European Union

Mr. Deputy Speaker (Mr. Michael Morris)

Before I call the Foreign Secretary, I must announce that I have imposed a 10-minute limit on speeches by Back Benchers.

The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd)

As usual, the debate covers a number of detailed documents, but I shall follow recent custom in looking forward rather than back. I shall try to set out the Government's approach first to the summit at Cannes under the French presidency at the beginning of next week, and secondly to the intergovernmental conference next year. Ideas for that conference are already being exchanged in the reflections group on which my representative is my hon. Friend the Member for Boothferry (Mr. Davis), the Minister of State.

I shall try to set out again the Government's philosophy and policies within the framework already established by my right hon. Friend the Prime Minister's speech at Leiden last year and his speech in the House on 1 March. That philosophy and those policies may not—indeed, do not—suit either extreme of the argument, and they therefore disappoint those who prefer excitement to reason, particularly in some parts of the press; but I strongly believe that they are the right philosophy and the right policies for the national interests of Britain and, indeed, for the success of the European Union. I also believe that, unless the Governments of Europe are remarkably foolish over the years to come, that is the 356 approach that will succeed in the end. I do not believe in either the disintegration of the European Union or its conversion to a centralised state.

Mr. Tony Marlow (Northampton, North)

Will my right hon. Friend give way?

Mr. Hurd

So soon!

Mr. Marlow

My right hon. Friend raised the spectre of a centralised European state. One issue that could be involved in that is obviously the single currency. Let us suppose that the next election took place in April 1997. I understand that, before joining a single currency, a country must have been in the exchange rate mechanism for two years. Given that our right hon. Friend the Prime Minister said that we would not join the ERM during this Parliament, would it be right to assume that the United Kingdom could not, in those circumstances, be a founder member of the single currency?

Mr. Hurd

It might be sensible if I dealt with the single currency at the point where it arises in my speech, but I do not know that I shall add a great deal to what my hon. Friend heard from the Prime Minister on 1 March, when he dealt with the matter at some length.

The line set out by my right hon. Friend the Prime Minister in the speeches that I have mentioned has been consistently advocated and defended by the whole Cabinet, which recently reaffirmed our commitment to it. It is greatly to be preferred to the policies of the Opposition, whose spokesmen hop about from one branch of the European argument to another, uttering first one note and then—a few weeks later—another, and, as far as I can see, being consistent only in their carelessness of the national interest. I believe that our policies are also to be preferred to others based simply on fear and dislike of the European Union to which we belong. If we want a Europe of nations, we need to work positively and persuasively with our partners to achieve it.

At Cannes and in the intergovernmental conference, we will be talking of the Europe of 1995, looking forward to the next century. Ten or 20 years ago, the mindset in Europe was different. Indeed, the general assumptions in Europe have changed since my right hon. and noble Friend Baroness Thatcher was Prime Minister. As she reminds us, she challenged the assumptions of the day with great vigour and she now summarises her stance as no, no, no. My recollection is a little bit different. I tend to remember it as no, maybe, yes. That was her approach.

Mr. Terry Dicks (Hayes and Harlington)

Does my right hon. Friend agree that the truth about Baroness Thatcher was that her approach was yes, yes, yes—yes to the Single European Act, yes to giving money when the Community overspent and yes to the exchange rate mechanism?

Mr. Hurd

I think that my hon. Friend, with the best of motives, is slightly exaggerating. I would prefer to summarise it as no, maybe, yes. That was her approach to the successful negotiation of the British rebate and it was certainly her approach to the decisive extension of majority voting in the Single European Act.

Mr. John Sykes (Scarborough)

Will my right hon. Friend give way?

Mr. Hurd

May I just finish this?

357 I think myself that it would have been Baroness Thatcher's approach also to the issues of Maastricht and I do not criticise her for that. What the noble Lady did was to argue hard and when she had the best deal available for Britain, she signed. She argued and she signed. That is the record and, in its time, it was a successful one. The style now is different but, actually, the approach of my right hon. Friend the Prime Minister is much closer to that of his predecessor than she now supposes.

Mr. Sykes

I am grateful to my right hon. Friend for giving way. I am not really interested in what my right hon. and noble Friend Baroness Thatcher did in 1986. I am far more interested in, and want to ask about, what will happen in 1997. I want to ask my right hon. Friend whether he remembers 20 years ago, when we had the referendum. I was recently looking in my attic and I found an old leaflet which at the time I busily shoved through people's letter boxes. If I could quote from this document, which I was happy to disseminate in 1975, on the question of sovereignty and ministerial responsibility it says that the real guarantee of Parliamentary control over new EEC legislation is the fact that British Ministers attending the EEC Councils remain responsible to Parliament at Westminster and can, if necessary, veto decisions to introduce new EEC legislation if they believe that it would not be in the national interest. It goes on to say, if my right hon. Friend will listen, that as long as Parliament can control its Ministers, it can control all important new laws that are made in Brussels and Luxembourg. How can I hold my right hon. Friend to account in the House 20 years later when we have sold so many of our interests to qualified majority voting?

Mr. Hurd

That is precisely what my hon. Friend is doing now. He is holding me to account. He can do so frequently. It is perfectly true that in 1985 in the Single European Act, in order to gain the advantages of the single market we—and the Prime Minister of the day—accepted a substantial extension of majority voting. I think that she was entirely right.

I do not think that we could have had a single market and rules and a proper enforcement of those rules if every anti-protectionist measure and every attempt to enforce the single market had had to be done by unanimity. That was the argument that the noble Lady accepted in 1985 and I think that she was entirely right. But we do not believe that that having been accomplished, it is necessary to go further. That is one of the differences, as I shall seek to explain, between our position and that of the Opposition.

Going back to the mindset of 10 or 20 years ago and illustrating the change that is now occurring, it was assumed in those years that community spending was a good thing in itself and that budget discipline was an eccentricity to which only the British were attached. The prospect of enlargement in those days to include the Scandinavians and Austria was viewed with suspicion. Remember the hostile reception given to Lady Thatcher's speech at Bruges in which this was one of her main themes? It was felt that Britain was interested in enlargement only because Britain was opposed to deepening. Deepening good, widening probably wrong was the general view in those days.

358 It was supposed that the more the Community did, the better. It was an absolute. There was a steady move to enlarge the areas in which the Community was competent, that is, to draw more and more power to the centre. There are still people who hold these ideas and preach them, and when they do so their words are happily pounced on here by those who like to believe simply that Britain stands alone against the unanimous continental ambition for a centralised state. However, these voices, which were once dominant and which we still hear, are now defensive because events and opinion are moving against them, as I shall seek to show.

Mr. Hugh Dykes (Harrow, East)

My right hon. Friend just now, quite rightly, gave the reasons why the Prime Minister is better as a successor to Baroness Thatcher, in respect not only of European matters but of other policies. Does he agree that one of the sad features of Baroness Thatcher is her repeated attacks on friendly member states in the so-called friendly European Union, not least the attack that she made on Germany yesterday? Will my right hon. Friend confirm that the Prime Minister has very good relations with the other member states?

Mr. Hurd

I was not seeking to make the point that my hon. Friend suggests. I was not seeking to make a distinction or difference; I was simply saying that the approach of arguing and then, when one feels that one has the best deal available for Britain, signing, is one shared by the present Prime Minister and his predecessor.

Going back to the difference between the mindset of those days and now, we now have the beginnings of budget discipline, as opposed to the time when it was thought that extra Community spending was essentially a good thing.

Mr. Alex Salmond (Banff and Buchan)

Will the right hon. Gentleman give way?

Mr. Hurd

No, I have to get on.

I say that we have only the beginnings of budget discipline because we are not yet satisfied, but, when my right hon. Friend discusses in Cannes next week how much money the European Union should spend on helping the countries of eastern Europe and the Mediterranean, the whole discussion will be within spending guidelines laid down under his chairmanship in Edinburgh in 1992. There will be plenty of argument—there always is plenty of argument about these matters—but it will be within the financial bounds already set, something that would have been inconceivable in the early years.

The enlargement of the Union, which was regarded as heretical in the old days, has happened and will happen again. The argument set out in Bruges by Lady Thatcher about including the east is now orthodox. It is also now orthodox to say that the European Union should do less and do it better. That is a phrase of the present President of the Commission, Mr. Santer. It is inconceivable that his predecessor, Jacques Delors, in his heyday would have used such a phrase.

No one in a position of authority now talks about the "United States of Europe". Indeed, the federal Chancellor of Germany, who used to use the phrase, has explicitly renounced it, saying that we are not aiming for a United States of Europe. The European Commission and the European Parliament have recently set out their ideas of 359 how the intergovernmental conference should end up, and there are many things in their papers that we would contest.

It is notable that in neither the Commission's paper nor in the Parliament's paper is it suggested that further matters should be transferred from the competence of nations to the competence of the European Union. That, in itself, shows the change of mindset in recent years. As the chairman of the reflections group told me in Madrid this week, the dreaded F-word is nowhere to be seen.

Mr. Peter Shore (Bethnal Green and Stepney)

Will the Secretary of State give way?

Mr. Hurd

I shall give way to the right hon. Gentleman in a minute.

No one is proposing an increase in competences. There is plenty of room for debate about what remains and about how Europe should act in the area already allocated for European action within the existing treaties, but there is no proposal on the table at the moment for an increase in that area. The accent is—

Mr. Shore

rose—

Mr. Hurd

I shall give way in a moment if the right hon. Gentleman will let me finish the point.

The accent is on subsidiarity and deregulation within those spheres where the Union has a role under the existing treaties, and we shall want to find ways to entrench subsidiarity and deregulation during the IGC.

Mr. Shore

Before the Secretary of State escapes entirely into cloud cuckoo land, may I put to him one obvious point? All the European institutions—the Parliament, the Commission and the European Court of Justice—are making proposals, which are now before the reflections group and will be before the IGC, to dismantle the two pillars of foreign and security policy and home affairs and justice, which were the right hon. Gentleman's greatest claim to success in the previous negotiations. Surely he cannot overlook this major assault, which will not be confined to those three institutions but which will be backed by virtually all the Governments of the nation states.

Mr. Hurd

There is certainly a tentative attempt by those institutions to enlarge their scope within the area covered by the treaties. The point that I was making was that, I think for the first time in the history of the European Community, or Union, there is now to be a conference at which no one will seriously suggest that areas now within the competence of the nation state should be put within the competence of the European Union.

Several hon. Members

rose—

Mr. Hurd

I shall give way to my hon. and learned Friend the Member for Burton (Sir I. Lawrence) and then get on.

Sir Ivan Lawrence (Burton)

What does my right hon. Friend say about the current demand that we could only have Europol as an instrument for controlling organised crime and drugs if we were prepared to accept that Europol must be judicable by the European Court of Justice, which is within the competence of the European Union, however strongly we have asserted that justice and home affairs should be the third pillar of Maastricht outside the competence of the European Union?

Mr. Hurd

We shall resist that. Indeed, my right hon. and learned Friend the Home Secretary is resisting it at the moment. I hope that it will be possible to reach agreement on Europol—a very important and valuable proposal—at Cannes, without accepting the jurisdiction of the ECJ in what should be an intergovernmental pillar.

Several hon. Members

rose—

Mr. Hurd

I shall give way once more and then I really must get on.

Mr. Iain Duncan Smith (Chingford)

May I press my right hon. Friend on the point about competence? Surely the real factor is not so much that extra competence is granted under the aegis of the IGC, but that the European Court of Justice, in the way that it is constructed, does not need extra competence to be granted because it will, through teleological interpretation and other devices, grant itself greater scope by reinterpreting the treaties. Is not the reality that federalism may not be spelt out literally, but is in action the whole time through the European Court of Justice?

Mr. Hurd

If my hon. Friend looks at the recent judgments of the court, for example, on competence, and on the question of the World Trade Organisation, where the court found in favour of the member states against the Commission, he will find that the pattern is not as uniform as he and sometimes others seek to lay down. But of course one of the things that we shall need to look at during the IGC is the role of the ECJ and whether it fits our idea of how the institutions of the Community should work.

The Opposition do not seem to have noticed the change in mindset, which I have been—I hope—proving. In the 1980s, the Labour party was wholly opposed to British membership of the European Union. It now embraces the European ideas of the 1980s, just when the debate in Europe is moving away from them, as I hope that I have proved. It seems determined to stay about 10 years behind the gang. For example, it clings obstinately to the social chapter, and it clings obstinately to the national minimum wage—presumably as the price which the unions exacted for their support on clause IV.

The social chapter and the national minimum wage may suit the Leader of the Opposition's internal policies, but we believe that there would be a heavy price for Britain. The accent now in the European debate, which will be sounded quite clearly at Cannes, is on restoring Europe's competitiveness, not on undermining it further. The accent is on creating new jobs, not on destroying those which already exist.

Mr. Mike Gapes (Ilford, South)

rose—

Mr. Robert N. Wareing (Liverpool, West Derby)

rose—

Mr. Hurd

I shall just finish this part of my speech and then give way to the hon. Member for Ilford, South (Mr. Gapes).

President Chirac has rightly put the creation of jobs at the top of the agenda in Cannes next week. Our Prime Minister, representing the country with the fastest falling unemployment in the European Union, is well placed to take the lead.

Mr. Gapes

How many member states of the enlarged European Union are in favour of ditching the social chapter?

Mr. Hurd

With regard to the member states at Maastricht, before this concern with competitiveness really took hold, people signed up to the social chapter who would have been much wiser to follow our example and stay well away from it. They are now repenting that. On that day, I remember very clearly, the European employers were not awake to what was happening. A recent report from the European Employers Federation puts deregulation and subsidiarity at the top of its list and realises that the loss of competitors in Europe is connected with the inflexibility of the labour market. It is now moving away from the ideas which the Labour party would have this country embrace. That is what I mean by saying that the Labour party appears to be, in the most damaging way, about 10 years behind the debate.

Mr. Wareing

Will the right hon. Gentleman give way?

Mr. Hurd

No, I am going to move on.

In his speech in Chatham house and again in Bonn recently, the Leader of the Opposition offered up four whole areas of policy for qualified majority voting: industrial, regional, environmental and social. Last month many of his Members of the European Parliament, presumably taking their cue from him, voted for much wider extension, to collapse the intergovernmental pillars and to move to full co-decision between the European Parliament and the Council of Ministers.

Mr. William Cash (Stafford)

Will my right hon. Friend give way?

Mr. Hurd

May I finish this passage? Then I shall give way to my hon. Friend.

To those of my right hon. and hon. Friends who want to establish clear blue water between the views of the Opposition and those of the Government on Europe I simply say this: "You have it. Read the speeches by the Leader of the Opposition and read the speeches by the Prime Minister, especially the two that I have mentioned." We do not need to retreat into a stream of negatives or a mood of sourness to establish a difference between the parties. The difference exists; it is there in the texts; the Leader of the Opposition created it. He thought that he was being fashionable about Europe, but the fashion has changed. Our policy is based not on fashion but on an analysis of the national interests of Britain. His policy is based on a set of ideas that, in our view and in the view of an increasing number of Europeans, have had their day.

Mr. Cash

Of course Conservative Members acknowledge that the Opposition are absolutely hopeless on majority voting, but will my right hon. Friend comment on the Foreign Ministers' report adopted in April, to which he and the Government subscribed? It is now contained in a Command Paper before the House, and it says clearly: On the question of efficiency the continued extension of qualified majority voting is a positive factor". How does my right hon. Friend square that with what he has just said about majority voting and governmental competence?

Mr. Hurd

As I shall say in a minute, for the single market, to keep the protectionists at bay and for the sake 362 of any future reform of the common agricultural policy, qualified majority voting will be needed. But I do not believe—in fact, I strongly disbelieve, if that is the right word—that qualified majority voting should be extended into the area in which I have most experience, that of foreign policy. I shall say more about that in a minute.

Mr. Wareing

rose—

Mr. Hurd

No, I shall get on.

As regards the summit at Cannes, I have already mentioned the debate on employment. Everybody hopes that it will be possible to reach agreement on setting up Europol, because agreement is needed. My hon. and learned Friend the Member for Burton (Sir I. Lawrence) asked me about that. Europol will not be a Community institution but will be established under the third pillar of intergovernmental co-operation. We hope that on the same intergovernmental basis it will be possible to reach agreement on conventions dealing with fraud and the exchange of information between customs departments.

The summit will be asked to take some financial decisions. For example, it will be asked to settle the size of the European development fund for the countries of Africa, the Caribbean and the Pacific under the Lomé convention. It will also be asked to strike a balance between spending in central and east European countries as they prepare for membership of the Community and spending in the Mediterranean, in whose stability all of us in Europe have a clear interest.

As the House would expect, the Chancellor of the Exchequer has been on the cautious side in those discussions. No one suggests that we should breach the Edinburgh ceiling. We British are keen that there should be a sizeable reserve for external spending on which we may need to call in an emergency, but which may remain happily unspent.

Mr. John Wilkinson (Ruislip-Northwood)

May I ask my right hon. Friend an important and topical question about spending? Why was it necessary for Her Majesty's Government yesterday to approve with the Spanish Government the assignment of £2.8 billion of European taxpayers' money to the countries of the Mediterranean? Was that done to buy off the Spanish over Gibraltar? How will it benefit living standards in this country?

Mr. Hurd

My hon. Friend may be referring to a report in The Times, but there has been no agreement between us and the Spaniards. I have referred to the balance between eastern Europe and the Mediterranean. The Commission put forward proposals for a rapid expansion in expenditure in the Mediterranean which ourselves and others, including the Germans, thought to be excessive. We contested that and we now have a presidency proposal which does not deal with the maximum proposal, but with a baseline minimum proposal which leaves scope for reserves for emergencies which might be happily unspent. We have not yet agreed on the matter, which will have to be agreed just before Cannes. The discussion is moving in a sensible way from our point of view, and the figures lie entirely within the ceilings embodied in the legislation that the House has approved.

There are some discussions taking place about stage III of economic and monetary union and, in particular, a single currency. There is no proposal at Cannes or anywhere else either to change the timetable in the treaty 363 or to relax the criteria which countries must meet before they can join the single currency. To return to the point raised by my hon. Friend the Member for Northampton, North (Mr. Marlow), the Prime Minister set out the Government's attitude on the single currency at some length in his speech on 1 March. There is really nothing that I can add to that today, and it remains the Government's policy. The House will recall that the Prime Minister explained at length and with care the reasons for his own wariness—the word he used—about the proposition so far as Britain was concerned.

My right hon. Friend also explained why he felt it right that we should hold on to the freedom that he obtained for us at Maastricht to take a decision on this matter at the time, if and when a choice comes before us. I note the strong endorsement of his stance in the report issued by the CBI yesterday. The Prime Minister has not excluded the possibility of holding a referendum on the single currency if the Government ever felt that such a test was in the British interest.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Can my right hon. Friend tell the House what the money to be spent in the Mediterranean will be used for? Is there not a slight tendency for some of the Euro-money spent in the Mediterranean to be frittered away by fraud? I am sure that my right hon. Friend would wish to reassure the House on that subject.

Mr. Hurd

We must be able to reassure the House on that matter, and that is why—as I have mentioned—we have been particularly energetic in trying to promote measures against fraud which would give even my hon. Friend reassurance on the matter. I hope that member states will agree at Cannes on new measures against fraud and also regulations which will enable the Commission to be more active and effective against fraud.

One of the ways in which the European Parliament can attract attention and respect is by being more energetic in using the Court of Auditors in this action against fraud. While my hon. Friend the Member for Wolverhampton, South (Mr. Budgen) is right in what he says about fraud, it does not occur only in the Mediterranean. That subject concerns every member state, and it is crucial for confidence in the Union that fraud is stamped out.

Mr. Budgen

What will the money be spent on?

Mr. Hurd

My hon. Friend asked for guarantees against fraud. A slice of the money will be spent on Gibraltar, for example. The stability of the southern and eastern shores of the Mediterranean is a matter of huge importance to this country. I am often questioned by my hon. Friends about the middle east peace process and what help we are giving to the Palestinians in their efforts to maintain the agreement which they have signed with Israel. One answer to my hon. Friend is that part of the money for the Mediterranean will go in that direction.

The European Union is making an entirely justified effort to do its best to create and preserve stability along the eastern and southern shores of the Mediterranean. That is something that we in Britain have always spent a certain amount of money on.

Mr. Salmond

The Foreign Secretary has spoken about a divergence of opinion on Europe, but is not the most obvious divergence of opinion that between the one that he is putting forward at the Dispatch Box and the basic 364 anti-European Union stance which now seems to be predominant among his Back Benchers? Earlier today I inadvertently found some Conservative Members handing out question papers for the next Foreign Office Question Time in a couple of weeks' time, no doubt designed to ambush the Foreign Secretary. Does he not increasingly resemble a waggon train surrounded by indians?

Mr. Hurd

What I am setting out is the policy that has been set out by the Prime Minister in a number of speeches and which was endorsed, unanimously, of course, by the Cabinet about a fortnight ago. It is now being worked up into detailed proposals in Whitehall, the details of which are gradually being made available to the House. That is the Government's policy. We believe that is right, in line with popular feeling in the country and in the interests of the country and of Europe.

Sir Peter Tapsell (East Lindsey)

On the important subject of the single currency, my right hon. Friend said that there were no proposals at Cannes either to ease the economic criteria conditions or to change the timetable laid down for that. Those two statements are incompatible. Everyone now knows—it is universally recognised—that the economic criteria cannot be satisfied by a sufficient number of European Union countries in order to establish a single currency according to the Maastricht timetable. Surely that is a fact.

Mr. Hurd

What is acknowledged and what the Finance Ministers explicitly acknowledged on Monday is that the earlier timetable as envisaged in the Maastricht treaty—1996-97—is unreal. That is something that the Prime Minister and the Chancellor have been saying here for a long time, but there were people on the continent, particularly in the Commission, who clutched at the dream that it might be possible to realise the earlier timetable envisaged in the treaty. My hon. Friend certainly knows that there is also provision in the treaty for a timetable based on 1999. People have not yet come to the conclusion that that is unreal, although they may have to do so eventually. I am not disputing my hon. Friend's basic thesis, but, so far, the earlier timetable has been abandoned as unreal.

Mr. Barry Legg (Milton Keynes, South-West)

Will my right hon. Friend give way?

Mr. Hurd

No. I must get on and deal with the issues before the intergovernmental conference.

The House is being kept fully informed of the work of the reflections group, and it will have ample opportunities to cross-examine Ministers about our negotiating stance. For example, I spent two hours with the Select Committee on Foreign Affairs this morning, to a large extent discussing that point.

As the Prime Minister has stressed, and as the House, I think, understands, Ministers cannot be expected to give every detail of a negotiating position in advance, but he and we have already set out the principles on which we will operate. There is no massive idea dominating the discussion in the run-up to the conference in the same way as the single market and majority voting dominated the discussion before the Single European Act and the way in which economic and monetary union dominated the discussion before Maastricht.

365 There will be discussions, however, of a number of difficult items. Qualified majority voting has already been mentioned. We shall argue, as the House knows, for a fairer system of weighting which gives a greater say to the larger countries. As I have said, QMV is necessary in certain spheres. We must face that. It is needed to keep the protectionists at hay and to prevent them from undermining the single market. It will certainly be essential when the time comes for further reform of the common agricultural policy, but we do not accept the case for its further extension into areas now covered by unanimity.

I feel particularly strongly about the sector which I know best, foreign policy. To spare the House a long explanation, I will put in the Library a copy of an article that I have just written for a German newspaper setting out my reasons. It is right that the countries of Europe should act together when they agree and the common foreign and security policy can be built, and is being built brick by brick in that way. I cannot think of any case, however, during my time as Foreign Secretary when we would have been more effective if it had been possible to override a member state on a foreign policy matter. There is a gap there between theoretical and practical thinking. The notion, for example, that somehow there would be peace in Bosnia, and in Croatia, today if we were able to use qualified majority voting in Brussels appears wholly unreal.

We do want to make foreign policy work better in Europe. Where does the remedy lie? Among other things, we believe in strengthening the presidency, so that when there is action agreed by everyone it can be more visible and effective. We need to consider the idea of shared presidencies so that the assets of the bigger member states in that sphere can be used better. We need better back-up for the Council: proper analysis, planning, and discussion of policy options.

My opinion is that the basic structure of the European Union is now about right, whether it be a Union of 15 or 20 or more members. We are on the right track as regards that. It is right that the single market should have rules and institutions which work out those rules and enforce them evenly.

Mr. Marlow

Will my right hon. Friend give way?

Mr. Hurd

May I finish this bit? Then I will give way to my hon. Friend again.

We need a Commission and a Court to ensure, for example, that British planes are allowed to fly into Orly, as they can today—as they could not a couple of years ago—that the Italians and Spaniards are heavily fined if their milk quota figures are wrong and that the Italians have to repeal a tax on luxury cars. Since that tax was repealed, under pressure from the Commission and the Court, there has been a massive increase in the sales of Jaguar cars in Italy.

Mr. Nigel Spearing (Newham, South)

rose—

Mr. Marlow

rose—

Mr. Hurd

I promised one Opposition Member that I would give way to him, but he is no longer in the Chamber. I give way to my hon. Friend.

Mr. Marlow

I am exceedingly grateful for the generosity of my right hon. Friend. Will he tell the House in what aspects of policy Her Majesty's Government will seek to regain competence to the United Kingdom from European institutions? Is it none?

Mr. Hurd

It is not none. We are still considering whether there are ways in which we could make clearer the definitions of competence. No one suggests, as I have said, an enlargement of competence. There may well he aspects in which it would be right and we could reach agreement. It should remain absolutely clear, where there is doubt at the moment, that matters about which there is doubt remain within national jurisdiction. We have that in the existing treaty as regards school institutions, education policy and as regards harmonisation of health care. Those are excluded. Perhaps that can be carried further in the next treaty. That is the type of detailed sub-policy work that we are still carrying through in Whitehall, and no doubt other countries are doing the same.

Mr. Spearing

rose—

Mr. Hurd

I think I will come to the end.

I am going through some of the specific ideas that we intend to propose. We shall seek changes as regards the Commission—a leaner Commission. As the Union expands, the infinite expansion of the college of Commissioners makes, in our opinion, no sense. We are considering a further control on unnecessary legislation. We believe that it is possible—not certain, but possible—that what is called a sunset clause should be considered. If an idea has got stuck and has not advanced in three years, why not allow it to lapse, to avoid cluttering the negotiating table with unwanted paper?

We need a European Parliament that can monitor the work of the Commission in ways that are beyond the reach of the House or national Parliaments. Fraud has been mentioned; the improvement of financial control is another example. We also seek—I mentioned that in my evidence this morning to the Foreign Affairs Select Committee—stronger ways in which national Parliaments and the European Parliament can work together, although that is something where we need co-operation with the House. It is not something that Governments themselves can decide.

Governments need to work together, outside the institutions of the Community, on an intergovernmental basis, as the treaty provides.

Mr. Bernard Jenkin (Colchester, North)

Will my right hon. Friend give way?

Mr. Hurd

I will give way to my hon. Friend for the last time.

Mr. Jenkin

I am extremely grateful to my right hon. Friend. May I read him a short paragraph?

It would be idle to pretend that the United Kingdom Parliament has any influence over the institutions of the European Community. It is equally unrealistic to believe that it could ever have effective control, or that other national parliaments, singly or acting together, could create an effective control mechanism. Those are the words written by my right hon. Friend the President of the Board of Trade when he was on the Back Benches.

367 Should not we recognise that the only effective way to strengthen the role of national Parliaments is to repatriate competencies from the European Parliament to the national Parliaments—not, as my right hon. Friend advocates, to strengthen the European Parliament?

Mr. Hurd

I do not agree with that at all. The energy that my hon. Friend and other right hon. and hon. Members spend on European matters in the House refutes my hon. Friend's thesis. The essential decisions—changes in the treaty, anything to do with foreign policy, defence, home and justice matters—are taken by unanimity. My hon. Friend can hold me to ransom; I am responsible to him and my voice, or that of the Prime Minister, is crucial. On other matters, for reasons that I have now explained twice in my speech, there is majority voting. We in Britain agreed that there should be majority voting in order to gain our objective, which is a single market.

Mr. Budgen

Some of us did not.

Mr. Hurd

Some did not, but most did.

That deal was in our interests. I do not accept that national Parliaments do not have a role—they do. Many national Parliaments, including most people in this one, would like it to be a stronger role. It is difficult to work out the practical ways of achieving that, but we have to try to do it. Some of the ideas that I set out to the Select Committee this morning—I hope that my hon. Friend the Member for Colchester, North (Mr. Jenkin) will study the reports—are ideas which I hope that Committees and Members of the House will take up and run with.

Mr. Dykes

Will my right hon. Friend give way?

Mr. Hurd

No, I have given way to my hon. Friend already.

The institutions that I have talked about are better suited to a Europe of nations than a united states of Europe. Yet we must acknowledge that neither in this country nor elsewhere do those institutions have a firm hold on the loyalties or even sometimes the respect of the peoples whom they exist to serve. That is not because people have suddenly developed a dislike of foreigners or suddenly turned against the idea of Europeans working together. On the contrary, market research, certainly in this country and, I think, in all the countries of Europe, shows that people want Europe to succeed. They want the Europeans to work successfully together, but they are ill at ease with the way in which things are done today.

That unease will not be cured by speeches or declarations or tinkering with the treaties. People will have greater confidence in the institutions of Europe when they see them working clearly for the objectives which they themselves—the people—think important: the building of prosperity through the opening of markets, through free trade, through deregulation and through strong action against fraud; the extension eastward of the stability and prosperity which, with all the arguments among ourselves, we take for granted in the west of Europe; and flexibility, so that national differences can be accepted, not regarded as heretical, and national identity is preserved.

As I hope that I have established, the record of the past few years shows much greater progress in those healthy directions than people yet perceive. Britain is well placed—better placed than others—to press for further 368 progress on all those points. The Prime Minister has set our course. It may not be dramatic enough for all tastes—it just happens to be right, and we shall follow it.

Sir Edward Heath (Old Bexley and Sidcup)

In his opening remarks, my right hon. Friend—and former assistant—praised my successor for her repeated technique of saying no, no, no and then saying yes and signing up. My right hon. Friend also emphasised that both he and the present Prime Minister closely follow that technique. That has given me immense reassurance and I now have every confidence in the future of the meeting at Cannes, of the intergovernmental conference, of the Union and of this country because if that excellent example is followed, we shall achieve all the aims that my right hon. Friend has been describing in his speech. Those who have been niggling away on the Benches behind us will be defeated and we shall all benefit. I thank him very much.

Mr. Hurd

That was not quite what I expected from my right hon. Friend. I learnt a great deal from him 20 years ago. I have forgotten some of it—whether to my benefit or not, I am not sure. I am grateful—or I think that I am grateful; it will need a little further study later—for what my right hon. Friend has said.

In conclusion, I believe that the record of the last few years and the change in the mindset that I have tried to document because it is often disputed shows that there has been greater progress in a healthy direction than people yet perceive. I also believe that this country is well placed to press for further progress on those points because, in many cases, we originated the argument which is beginning to prevail. The Prime Minister has set our course in the speeches that I have mentioned. I entirely accept that it may not be dramatic enough for all tastes; it just happens to be right. We shall follow that course steadily, firmly and in the national interest.

Mr. Robin Cook (Livingston)

For the convenience of the Foreign Secretary, I make it clear at the outset that I do not intend to utter any word of criticism of him in my speech. Having listened to his speech and watched the Back Benchers behind him, I fear that he will receive enough criticism in the course of the debate without any contribution from me.

I found the least convincing passage in the right hon. Gentleman's speech that moment when he attempted to explain that there was clear blue water between his position and that of the Labour Front Bench. I do not suggest that the Foreign Secretary should intervene at this moment, but the reality is that he knows in his heart that, if he had the freedom of speaking from the Back Benches, he would make speeches very similar to those from which he quoted by my right hon. Friend the Leader of the Opposition. [AN HON. MEMBER: "Would you?"] Indeed, I have not the slightest hesitation in answering yes to that question. My right hon. Friend and I share each other's speeches.

If one looks for clear blue water, one will find it within the Conservative party. That has been demonstrated and measured in the past few months by the war of the pamphlets. In February, we received an interesting pamphlet from the hon. Member for Worcestershire, South (Mr. Spicer) arguing the cause of Euro-scepticism.

369 In March, we received a pamphlet from the hon. Member for Wycombe (Mr. Whitney) arguing the case for a more positive approach to Europe.

It is interesting that both pamphlets contained forewords by the Prime Minister. He welcomed the pamphlet on Euro-scepticism as a "thought-provoking contribution", and a month later he welcomed the pamphlet that was positive to Europe as a "constructive contribution". I advise right hon. and hon. Members opposite to hold on to their Prime Minister. He seems to be the only person in the Conservative party who can possibly span the gulf that is opening up between its members over Europe.

I was sorry to read in the past week that some doubt has been cast on the Prime Minister's continued survival because of a meeting with a number of Conservatives, some of whom I presume are in the Chamber now—although there is no published minute of that meeting. We understand that 60 Conservatives attended a meeting of the Conservative party's Fresh Start group, at which the Prime Minister was strongly urged to be tough on Europe and tough on the causes of Europe.

I tried to warn the Prime Minister about the views of the Fresh Start group. Three weeks ago, I released the agenda of its previous meeting.

Mr. Duncan Smith

You used to be a member.

Mr. Cook

I do not think that I was ever a member of a Tory party group in this place; I must set the hon. Member straight on that point.

The agenda stated: Britain should veto all further discussion at the intergovernmental conference unless the points stated above were agreed, which was unlikely"— having read the above points, I concur with that view. It continued: That overall veto would create a crisis with the other members. I cannot think of any more irresponsible strategy to adopt in relation to our immediate neighbours and the rest of the European Union than one that deliberately sets out to create a crisis by vetoing the proposals of everyone else.

Mr. Cash

Will the hon. Gentleman give way?

Mr. Cook

Of course. I presume that the hon. Member was present at the meeting last week, and perhaps he will tell us some more about it now.

Mr. Cash

Will the hon. Gentleman concede that, although many of us are in favour of the idea of a referendum, when the referendum was proposed in 1975 after we had signed the original treaty, it would obviously have created a crisis if the Labour party's policy with regard to a referendum had been seen in its true light?

Mr. Cook

The Labour party gave the people of Britain the opportunity to make a choice. We understood that they were promised such an opportunity in 1970, when we were told that the country would enter the European Community only with the full-hearted consent of the British people. It was left to a subsequent Labour Government to provide the opportunity for the people to give that full-hearted consent. The hon. Gentleman keeps ignoring the fact that they gave that full-hearted consent in a referendum.

370 I am disappointed that the Foreign Secretary gave us no insight into how the Prime Minister responded when he was invited to create a crisis with the other members of the European Union. Let me remind the right hon. Gentleman and his colleagues with what organisation they will be seeking to cause that crisis. It is the continent that receives the majority of our visible exports. When I referred to that at Question Time last week, I was howled down by certain Conservative Members, who said, "No!" In case they were correct, and in a spirit of humility, as I might have been wrong, I took the opportunity of checking the figures.

In 1994, 57.1 per cent. of Britain's industrial exports and visible exports went to the other member states of the European Union. It was fractionally more than in 1993. Those are the countries with which Conservative members want to create a crisis. What possible rationale is there in seeking to create a crisis with the people who buy the majority of our exports?

Mr. Duncan Smith

I am sure that the hon. Gentleman would not wish to mislead the House. He will therefore want to correct his statement, as he has been carefully selective. He should be discussing the totality of British exports, including invisibles. He should therefore admit that we do no more than 43.6 per cent. of our total trade with Europe, including invisibles. Will he comment on the fact that he has been selective, and should not invisibles— which are highly profitable and employs many people—also be included?

Mr. Cook

The hon. Gentleman has raised a genuine issue. I would have more respect for what he said had he responded to that problem by saying that we should be seeking to open up the single market in financial services and insurance services to address the under-performance of the invisibles. To return to the hon. Gentleman's point, first, he is wrong. The figures from the Library say that the figure is 48.3 per cent., including invisibles. Secondly, what an extraordinarily cavalier attitude it is to say, "Does it matter, because it is only 48.3 per cent. of total exports?"

There is another reason why Europe is so important to us. Conservative Members are fond of quoting inward investment to Britain as a triumph for the Government. If they really want to take any credit for inward investment in Britain, or any real interest in that investment, it is about time they recognised why it comes to Britain.

I am fortunate in representing a constituency that is still a very large manufacturing area: 40 per cent. of the work force—double the national average—work in manufacturing. My constituency has attracted major investment. Most Japanese electronic firms are represented in my constituency.

Mr. David Martin (Portsmouth, South)

Under which Government?

Mr. Cook

Under both Governments. The hon. Gentleman should think through the logic of his intervention.

Many American companies are also there. Those companies did not come to Scotland for the Scottish or even the British market. They did not come to Livingston because of the intrinsic beauty of new town architecture or the quality of our weather. They came to Livingston 371 and to Britain because they wanted access to the market of Europe, and nothing would put in doubt that investment more than any doubt over our future in Europe.

There was a time when the Conservative party claimed to be the party of industry. The divisions among Conservative Members and the voices being expressed from within their party are causing dismay to industrialists. The Foreign Secretary referred to this week's statement from the CBI, which urges the Government to re-establish their credibility as a negotiating partner in the European Union. This week, the author of that report says: I know, through my dealings with colleagues in other member states, that the UK is losing credibility as a negotiating partner in the European Union. Political divisions over Europe and the hyperbolic statements which result have often been misguided and are deeply damaging. The splits make it harder to do business and harm our economic interests. If Conservative Members take a different view, they should perhaps ask themselves why four other countries have, within the period that we are debating, signed up to the EU. Those four countries understood perfectly well that their market was inside the European Union, and that, if they want to influence the terms under which they trade in the EU, they have to play a full part in it. None of them imagined that they were surrendering sovereignty when they signed up; nor do we.

Mr. Jenkin

Is it not important to keep this in proportion? May I point out that Switzerland has increased its trade with the EU faster than Britain has during its period of membership? Switzerland has also maintained a stable currency. It is an efficient country, and it provides a good standard of living for its people. Life outside the EU need not necessarily mean death. In any case, few Conservative Members are advocating leaving the European Union. We advocate redefining our relationship with it so that it is more in our interests.

Mr. Robin Cook

I understand from press reports that the hon. Gentleman was present at the meeting in question when creating a crisis with other EU members was discussed. Certainly that is one way of redefining a relationship.

Of course, there will always be a place—in Europe and the world—for a small nation with a modest manufacturing base, such as Switzerland, looking for niche markets. Anyone who wants to go out to the public and say that Britain can survive on the basis of Switzerland's economy will get a loud raspberry in return from anybody who understands the facts of industry.

Sir Peter Tapsell

The hon. Gentleman is putting up a number of amusing Aunt Sallies, only to knock them down. Having been present at the meeting, may I tell the hon. Gentleman that no one suggested to the Prime Minister that we should provoke a crisis with Europe; and that no one, to my knowledge, in the Fresh Start group wants to do anything of the kind. What we want to do, as my hon. Friend the Member for Colchester, North (Mr. Jenkin) has just said, is to maintain our access to the single European market without getting mixed up in a lot of socialist bureaucracy of the central European kind.

Mr. Cook

I ought to let more Conservative Members intervene. The hon. Gentleman has clearly demonstrated that what they want, simply and solely, is an agenda for those at the top of business, with no agenda to help the 372 people who work in business. It is hardly surprising, therefore, that the hon. Gentleman's colleagues in the Fresh Start group may not yet have created a crisis in Europe, but they have most certainly created one in the Conservative party.

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)

As one who was not at that meeting, may I tell the hon. Gentleman that it is no good standing at the Dispatch Box smugly pretending that all is sweetness and light in the Labour party? If he thinks it is, he has only to look at some of his right hon. and hon. Friends behind him and ask them what their views on Europe are.

Mr. Cook

rose—

Mr. Denis MacShane (Rotherham)

Speak for England!

Mr. Cook

I should be in deep difficulties with my constituents if I spoke for England. I assure the hon. Gentleman that it would greatly enhance the quality of these debates if we could look at our hon. Friends behind us instead of at Conservative Members opposite us—

Sir Teddy Taylor (Southend, East)

rose—

Mr. Cook

I have not yet answered the previous point.

I speak for Labour party policy—particularly, for the Labour party policy document that went through conference in 1993 without a single nem. con.

Sir Teddy Taylor

In the course of his Library researches, did the hon. Gentleman find out—many of us would like to know—why, before we joined the EU, we had a positive balance of trade, whereas since we joined we have built up a total accumulated deficit of £100,000 million—the equivalent of £2,000 per head of the British population? Moreover, did the hon. Gentleman's researches explain to him what has happened to Sweden and Norway since their respective referendums?

Mr. Cook

The hon. Gentleman really should do more research into the trade figures. If he did, he would discover that, until 1980, we had a surplus in manufacturing exports with the whole of the world, that we did not have a deficit with the rest of the world before then, and that, since 1980, as a result of the collapse of manufacturing industry, and this Government, there was no surplus in any year until 1994. If he would like to go up and down the country and draw that to the attention of the electorate, I would be thoroughly pleased, and so would every Labour candidate in Britain.

I shall now address our real position.

Mr. Duncan Smith

Answer the question.

Mr. Cook

I have answered the hon. Gentleman's question.

Our position is that we do not, as Conservative Members like to fantasise, support a federal Europe or any super-state in Europe. We are not in favour of joining a European Union in which we have to surrender sovereignty. We favour a European Union that is a free association of independent member states, not surrendering sovereignty but sharing our common interests.

I must say to the Foreign Secretary that his idea—that the position that he was outlining is more central to the Europe of the 1990s—is totally at variance with the experience of 373 his own negotiator at the previous meeting, who found that he was outnumbered by 14 to 1. Some of his hon. Friends seem to prefer that isolation. The problem is that isolation is a poor place from which to negotiate the best deal for Britain. Hon. Members would know that if they read the document produced by the Department of Trade and Industry only last year, which spelt out that officials of Britain feel marginalised in negotiations within Brussels, precisely because of the negative attitude taken by Ministers.

There is, of course, a wider issue in this debate—the world is shrinking. Trade is expanding at double the rate of output. Financial flows across the exchange markets every day now clock up 20 times the amount required to finance any one day's trade. What makes that movement irreversible is the change in the telecommunications industry, which has meant that industries around the world are interlocked. It is now possible to transmit the entire "Encyclopedia Britannica" around the world in three seconds—and the Tory manifesto in a nanosecond.

That creates a real challenge for politicians. We have to grapple with two separate realities. On the one hand, there is a powerful, rich sense of identity with the nation of our people. It is a sense of identity that is deeply creative, which Labour Members totally respect, because that sense of national identity is one of the strong bases of the social solidarity that we hold dear. We will take no lectures on the importance of national identity from people who have done more to break up social solidarity in Britain than any previous Government this century.

The challenge for responsible politicians is how one reconciles that powerful sense of national identity with the requirement to create international structures that regulate economic relations and resolve the opportunity for friction between nations. That is the central challenge facing us.

Conservative Members refuse to face that challenge. They are retreating into the rhetoric and mind-set of an 18th-century nation state. I do not say the 19th century, as the 19th century would be too modern. At least in the 19th century Britain understood that it could not be isolated from the world.

Conservative Members are failing to grasp the logic of their own position. As I understand it, Conservative Members on the Front Bench and the Back Benches are united on one item for the intergovernmental conference: enlarge the European Union and bring in other countries of central and eastern Europe. We are entirely at one with them on that. I believe that western Europe at present has a very important mission: to embrace the new democratic countries of Europe and bring them into the family of democratic nations. We would then be able to underwrite those democratic structures and firmly anchor them into a structure of human rights, so that we never again see them slip back into totalitarianism.

If Conservative Members are sincere and genuinely want to see the European Union expanded to bring in all the countries of central and eastern Europe, they cannot continue to say that there must be no change to the EU's institutions. Those institutions were designed when there were six member states. We cannot expect those same institutions to work without change when we have a European Union with over 20 members.

Mr. Dykes

I am grateful to the hon. Gentleman for allowing me to intervene, especially at such an interesting part of his speech.

Does he agree that the Government are definitely sincere about the proposals to which he has referred, given all the evidence, but are facing increasingly dotty xenophobia and a manic dislike of socialism in Christian Democratic Germany, for instance, by some Conservative Back-Bench Members? I fear that that will become worse.

Therefore, rather like other principal countries of the Union where there are no significant differences over European policy between the major parties, why is it not possible for the Opposition to respond more positively to the idea of free votes in future in the House, where there is a large built-in majority for European development? That would, of course, need co-operation from the Opposition. Why cannot they be more constructive in that way, especially if the Government were, interestingly, able in future to offer some abandonment of controversial legislation such as British Rail privatisation?

Mr. Cook

My right hon. Friend the Member for Bishop Auckland (Mr. Foster) might like to retire at this stage with the hon. Gentleman to tie down the deal that he was offering. If the offer were on the table—that we can halt the privatisation of British Rail in exchange for a free vote on Europe—it would be one that we would happily entertain.

A free vote would, of course, have to cut both ways. Conservative Members would have to recognise the importance of such a free vote. If the hon. Gentleman is suggesting that, in certain circumstances, he and his colleagues might be tempted into the Opposition Lobby, we shall happily take away the suggestion and reflect upon it. We could happily do so when I and some of my hon. Friends leave the Chamber to attend a meeting in nine minutes' time.

I shall finish the point that I was making about enlargement. The Foreign Secretary knows the truth of what I have just said. In any event, we can test him on it. The demand from the Government Back Benches, including the Fresh Start group, is that he should veto any extension of qualified majority voting. Would he do that? Would he give us an undertaking that he would veto—

Sir Teddy Taylor

No.

Mr. Robin Cook

I know that the hon. Gentleman aspires to be Foreign Secretary, but it is perhaps unfair for him to answer for the Foreign Secretary. However, he voices the thought that is in all our minds. The answer is no, because the Foreign Secretary is far too sensible to take such a course. He knows that it was the Conservative Government under the previous Prime Minister, who agreed to the last major expansion of QMV when she signed up to the single market.

I watched the former Prime Minister with interest when she was being interviewed about these matters. She appeared to give the impression that she felt that she had been cheated when she signed the agreement. She thought it was an agreement with Singapore. No one had told her that the end user would be the European Commission.

Let us turn to another area where the Foreign Secretary is under pressure. The right hon. Gentleman is being pressed to veto an extension of the European Parliament's role. I can understand why Conservative Members are anxious to avoid any extension of its role. After all, they 375 have great difficulty in getting elected to the European Parliament. I shall not ask the Foreign Secretary if he will veto any extension of that Parliament.

I shall ask the right hon. Gentleman another question. What conceivable British interest would be served by stopping the European Parliament scrutinising the agriculture budget? At present, the European Parliament can have powers of scrutiny only over the non-compulsory section of the budget. That excludes the agriculture budget. What possible purpose is served in Britain's interests by stopping the European Parliament from being able to ask questions and to vote on that budget?

Reference has been made to fraud. Fraud stems from the common agricultural policy. Despite the promises given before Christmas, fraud is increasing. More cases of fraud were recorded in the first nine months of last year than in the whole of 1993. Why not also make that something that is open to scrutiny, vote and judgment in the European Parliament?

May I offer one word of warning to those on both sides of the debate? Looking ahead to the next 12 months, I can see that our debates on Europe will be dominated by the issues before the intergovernmental conference. Those issues are, of course, highly technical. They take us into orbit among remote and lonely planets of the institutions of the European Union. If we, on either side of the debate, really want to connect the debate about Europe with the public, we must debate Europe in terms that relate to the lives of the public.

I would entirely accept the challenge that the Foreign Secretary threw down to us. One of the ways in which Europe can affect the public's lives is the way in which it can provide them with working rights at the place of work—and yes, I confirm entirely, as the Foreign Secretary said, that the Labour party is fully committed to the social chapter, and that one of our first steps will be to sign up to it. To suggest that that position makes Labour isolated in Europe is extraordinary, given that the Government are the only one who have not signed it, and that four new countries have joined it within the past six months.

Mr. John Carlisle (Luton, North)

Will the hon. Gentleman give way?

Mr. Cook

I shall give way for the last time.

Mr. Carlisle

In the earlier part of the hon. Gentleman's speech, he proudly boasted that American companies were coming into his constituency of Livingston because they wanted access to Europe. May I remind him that an American company came into my constituency because it wanted access to Europe, and that it came to Britain rather than to another European country because we had not signed up to the social chapter? Had it gone to another European country, it would have suffered the iniquities that the chapter has brought. It came to Britain for that very reason. Should the hon. Gentleman get into power, that company may desert us, and his American investment would go away from these shores for ever.

Mr. Cook

On that point, I shall be guided by the Labour Member of Parliament who will replace the hon. Gentleman as the representative of his constituency by the time we come to power. I regularly meet American and 376 Japanese companies in my constituency. Not one of them would have the slightest problem with living within any minimum wage that this party may propose; nor do the companies that trade internationally have the same difficulty over the social chapter that Conservative Members appear to have, which is why three companies have signed up to a works council, and all of them, at the same time, withdrew their donations to the Tory party.

Sir Richard Body (Holland with Boston)

Will the hon. Gentleman give way?

Mr. Cook

No. I have given way for the last time. With respect to the hon. Gentleman, I have been generous in giving way, and I said before that that would be the last time that I gave way.

The fundamental difference between the Front-Bench teams of both parties is that we fully reject the idea that one can achieve competitiveness in the new global economy by lowering wages and lowering conditions. People in China will work for 10p an hour. Not even Conservative Members would advocate that we pay 10p an hour in Britain. [HoN. MEMBERS: "They would."] I say to my hon. Friends that Conservative Members would never agree to work for 10p an hour themselves. We will never successfully compete by doing the job cheaper. We will compete only by doing it better, and that means higher skills and higher technology.

The reality is that Conservative Members are limbering up to fight the next election as the nationalist party of Britain. Indeed, some of them see that as the solution to their difficulties. It would be not a solution to their difficulties but the start of their problem, because a nationalist party would have difficulty relating to the new world.

What the electorate out there want is a Government who can relate to the real world, who can build alliances in the real world, who can find common ground with their trading partners, who can give people opportunity in the global economy and the full opportunity to take the benefit of the globalisation of the economy, not a Government who will isolate Britain behind the new great wall of opt-outs and vetoes.

If Conservative Members really want to conspire to offer that choice to the people of Britain at the next election, I warn them that I shall be happy to accept it. We shall offer them a Government prepared to face a new century, because they understand that new century and will work with it; we shall be happy to fight an election against a party that would prefer to retreat into the 18th century. I have no doubt which century the electorate will choose.

Several hon. Members

rose—

Mr. Deputy Speaker (Sir Geoffrey Lofthouse)

Order. I remind hon. Members that Back-Bench speeches are limited to 10 minutes.

Mr. David Howell (Guildford)

With his usual courage and integrity, my right hon. Friend the Foreign Secretary struggled to draw from the sea of documents listed on the Order Paper—the vast output of bumf that seems to have flowed from every European institution—an awareness of positive developments in the European Union. I agree with him that some of those developments are very 377 positive, and that we are unwise to see everything in black, negative terms: we should not conclude that all that happens in Europe is against our interests.

I shall deal in a m