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That is what article 2 states, and of course it is now in the Lisbon treaty, which consolidated all the existing treaties.

The Maastricht rebels, for whom I had the honour of leading many of the debates, took a strong position and refused to support the arrangements in question. I am glad to be able to inform the House that the right hon. Member for Neath (Mr. Hain), no less, the current Secretary of State for Wales, made a powerful speech in which he condemned the wishful thinking of the arrangements, and went on to vote against the Maastricht treaty on Third Reading. He was joined by a number of Labour Members, but not enough.

This is not just about history; it is about the present. Based on our predictions, all the Maastricht rebels, including my hon. Friend the Member for Christchurch
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(Mr. Chope), who is sitting next to me today, declined to vote for the proposal on the grounds of the impracticability of what was contained in article 2. Now, as is becoming increasingly obvious in this context and many others, the European Union simply is not working. I refer to what section 5 of the 1993 Act actually states:

the provisions of the treaty that I have just mentioned,

It states that the report will be submitted to the European Council and European Commission in pursuit of their responsibilities under various articles.

Over an extended period, particularly in relation to the Fiscal Responsibility Bill-I referred to it as the fiscal irresponsibility Bill-those of us on the Conservative Benches have made one attack after another not only on the United Kingdom's performance, as set out in the pre-Budget report, but on the performance of the eurozone countries in complying with those provisions. I spoke about that only last week in the debate about financial management in the European Committee. We have also made the point, as I did earlier, about the absurdity of the no-growth, no-stability, no-pact arrangements in the so-called stability and growth pact, which was introduced by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) in those heady days.

We are caught up in the failure of the European Community and European Union on their economic policies, which are simply not realistic. We need only examine article 2 to realise how much wishful thinking lies behind it. It does not work, because of the failure of the Lisbon agenda, because of over-regulation and because of the degree to which the report of the European Court of Auditors does not stack up, as I mentioned in Committee the other day. I do not have to repeat all that, because it is already on the record.

With regard to fiscal stability, the Government have failed woefully. I have said before that they have lied on the question of the actual debt, and that is why Standard & Poor's, PIMCO and other organisations that have great control and influence over both credit ratings and the bond market are looking so nervously at the underlying weakness of the British economy. The plain fact is that we are in serious difficulties and the Government are doing nothing about it. That is part and parcel of the problem that comes from attempting to subscribe to principles laid down in the Maastricht treaty, as endorsed by the Lisbon treaty, that simply do not work.

I have not advocated the idea of outright withdrawal, just like that. However, what is going on in the eurozone at the moment, as evidenced by a number of important articles that have been written over the past few days, has demonstrated the seriousness of the situation. It is simply astonishing that here we are in a virtually empty House, with nobody at all on the Labour Back Benches other than the Parliamentary Private Secretary to the Minister, when the eurozone is in deep trouble and may even be beyond crisis and when an economic summit meeting to deal with the matter is proposed for Thursday.

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Wolfgang Münchau stated in the Financial Times in an article written on Monday 8 February that

I strongly recommend that anybody who reads these debates should also read that article. It continued:

That was certainly not what the Prime Minister said at Prime Minister's questions today.

There is deep concern that the International Monetary Fund may be called in to sort out the problem, but equally France and Germany might do so. As I have said repeatedly, it will be yet another prescription for danger in the EU if some counties, including ourselves as a net a contributor, are called upon to bail out others. It will not just be Greece, because as we have seen reported in the newspapers regarding Spain, the next step will be the same as on 16 September 1992. Those of us who had campaigned against the compulsory exchange rate mechanism were proved right when the ERM collapsed, to the serious detriment of the people of this country, including my constituents. Wolfgang Münchau stated that these last few days of February

He based his whole article on that analogy, and he is right, because it will not just be Greece. Whether or not Greece is bailed out, there will then be Spain, and then Italy, Ireland and Portugal, not even mentioning countries such as Romania and Bulgaria that are outside the eurozone for the time being and should never have been brought into the EU by accession. As everybody outside this place knows, we have a serious crisis for the eurozone as a whole. I do not say that with any great satisfaction or gloating, but I wish people had listened to us back in 1993.

Apart from voting against the mad arrangement that is now creating all the problems, in 1993 I said that we needed to ensure that we did not return to the dark forces of the past, with massive unemployment and the consequences of a failed economic system. That is what we predicted would happen, and we said that it would lead to the rise of the far right. That is exactly what I said in an article that I wrote in 1993, and I stand by it, because next to my constituency in Staffordshire the British National party is beginning to emerge.

There is a particular problem in Germany, because there is still an unemployment rate of more than 20 per cent. in the eastern part. The unity of the Deutschmark and now the euro has not solved the problems of eastern Germany. If the Germans are asked to bail out Greece-that is basically what is happening, because the French are just bystanders in this, and it is just a bit of political fixing-do we seriously believe that Angela Merkel and the German Government, not to mention the German people as a whole, will accept the prospect of bailing out all those other countries as well? That is what is in prospect.

Mr. Jeremy Browne: I am genuinely curious as to what solution the hon. Gentleman would suggest for Greece's problems if it was not a member of the European Union or the eurozone. Alternatively, for the sake of an illustrative debate, how would Greece address its severe budgetary problems if the EU did not exist at all?

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Mr. Cash: That is a good point, and it applies, as things stand, to the UK. It is precisely because those of us who campaigned against going into the euro won the battle in the Maastricht debates-that was at huge political cost, but necessary in our vital national interest-that we are out of the euro. The Prime Minister has no credit for that whatever. He just kept the debate going because he knew we were right-that is all there is to it. The plain fact is that we were right. Regrettably, we had to fight a Conservative Government over a long period on that issue. If Greece were not in the eurozone, it too could do what the UK can do, which is keep afloat even though that means devaluation-we must recognise that there is an international financial crisis, but it is being made much worse.

In City AM today, Allister Heath, who at one time was the chairman and research director of the European Foundation, which I founded in 1993, says:

There is another exceptionally good article in that paper as well. The plain fact is that the analysis in the City is clear. There is deep worry, and every reason why people should be worried.

In an article in today's Financial Times, Martin Wolf says that Germans must start buying to save Europe's stragglers. At the end of it, he says that that

but that

The point is that in his proposals on the European Union, my right hon. Friend the Member for Witney (Mr. Cameron) has made it clear that his imperative is to increase British competitiveness, and it is absolutely essential that we do so. We need to get rid of unnecessary over-regulation, most of which comes from the EU. We must follow up those proposals, but how will we do it?

That is where there is a serious and important decision to be taken. The decision hinges on my gold-standard-if I may dare to call it that-United Kingdom Parliamentary Sovereignty Bill, which has been debated in the House and which is strongly supported by a significant number of Conservative Members. My right hon. Friend has accepted it in principle, because he has stated that there will be a sovereignty Bill.

What is the relevance of that Bill to this debate? There are economic crises in Europe and the UK, and we cannot separate the European issue from economic questions. The two things are absolutely interwoven on reacquiring growth and competitiveness, as my right hon. Friend said, and on the applications of the stability and growth pact and the Maastricht criteria, to which I have referred.

Rather than take issue with Conservative Front Benchers on that subject, I will simply say that it would be a great mistake to attempt to deal only with the economy in our manifesto going into the general election. We must deal with the European dimension at the same time. Therefore, we should deal with both the European issue-in spades-as well as the economic issue, because they are interdependent. To achieve that, we must repatriate powers to the UK Parliament, Government and people to ensure that we have a working, stable democracy that achieves for the UK the objectives of stability and competitiveness, to enable us to secure jobs and move forward.

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On that basis, my Bill would provide the template to enable us to repatriate powers where there is any conflict between the requirements set out in the old Maastricht treaty and now in the Lisbon treaty, or the requirement for competitiveness-there is a stack of stuff that I will not now go into to deal with that. When it comes to repatriation of powers, we must be in a position to require the judiciary to take note of, follow and obey the Westminster legislation that is needed to override the European legislation. That is the solid template. That is what it is all about.

Mr. Browne: When the right hon. Member for Witney (Mr. Cameron) warned members of his party to stop "banging on" about Europe, did that put any doubt in the mind of the hon. Member for Stone (Mr. Cash) regarding his commitment to the United Kingdom Parliamentary Sovereignty Bill that he introduced to the House?

Mr. Cash: Absolutely none whatever. I was asked that question several months ago, and I said that I would make no apology for so-called "banging on" about Europe, because I am realist. The Bill is exactly what we need to get the European issue and the economic questions running together. My right hon. Friend the Member for Witney has on three separate occasions supported that Bill by providing Tellers for my proposals on the supremacy of Parliament. We are running together on the Bill. It is just a question of how clear and categorical that measure is.

This is a crucial debate, because it is about the future of the British economy and achieving an association of nation states. Everybody needs to wake up and understand that.

3.27 pm

Mr. Andrew Tyrie (Chichester) (Con): That was as usual an extremely interesting speech from my hon. Friend the Member for Stone (Mr. Cash)-apart from the fact that I have heard it before and so have had time to think about it. I agree with three quarters of it, and there are just a few slivers that keep jutting in that I find difficult to go along with in full. Rather than answer my hon. Friend's speech, I will have a go at making my own in the time remaining.

We are debating fiscal fig leaves today-the European fiscal fig leaf is called the growth and stability pact; and our own is called the fiscal rules which, of course, lie in a heap of rubble. The stability and growth pact was a sop to the Germans, who wanted some protection against exactly what has now happened, which is Greece behaving highly irresponsibly. The Germans got nothing more substantive than the pact. When he was Chancellor of the Exchequer, the Prime Minister clearly wanted a fiscal fig leaf to convince the markets that there was something substantial to buttress his idea that he was able to abolish boom and bust. We know what happened to that.

I was going to say a few words about how much worse or better off we would have been in the eurozone, but I dare not, given present company, so I will move on swiftly. We are none the less subject to what is known as the excessive deficit procedure. That is what we are debating today. Under the procedure, we are required to
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deliver an explanation to the Council, and we have that 112-page document today, although it was difficult to get hold of. I got a copy from the Library this morning and it is just a cut and paste job of the pre-Budget report, which is why some of the phraseology reads like something that was published some time ago.

Like the PBR, the document is a fitting product from a fag-end Government at the end of their parliamentary term. The main elements of the document-and the PBR-are a forecast that carries very little credibility, a plan to deal with the fiscal crisis, which nobody believes, and proposals for a Fiscal Responsibility Act to replace the shattered fiscal rules. That Act is now on the statute book and was so absurd that not a single Labour Member outside the Government was prepared to speak in its defence. What we should have had was, first, a forecast with some independent verification and, therefore, some credibility. Secondly, we should have had a plan to close the deficit supported by credible numbers on public spending cuts. Thirdly, we needed something along the lines of an office for fiscal responsibility to support the credibility of the Government's fiscal policy in the longer term. Those three measures would have given some substance to our submission to the Council on how we would remedy the fiscal crisis under the excessive deficit procedure.

The UK agreed in December 2009, at a meeting of the Council, to a deadline of 2014-15 to correct our non-compliance under the rules. Of course, that deadline will have to be completely ignored. If the Government were to be re-elected, compliance would rely entirely on the PBR which is, as we know, virtually content-free. The condemnation of the PBR was so severe that I cannot remember anything like it. I shall not rehearse all the quotations now, but anything produced by Goldman Sachs, Barclays, Citigroup and a host of others will confirm my point.

Does it matter that we are living in this Alice in Wonderland world of fiscal policy, and how does it affect our constituents? The first respect in which it matters is a highly political one. Make-believe documents-for that is what we have before us-give the impression of a more benign medium-term environment than actually exists. Unless we tell the electorate the truth about the public finances, the next election will take place on the basis of a false prospectus, and that erodes the credibility of politicians, politics and this institution. It eats away at the moral authority of any Government trying to deal with the crisis, just as the false prospectus on Iraq did at the time of that crisis. In the end, the whole nation suffers as trust in Government atrophies. Unless we are careful, that is what awaits us on economic policy. That is where we were in the dark days of the 1970s, for those of us who can remember them, and it is important that we never let that happen again.

A second respect in which it matters that this document lacks real substance is that the vacuity of the PBR costs money, including higher public spending. To the extent that markets lose confidence in Government plans, the cost of Government borrowing rises, and we all pay for that. That is why it is worth considering the effects of the Government's fiscal plans from the perspective of the bond markets.

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