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Mr. Wayne David (Caerphilly): Is not Commissioner Neil Kinnock making tremendous advances in reforming the Commission?

Alan Howarth: Notwithstanding the heroic struggles of Commissioner Kinnock, as Vice-President, with the task of reforming the Commission, he has a job on his hands even tougher than any he had to do as leader of the Labour party.

I mean no disrespect to the European Parliament if I note that it is an immature institution, by no means capable of bearing the weight of democratic responsibility implied by the single currency. Its powers are modest. It is based on limited trust, and on shallow accountability. We in this country are not remotely ready, ideologically or organisationally, to practise democratic politics on a European scale. The remedies now proposed by the Belgian presidency to deal with the gulf that they see widening between the peoples of Europe and the institutions of the EU include cross-European political parties, further extensions of qualified majority voting, enshrining the charter of fundamental rights in EU law,

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and direct election of an EU President. I hope very much that at Laeken my right hon. Friend the Prime Minister will explain that it is not sensible or appropriate for Britain to accept such proposals. We would do better to concentrate on learning how to make devolution work well in the United Kingdom, and on restoring our citizens' faith in this Parliament.

The Labour party was elected in Britain to carry through a social democratic programme, particularly to improve our public services. Membership of the single currency would, at least, severely hamper our efforts. We would lose the freedom to pursue the economic policies that we judged to be right. As things are now, the Monetary Policy Committee of the Bank of England has had the freedom to cut interest rates over recent months more aggressively than the European central bank. My right hon. Friend the Chancellor's fiscal programme, which he was told by the Commission earlier this year would be out of order within economic and monetary union, looks admirably judged. The International Monetary Fund projects UK growth next year of 1.8 per cent., against eurozone growth of 1.3 per cent.

If we joined EMU, we would be members of a system whose record on unemployment—I think particularly of the loss of manufacturing jobs—has been and remains lamentable. Why should we imprison ourselves in a system locked into deflation by the remit of the European central bank, and compounded by the masochism of the growth and stability pact? Let us keep our discretion in policy making, and our capacity to configure policy to take account of our distinctive economic characteristics and social priorities. Let us not put our jobs at such risk and erode our democracy.

I greatly admire the thoughtfulness, energy, skill and courage shown by my right hon. Friend the Prime Minister in international affairs—not just following 11 September, but since 1997. His scope as a leader, domestically and internationally, would be diminished rather than enhanced in the integrated Europe to which the single currency leads. I do not think it appropriate or realistic for Britain to aspire to lead the European Union. It will be better if, true to our history, we continue from within a more limited—though positive—participation in Europe to preserve the freedom to act on our judgment of Britain's interests at home and abroad.

8.9 pm

Mr. David Heathcoat-Amory (Wells): I am very pleased to follow the right hon. Member for Newport, East (Alan Howarth). Our political opinions have diverged somewhat in recent years, although I am glad to say that there is a convergence on this issue, at least. I have always respected his political principles, even when I disagreed with him. However, I am delighted that he puts right at the front of his political thinking the crucial need to maintain self-government in the United Kingdom. That is important for the electorate.

Although the vision that the right hon. Member for Newport, East and other Labour Members have for the United Kingdom's social and political structure differs very much from mine, I think that he and I agree that the electors must be able to choose. If hon. Members hand over all these powers to people whom we have not elected and cannot remove, we shall be giving away not so much our powers as those of the people who elect us. That will create a very widespread disillusionment with unpredictable results.

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The Minister introduced the debate by referring to the forthcoming meeting at Laeken. I suppose that that will be one of the periodic episodes when the European Union goes through an internal crisis of confidence and tries to re-invent itself. We have learned that a paper has been prepared for that summit by the Belgian Prime Minister, who is chairman of a committee of wise men that includes Jacques Delors. That paper, like everything else in the European Union, is confidential, but, again like everything else in the European Union, it has been leaked.

We are told that that study has concluded that the European Union is secretive, remote and undemocratic. Although I fully agree with that analysis, I am slightly worried about this constant reinvention of the European Union. I have lost count of the number of times that it has tried to relaunch itself or give itself a make-over, a face-lift or some type of rethink. Of course nothing ever really happens. The aim is a noble one: it is always to close the gap between rulers and ruled and to create a people's Europe rather than a politician's Europe. But of course it never happens.

This particular reinvention looks particularly unpromising because its apparent solution is to entrench the European charter of fundamental rights and to introduce a written European constitution. Both policies were firmly rejected by the United Kingdom and the Prime Minister in the Nice negotiations, although I confidently expect that if the German and French Governments get their way on it, the Prime Minister will find a way of saying that he was in favour of those policies all along.

The basic flaw is that the supposed solution to widespread public disillusionment with the European Union is yet more of the same policies. I think that, one day, it will occur to Heads of Government that something is more fundamentally wrong with the Union and with the structure and direction of policy. The Minister has referred to that disillusionment in this debate. It manifests itself in various ways, such as the very low turnout in European elections, which has reached almost farcical levels in the United Kingdom. We have also had the very unexpected referendum results.

It is very noticeable that when the people of Europe are allowed anywhere near a decision, they usually reject the advice of the European political elite who tell them what to do and they reject the proposal. That is what happened in the Danish referendum on the euro, when almost all the political parties, newspapers, trade unions and employers' organisations told the people of Denmark to vote yes, but the people of Denmark voted no. The same happened in Ireland with the treaty of Nice.

Unless that disillusionment and sense of alienation is tackled fundamentally, the results will be dangerous and even unpredictable. However, I do not want to be only critical; I have a few suggestions for the Government, the first of which is simply to tell the truth. As I know that that is difficult advice to give to the Government, I shall give an example. The other day, the Prime Minister came down to earth from his mission to save the world and set about trying to save the reputation of the European Union. He came up with the old familiar figure that 60 per cent. of our trade is with the European Union. That is simply untrue.

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The Pink Book, of which I am a regular reader, gives a most useful geographic breakdown of the United Kingdom's trade patterns, and it breaks down our current account into earnings and payments. The recently published 2001 edition of the Pink Book says of those earnings and payments that

That figure is less than half of the total. Even if we took out investment earnings and other transfers, the figure for trade alone would be 51 per cent. There is no figure anywhere in the tables or the text of the Pink Book, even for goods alone, that even approaches the 60 per cent. figure that has been quoted by the Prime Minister and the Government. Let us, right at the start of this debate, at least respect the facts. If the Government ever again produce the figure of 60 per cent. of our trade being with the European Union, we will know that they have something to hide or a very weak case.

We also have the debate on the euro. I was very struck by the acute analysis of the right hon. Member for Newport, East, and I agreed with much of what he said. Again, however, we are not having a proper debate in this country because we are not being given the facts. We are not even told what the estimated cost of changing over to the euro would be for this country. Various private-sector estimates are that the cost for the United Kingdom private sector will be £30 billion, but the Government have to tell us what the public sector cost will be. I know that such an estimate exists. I was in the Treasury five years ago, and even then there were outline estimates for Departments and Government agencies of the cost of changing over to the euro. If the Government are serious about having a debate on this crucial issue, let us have the facts.

We know that the truly difficult debate is occurring not yet in the country but inside the Government and that the Prime Minister and the Chancellor are circling round each other looking for political advantage. They have the agreed five economic tests, but we all know that those are highly subjective and that the same people who are asking the questions will be answering them and then judging the result. We also know, as my hon. Friend the Member for West Suffolk (Mr. Spring) said, that there is an unannounced sixth test, which is whether public opinion can be changed in time.

Therefore, on this crucial issue, all we have from the Government is a policy of fudge and delay. If the Government really want to start a rational debate and include people in this assessment, they should try to advance some of the arguments for joining the euro themselves, rather than leaving it all to poor old Britain in Europe. I do not know whether Britain in Europe still exists as an organisation; it is certainly very demoralised and bankrupt. Nevertheless, it is most unfair for the Government to expect Britain in Europe to make all the running when Ministers themselves are unwilling to try to dream up some of the supposed advantages.

The arguments so far simply resolve themselves into one of inevitability: we are told that it is going to happen and that it is therefore a good thing. That is less of an argument than an attitude, and a pretty feeble one at that.

We used to be told that communism was inevitable, but free people in a democracy have choices to make. We need to know what is best for this country.

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The only other argument that we hear is the influence argument. We are told that we have to join the euro to sit at the top table, whatever that is. Sometimes, the metaphor changes: unless we join, we will miss the bus or be left behind in Europe in some unexplained way. Of course, that is all nonsense. I want influence over the matters that I am sent here to decide by my constituents. I want 100 per cent. of that influence, but it is a secondary matter whether I have influence over other countries with their own electorates.

In any case, what brings a country influence in the world is not membership of some bloc but economic success, combined with military capability and the freedom to use it, and a foreign policy that is clear and over which the country has control. All that is on display in Afghanistan. We have influence on that issue, but it has nothing to do with our membership of the European Union or whether we are in or out of the single currency. In fact, the reverse is true. All our influence is threatened by the European Union.

Economically, the EU is in the slow lane. The eurozone has an appalling record of job creation. It is sitting on a demographic and pension time bomb that it will not acknowledge. It endlessly talks about economic reforms, but nothing happens. After the Lisbon summit, the Prime Minister came back here with wonderful declarations about reform, but nothing happened. Nothing ever changes. Meanwhile, the regulations, the red tape and the tax harmonisation continue, eroding the competitiveness of Europe in the wider world—and that is the really big issue. I simply do not understand how we would benefit economically. If we take into account the fact that our gross contributions to the EU are running at £20 million a day, of which we get back only about half, the profit and loss account looks distinctly unappetising.

Politically, the Government persist with the old-fashioned view that we exist as a country only in so far as we belong to a bloc. There are far more important forces at work in the world today, driven by issues such as information technology and the internet that have made geography irrelevant. We have witnessed the rise of the English language to world dominance, which is a huge advantage to this country that has nothing to do with the European Union. In fact, it is threatened by the EU, which persists in refusing to recognise that English has become the language of business and information technology in the whole of the rest of the world. Multilateral trade talks in the World Trade Organisation and tariff reduction talks are increasingly making the EU tariff wall irrelevant. Those developments reinforce the global maritime tradition of the UK. It is thus bizarre that the Government should defy that and attempt to lock us irreversibly into a low-growth trade bloc on our doorstep.

The big lie at the centre of the debate is that it is about economics. I agreed very much with what my hon. Friend the Member for West Suffolk said about that issue. It is widely acknowledged on the continent that this is a political project. Sometimes we pride ourselves on the quality of our debate on the issue, but we should not boast like that because the other EU members are far more honest about it. For example, Otmar Issing, a chief economist at the European central bank, said:

That is true, but it is dismissed by the British Government as the ramblings of a continental eccentric. However, people such as Mr. Issing and his colleagues are serious,

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sensible, intelligent men and they know what they are talking about. They are speaking the truth. It is only the British Government who pretend that the euro project is all about some five economic tests dreamed up by the Treasury. There are enormous political and constitutional implications that are simply dismissed by the Government. I respect those hon. Members and others who make the political case for joining the euro. I disagree, but at least we can have a debate. I have no respect for people who advance the case for joining the euro and ignore the political implications or claim that they are irrelevant.

Let us also be honest about what is happening to our democracy even in the absence of joining the euro. The Government are now regularly outvoted in Europe, which means that policies are imposed on us that, by definition, the House and the Government disagree with. The right hon. Member for Newport, East mentioned the art market, which is a good example. Some 50,000 people are employed in the British art market, but it will go off to New York because the EU intends to impose a resale levy on works of art.

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