Previous Section Index Home Page

Kelvin Hopkins (Luton North) (Lab): Let me first say what a splendid speech we have just heard from the hon. Member for Hove (Mike Weatherley). I am particularly
3 Jun 2010 : Column 660
interested in his support for music. As a former musician and a lifetime lover of music, I think that he will make a very valuable contribution.

Chris Bryant (Rhondda) (Lab): You like jazz.

Kelvin Hopkins: Indeed, that is true, but I have a wide range of tastes in music, including opera and classical. My son is even educating me in heavy metal, but that is a rather new field for me, I am afraid. I was very interested in what the hon. Member for Hove said, and I congratulate him; I am sure that he will make a fine contribution to the House over the years.

I want to speak about the eurozone and its current problems and to reflect some of the points made by my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart). The eurozone is facing disaster at the moment-a disaster that some of us predicted some time ago. However, the eurozone is not the European Union, and it is quite possible to imagine the European Union without a eurozone. Indeed, I think that that is likely to be the future provided that the EU itself does not start to fragment as a result of the eurozone's troubles. I also want to emphasise, as I have time and again in the past, that Europe is not the European Union, or the European Union is not Europe; eliding the two terms is a mistake. The European Union is a political construct that has been imposed on, or adopted by, several of the nations of Europe, but it is not Europe. Europe is a place that, like the hon. Member for North West Leicestershire (Andrew Bridgen), I love very much. In a few weeks' time, I shall be surrounded by the vineyards of Provence, no doubt listening to Mozart and drinking something very decent. I love Europe in every sense, even in struggling to speak French, but I am deeply critical of the European Union and think that the eurozone is a terrible mistake, as is proving to be the case.

The eurozone is in crisis, and a very predictable one. Some 20 years ago, I wrote a paper-I used to write many papers on the EU and its economy-predicting the exchange rate mechanism debacle before we actually joined, and I proved to be exactly right. People thought I was prophetic, but anyone with a moderate knowledge of economics and a little foresight would have seen that the ERM was going to bring about a disaster. In fact, it led to the defeat of the Conservatives in 1997 and the election of a Labour Government, so for the Government side of the House it was indeed a disaster, but, unusually and unexpectedly, it brought benefits in terms of a Labour Government.

Strong currencies derive from strong economies, not the other way round. If one tries to impose a strong currency on a weak economy, it will not survive. There are great examples of this around the world. The best one in recent years is perhaps Argentina, where people linked the peso directly and rigidly to the dollar for a period, which caused terrible mayhem inside their economy. Eventually, after some 10 years, when the economy was almost wrecked, they were forced to devalue to break that link. As a result of that devaluation, Argentina is now bouncing back, no doubt helped by its splendid wine industry. I am sure that the competitive edge that the wine industry has had because of devaluation has helped the Argentine economy to recover.

Weak economies within the eurozone will have exactly the same problem, and we will not solve it without those
3 Jun 2010 : Column 661
countries departing from the eurozone. The first would be Greece, but others would follow. I will come to some of the problems with that in a moment. From time to time, I have met Irish politicians and suggested that their only solution is to recreate the punt, devalue and rejoin the sterling zone instead of the eurozone, because we are Ireland's major trading partner-it is essentially part of the larger economy of the British Isles. Ireland would benefit greatly from such a decision.

Some people think that it is unrealistic to expect countries to leave the eurozone, although Angela Merkel suggested, some eight or nine weeks ago, that it should not be impossible for countries to do so. She was then roundly condemned with a fierce reaction from the French, who thought that that was an appalling thing to say, and she has now drawn back from it. However, there are those who believe that in the long run the Deutschmark will be recreated, or that there could be a Deutschmark zone that might include Holland and Luxembourg, but not much more.

The problem is that if Greece goes, the other PIGS countries--Portugal, Ireland and Spain--will also eventually depart the euro. The problem that the French and German Governments have is that their banks are heavily exposed in lending to those countries, which would immediately devalue and start to become very competitive with stronger nations in northern Europe, particularly with the French. The French would immediately have a problem competing with Italy and Spain-their next-door neighbours--and would then eventually leave the eurozone and devalue. That would leave the German economy on its own, effectively with a currency that in real terms was much more highly valued because the others would have been devalued.

That takes us back to what Keynes suggested in Bretton Woods. He wanted a world in which there would be stable but separate currencies and said that those countries that get into a big deficit should be able to devalue and, indeed, those countries that run big surpluses should be required to revalue. Indeed, the German economy was built for decades on an undervaluation of the Deutschmark, which is, in a sense, what has given it its strength and has enabled it to become effectively overvalued within the eurozone. Other countries cannot compete with Germany-indeed, we cannot compete with it, which is why, I think, we devalued. Despite the devaluation, we still have a massive trade deficit with Germany, but we are starting to improve and recover, because we had that opportunity.

Because we are outside the eurozone, we have the ability to devalue-depreciate-our currency as appropriate and to choose our own monetary and fiscal policy. Those policies are interrelated-we have relations with the countries in the eurozone-but, nevertheless, we have a degree of freedom in managing our economy that countries inside the eurozone do not. If we try to impose strong currencies on weak economies, such a problem occurs.

If we do not allow those countries to leave and dismantle the eurozone, we will see massive deflation. One cannot just expect countries such as Greece and Spain to cut their deficits and deflate their economies massively and, indeed, get rid of protection for workers, so that wages are driven down. That would merely make
3 Jun 2010 : Column 662
their economies much poorer and weaker, increase unemployment and be no good at all. The logical thing for those countries to do would be to withdraw from the eurozone, start to direct demand towards their own economies and spend time behind the effective barrier of a depreciated currency, rebuilding the strength of their economies in a realistic way.

That is what is needed in the eurozone and that is why the eurozone is deeply flawed. It has to be dismantled and we have to build a Europe based on economies that have separate currencies, which are like shock absorbers between economies--they have to be able to adjust. If they cannot do so, those economies will be in serious trouble for a very long time. Indeed, there could be serious social unrest, the like of which we have not seen for a long time.

In a sense, I agree with what my hon. Friend the Member for Birmingham, Edgbaston was saying. We ought to look forward practically. Rather than indulging in Schadenfreude-pleasure in the pain of others-and saying, "I told you so," we should take practical steps to persuade those countries to think about dismantling the eurozone, recreating their separate currencies and progressing from there onwards in a much more practical and sensible way.

4.23 pm

Mr William Cash (Stone) (Con): I had the pleasure of being able to refer to some of the matters I wish to mention in the Queen's Speech debate. I am grateful to you, Mr. Deputy Speaker, for giving me another opportunity to carry the matter forward, particularly in the light of some absolutely superb speeches from Back Benchers on our own side on the question of the European Union as a whole and also in the light of the contribution of the hon. Member for Bermondsey and Old Southwark (Simon Hughes), who began to move quite perceptibly towards the centre of gravity of where we are now in the coalition Government.

It is no secret that my concern about any coalition Government remains that we must keep to our principles and our manifesto promises. It is essential that we stick to our template and manifesto commitments on sovereignty-I originally proposed a sovereignty Bill some five to seven years ago-and human rights, with which I will deal shortly, and the associated charter of fundamental rights, for a simple reason. There are three categories of activity in coalitions: the easy stuff, the difficult stuff and the red lines stuff. As I said repeatedly on radio and television in the aftermath of the coalition announcement, we must stick to the red lines because they are about who governs us and how. I do not need to elaborate, but a sovereignty Bill and the repeal of the Human Rights Act 1998 are central to that.

As hon. Members who spoke this afternoon have strongly emphasised, we have a responsibility and an obligation to put the sovereignty of Parliament at the top of our agenda because, as I have often said, it is not our Parliament but that of the people who elect us. The question, "Who governs the United Kingdom?" is therefore central and we have no right to make any concessions on that.

Like the hon. Member for Luton North (Kelvin Hopkins), I pay tribute to the hon. Member for Birmingham, Edgbaston (Ms Stuart) for her speech. By
3 Jun 2010 : Column 663
the mettle of her arguments and the manner in which she addressed the questions that I asked in several interventions on the Foreign Secretary and the shadow Foreign Secretary about the burdens on business and deregulation, she gave the impression that she had somehow been liberated.

With great respect, it is not good enough to imply that gold-plating and national over-regulation is the real problem, when the problem is the extent of the acquis communautaire. It has an enormous impact on burdens on business-£88 billion according to the British Chambers of Commerce recently. I pay tribute to Tim Ambler and Francis Chittenden for their remarkable analytical work, from which I drew the figure of 4% of GDP, to which Lord Mandelson referred when he was a Commissioner. Mr Verheugen gave similar figures about the over-regulation of European business.

The eurozone does not function properly because of the economic model of the Lisbon agenda-my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) admitted that it had not been working. For years, the European Scrutiny Committee has shown that it has not worked properly. That is all part and parcel of the reason for the widening of our trade deficit with Europe. We cannot manage to trade with an imploding eurozone, part of which is affected by profligate public expenditure, as in the case of Greece, and part of which is affected by the deeply flawed statistical base of the EUROSTAT system. People are allowed to engage in what would be regarded as false accounting in any company.

We are in a European Union that simply cannot work as it is. It is imploding. It cannot compete with China and India because it is inherently ossified. It is a great concrete jungle of over-regulation. One cannot change the nature of employment, yet the whole social and employment base must be changed. To my mind, whether we transfer further powers is neither here nor there. It would be wonderful if we had a referendum on the European question, but the notion that we would be committed to it only when a further transfer of powers occurred is wrong. I have heard it all before. I heard it when Lord Hurd was Foreign Secretary during the debates on the Maastricht treaty. I stood in this very place, inveighing against it. As the hon. Member for Luton North said, we got so much about that right at the time. The late Peter Shore and I found an amity based on a common understanding that that system was not going to work, and so it has proved.

Kelvin Hopkins: The hon. Gentleman may know that Lord Hurd, a euro enthusiast, said last week that it would now be difficult to find more than one in 10 people in Britain who are prepared to contemplate the single currency.

Mr Cash: I certainly do, and I say without any sense of self-congratulation that when we said such things in the Maastricht debates, we were vehemently criticised by the then Government. We were rubbished, if I may use that expression, for daring to suggest that the single currency would not work. The same goes for the paraphernalia that followed in a succession of treaties. I must have tabled at least 150 or 200 amendments-I cannot remember exactly how many-to each of the treaties from Maastricht onwards, including the Lisbon treaty, which we simply must not implement.

3 Jun 2010 : Column 664

The whole European system must be radically and drastically reformed, precisely because it is impossible to repatriate powers without a sovereignty Act-I repeat my call for that to be introduced as urgently as possible-and we need that to underpin the negotiations on economic recovery. We must have economic recovery because otherwise, we cannot reduce the debt or pay for the necessary public services. We are living in a fool's paradise if we think otherwise. That is fundamental.

I am concerned about further enlargement, and my earlier exchanges with the shadow Foreign Secretary are on the record-I was slightly pulled up for following my point up. The European Scrutiny Committee asked very serious questions about the accession of Bulgaria and Romania. Those countries are reasons why we should not enlarge any more, to include, for example, Albania, Croatia, Macedonia and Turkey. I do not have time to go into those arguments now, but the bottom line is that the European Union is more than large enough, and unfortunately, it does not work, and must be reformed drastically.

If there is no way of reforming the EU from within because of the acquis communautaire and the role of the European Court of Justice, and because other member states are simply not prepared to negotiate sensibly on legislation that requires unanimity to repeal, we are going to be stuck by the majority vote. All the protestations, hopes, aspirations, and perhaps some rather over-enthusiastic promises, will come to nothing, because it is impossible to change the system under majority voting when there is no will to do so on the other side, which takes us back to repatriation and the sovereignty Act.

The human rights question is enormously important. The necessity for the repeal of the Human Rights Act 1998 runs in tandem with the charter of fundamental rights. In a recent speech to judges, the Lord Chief Justice stated:

We must take such things very seriously.

Lord Hoffman has said that the European Court of Human Rights in Strasbourg

The same applies to the charter of fundamental rights. We must stop that process.

4.35 pm

Grahame M. Morris (Easington) (Lab): I am grateful for the honour and the opportunity to make my first contribution to this House and I congratulate other hon. Members who have done so today. If I may be forgiven for being partisan, I especially enjoyed the contributions from my hon. Friends the Members for Newcastle upon Tyne North (Catherine McKinnell), for Sunderland Central (Julie Elliott), for Wirral South (Alison McGovern) and for Nottingham South (Lilian Greenwood). I also wish to compliment the hon. Members for Hove (Mike Weatherley), for North West Leicestershire
3 Jun 2010 : Column 665
(Andrew Bridgen), for York Outer (Julian Sturdy) and for Brighton, Kemptown (Simon Kirby).

As several of my colleagues have said, to represent the people of your home constituency-in my case, Easington-is a great privilege. It is all the more special for me as I represent the constituency in which I was born and where I have lived, brought up my family and worked all my life. As hon. Members may be aware-or perhaps not-Easington has an illustrious list of former Members of Parliament and a proud tradition of trade union and Labour party representation. The area that I now represent has returned Labour Members of Parliament since 1921, when the great socialist Sidney Webb was first elected. He was a leading member of the Fabian Society, one of the founders of the London School of Economics, and author of the Labour party's original clause IV.

Labour's Prime Minister Ramsay MacDonald was one of my predecessors. The House would do well to take note of his experience of peacetime coalition Government. When he split with the Labour party, his 1931 coalition leading the Tory and Liberal Democrat-sorry, I mean Tory and Liberal-parties, with an agenda of severe cuts in public spending, was opposed by the Labour Party. At that time the Labour Opposition developed a progressive socialist alternative and opposed the cuts that were to hurt ordinary working people and the unemployed. The following election saw Labour gain 102 seats, and the election after that was a Labour landslide.

The eminent Manny Shinwell served the people of Easington for more than 35 years. As Minister for fuel and power he achieved the nationalisation of the coal industry in 1947. It is recorded in Hansard that following angry exchanges in this House, Shinwell crossed the Floor, not in the usual fashion, but instead to strike a blow at the face of a Conservative MP. More recently, the popular Jack Dormond represented his local seat of Easington and served as chairman of the parliamentary Labour party for several years.

However, it is my direct predecessor John Cummings about whom I can talk without reference to history books or the parliamentary archives. Like me, John was born in Murton, a small village in Easington, and he worked in the coal mines from the age of 15. He was a political activist in the Durham Colliery Mechanics Association and the Labour party. He was later elected to the Easington district council and became its leader. In 1987, he was elected to this House and he has served the people of Easington with passion and diligence for 23 years. Indeed, I had the privilege of working for John and witnessing his extraordinary commitment on behalf of the people of Easington during his 23 years of public service. The whole House can be proud to serve in a democracy where a boy who went down the pit aged 15 could rise up to serve as a distinguished Member of this House. John is a friend who has been an inspiration to me, and I wish him well in his retirement.

Next Section Index Home Page