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Lord Bruce of Donington: The noble Lord, Lord Shore, dealt with unemployment in Europe. As he said, it has increased by about 5 million despite all the policies that are alleged to have been so successful. Day to day--it is echoed in the press of this country--we are all prospering for some reason or other. We talk of rising prosperity. They talk of it in Europe.

Speaking for the correspondents, in particular those who spend a good deal of their time on the ground floor in the Commission buildings, where they are periodically fed by communiques from the Commission itself, that makes a lot of sense. It saves them a lot of trouble if they broadcast the alleged prosperity within Europe. But the question of unemployment is not entirely confined to Europe. For example, in the Statement repeated by my noble friend Lady Hollis today we had an admission about our own unemployment. It will be in the recollection of the House because the Statement was made only a few hours ago. She said:

I welcome this recognition by Her Majesty's Government that the unemployment figures have in the past been fiddled. It is something that we have not emphasised unduly in the past. It is undoubtedly so. To talk of rising property either in Europe or in this country is a load of nonsense.

Europe as a whole has been influenced--and this country has not been entirely uninfluenced--by the provisions of Article 99, formerly Article 103 of the Treaty of Rome as amended in Maastricht at page 162 of the current Treaty of Amsterdam. It states--to do them justice, the governments have apparently responded--at paragraph (1):

    "Member States shall regard their economic policies as a matter of common concern and shall coordinate them within the Council, in accordance with the provisions of Article 98".

Paragraph (2) states:

    "The Council shall, acting by a qualified majority on a recommendation from the Commission, formulate a draft for the broad guidelines of the economic policies of the Member States and of the Community, and shall report its findings to the European Council.

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    "The European Council shall, acting on the basis of the report from the Council, discuss a conclusion on the broad guidelines of the economic policies of the Member States and of the Community.

    "On the basis of this conclusion, the Council shall, acting by a qualified majority, adopt a recommendation setting out these broad guidelines. The Council shall inform the European Parliament of its recommendation".

That was the position after Maastricht.

I ask noble Lords to ponder a very important question. What expertise (if any) lies behind these recommendations? Who, with authority, is making an assessment of individual economic policies in each of the countries? Who is in an intellectual position to make an economic pronunciamento to be adopted by member states as to the economic policy to be followed in Europe?

It seems to be current thinking that the moment something gets into print, the moment it is incorporated in an official document, that alone gives it some intellectual validity. In fact, what happened is very simple. The Commission brought out its pamphlet--or rather, its tome--on growth, employment and inflation, the famous White Paper, which recommended economic steps to be taken by Europe as a whole and by individual member states which have, frankly, proved disastrous. They have produced deflation in Europe and in the United Kingdom. All we are invited to do in the current article of the Treaty of Amsterdam is to carry on the same policies as before--except that Article 109o states:

    "Member States, through their employment policies, shall contribute to the achievement of the objectives referred to in Article 109n in a way consistent with the broad guidelines of the economic policies of the Member States and of the Community adopted pursuant to Article 103.2".

What has happened at Amsterdam? All that Amsterdam has done, instead of initiating a complete reappraisal of the disastrous economic policies that have been followed throughout the European Community since Maastricht, is reinforce them and endow them with a new sanctity. I do not believe that is in the interests of Europe.

The Amsterdam Treaty now proposes in Article 109q:

    "The European Council"--

let us note the "European Council", not the Council of Ministers--

    "shall each year consider the employment situation in the Community and adopt conclusions thereon, on the basis of a joint annual report by the Council and the Commission".

Who--what body of people--is in fact capable beyond all reasonable doubt of formulating sensible policies in relation to this?

Baroness Ludford: I am grateful to the noble Lord for giving way. He queried who would have the intellectual capacity. In view of the fact that the Chancellor of the Exchequer would be on the Council and the Prime Minister would be on the European Council, is he saying that there would be no intellectual capacity to contribute to this exercise?

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Lord Bruce of Donington: I have not yet had the opportunity of engaging in debate with either the Chancellor of the Exchequer or his representatives in this House on the merits or otherwise of the economic steps that he proposes to take. Should such an occasion arise, I shall enter into the debate with some zest.

Paragraph 2 of Article 109q then states:

    "On the basis of the conclusions of the European Council, the Council, acting by a qualified majority on a proposal from the Commission and after consulting the European Parliament, the Economic and Social Committee, the Committee of the Regions and the Employment Committee referred to in Article 109s, shall each year draw up guidelines which the Member States shall take into account in their employment policies. These guidelines shall be consistent with the broad guidelines adopted in Article 103.2".

The reference is to page 162 of the current treaty. They are living in Cloud-cuckoo-land. Can it be assumed that a responsible body of people, sitting in various parts of Europe, endeavouring to solve a problem common to all member states, can reach conclusions which are thereupon enshrined almost in law? As if any printed format of economic policy agreed to by member states can be appropriate to any one of them, let alone all of them taken together!

The existing policies to which everyone now apparently genuflects have been policies disastrous to the whole of Europe and the United Kingdom. They certainly do not merit endorsement in a treaty signed by us which will bind the country from now on.

10.45 p.m.

Lord Tebbit: It is rather nice to find myself from time to time in some measure of disagreement with the noble Lords, Lord Bruce and Lord Shore. It restores the normal healthy routine of the political process and, no doubt, brings a sense of relief to some of our Front Bench colleagues.

However, we still stand on a great deal of common ground. The noble Lord, Lord Bruce does not like the policy which is being implemented in Europe. I differ from him about some aspects of it. I think it is vitally important that we pursue policies which maintain the value of money and there may be difficult times in ensuring that that happens. But during the years when the German government and the Bundesbank were much more successful than we were at maintaining the value of money by rather restrictionist and perhaps what the noble Lord, Lord Bruce, would call deflationary policies, its record on unemployment was also much better than ours. So I do not think it is self-evident that inflationary policies are better for the economy than deflationary policies.

However, that is not the real core of the discussion which we should be having this evening. The discussion this evening is surely about in what manner economic policies should be made: whether they should be made within national governments, within nation states, and whether or not as a result of the electoral process those

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policies can be changed. That seems to me to be the key point. I would always accept that if the majority decide at a general election that they want the economic policies which the noble Lord, Lord Bruce, would wish to follow, then we abide by it. He has had some experience over the past 18 years of abiding by policies which he does not like. But there was always the opportunity for those policies to be changed.

I return to the question which I asked in an earlier debate and which was so unsatisfactorily answered. It was not answered--I had a response, but not an answer. We are now committing ourselves in this treaty to extending the area of economic policies which are covered by the treaty. That is what the social chapter is about. These are essentially matters of economic policy. Whether we should have a minimum wage will soon be a matter covered in this area. As the noble Lord, Lord Shore, reminded us in an earlier debate this evening, these things creep in. Once they are in the treaty, have no doubt about it, the bridgehead will be expanded. Since the creation of the Treaty there has been no record of a bridgehead contracting.

So what we can expect is that this bridgehead will be opened and expanded more and more in the future. Policies will be reached--sometimes the noble Lord, Lord Bruce, will agree with the policies; sometimes I might agree with them. But I have to ask the question again: what happens when the British electorate do not agree with the policy and want it changed? They change the majority in Parliament; we all swap sides of the Chamber; but the policy goes remorselessly on. We cannot change it.

Will any incoming government have any realistic chance of removing the social chapter from the treaty? Not a ghost of a chance. It is there. It is not going to get pulled out any more than the sections on foreign and defence policy will get pulled out. They will simply get bigger. They will spread out further and further. We will find that what the British people say in their elections has less and less influence.

In the last debate I was mildly chastised for not understanding that treaties entered into are binding not upon the government which entered them but upon the state. Quite so. But we have never before entered into a treaty which did not have the facility for renunciation. We have never before entered into treaties which have expanded over such a wide area of our national life. We have never before entered into a treaty under which, before very long, through the social chapter, the way in which we conduct our industrial relations shall be decided not here, but somewhere else; not by us, but by other people with ourselves in a minority of the people who decide. There is no provision for our having second thoughts. There is no provision for saying, "No, we have changed our mind and we want something different."

What happens when consistently, over one area after another at some time in the future, the British people say they want different policies? They will be told, "You cannot have different policies because a combination of

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the Germans, the French, the Greeks and the Finns"--or something or other--"amount to a qualified majority vote, and that is it." What has happened to the democratic process? I would agree that in many ways we have to accept that in a modern world the freedom of manoeuvre of nation states is much more limited than it was--though we see time and time again that some relatively small states seem to have a great deal of freedom of manoeuvre; they may indeed even defy the United Nations.

The point is that we are conceding that general elections in this country in future will not matter very much. What will be the result in our national life? Why do we think that the number of people voting in general elections is falling? Why do we think that our debates in this House and in the other place are less and less reported by the press and the BBC? Surely it must be that people are already tumbling to the fact that what is said here matters less and less, and what is said on the continent of Europe matters more and more. We are no longer masters of our own destiny.

As I say, in some areas, naturally, we have to concede that it is more effective for us to move jointly together than it is separately. I would certainly accept that we should enter into commitments with our trading partners about the manner in which we open markets and such like things. But the idea that we have to expand constantly that area over which the British people have no direct control is absurd, it is dangerous and it will undoubtedly lead to great troubles.

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