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Noble Lords: Hear, hear!

Lord Buxton of Alsa: My Lords, pooling is totally false. I was born during the First World War; I served for seven years, in the Second World War, and I have had 40 years in business. I have a good deal of experience of mergers. One can have a merger between two people, but in the course of time, or instantly, the stronger partner assumes complete control. The second, or weaker partner, is made president and everyone else is floated off. If there are more than two, the situation becomes complicated. If there are three organisations it is virtually impossible. When one talks about double figures, there is only one way in which a merger can be dealt with, and that is to have a strong bureaucratic dictatorship which nobody can contradict.

It is interesting to refer to the point made by the noble Lord, Lord Bruce of Donington, about propaganda and an EC cost of £200 million. Sir Edward Heath objected strongly, in an article about surrendering sovereignty, to Sir James Goldsmith spending £20 million of his own money. I personally prefer people who put their own money where their mouth is. I dread the prospect of cohorts of bureaucrats from Brussels coming here constantly, partly at our expense, and worst of all with that valiant Englishman Sir Leon Brittan, espousing one side of the argument--on even one occasion to the point of attacking our ancient friend, Canada, when Spain was pirating their fisheries. But Sir James Goldsmith's expenditure is peanuts. There will be 10 or 20 times more spent by these bureaucrats who, as the noble Lord, Lord Bruce of Donington, assures us, have no budget anyway. It will be our money and we are going to be flooded with propaganda on only one side.

1.44 p.m.

Lord Wyatt of Weeford: My Lords, I would like to congratulate the noble Lord, Lord Pearson of Rannoch, who has started something that will not go away and given it impetus. I believe that the debate that he has initiated will help to start educating the public, who are woefully ignorant of all the issues involved. The most important issue at the next election is Europe and not the economy. We all know about the economy and how well it is doing. But we are drifting like sleepwalkers into the stranglehold of Europe without seeming to realise where we are going. To a large extent that is the fault of the political leaders, who are always trying to conceal their views or giving them a different meaning. At the moment there is a clear difference between the three parties on this issue.

General de Gaulle was quite right when he rejected Macmillan's appeal for support in signing the Treaty of Rome. General de Gaulle knew that it would never fit the United Kingdom. He knew that we would never

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fit in with people on the Continent, whose languages are different and who have no particular kinship with us. He knew that the United Kingdom will always be more pro-American than pro-European. They are our children. We help them and they help us when the chips are down. We have the same language and culture; the same tradition of democracy and the same attitude towards the law. Even as regards the stock exchanges, what matters is not what goes on in some miserable bourse in Paris or Frankfurt as regards the English market. It is what happens overnight on Wall Street, and vice versa. We are linked economically far more to America than we are to the European Continent. It is impossible for us to be part of a federal Europe. European countries have very scant acquaintance with democracy and they have docile parliaments. They can be led in any direction that takes a leader's fancy. In any case, those leaders override the opinions of their own public.

In this country, resentment against the European courts, with an alien Continental legal system overriding ours, rises steadily, and so does resentment against the ever-increasing encroachment of European bureaucracy in our affairs, particularly when it has nothing whatever to do with competition but is merely an attempt to extend the range of the federal notion. There is a great deal of resentment, too, at the pressure coming from Europe and the spending of our money on propaganda in this country in order to say what a good thing the single currency is.

I support the Government's position, which is one of extreme doubt that a single currency will ever happen or that we shall ever join it. That view has been marred only by the Chancellor of the Exchequer, who seems to be a most interesting character. I am very fond of him. He has been shrewd and able in conducting the economy following the lines set originally by the noble Baroness sitting a few yards away from me and by Norman Lamont. But the Chancellor has really screwed up on this subject. He declares that he does not want to join the exchange rate mechanism again because it will be very damaging. Nevertheless, he wants us to be in a single currency. Joining the ERM is an essential prerequisite for going into a single currency. If we had been in a single currency, with our interest rates dictated by the Bundesbank or an extension thereof, he would not have been able to vary interest rates, as he chose to do--in my view he has done rather wisely in his conduct of the Exchequer--and we would be unable to have our own system of taxation. That would be quite impossible if we had a single currency.

The country needs to know the differences between the parties more clearly than it does now. Perhaps I may use a form of shorthand to describe the situation. The Labour Party is committed to joining up to the social chapter, with all the terrifying consequences that that would have for this country's employment and exports. It is in favour of qualified majority voting, which the present Government do not want to extend any further. The Labour Party believes in closer integration with Europe. It does not want this country to be isolated in Europe. But you have to be isolated if you are going to

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stand up for British interests against all those rogues in Europe, as closer integration is merely a push-over leading to federalism.

To be fair to the Liberal Democrats, they are quite honest. They say, "Yes, we do want a federal Europe. We do believe that Britain is a second-rate country and needs to be governed from abroad so that our Parliament at Westminster is really nothing more than a glorified county council". They say that we should admit that and accept our place as a declining nation.

I do not accept that. I believe that we have some of our greatest days ahead of us. You can never beat the British people. Lots of people have tried but have never succeeded. There is a pulse that throbs in this country which will assert itself, which will be ingenious and which will always overcome all difficulties, if allowed to do so by government.

As far as the Government's position is concerned, Mr. Major is very much in favour of rolling back the powers of Brussels. He resists further encroachment. He clearly does not want the single currency. He "who runs may read"--"Watch my lips" and all the rest of it. In that respect, he is like many members of the Labour Party and it is absolute moonshine to suggest that despite the draconian orders issued by dictator Blair, all Labour Members of Parliament are madly in favour of the single currency or Mr. Blair's approach to Europe. Clearly, they are not. The overwhelming majority in this country is in favour of the stance taken so far by Mr. Major. As long as it is clearly explained to them, they can see where it leads.

I do not think that we have anything whatever to fear economically if we leave the Community. From 1990 to 1995 an increasingly adverse balance of payments trade in invisibles arose with Europe. In 1991 our adverse current account with Europe was £6.5 billion. By 1995 it was £14.25 billion. I repeat that that is the adverse balance. We were importing more from Europe than we were exporting. Even with the European Free Trade Association our current adverse balance is over £7 billion a year, making a total minus quantity with Europe of £21 billion. They need us much more than we need them. Our surplus comes from the United States, Canada, Australia, parts of the old Commonwealth, South Africa, Saudi Arabia, India and Asia--from anywhere in the world except from Continental Europe. We now have a superior balance of trade with the rest of the world despite the fact that we carry the burden of that £21 billion deficit a year with Europe.

Other European countries are crippled by their social welfare payments and the social chapter, which we have opted out of. That is why they are in such a mess and that is why their unemployment is rising as ours is decreasing. In my view, we can dictate our terms for reverting to the original concept of a common market as a loose, free trade association. The GATT rules will prevent Europe from putting up barriers to exports from this country. It is impossible for Europe to do that now. The gentlemen from Toyota have nothing to worry about if we do not join the single currency. We would remain the country pre-eminent in the entire world in terms of inward investment. What the gentlemen from

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Toyota should be worried about is what would happen if we were to join the social chapter and the single currency. Our production costs would soar and we would be in exactly the same economic mess as the rest of Europe.

1.55 p.m.

Lord Braybrooke: My Lords, I too am delighted to have this opportunity to speak and to support the noble Lord, Lord Pearson of Rannoch, in this debate on the European Communities as I suggest that we are now facing a more severe threat, albeit in a slightly different form, than that which we faced in 1940.

I must declare my interest. I voted against the Common Market in 1975--not because of any antipathy towards nations trading together or joining in a common trading market, but rather through a passable knowledge of history. Perhaps some of your Lordships may agree that in order to foretell the future it is essential to know something of the past.

Your Lordships may or may not agree that none of us changes. By "none of us", I mean that the aspirations and temperaments of individual countries do not change. The Irish do not change; we do not change and certainly the Germans and the French do not change, looking back at past performance. In the case of the Germans, we are now experiencing a third attempt at European domination, but this time by economic means rather than force of arms. Our aspirations and temperaments remain in the same vein over the centuries, and whereas at one time big was beautiful, it now appears that many countries want to have a say in running their own affairs. One only has to look at the break-up of the Soviet Union to see that--and I am sure that the Scots and Welsh--and maybe even the Cornish--would agree.

I suggest that we are all the same as we always were, as is written in that delightful prayer by Canon Scott Holland. Why are we dallying, therefore, with thoughts of transforming ourselves into a small part of a socialist, federal republic of Europe where all our sovereignty and individual laws would be prostituted to the mistaken ideals of a latter day Soviet Union? Almost daily we are giving up our sovereignty. In my view it is quite disgraceful for us to throw away the freedom which was granted to us by the sacrifice so freely given by millions of men and women in two world wars.

So far, I have been dealing mainly with the sentimental or emotional aspects of what I believe to be running against the tide. To use a well-known adage, in spite of the fact that figures can lie and liars can figure, I suggest that if we try to look at the facts as nearly as we can ascertain them, the reasons against our becoming part of a federal, socialist republic of Europe are even more illuminating.

First, the largest three net providers of cash to this Tower of Babel are Germany, Great Britain and the Netherlands in that order. Why, one may ask, should we fund other countries which are quite capable of pulling their socks up if they so desire? Secondly, I ask why we should join a series of economies which are going downhill because of the power of their

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unions. One has only to look at recent events in Germany and France, let alone Greece, to see that. Why, indeed, should we join countries whose pension industry is seriously underfunded? Here we can look at the recent figures of all the major European countries: Germany, France, Italy and Spain. If we become fully federalised, we would undoubtedly have to contribute to their pension funds, whatever they may promise now.

We are a parliamentary democracy and proud of it--and we have been a parliamentary democracy for many more years than any other member of the European Community. Why do we desire to throw that away in order to be ruled by unelected commissioners and the European Court, who have little knowledge of the United Kingdom, save that they are probably rather jealous of us? Why, I ask, should we be joining declining economies whose cost base is unsustainable? I know that 40 per cent. of our exports is alleged to be with the single market, but at least 50 per cent. goes elsewhere.

We have a deficit with the Common Market but elsewhere our trade is growing fast. While I cannot put my hand on my heart and give your Lordships absolute statistics, in the past five years that I have given to companies in Essex Queen's Awards for Industry and Technology on behalf of Her Majesty the majority have done more trade with the rest of the world than with the Common Market.

I believe that at the moment we have one of the better economies of the world. Why should we wreck it by joining the declining dinosaurs of Europe? With the existence of GATT and WTO we cannot be penalised on trade if we withdraw from the Common Market. We have a deficit with the Common Market, so any tariffs would hurt them rather more than us. Can we allow our foreign policy and Armed Forces to be controlled by Brussels and European MPs? Although this is whistling in the wind, do we need European MPs in any event? Surely, they are extraordinarily expensive luxuries and can easily be replaced by a Minister for Europe in each country who should--I repeat "should"--be more than capable of handling Common Market affairs. The closure of the European Parliament would save all taxpayers throughout Europe an enormous amount of money. I believe that the cost of each member approaches £500,000. Other noble Lords tell me that the correct figure is £1 million.

Of late the Government have been trying to do away with an additional tier of government in the shape of the county councils. Yet we still have an immensely expensive and, I suggest, totally unnecessary gravy train in the form of bureaucrats and Euro MPs who search hard to justify themselves. Perhaps England has spent the past 40 years or so looking for a new role since losing its empire. I suggest that we appear to have found it. We have a low tax environment, a mobile workforce and an increasingly vibrant economy. In contrast, the leading European countries, Germany and France, have intolerant unions, labour laws and rising unemployment. They have had a very satisfactory 40-year run but they are now definitely over the top and are falling behind.

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In my view, to join a federal Europe is to put ourselves in very much the same position as West Germany found itself in when that country took on East Germany with all the consequences thereof.

Do we really want to submerge ourselves in such a socialist quagmire? I do not believe that this is a matter of party politics. Either we grasp our freedom and the future that lies in the palm of our hand for the asking or we surrender to the mistaken Utopian, and largely socialist, dreams of yesterday's men. Our future trading possibilities and potential lie more with the developing countries than with the old world. Let us not deceive ourselves. If we agree to a universal currency, a universal VAT rate and uniform taxation arrangements, we shall no longer run our own country and the last vestiges of sovereignty will disappear for ever.

Enormous credit belongs to our Prime Minister for our current healthy economic position. We are in danger of being dragged down by Europe and all our success could be lost for ever. Thus far, I have never formed the opinion that we should disengage ourselves from Europe. However, we are being swamped by directives drafted by unelected foreigners who neither understand nor care about our laws and customs. It appears that the terms of the treaty signed by Sir Edward Heath 20 years ago are less and less appropriate to Great Britain today. We have spent the past 17 years trying to rid ourselves of socialism, and yet Europe is a socialist state where Nanny knows best. This was not what we fought two world wars for. It would be shameful to surrender by the back door all the gains that had been won with such enormous sacrifice in 1914 and 1939. It is our right and duty to stand firm and be counted.

2.5 p.m.

Lord Hardinge of Penshurst: My Lords, I too thank my noble friend Lord Pearson for introducing this Bill and for his efforts in furthering a cause in which I believe. I was 17 in 1938 when the whole country, from Westminster to both ends of the United Kingdom, was torn apart by the policy known as appeasement. Party politics were transcended by other greater loyalties. The second great political crisis that I lived through was Suez in 1956. We now face the third and perhaps greatest crisis of all. We are well on the way to surrendering to foreigners the governance of the United Kingdom. Put like that, it sounds absolutely incredible. Goodness knows what my father, his father or some of my friends who died in World War II would have thought of it. But I will not discuss the rights and wrongs of it. Others will do that better than me.

I have one simple suggestion that may resolve the whole mess. I submit it to your Lordships with very great humility as I am no expert on parliamentary procedures. At the risk of appearing naive, I suggest that the Government order a referendum to be held on, say, 31st March. That would transform the election debate both before and after the result was announced and put it in its proper place--at the top of the agenda. Experts tell me that in the time available it would be impossible to pass the necessary legislation to hold a referendum. I do not entirely accept that. It is surprising how quickly governments can act if they want to. If one postponed

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other business--in some cases it would be no great loss--and rushed through this measure, surely it would be possible to put the legislation in place in two whole months. Who would oppose it? The only problem would be the phrasing of the question. Another advantage is that it would eliminate Sir James Goldsmith's party and the UKIP, for both of which I have considerable admiration.

I strongly support the Bill of my noble friend Lord Pearson, but let us not prolong the agony. The Prime Minister is known for his boldness in politics. Will he now consult the people, hold a referendum and unite his party?

2.8 p.m.

Lord Stoddart of Swindon: My Lords, I should like to congratulate the noble Lord, Lord Pearson, on bringing forward the Bill. The discussion that we have had so far justifies it. Of course, I shall support the Bill at the end of the debate. However, socialists believe in government of the people, for the people and by the people. At the present time in Europe one does not have socialism but corporatism--big business, big government, big bureaucracy and little democracy. Corporatism is a deadly danger to all of us, whatever "ism" we embrace.

I say to the noble Lord, Lord Taverne, that, because people like myself and others want Britain to continue to be governed by her own people and institutions, that does not make them Europhobes. I wish that people like him would stop implying that. It is an insult, because of all the people I know who have reservations about our place in Europe, none of them hates Europeans or any country in Europe. Indeed, we love them. We just do not want to be ruled by them. That is the difference. Perhaps he wishes to be ruled by Europeans. I do not call him an Anglophobe for that.

In 1972 when we joined the Community no mandate was given to that Government. What Mr. Heath asked of the British people in 1970 was to negotiate--no more and no less. Yet, despite that, a Bill altering our constitution was brought forward to Parliament and passed by just eight votes. There was no referendum about whether or not we went in. Let me correct those who have said that there was. There was a referendum as to whether we remained in on renegotiated terms. So the British people were never asked in the first place whether they wished to join what was then a common market.

It has always been a source of amazement to me how, in 1972, parliamentarians in two short clauses of a slim little Bill containing only 12 clauses could divest themselves of so much of their power to legislate, hand it over to a polyglot junta sitting in a foreign capital, and render our own courts subservient to the European Court of Justice--a court incidentally of the collective, dedicated to the furtherance of a political objective, which is the united states of Europe.

Members of the House of Commons at that time, such as Enoch Powell, Peter Shore, Douglas Jay, Dick Body, Derek Walker-Smith, and many others, warned that the 1972 Act did more than join us in a common market;

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that, in fact, we were on the road to a federal or unitary European state. They were derided then. They were told that they were talking nonsense, telling lies, but in actual fact they were right then, and their arguments are still sound today. That is why we have this Bill before us--because those arguments are still sound today.

That Parliament was frightened into passing the 1972 Act. Members were told of the dire consequences if they did not go in; how we would lose trade; how our economy would be damaged if we did not go in. As it so happens, our economy has been damaged severely because we did go in. Let us make no mistake about that.

I think that it was my noble friend Lady Ramsay who said that Europe was a market of 360 million people. I would remind her, and the rest of the House, that out there in the world there is a market of 5,000 million. If we want to develop our trade and have increased trade, it is in the real world--the world of 5,000 million--that we should be developing. That is where the dynamism is at the present time--not in the backwater of Europe but out there in the Far East, the United States and South America. Those are the markets that we should be developing at the present time.

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