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Denzil Davies: We have just heard two excellent maiden speeches. They, and the other such speeches that we have heard, caused me to cast my mind back to my own halting and nervous first contribution. I made my maiden speech in the early hours of the morning some time in June 1970, when not many hon. Members were around to hear it. By contrast, the hon. Member for Westbury (Dr. Murrison) and my hon. Friend the Member

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for East Lothian (Anne Picking), and others, have spoken with a fluency that fills me with admiration. The hon. Member for Westbury mentioned his predecessor, David Faber. Many Labour Members may not have known Mr. Faber as well as the hon. Gentleman, although I do not mean that as a criticism, but we all knew John Home Robertson, the predecessor of my hon. Friend the Member for East Lothian.

I mentioned earlier that I was the Labour party's defence spokesman in the 1980s. It was an exciting time both for the party and for defence spokesmen. Many members of our armed forces were stationed in Wiltshire, and I remember visiting the county. I was struck by the remark by the hon. Member for Westbury that not all parts of Wiltshire are as affluent as people—especially people from the Celtic fringes—tend to believe. Even in the 1980s, parts of the hon. Gentleman's constituency were notably less affluent than some expected.

My hon. Friend the Member for East Lothian mentioned John Home Robertson, who was known, liked and admired by all hon. Members. She also mentioned Mr. John P. Mackintosh, about whom I have mixed feelings. I admired him greatly as a constitutional expert and writer of well-known and excellent books, but I was a junior Treasury Minister between 1975 and 1979, in a Government which, between 1977 and 1979, had no majority. Trying to see a Finance Bill through Standing Committee without a majority is quite an experience, and not one through which I should like to put today's Ministers.

Such an experience hones one's advocacy skills. If one wanted John P. Mackintosh's vote, one had to be pretty skilful. He and his friend Mr. Brian Walden used to go about together sometimes, and they were quite likely to end up in a different Lobby from other Labour Members when a Division was called. However, Mr. Mackintosh was a distinguished Member of Parliament.

My hon. Friend the Member for East Lothian also mentioned the Jacobites. I was 15 years old when, as a grammar school pupil in Wales, I had to study the Jacobite rebellion for the old O-level exam. I pity our history teacher now, as it must have been an impossible task to explain the reasons for that rebellion to 15-year-old boys in west Wales. I congratulate my hon. Friend and the hon. Member for Westbury on their excellent maiden speeches.

I turn now to enhanced co-operation. Everyone is in favour of better co-operation—even the hon. Member for Stone (Mr. Cash), in certain areas at least. It is an important matter, and is addressed by amendment No. 56 in particular, which deals with article 2 of the treaty.

It appears to me that, if Britain entered an enhanced co-operation arrangement with eight, nine or 10 states, our democracy would be diminished. Such arrangements cannot be changed. I have read the articles, and I believe that it would not be possible to withdraw from enhanced co-operation arrangements without securing a qualified majority.

Mr. Cash: The acquis communautaire means that the arrangements would not prejudice the assumption that all member states must accept the pre-existing legal framework. That framework would not be altered.

Denzil Davies: The hon. Gentleman probably understands these matters better than some other hon.

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Members, although I am not sure that I understand that explanation completely. I suspect that it would not be possible simply to withdraw from an arrangement without securing some kind of qualified majority, which would take the matter out of Britain's democratic and political grasp.

For example, no party could enter a general election saying that it would pull out of an enhanced co-operation agreement on agriculture, just as no party now can say that it wants to come out of the common agricultural policy. Since about 1979, all parties—without telling the public—have wanted to leave the CAP, but that is impossible because all other member states would have to agree.

Enhanced co-operation, like qualified majority voting, would represent another diminution of our democracy. Choice at the polls would also be diminished, as the number of areas that could not be changed by the normal democratic processes of the nation state grew.

Mr. Hendrick: Why does my right hon. Friend feel that it would be necessary to withdraw from an agreement? One enters an agreement with a view to carrying on that agreement.

7 pm

Denzil Davies: Circumstances change. I well remember the arguments for the common agricultural policy during the debate on the European Communities Act 1972. One of the reasonable arguments made was that Europe needed a common agricultural policy to protect its food production so that it would always have a supply within that tariff area. Many people accepted that argument. Well, the world has changed; there is no shortage of food. It is perfectly possible now to import food at much lower prices from other parts of the world. I should think that many people, whether they are Euro-enthusiasts, Eurosceptics or whatever, would argue that the CAP has outlived its purpose and should be changed. So my hon. Friend should not believe that once one has entered into an enhanced co-operation agreement, it is right and good for all time. There is no democratic mechanism as far as I can see for the nation state to withdraw from such an agreement without the agreement of all the other EU members. That diminishes our democracy, and it is one of the real problems of the EU. That democracy is not really replaced, unless we go to a fully federal state, by any of the new arrangements. To that extent, the new arrangements are anti-democratic for the nation state.

I do not know whether the British Government wish to enter into enhanced co-operation on taxation, but I believe that it will happen. This week I had sent to me a paper dated 1 June 2001, produced by Mr. Bernhard Zepter, the Deputy Secretary-General of the European Commission, on tax policy in the European Union. I do not think that the hon. Member for Stone has received it yet, so I think I am a step ahead of him. I suspect that it will be in the next edition of "European Forum" now that I have mentioned it on the Floor of the House.

The paper is called "Tax policy in the European Union—Priorities for the years ahead." It was sent by Mr. Zepter to Mr. Javier Solana. Unlike the hon. Member for Stone, who seems to dislike the gentleman, I have nothing against Mr. Solana. Mr. Solana describes himself as as a secretary-general but also as a high representative.

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May I make a slight plea to the Minister for Europe, the Minister for plain speaking, who is represented by an equally plain speaker in the Under-Secretary, my hon. Friend the Member for Rotherham (Mr. MacShane)? I can see that my hon. Friend assents to that. Could they please stop calling themselves high representatives? It has a Gilbertian ring about it. They have been doing it certainly since I have been involved. I think that it goes back to the European Coal and Steel Community. No doubt it is a diplomatic phrase that keeps the diplomatic corps happy.

Mr. Cash: In the operas to which the right hon. Gentleman is referring, it was the lord high executioner.

Denzil Davies: I did not like to digress, Sir Michael, or you might have said that I was out of order.

"Secretary-General" I do not mind. "Secretary" would be all right, but everyone is a secretary-general these days. But not "high representative" please. If we are getting rid of flummery and diplomatic language and adopting plain speaking, let us drop these rather silly titles. That is a small and perhaps frivolous point.

I refer the Committee to paragraph 4.4 of the document. I accept that Foreign Office Ministers have not seen it, at least for the purposes of this debate. It relates to enhanced co-operation in the field of taxation. The paper is about taxation and ways of getting round the veto. It is not put in such plain language, but in effect it tells the high representative how the Commission would like to find ways to get round the veto on taxation, especially direct taxation, because the Commission rightly believes that it hampers the development of the internal market. I believe that it affects the euro as well.

Many ideas are put forward in the document, including something called soft legislation, which is not in fact legislation but guidelines. We will leave that for another occasion. One area that the Commissioners hit on—they are very clever, these people—was enhanced co-operation. I shall quote paragraph 4.4, as probably no one else but me has a copy. The Deputy Secretary-General writes:

"The possibilities introduced by the Amsterdam Treaty and developed by the Nice Treaty for closer co-operation between sub-groups of like-minded Member States could also be envisaged in certain cases. In particular, this could be used in tax policy areas where, even in the long term, decisions in the Council are taken by unanimity. . . . The decision at Nice will enable the Commission to propose to the Council that as small a group as eight Member States may co-operate more closely, after approval within the Council by qualified majority."

That does not give the steps correctly. The eight member states obviously have to get together first. Then, as new article 11 states, the eight member states tell the Commission, the Commission puts a proposal back to the eight member states and they pass it by qualified majority.

The document continues:

"However, in line with the principles agreed at Nice, this approach"—

enhanced co-operation in both direct and indirect taxation—

"must not, among other things, undermine the Internal Market".

Clearly, it would not undermine the internal market. In the view of the Commission, it could probably be said to enhance the internal market if eight, nine or 10 states harmonised their tax rates or certainly their tax structures, gradually moving towards harmonisation of rates, as is happening with VAT.

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The document also says that the arrangement must not

"constitute a barrier to or a discrimination of trade".

Well, it would not in taxation cases. It says that the arrangement must not

"distort the conditions of competition".

I should not have thought it would; again, it could be argued by the proponents that it would enhance co-operation, given that different tax rates and structures distort competition. Similarly, the arrangement must not

"affect the competences, rights and obligations of the non-participating Member States."

It would not do that either.

It is clearly the view of the Commission that the ideas in the document are a pretty good wheeze to get round the awful veto by member states of changes in direct or indirect taxation. This interesting document continues:

"In the field of direct taxation, co-operation between Member States has been organised mainly through bilateral tax treaties."

That is correct. There are not only international tax treaties; I believe that certain countries within the EU have their own tax treaties, mainly to regulate cross-border transactions. The document continues:

"The enhanced co-operation could be targeted so as to produce such benefits for the participating countries"—

this comes back to a point that was buried in the speech of the hon. Member for Stone—

"that non-participants"—

this is the sting in the tail—

"would be motivated to become involved."

Of course they would be, if eight, nine or 10 states decided to enter into enhanced co-operation on direct or indirect taxation. The document goes on to deal with indirect taxation. VAT is already practically harmonised, so there is not much room for enhanced co-operation there.

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