repeatedly heard Ministers and other Labour Members express their desire to end boom and bust. I represent communities that understand boom and bust all too well. The Merthyr Tydfil of 1900, when Keir Hardie was first elected to the House, was part of a tiger economy. Its population and economy were growing fast. Within 20 years, however, that economy went from success to one characterised by destitution. The whole economy imploded, throwing 65 per cent. of the working population out of work. No one wants that boom and bust to return.

After that boom and bust--contrary to what the hon. Member for West Worcestershire said--the Government intervened in macro and micro-economic policy to create in my community a manufacturing society that did not exist before the 1930s. They created a range of job opportunities for those who did not migrate but remained in the community. Government and state action recreated the economy of south Wales into the form in which it has remained since the second world war.

There followed the period that the hon. Member for West Worcestershire thought was so wonderful--the miserable and painful recession of the 1980s and early 1990s. Although that recession--unlike the one in the 1930s--was ameliorated by benefits and state support, it was equally miserable, degrading and, in many ways, dignity destroying. Economic inactivity led to great resignation and fatalism among almost a whole generation of those whom I represent.

Only since 1997 have we started to break through that fatalism and resignation, with micro-economic measures--which the hon. Member for West Worcestershire seems to despise and a Conservative Government would attempt to abolish--such as the new deal, the minimum wage, the working families tax credit, employment zones and education and training programmes. The Government are at least breaking through the fatalism and resignation of the 1980s and early 1990s--that there were no jobs and that life was to be lived only on benefit. I listened to the hon. Gentleman extol the virtues of competitive capitalism, but his comments do not ring true when I consider the experience of the communities that I represent.

I welcome very much references in the Queen's Speech to improvements in education and training. I hope that hon. Members will agree that one of the most astonishing features of talking to many young people of 16, or even in their early twenties, is the discovery that they are illiterate and innumerate. Although free state education has been provided for the best part of 60 years, we have high levels of illiteracy and innumeracy. In the past few years, however, the Government have begun to deal with that combination. They have given people hope and have started to give a bit of shape to their lives.

Public expenditure, which is one the few redistributive instruments left to the Government, is now being rightly and properly used in the health service, for children's commissioners and to deal with the problems of crime and the economic requirements of our communities.

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The hon. Member for West Worcestershire asked for a debate, and he is going to get one. I do not believe that so-called supply-side solutions to regional economic problems will be sufficient to solve them. I do not believe that the combination of education, training and tax credits that is offered in the United States will work in resolving the continuing structural problems facing our regional economies. Five years ago, I would never have forecast that I would now be representing a community in which most jobs are in call centres and a meat factory. There has been a complete transformation. Our economies do change.

I fear, however, that regional economies--like the global consumer society and its goods--are becoming disposable. As the products that we produce fall out of fashion or can be made more cheaply elsewhere, we shall again--we have already done so once since the war--have to face the task of recreating our regional economies. We have to learn lessons, and not only the type that we have already learned in the new deal and in the education and training programmes of the past two or three years. It will be no good simply to educate and train people; we will have to be active in job creation and in the new regional employment-creation scene.

Such an economic approach is supposed to be old-fashioned, but I suspect that it will come back into fashion in the 21st century. I do not think that the models that we follow today are the only ones. Many hon. Members on both sides of the House are attracted to the American model, but the American economy is a continental economy. It has great mobility, on a scale that neither the United Kingdom nor Europe has seen except by compulsion in the 1920s and 1930s. I agree with other people that the sclerotic European economy is not necessarily the model to follow in dealing with regional economic structural change.

The Welsh nationalists, and many other nationalists, are very attracted and enticed by the Irish experience. However, I think that that experience is almost incomparable with ours. The Irish experience is of a first industrial revolution. We live in an almost post-industrial society, and the issue for us is how to regenerate an industrial manufacturing society.

I have been looking for alternative models and possible ways of learning from others--we should not be ashamed of making such a search--and I have found an interesting alternative from a most strange and alien country. Recently, I had the pleasure of making a visit--which I have declared in the Register of Members' Interests--to Taiwan. It is an island economy and its first industrial revolution was built on T-shirts and trinkets. I recall one of my youngsters coming home with a Welsh love spoon that had been made in Taiwan. That exemplified the character of the Taiwanese economy. The Taiwanese built their first industrial revolution on a range of cheap, easily produced goods that were developed for the western market. About 15 years ago it dawned on the Taiwanese Government that an economy that depended entirely on that generation of manufacturing had no future, so they planned an alternative manufacturing economy.

As I am sure the hon. Member for West Worcestershire will be aware, the Taiwanese Government are not a left-wing outfit; they represent a liberal, right-wing, basically autocratic society. The Taiwanese Government sat down with their small and medium industries and their economic institutes--they invest in economic institutes--

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and planned an alternative manufacturing society. Through industrial and applied research they built what is now the third largest manufacturing economy in IT goods. The Taiwanese economy has progressed from T-shirts and love spoons to scanners and computer equipment. That happened not by accident or by some natural competitive process but as a result of planning of a type and character that we have foresworn for so long.

Regional economies such as south Wales, which faces the problem of having to recreate its manufacturing sector, could take a lesson from Taiwan rather than from Ireland or many of the so-called European motor regions. It could work, but I do not see us thinking or planning in that way. I do not see us doing such a thing in Wales. I am sorry to say that we have been obsessed with the process of objective 1; we have created a plethora of local partnerships rather than trying to create the industrial and science parks that generated 90,000 new jobs in IT in just over a decade in the Taiwanese economy. I would like us to think and plan in those terms, which are completely contrary to the way in which the hon. Member for West Worcestershire would like us to think and plan.

In my speech so far I have indulged in what is the essence of being a Member of Parliament under the present system--speaking on behalf of my constituents and my constituency as a single Member representing a single seat. In that context I am pleased that certain proposals are absent from the Queen's Speech. I am glad that no further constitutional changes are proposed and that there is no suggestion of any more fanciful franchises that might undermine the concept of the single-member seat, which is the peculiar quality of British representative democracy. I have been here for about 30 years and I hope that my predecessors also spoke with passion about the needs of our community, from which we draw our strength and authority.

I am not denying that each of the constitutional changes that have been made in the past three years of this Parliament has been justified--devolution and the human rights legislation were certainly justified. Europe, too, has developed and we each have our perceptions of that. Sadly, there has been no continuation of the bonfire of the quangos and agencies. Although it might not have been intentional, the changes have been made one by one and we have not counted the sum total of the consequences for the way in which this place works. For example, increasingly large sums of public money are being spent outside the purview of even the Public Accounts Committee as a result of the curious combination of next steps and semi-detached agencies spawned by the previous Government and, I fear, perpetuated by ours, which is leading to a lack of proper scrutiny.

We have been through a phase of modernising the House--and rightly so. There must be a more efficient way to work and to use our time. It might have made our lives more comfortable, but I wonder whether it has also made the Government's life more comfortable, and it is not our job to make any Government comfortable; rather, it is our job to make them uncomfortable. I fear that in some respects the combination of changes has--to borrow a phrase from my right hon. Friend the Deputy Prime Minister--gutted the role of the House. Therefore, I hope that we will not proceed too much further without understanding the consequences of what we are doing to this place as it has been a privilege to attend it.

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I should like to illustrate that by one further reference in the Queen's Speech. It states

I wish that the language were not so opaque. I think that it means that there will be a draft Bill--but, sadly, not a Bill--to implement the Scott recommendations on arms licences and to deal with brokering and licensed production of the type and character that the four Select Committees that I had the privilege of chairing have been recommending strongly and continuously since they were established.

The past three years have proved interesting. I pay tribute to the fact that there is far greater openness than ever before. The European Union code, the criteria on arms sales and the annual report on strategic export licences represent a major breakthrough in openness and transparency. I wish only that the Government had decided to make a Bill to implement the Scott recommendations a priority for this Session. I hope that we still have time to do that because we rightly exposed the previous Administration on these issues. We have a legislative debt of honour, which we should repay this Session.

We do not need to wait for legislation before taking another step forward in transparency and openness. If we are to improve the transparency of export controls, I suggest that Ministers accept the unanimous recommendation of the four Select Committees that form the quadripartite Committee that is scrutinising arms licensing and agree to prior scrutiny, so that instead of conducting post-mortems on arms sales, which lead to controversy and can sometimes damage the reputations of Governments, we have the opportunity of prior scrutiny and we can all be better informed by a more transparent system. I should like to see both those measures in place before I leave the House.

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