Below is Mr Major's statement in the House of Commons on the European Community, give on Wednesday 20th November 1991.
The Prime Minister (Mr. John Major) : I beg to move,
That this House, believing it is in Britain's interests to continue to be at the heart of the European Community and able to shape its future and that of Europe as a whole, endorses the constructive negotiating approach adopted by Her Majesty's Government in the Inter-
The European Council in Maastricht is set to decide issues which are crucial to the future of the European Community and to Britain's role as a leading member of it. This afternoon I would like to set out what is at stake, the parameters of what we can accept and also what we cannot accept. I shall deal, first, with a misconception that is held by some of our Community partners. They believe that Britain may argue hard against many of the proposals-
The Government want to reach an agreement at Maastricht. We are negotiating for one. There is still some way to go and I hope that we will be successful, but it may be that a deal is genuinely unobtainable. If we do not reach an agreement, it will be a setback. So it must not be through misunderstanding, or misjudgment, and certainly not through bad faith. Therefore, this afternoon I will make our position clear.
For historical, geographical and political reasons, the issue of membership of the European Community has been more controversial in Britain perhaps than in any other member state. We joined the Community late, and we joined a Community whose rules were drawn up by the original members and not by us. The structure of the Community's budget meant that only two countries-
It is because of our membership of the Community that Nissan cars, made in Sunderland, can be sold freely in continental Europe. Seventy-
It is because of Community law that we shall be able to sell our financial, banking and insurance services freely throughout the Community. It is thanks to the collective strength of the Community that we can negotiate a good deal for Britain in international trade negotiations with the United States and Japan.
Those are all positive advantages. They illustrate very clearly why the countries of the European Free Trade Association, none of them economic slouches, have just done a deal with the Community. That agreement gives them the benefits of the European single market. In exchange, they have had to accept our regulations and our standards without having any say in framing them. Most of them now want membership of the Community to give them that equal say in framing the Community's laws.
There are, in truth, only three ways of dealing with the Community : we can leave it, and no doubt we would survive, but we would be diminished in influence and in prosperity ; we can stay in it grudgingly, in which case others will lead it; or we can play a leading role in it, and that is the right policy. It does not mean accepting every idea that is marketed with a European label. It does mean trying to build the sort of Europe that we believe in, and I will turn specifically to that in the course of my remarks.
Mr. A. J. Beith (Berwick-
The Prime Minister : If the hon. Gentleman will forgive me, I would like to make a little progress. I have much to say in order to cover the points in which the House will be interested.
At the Luxembourg European Council in June, draft texts on monetary union and political union were produced that had huge deficiencies but which did recognise many of our concerns. In September, a new Dutch text on political union appeared. That was quite unacceptable and we rejected it. It was withdrawn, and replaced a few days ago. These early texts have caused much alarm about proposals that this country would and could never have accepted.
I will turn first to the treaty articles on economic and monetary union. The treaty of Rome defines as its goal the achievement of "an ever closer union among the peoples of Europe."
In 1972, the Heads of Government of the Community-
The treaty now before us envisages the realisation of economic and monetary union through the creation of a single European currency to replace the historic currencies and a European central bank to manage monetary policy.
In stage 1 the single market and single financial area will be completed; competition will be strengthened; capital movements liberalised ; and the greatest possible number of currencies will join the exchange rate mechanism of the European monetary system. The United Kingdom is fully committed to stage 1 which began on 1 July 1990. The substantive provisions of the treaty apply to the second and third stages of economic and monetary union. It is here that we begin to run into the areas of greatest difficulty and controversy in much of the negotiation before us.
In the second stage, the text proposes to establish a European monetary institute, essentially the present meeting of European central bank governors under another name. Its task would be to strengthen the co-
The present stage envisages that, before the end of 1996, the member states of the Community would take stock, in the Economic and Finance Council and in the European Council, and reach a decision as to whether to move to the final stage of economic and monetary union. A crucial element in the decision whether or not to move to stage 3 would be the economic convergence of the member states. We were the first country to argue that convergence was vital before monetary union could even become a possibility. That view is now accepted by our partners. The latest text sets out strict convergence criteria on inflation, on interest rates, on successful membership of the narrow band of the exchange rate mechanism and on the avoidance of excessive budget deficits.
The Council of Ministers would decide who has met the conditions, and the European Council would decide unanimously whether or not the conditions were right for a move to stage 3. We believe that there should be at least eight member states ready to move to stage 3 before that step could be taken.
Our insistence that there should be no imposition of a single currency is well known : by that we mean that we cannot commit ourselves now to entry at a later date as a result of the treaty. We are therefore insisting that there must be a provision in the treaty giving us the right, quite separately from any European Council decision, to decide for ourselves whether or not to move to stage 3. That decision can be taken only by this House.
That means that, even if the requisite majority of member states decide to embrace full economic and monetary union with a single currency and a single central bank, Britain will not be obliged to do so. Whether to join-
Mr. Beith : Is not the Prime Minister now outlining a fourth option, which is that Britain remains a member of the European Community, but excludes itself from the development of the single currency, and thereby excludes itself from being the financial centre of Europe and from gaining the full advantages of membership?
The Prime Minister : Expressly not. I am outlining circumstances that mean that we would decide to join provided the circumstances were right and that the House thought it was right. We are not committing ourselves to joining now without knowing the circumstances, without knowing the conditions, and without knowing what economic chaos it might lead to.
Mr. Giles Radice (Durham, North) : Can the Prime Minister see any advantages for Britain in joining a European single currency?
The Prime Minister : I shall come to those points in a few moments.
Mr. Jim Sillars (Glasgow, Govan) rose -
The Prime Minister : I have given way twice already. I will give way to the hon. Gentleman later.
One of the most sensitive issues in this debate is the conduct of the United Kingdom's fiscal policy-
For stage 2, the treaty would provide for a formal process whereby the ECOFIN council can, on the basis of a Commission report, examine any state's economic policy and budgetary position. If it finds a budget deficit to be excessive, it can make non-
Mr. Terence L. Higgins (Worthing) : Does my right hon. Friend agree that the Dutch draft as it now stands says, in paragraph 1 of clause 104B, that countries "shall not"-
The Prime Minister : I agree with my right hon. Friend. We have made it clear to our partners that we are still negotiating on that point and that we have not accepted that binding element in stage 2. As my right hon. Friend will see in a moment, we shall go further in terms of our position on binding deficits subsequently in stage 3. Where we part company from some other member states is on stage 3. The Dutch draft treaty provides the ECOFIN Council with legally binding powers, backed up by sanctions, to require a member state to reduce its deficit. We consider that there is no better sanction than the market, and we will continue so to argue in the intergovernmental conference.
There are some hon. Members who say-
What we could not do is to prevent some or all of the other eleven member states making a separate treaty on their own outside the treaty of Rome. Those who argue that they would not do so are mistaken. They are as mistaken as those who said that, without Britain, the original Community would never happen, or that if it did, it would amount to nothing. I fear that I do not agree with hon. Members who take that view. I believe that they are wrong, and potentially damagingly wrong for the long-
Mr. Sillars : Will the Prime Minister give way?
The Prime Minister : No, if the hon. Gentleman will forgive me for a moment.
Therefore, I do not believe that it would be right to block the treaty on economic and monetary union, provided that it contains within it the conditions that could make such a union a success. Nor is it necessary to do so to safeguard our own interests. For the text gives this country the crucial provision that we need, which means that we can decide at a time of our own choosing whether to join or not.
Mr. Sillars : Let us imagine that we proceeded down the road that the Prime Minister describes. The other countries create a single currency, the ecu. This Parliament decides not to become involved. Would sterling then float free, or would it be forced to shadow the ecu? If it is forced to shadow the ecu, what is the point of remaining out?
The Prime Minister : That is one of the matters which have been discussed only in preliminary form. It is likely that sterling would have a relationship with the ecu, but that is not yet determined, because the treaty is not yet concluded. It is precisely for that reason that we are still negotiating both in ECOFIN and at the European Council.
If the convergence conditions set out in the draft treaty are not met, we would certainly not wish to be part of an economic and monetary union with a single currency. But if they are met, our successors may wish to take a different view. A single currency could be the means of safeguarding anti-
We have in front of us not, as it has been described, an opt-
In many respects, the treaty on political union poses starker problems. We are committed under the treaty of Rome to
"ever closer union among the peoples of Europe".
Under the Single European Act, the member states of the Community agreed
"to transform relations as a whole among their states into a European union".
The purpose of the new treaty text is to define what political union means in practical, legal terms.
For many of our Community partners the definitions are not as important as they are for us. For many of them the diminution of the power of national Governments and national Parliaments is not an issue. They accept the idea of a European federation. We have never done so. When we joined, we accepted that Community law would take precedence over national law, but for that very reason we have always been concerned about the scope of Community law-
Mr. Tony Banks (Newham, North-
The Prime Minister : The Germans have a different political history and structure from the one that we have in the House. It is for Germany to make its judgment. It is for the Government and this House to make the judgment that we believe is right for Britain. We should not be bound by what other countries think is right for them.
It is against that background that we approach the political union treaty with its implications for our national sovereignty. Unlike the provisions on economic and monetary union, these provisions can be adopted only if all 12 member states and their Parliaments agree. That safeguard is there to be used if it needs to be used. There are many definitions of what federation means, but to most people in this country the notion of a Federal Europe leads over time to a European Government and Parliament with full legislative powers, to which national Governments and Parliaments are subordinate. I do not believe that that is a road down which the country would wish to go. We will not therefore accept a treaty which describes the Community as having a federal vocation. Such a Community will not succeed.
Let me set out the main elements of the political union treaty, and our attitude to them. First of all is the treaty's structure. The first Dutch text in September brought all the elements of the treaty under a single structure-
Such a treaty may be popular with some of our European partners, but it is unthinkable for us. We made that clear, and those provisions have now been withdrawn.
The new treaty text would create what have become known as separate pillars. Some elements of our co-
Those changes are welcome. The countries of the European Community would be able to co-
We began co-
Under the Single European Act, we strengthened our co-
Sir Patrick Duffy (Sheffield, Attercliffe) : Will the right hon. Gentleman give way on that question?
The Prime Minister : I have not quite finished the point, if the hon. Gentleman will forgive me. He may not then wish to interrupt. I see merit in joint action and in that joint action being carried out by member states. For example, were we to take a decision, as 12 member states, to impose sanctions on a country, it would be damaging for one member state to abrogate those sanctions unilaterally. In most areas it would be in our interest to work for joint action, but we cannot allow the search for joint action to inhibit our right to take separate national decisions essential for the pursuit of our foreign policy. Where we can act together, we will do so. Where we need to act on our own, we must be free to do so. Even where joint action has been agreed, there must be provision for a member state to act separately and unilaterally if it decided that its vital interests required it to do so.
Mr. Robert Hughes (Aberdeen, North) rose-
The Prime Minister : The text proposes that majority voting should be used for implementing decisions. We see great difficulties in that proposal. What, for example, is the difference between a decision of principle taken by unanimity and an implementing decision to be taken by majority vote? None of our partners has yet found a satisfactory answer to that question.
Mr. Hughes rose-
The Prime Minister : That seems to be a recipe for muddle and confusion. The onus must be on those who want to change the existing arrangements to justify that change. Thus far they have not managed to do so.
Mr. Hughes rose -
The Prime Minister : If the hon. Gentleman will forgive me, I have declined to give way to him and I do not propose to change my mind. On defence, the position is clear. We have in NATO the means of our defence. At the recent summit, all the members of NATO were clear that we must do nothing to call in question the continuing American and Canadian presence in Europe. Europe should undoubtedly do more for its own defence, but we do not need to invent a new structure for that to happen. We need to develop a policy that is consistent with our existing obligations and arrangements through NATO and the Western European Union.
It is for that reason that Britain and Italy put forward proposals which would build up the WEU, not as the European alternative to NATO, but as the European pillar of NATO. We would establish close links between the WEU and the European Union. We can discuss security issues in the European Council, but we cannot accept a situation in which the European Community would effectively set up a competing security structure.
Mr. John Wilkinson (Ruislip-
The Prime Minister : I give way to my hon. Friend.
Hon. Members : Oh.
Mr. Wilkinson : May I say how much I welcome my right hon. Friend's announcement today that WEU is to be the European pillar of NATO, that we should fully contribute to WEU and to NATO, and that there should be no incompatibility between them? As he has dealt with many matters in detail, can he say what the aims and objectives of Her Majesty's Government will be at Maastricht?
The Prime Minister : I can certainly say to my hon. Friend-
Mr. Speaker : Order. The Prime Minister.
The Prime Minister : The Government's aims at Maastricht on that point are entirely clear. They are to build up the WEU and to ensure that it has an adequate relationship with NATO and the European Council but is not subordinate to either NATO or the European Council. That point was made perfectly clear after the NATO summit, and I am happy to reiterate it today.
Europe should undoubtedly do more for its own defence. It is for that reason that Britain and Italy put forward proposals which would build up the WEU substantially. We would establish close links between the WEU and the European Union, precisely as my hon. Friend expected me to indicate a moment ago. We can discuss security issues, but we cannot under any circumstances have any shred of subordination of the WEU to the European Council. There is no case for making the WEU subordinate to the European Council. We cannot and will not accept any treaty that contains such provisions.
Sir Patrick Duffy : The Prime Minister properly recognises that the British-
The Prime Minister : The Franco-
As I expressly said a moment ago, we cannot accept a treaty that requires the Western European Union to be subordinate to the European Council-
Mr. Tony Benn (Chesterfield) : May I ask an essential question with which the Prime Minister has not yet dealt? Even with the reservations that the right hon. Gentleman has set out, which will be studied with great care, the changes that he proposes are fundamental in character and will affect parliamentary democracy itself. Does not the right hon. Gentleman believe that partnership with Europe must be paralleled by partnership with the British people? He has placed much emphasis on the citizen's choice and the citizens charter-
The Prime Minister : As I said at Question Time yesterday, I do not favour the idea of a referendum, which underlies the right hon. Gentleman's question. I do not favour referendums in a parliamentary democracy, despite the arguments that others have advanced. The role of the European Parliament is one of the most difficult issues in the development of the Community. There are widely differing views about it. Some believe that it should have the power to initiate legislation. We do not believe that. Many member states would like to give the European Parliament an effective power of co-
If we are to control the growth of Community law, it is essential that we have democratic control. National Parliaments, this Parliament in particular, have played a crucial role in that, and will continue to do so. I pay tribute to the Scrutiny Committee and the hon. Member for Newham, South (Mr. Spearing), who has chaired it with tireless skill. That work must continue.
Under the treaty of Rome, the European Commission has sole power of initiative for Community legislation. It also has certain independent powers-
Mr. Tam Dalyell (Linlithgow) : How would the Prime Minister envisage arbitration between a Government and the Commission on thorny problems such as additionality and RECHAR, which is affecting all our constituencies?
The Prime Minister : That is a matter for the Government to discuss bilaterally, not a matter to put in the treaty.
At an earlier stage, some member states were preparing to give the European Parliament far-
There is a tendency for the Community to want to legislate over a wide area. That tendency needs to be curbed [Hon. Members :-
There are areas where Community law must apply. A single market can work only if there are common standards. We need to know that our goods can compete on equal terms when we export. We want to be confident that imports meet safety standards.
There is no point in one country having one standard of river pollution and another country another. Pollution of the Rhine is equally damaging to France and to Germany, not to mention other North sea states. Majority voting was introduced in this area under the Single European Act and it could be extended under the new treaty, but there must be limits to this action. Whether a town bypass goes to the east or to the west has nothing whatsoever to do with cross-
So too are matters relating to industrial practice, union relations and wage bargaining. We will not agree to extensions of Community competence which have nothing to do with fair competition but which would undermine the hard-
In health, it may be right for the Community to complement national programmes through co-
Significant extensions of Community competence were agreed in the Single European Act. Other extensions have happened by a gradual process of accretion. It makes sense therefore to codify and ring-
Our present system of frontier controls helps protect this country from not only crime but illegal immigration, drugs, and terrorism. It would be irresponsible to weaken our controls, and we are not prepared to do so, but in the fight against international crime we need the maximum international co-
For an agreement to be reached at Maastricht, there will have to be give and take on all sides. I have set out for the House the most crucial points.
On EMU, there must be strict economic convergence, and a provision that will allow this country to decide whether, not just when, to join a single currency.
On political union, we must safeguard NATO and avoid the creation of competing European defence structures.
We will co-
We must include powers for the European Parliament that give it greater control over the Commission but do not allow the Parliament to become an equal of the Council in making policy for the Community.
We must constrain the extension of Community competence to those areas where Community action makes more sense than national action or action on a voluntary, intergovernmental basis.
The Community has been the motor force of Europe's post-
Mr. Gerald Bermingham (St. Helens, South) : Will the Prime Minister give way?
The Prime Minister : No.
Today, the Community is still the motor force for Europe's development, but there is more at stake in Maastricht than the legal text that we shall have before us. In recent months, we have seen tumultuous changes in our continent.
Mr. Cryer : Will the Prime Minister give way?
The Prime Minister : I shall not give way to the hon. Gentleman. At Maastricht in December, we shall shape the future of the Community. We must shape it in ways that will accommodate those wider European changes. Our overriding aim must remain democracy, stability and prosperity in Europe, but our responsibility is now wider than just to the existing members of the Community. It must also be to all the other European countries which are now returning to democracy for the first time in 50 years. Our door must be open to them. We must prepare for the day when the EFTA countries in the north of Europe and the new democracies in the east of Europe want to become part of the Community. When they are economically ready to join the Community, we must be ready to accept them; and we must tell them so now.
We can now plan for a European Community stretching north to the Baltic and east to the Urals-
I commend that Europe and this motion to the House.
Mr. Neil Kinnock (Islwyn) : I beg to move, to leave out from "House" to the end of the Question and to add instead thereof : regrets that Her Majesty's Government's preoccupation with divisions in its own Party has meant that in the Inter-
The background to this debate, and clearly the cause of this debate, involves the great change-
The need for an active and positive approach to change is well understood by Governments in the rest of the Community. They recognise the reality of the economic interdependence that now exists and which will be intensified by the completion of the single market. As a result, they are determined to build on that interdependence by moving towards economic and monetary union. They are clear about their objectives; they know what they want. This Government most certainly are not clear.
"As so often in the past, our Government are stuck in the defensive mud. Grabbing a begrudged compromise here ; clutching an opt-
I am grateful to the Daily Mail for that accurate description of the Government's attitude. It is not good enough for our country to have a Government who are playing for a draw. It became clear as the Prime Minister's speech progressed that that is precisely the most that he is playing for.
The country cannot be properly served by a Government who pretend that they can somehow call a halt to or defer the agreed purpose of the rest of the Community. As the right hon. and learned Member for Surrey, East (Sir G. Howe) advised everyone in the Financial Times last week,
"There is nothing to prevent a group of countries pressing on with a separate Treaty The fact is that we cannot, even if we wished, stop the others going ahead."
The Government must face that reality and its implications squarely, but they have not. They must stop trying to persuade themselves or the country that some sort of semi-
More immediately, before those years pass and there is any immediate prospect of monetary union, it must be recognised how vulnerable Britain would be if the Government's strategy were to avoid commitment to the process under way in the European Community. That is not a theoretical matter, but a practical issue. If a British Government continued, as a matter of policy, to stand apart from the process, would inward investors who need access to markets of the whole community think of locating in a semi-
Mr. Robert Adley (Christchurch) : The right hon. Gentleman spoke a short while ago of consistency and clarity. A few seconds ago, he mentioned inward investment and a Japanese company. I do not recall that that was always his keenest and most enthusiastic point. In 1972, when he and I were both in the House, I voted in favour of the European Communities Bill, as it then was, and the right hon. Gentleman voted against it. In 1974, I opposed the referendum on Europe when he was in favour of it. Will the right hon. Gentleman give the House one example-
Mr. Speaker : Order. The hon. Gentleman is making an intervention, not a speech.
Mr. Adley : Will the Leader of the Opposition give the House one example of one major issue since 1970 to this very afternoon on which he has not changed his mind, purely for the electors' convenience, that relates to the European Community?
Mr. Kinnock : Immediately the hon. Gentleman and I entered the House -
Hon. Members : Withdraw!
Mr. Speaker : Order. Let us settle down. This is a very important debate that is being listened to outside the House. I am not sure-
Mr. Kinnock : The question to which the Government must respond-
Hon. Members : Withdraw.
Mr. Speaker : Order. This gives a very bad impression to those outside the House.
Mr. Ivor Stanbrook (Orpington) : On a point of order, Mr. Speaker. Is it in order to insult an hon. Member by calling him a jerk?
Mr. Speaker : I have just said that I think that "jerk" is not among the list of unparliamentary expressions but I asked the Leader of the Opposition to refine it. Perhaps he will now do so.
Mr. Kinnock : Thank you, Mr. Speaker.
The question that the Government must answer-
Mr. Speaker : Order. Let the House settle down. I said to the Leader of the Opposition that "jerk" is not on the list of unparliamentary expressions but, bearing in mind the nature of this debate, it would help the House if he refined what he has said in the interests of good order.
Mr. Kinnock : I respect you, Mr. Speaker, and I respect the House. If the hon. Member for Christchurch (Mr. Adley) is offended, though I doubt it, I withdraw any offence.
The question that the Government must answer is whether, if they were to maintain their stand-
Mr. Terry Dicks (Hayes and Harlington) : Get on with it.
Mr. Kinnock : The hon. Gentleman has an incurable problem, so I cannot help him.
The Chancellor of the Exchequer (Mr. Norman Lamont) : The House will be grateful to the right hon. Gentleman, because he has been making a clear statement and drawing a clear distinction between the two sides of the House. May we take it from what he has said that he is saying definitely that he would be prepared at Maastricht to make an irrevocable commitment to a single currency? That is what he is saying.
Mr. Kinnock : I am coming to that precise point. It is interesting that the Chancellor should anticipate it, and I am sure that he will find the answer very satisfactory indeed. He will also discover that my desire-
Mr. Speaker : Order. Will Conservative Members now please settle down? The Prime Minister was heard in silence, and I expect the same courtesy to be extended to the Leader of the Opposition.
Mr. Kinnock : The problem of the Government demonstrating a commitment to the continuing process in the EC is highlighted by the so-
If that clause was taken to be a definition of the Government's position and repeatedly referred to as an escape route, which appears to be the intention, it would fundamentally undermine confidence in the Government's commitment to the European process. It would be a deterrent to investment and a disincentive to industrial development. That is a matter of basic practical issues, of jobs and of prosperity. Opting out would mean losing out. That is not an issue for some distant day in 1996 or 1998.
Mr. Norman Lamont : I assure the right hon. Gentleman that what he has said is not correct. Other countries are prepared to give a commitment that they will move to a single currency without reference back to their domestic Parliaments. We are not prepared to do that, and that provision will not be in the treaty unless we ask for it. Is the right hon. Gentleman saying that he would give a commitment on any terms less than those that we are prepared to give? That is a question that he has not answered.
Mr. Kinnock : I would not be giving evidence of bad faith by looking for an opt-
Mr. John Butterfill (Bournemouth, West) : Will the right hon. Gentleman allow me to intervene?
Mr. Kinnock : No, I will not give way. There have been a few interventions.
The divisions in the Conservative party have already undermined the Government's position in their negotiations at the intergovernmental conferences. Every other Government in the European Community know that, for months past, the British Government's negotiating energies have been directed not at shaping the future of the Community but at papering over the cracks in the Tory party.
The Prime Minister must, even at this late date, put country before party. In the 20 negotiating days that remain before Maastricht, the Prime Minister must work for a treaty that will serve the best interests of Britain, and in doing so serve the wider interests of the Community. The right hon. Gentleman can do that by negotiating a more practical approach to the co-
Would it be right to conclude from the Prime Minister's remarks about the limitations on deficits that he completely rejects the 3 per cent. limit? Would it be right to conclude from his remarks also that in place of the stipulations that exist-
In a reply to me in July, the Prime Minister recognised that there was a need to achieve "flexibility" in responding to changing economic circumstances. Is that what he has been seeking to negotiate in the references that he made to the limitations on deficits? There is widespread interest in that aspect, and I am sorry that the Prime Minister does not take this opportunity to make clear what should be a very straightforward point.
The Prime Minister : I have done so already, expressly and explicitly, in my speech-