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Mr. Paterson: I went to Ireland with the Select Committee on Welsh Affairs in 1997 shortly after I was elected. We met the head of the Irish development commission who said that although the European grants were nice, the real trick to the success of the Irish economy was corporation tax at 10 per cent.

Kelvin Hopkins: That is an interesting point and I should like to debate it with the hon. Gentleman, although I cannot help but feel that being forced to cut interest rates and being given 5 per cent. of one's economy is quite helpful.

Rev. Ian Paisley: Surely, receiving £6 million from the Common Market every week for five years was what put the south into a good position.

Kelvin Hopkins: I have an interest in this matter because my constituency includes the largest Irish community in the east of England. Many of those people came to England 20, 30 or even 50 years ago from extremely poor backgrounds and many are now returning to a prosperous country that has done well from its membership of the EU. The situation in Spain is similar; Spain still receives substantial net transfers. On the other hand, countries such as Germany and Britain have to make those transfers, and I shall refer to those contributions later.

More important is having one's currency cemented into a single currency at an inappropriate exchange rate and being unable to change it. The interest rates were too high for the German economy and Germany can do nothing about it. The Germans have even been told to cut their borrowing but that will deflate their economy even further and put it into a worse state. An economic crisis in Germany could give rise to unpleasant politics and if we do not consider that we may have problems. I can quite understand why 56 per cent. of Germans want the Deutschmark back.

Former Chancellor Erhardt, who created the German economic miracle, must be turning in his grave. He was not a socialist but a Christian Democrat who believed in
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moderate managed capitalism. He would say that the currency is obviously overvalued. He always kept it slightly undervalued to give Germany a competitive edge. That is how the German economic miracle was achieved—by building up a big trade surplus with every other country in Europe. Good business, if nobody notices. That is what Germany did in the past but now it is doing the opposite. Germany cannot solve its problems without withdrawing from the euro, recreating its own currency and adopting a more sensible macro-economic strategy.

The Italians are even further along that route. A member of the Berlusconi Government has called for a referendum on reintroducing the lira. I should strongly support that, albeit from a position on the left rather than from Mr. Berlusconi's Government, with whom I do not sympathise.

Mr. Hendrick: I thank my hon. Friend for his generosity in giving way again. Is he not making the same mistake as many people in France and elsewhere, in that he is discussing the euro and monetary union when in fact the vote should have been about a new constitution to make the EU work better?

Kelvin Hopkins: The constitution was a consolidation of earlier treaties to provide one treaty that covered all aspects of EU arrangements. Indeed, I have suggested in previous debates that there should be two treaties—one for the eurozone countries and one for the whole of Europe, so that we could separate the eurozone component. On that basis I might be more sympathetic to the proposal, although I am not saying that I would vote for it. If one could adopt the constitution without implicitly accepting Maastricht and the Single European Act, I should be much happier about it.

Mr. Brady: Perhaps I can help. The hon. Gentleman may be looking for article I-8 of the constitution, which explicitly says:

Kelvin Hopkins: Indeed, and there are many more provisions relating to the European Central Bank and so on, so clearly the treaty covers the whole of Europe but includes the eurozone component, which should be separated. The majority of European Union members do not belong to the eurozone and many are unlikely to join—including Britain, one would hope. Indeed, it is just possible that the whole thing might dissolve fairly soon and we shall be saved the trouble. But we certainly would not join the euro at this moment, for all sorts of reasons, but particularly because it is very uncertain.

If or when one country, perhaps Italy, chooses to withdraw from the eurozone and recreate its own currency—which is possible; it is not too difficult—the whole thing could start to crumble. All it needs is for one elected majority Government in any member state of the eurozone to say, "We think this isn't working; we are going to withdraw," for the whole thing to start to crumble. We could then start again with a more sensible economic arrangement in Europe, based on each country having its own currency and its own macro-
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economic strategy but working together with the other countries co-operatively, in a sensible way but on a voluntary basis.

John Bercow: I am grateful to the hon. Gentleman for being so generous in giving way again. It is most unfortunate that the hon. Member for Preston (Mr. Hendrick) is so coy about discussing the perfectly relevant subject, in this context, of the euro. Does the hon. Member for Luton, North (Kelvin Hopkins) think that might have something to do with the fact that, at any rate the last time I looked, the governing council of the European Central Bank comprised three Germans, two Dutchmen, two Finns, two Frenchmen, two Italians, two Spaniards, a Belgian, an Irishman, a Luxembourger and a Portuguese, and the Government have never been able successfully to explain how or why it would ever be in the long-term interests of this country to have the interest rate judgment made for Britain on the say-so of those people, who owe no loyalty to our economic interests?

Kelvin Hopkins: As so often, the hon. Gentleman has an encyclopedic knowledge of these things, which I do not possess. I did not know the nationalities of the European Central Bank council members, but I am interested in what he says. I believe that they are appointed for eight years. They are deliberately appointed in a way that ensures that they are not subject to political control by their own country. Deliberately to create an institution that controls one's economy, which has no responsibility to any kind of democratic structure, is an abnegation of democracy; it is daft economically, but in democratic terms it is extraordinary. I am interested in what the hon. Gentleman says, but I think that those people will spend increasing amounts of time pondering their navels in the next few years because the economies will be in difficulties.

Mr. Hendrick: I thank my hon. Friend for his excessive generosity in giving way to me a third time. Is he saying, then, that apart from the new provisions in the constitutional treaty, citizens of other countries are actually now passing judgment on every other previous treaty, as he is? Do the people who opposed previous treaties now want to bring the whole thing down? If so, why do not people say that they are for withdrawal from Europe and disintegration of the European Union instead of pretending that this is about the new provisions in the constitution?

Kelvin Hopkins: I am very positive about Europe. I see myself as historically, culturally, linguistically and geographically European and I want Europe to work, but it will not work on this basis. That is the problem. I go to the continent of Europe for holidays every year. I like nothing better than France, Italy and Germany—they are wonderful places. I want them to work. I want to have good relations with my German, French and Italian neighbours. I want to enjoy their company, try to learn their language and even drink their wine, but I want us to do that on a happy, co-operative basis where we all volunteer to work together for our mutual benefit. I do not want to see half my trade union colleagues and half the socialist voters in Germany and France out of work because the economy is not working. So I want a Europe that works, not one that does not work, and the one that we have at the moment does not work.
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I am not just going to whinge about the unfairness to Britain of things, because we are doing quite well—outside the eurozone, I may say, and several other countries are also doing quite well outside it, by contrast with those inside. Before I draw to a conclusion, I want to talk briefly about the rebate, because it is significant. It is not just about our money and their money. The gross contribution is currently about £12 billion, and it is likely to rise to £14.5 billion in three or four years, according to today's newspapers. Well, £14.5 billion is a fair amount of money. I should prefer it to be spent on hospitals, schools or pensioners, for instance.

I appreciate that there are countries in the European Union that are poorer than us. There should perhaps be transfers between rich and poor countries on a co-operative basis. The problem is due not to our giving money to poor countries, but to the perverse operation of the common agricultural policy. I have said here many times that we should abolish the CAP, and make the problem disappear. I have said, in the Chamber and in Committees, that if we want a fair budget that everyone would accept, we need contributions and receipts on the basis of differences in prosperity. Rich nations should contribute according to their ability, and poor nations should receive according to their needs. That would be fair, and everyone would know how it worked and would accept it.

I have suggested that many times in Committees. I do not know whether it was just me, but it is significant that the last EU document we looked at in the Chamber, shortly before the general election, specifically rejected my suggestion without giving any good reason. It said something along the lines of "It has been suggested that the budget might be distributed according to relative degrees of prosperity in the different nations of Europe. We reject that because, because, because . . . " I do not remember the precise reasons, but they were not very persuasive.

The CAP is not just unfair to us; it is unfair to the rest of the world. I have argued that if we want to subsidise agriculture, European member states should be able to do so from their own budgets. If there are countries that are poorer and countries that are richer and we want to work together to aid the poorer countries, there should be fiscal transfers from the richer to the poorer.

If we abolished the CAP, the budget problem—the rebate problem—would disappear. That is what Ministers should say next week when they discuss these matters with their European colleagues. If the CAP is abolished, we will not ask for a rebate. It is very simple.

Other people may say that the European Union might then start to fall apart, because the CAP is what glues it together. Inventing some grotesque form of agricultural subsidy to hold the EU together, however, is illogical and silly. We ought to work co-operatively, on the basis of international solidarity and a mutual interest in helping other Europeans—and, indeed, people throughout the world. We would all then be happy to be in the European Union, but a European Union completely different from the one that we have now.

4.12 pm

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