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9.11 pm

Kelvin Hopkins (Luton, North) (Lab): It has been a long wait to be called, but worth it.

I am very pleased to say that, in my borough of Luton, Labour came first in the European elections. We had a good result, with slightly more votes if a slightly lower percentage. I have a very high profile as an opponent and critic of the EU. Indeed, I toured on an open-top bus with a loud hailer during a mini-referendum that was held in the town on whether we should have a full referendum on EU membership. We won it massively: there was a big majority in favour of a full referendum, and there were pieces in the newspaper and on television and so on. I might be flattering myself, but I like to think that I had a small influence on the election result in Luton and that being very critical of the EU actually benefited Labour in the town. I might say that we also had a very successful campaign against the British National party.

The results show that only a small proportion of those who voted were Euro-enthusiasts. I suspect that the overwhelming majority of the 65 per cent. of people who did not vote were not Euro-enthusiasts, as such people would have known that they were under pressure and so made sure to get their vote out. I suspect that the people who did not vote were either Eurosceptics or, at best, disinterested or cynical about the EU. It is clear that an enormous majority of people in this country take a critical position on the EU, and only when we move to a more democratic Europe—an association of independent democratic states collaborating for mutual benefit, and not a bureaucratically driven economic arrangement—will we see Europe becoming more popular.

However, what I really want to talk about is the European economy because, in common with the rest of the developed world, it is in serious difficulty. We have been affected by the recession and the credit crunch very badly, but differentially: in the first quarter of 2009, UK gross domestic product declined by 1.9 per cent., but in the same period the eurozone’s GDP fell by 2.5 per cent., while Germany’s fell by 3.8 per cent. Despite that, Angela Merkel is critical of the UK’s policy of providing fiscal stimulus by putting money into the economy to sustain demand through these difficult times.

I think that the policy is absolutely right. I might criticise details, but we have taken the right approach. We have to sustain demand through this difficult period, because otherwise we would be in even worse trouble.

Mr. Drew: Does my hon. Friend accept that there is at least a note of irony here? It would appear that Chancellor Merkel is the favourite to win the German elections later this year, at a time when capitalism is in crisis. The simple fact is that that is because the left is not believed, due to its passionate support for the EU. Clearly, that is a dilemma that all of us on the left face.

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Kelvin Hopkins: My hon. Friend is absolutely right. The Social Democrats are in coalition with the Christian Democrats and are being dragged along. German working people and trade unionists face a choice: they can vote either for a collaborationist Social Democrat party, or for a Marxist party that is based on what is left of the East German Communist party. They find that a very difficult choice, and I suspect that many will not vote at all. If the Social Democrats came out with a strong, democratic socialist, Euro-critical position, I suspect that they would do much better in the elections than if they were just dragged along by a right-wing, deflationist Government.

There are many reasons why I think that Britain is better placed to weather the storm. The major one, of course, is that we are not members of the eurozone. One thing on which I congratulate my right hon. Friend the Prime Minister is having kept us out of the euro. For the past 12 years, we have had the advantage of having our own currency. There has been substantial sterling depreciation, which has been helpful. I know that there are costs and benefits to depreciation, but by and large it has been beneficial; there has been a slight improvement in our balance of trade in these difficult times, and it is right that there should have been. Unfortunately, we have had an overvalued currency for some years, but it is now coming into line. That is a necessary correction, and I hope that we sustain at least some of that depreciation for the longer term.

We also have control of our interest rates, and can adjust them monthly to benefit the economy. There was a massive drop in interest rates, and that was followed in other countries, too. It affects those with mortgages. Members of my family have had their disposable income increase by £300 in a month. That has put an enormous boost into the economy just when it was needed. That is another benefit. There has also been some printing of money to help us on the way.

The crisis in the eurozone is most interesting. There is speculation about whether it will survive at all. In May, the German Finance Ministry was drafting plans to prevent default by countries on the edge of the eurozone. Such a default could lead to a full-blown collapse of the EU’s monetary system, yet years ago a solemn pledge was given to German voters that the German political elite would never leave German taxpayers exposed on the hook of the debts of half of Europe, which is what is happening. The countries involved have a dilemma: do they save the eurozone, or look to their own economies?

The eurozone’s bail-out liabilities could be enormous. Italy is in serious difficulties. It has net debt of 111 per cent. of gross domestic product—that is more than twice our figure. Austria has loans to eastern Europe that are equivalent to 70 per cent. of GDP. Spain has serious problems, and we know about the position of Ireland. We should dwell on Ireland; if it had not joined the eurozone, it could have depreciated its currency in line with the depreciation of sterling and saved itself an awful lot of pain, as its major trading partner is, of course, Britain. It blames us for depreciating, but what were we to do? We could not sustain our currency at an overvaluation just to help the Irish; we have to do what we must to help our economy. I have even suggested to Irish politicians that they might re-introduce the punt and devalue to help their economy. They are rather shocked at the thought, but it is a practical proposition.

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The eurozone is in a critical state, especially for Germany. In Germany, a mortgage lender, Hypo Real Estate, is imploding, despite the fact that it has been lent €87 billion of state money. The German Finance Minister, a Social Democrat, has said that nationalisation is inevitable. If Germany does not nationalise it, there could be a collapse with an impact similar to that of the collapse of Lehman Brothers. There are really serious problems inside the eurozone, and Germany has a dilemma: does it move towards an interventionist policy, in which it borrows and spends considerable amounts of money to save the German economy, or does it spend even vaster sums of money bailing out weaker members of the eurozone? It is a real question whether the eurozone can survive. If one or two members on the outside start seriously to default, and perhaps to withdraw, the whole shooting match could be over. As I have said in previous debates, there are those in Germany who, quietly behind the scenes, think that there is a possibility—or probability—that eventually Germany will withdraw and go back to the Deutschmark, and that national currencies will once again be created.

This year, 700,000 German workers will lose their jobs. They will not be at all pleased, to put it mildly, to see vast sums of what is effectively German money being used to bail out weaker members of the eurozone. I suspect that there will be a point at which some politician will be brave enough to say, “The eurozone has gone far enough, it does not work, and it does not benefit Germany or anyone in Europe.”

Currencies are necessary as shock absorbers between economies. We are not one economy; we are an association of economies that trade with each other, and those economies must have a degree of independence to ensure that they are managed at a national level, not at a supranational level by bureaucrats in Brussels.

Mr. Walter: For the past five minutes or so, I have listened to the hon. Gentleman’s tale of doom about what is going to happen to Germany. Can he tell me how much money the German taxpayer has used to bail out those other economies? I am not aware of any.

Kelvin Hopkins: I am speaking about what will have to be done to keep the eurozone a reality. If the smaller, weaker economies start to default, the big rich countries will have to bail them out. If those start to default, there will be serious trouble.

Ms Gisela Stuart: May I add to the debate? The monetary union is not a credit and debt union. Bail-outs have not yet happened, and of course they would be useless because long-term intervention would be required. For Germany to be in a position to rescue other currencies would require a change in the structural arrangements.

Kelvin Hopkins: There are debates about whether that would be illegal or acceptable. If there is a monetary union with a single currency and the members are still effectively separate countries, they cannot allow individual countries to collapse, in the same way that we could not allow Yorkshire to collapse.

Mr. Hague: Unthinkable!

Kelvin Hopkins: Indeed. I should perhaps have said Bedfordshire; I stand corrected.

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If the deflationist tendencies in the eurozone continue, particularly in Germany, we could see uncomfortable parallels with the early 1930s and the BrĂ1/4ning deflation, to which the hon. Member for Louth and Horncastle (Sir Peter Tapsell) constantly refers. He is wise and knowledgeable in these matters and he keeps drawing attention to the fact that what led to the rise of Hitler was the deflation in the early 1930s under the Weimar Government. That is the danger.

We must have reflation, managed economies, intervention and a return to the kind of economic strategies that worked very well between 1945 and 1970. That was a world of full employment, growth, redistribution, growing welfare states and relative equality—a much better world than we have now. The present situation is insecure and frightening. A more democratic socialist approach to Europe, with individual member states managing their own economies, taking account of other countries’ interests and working together co-operatively where appropriate, would be a much more sensible way forward towards a Europe that worked.

9.23 pm

Mr. David Drew (Stroud) (Lab/Co-op): I shall be brief in order to allow the hon. Member for Isle of Wight (Mr. Turner) to speak.

I was in Committee earlier, but since I have been in the Chamber all the Labour Members who have spoken represent what I would call the traditional Labour view, rather than the view of new Labour. Although I did not hear my hon. Friend the Member for Glasgow, South-West (Mr. Davidson), I know that he made a ripping good speech and said what I would like to have said.

I shall make three quick points. I spent last Friday evening with good friends at the annual presentation of the Stroud and district skittles association, of which I am a well known advocate. One of my friends there, who is well into his 70s, had to admit, with some shame, that for the first time in his life he had not voted Labour in an election. I know that he is a regular voter because I keep an eye on him. He did not say how he had voted, but he said that he did not vote Labour because he felt robbed, as we had failed to deliver on the referendum on the Lisbon treaty. It was as simple as that. He felt that the party could no longer be trusted. Although he finally said that he would vote for me, until we are trusted on that there will be a huge divergence between the support base of the Labour party and what the party and members of its Front-Bench team stand for. Until we overcome that, we will be in grave difficulties.

My second point is that the Labour party did so badly in the European elections because, yet again, a totally alien electoral system was foisted on us. The closed list system has no history that makes any sense in this country, and I know that on polling day many people were confused about the length of the list of people and parties for which they could vote. The system’s antecedents are alien to this country, and we must ditch it. We loved the Justice Secretary’s explanation of the d’Hondt system, which kept many of us riveted during the most boring of those Electoral Commission debates that led up to the introduction of the new electoral system. However, it is wrong, it has been proved to be wrong and it has cost this party dear.

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My third point, on which I intervened on my hon. Friend the Member for Luton, North (Kelvin Hopkins), is about the anger felt on the Labour Benches. At the very time that socialists should feel that the capitalist system has a huge question mark against it, the greatest losers in the recent elections, and those who stand to be the greatest losers in the national elections, are on the left. The reason why the left is losing is, quite simply, that our electorate do not believe us on economic policy, and that is because we have fastened ourselves to the mast of the European Union. Until we regain some credibility with our electorate on that issue, they will continue to vote for other parties, and not even for the main Opposition.

Mr. Walter: Will the hon. Gentleman give way?

Mr. Drew: I shall not, because I want to give the hon. Member for Isle of Wight at least a couple of minutes.

Until we are absolutely clear that we have a policy on Europe which is more in touch with our voters, we will face that problem. The real anger and dilemma that many of us face when we see Governments of the right sweeping through national elections is entirely down to the fact that we as a party are so arrogant, so indifferent to our electoral base and so completely beset by the notion that we will eventually persuade them that we are right—when the reality is that they are right and we are wrong.

9.27 pm

Mr. Andrew Turner (Isle of Wight) (Con): My first point is about the European common fisheries policy, which has completely failed. Only last month, the EU Commission was forced to admit that its quota fishing system had failed. The position paper stated that 88 per cent. of European fishing stocks are overfished and 30 per cent. of managed fisheries are now outside “safe biological limits”. The single market is encouraging greed in the fishing industry at the cost of ecosystems and the national fish stocks that they support. Enough is enough. The best place to make a safe and sustainable fishing policy for Britain is here in this House. Is it not time to renounce the European common fisheries policy before the British marine ecosystem is damaged for ever?

My second point is that, although the single market has some clear advantages, such as the removal of trade barriers, there are elements that still harm rather than help our country. First, there is the open-door policy for labour to move back and forth across our borders. That may help to fill vacancies for unskilled labour and the like, but it may be damaging to the future of certain professions in this country. I am sure that Members from throughout the country will have heard stories, from their constituents or in the media, of EU workers undercutting their British counterparts. I welcome healthy competition in the market, but prolonged and widespread cost undercutting in plumbing and joinery, for instance, damages our economy. It forces many British tradesmen to retrain or leave their professions entirely. Some people simply have nowhere else to go and join the unemployed. As we have seen, since the expansion of the EU, labour has almost always been in a state of flux. Once British tradesmen have been forced out of the market through undercutting, British expertise will be lost. If the migrant workers decide to return to their home countries, who will be left to carry out the work?

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9.30 pm

Mr. Mark Francois (Rayleigh) (Con): It is a pleasure to wind up this debate on behalf of Her Majesty’s Opposition. I am particularly pleased to be following my hon. Friend the Member for Isle of Wight (Mr. Turner); we are delighted to see him back in his place, speaking so eloquently on behalf of his constituents.

I take this opportunity to welcome the hon. Member for Rhondda (Chris Bryant) to his new responsibilities. He will now serve the Government as an Under-Secretary of State at the Foreign and Commonwealth Office and will have the additional responsibility of being the Government’s spokesman on European matters in the Commons, as their Minister for Europe now sits in another place. I first crossed swords with the hon. Gentleman in 2004, during a Westminster Hall debate about Gibraltar. Shamefully, the Government were trying to sell out the people of the Rock in a deal with the Spanish Government behind their backs. We won that argument and I hope to win other arguments against the hon. Gentleman in future.

There have been some lively Back-Bench speeches in this debate; I shall not go through every one in turn, but I noted that the majority of speeches from the Labour Back Benches opposed, rather than supported, their Government’s policy on Europe. There were a number of interventions, including on my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), from the right hon. Member for Rotherham (Mr. MacShane), who, unfortunately, is no longer in his place. Presumably, he is quietly consoling himself following his failure to get the job of Minister for Europe when it came up again. A number of us, himself included, wondered whether he would be recalled to the colours when an opportunity presented itself. The call, however, did not come. But we have news for him. He should not be too downhearted; given the very high turnover of Labour Ministers for Europe—there have been 11 since 1997—it is not inconceivable that, if he hangs on a little, he will get an opportunity to serve in that position again.

During the last debate on Europe, we discussed the situation in Georgia. In the intervening time, unfortunately, the situation has not improved. It is now almost a year since the Russian invasion of Georgia, and Russia has still not abided by the terms of the ceasefire brokered by the French EU presidency. Specifically, Russian troops have not returned to where they were prior to the invasion. Russia has still not allowed Organisation for Security and Co-operation in Europe monitors into South Ossetia, and ethnic Georgians expelled from areas under Russian control have still not been allowed to return.

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