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1995 - Mr Major’s Commons response to the Opposition Day on the European Union

Below is Mr Major's Commons response to the Opposition Day on the European Union, held on 1st March 1995.


Madam Speaker: I have two short announcements to make before we begin the debate. First, I have selected the amendment standing in the name of the Prime Minister. Secondly, so many Members want to participate in today's debate that I have put on a 10-minute limit from 7 o'clock; but I would hope that Members fortunate enough to be called before then will voluntarily limit their speeches. I want to hear as many voices as possible in this debate.

Mr. Tony Blair (Sedgefield): I beg to move, That this House does not support Her Majesty's Government's policy towards the European Union and does not believe it promotes the interests of the British people.

The case that we make today is that it is in Britain's interests to be fully at the heart of Europe. So far from pandering to Conservative Members who may take a different view, let me say at the outset that I intend to try to deal with their arguments head on. Let me also tell our Ulster colleagues that I support the Government's position on Northern Ireland and that that support will not change. The crux of this debate, therefore, is not the parliamentary arithmetic but the policy towards Europe.

At each stage I shall set out the Labour party's position, and I shall then ask the Prime Minister to clarify the Government's. Let us dismiss straight away, however, the bogey of some federal united states of Europe. The choice is not between a federal and a non-federal Europe. The true choice is whether Britain's interests are best served by remaining at the heart of Europe, engaging constructively with further European co-operation; or by retreating to a different relationship altogether with the European Union. Both are logical and sustainable positions, but they imply quite different visions of Britain's future.

At one time the position of the Government was clear. It was the Prime Minister himself who said, just a short time ago:

"It is absurd to believe that Great Britain would voluntarily separate itself from the mainstream of European development . . . Great Britain stands at the centre of Europe and will remain as such."

Indeed, at an earlier stage he even said:

"There is no more important issue facing the European Community than the path we choose towards economic and monetary union. We are all committed to this goal. That is no longer news."

Of course the right hon. Gentleman was right to want to be at the centre of Europe. Europe and NATO have given Britain and Europe peace. The single market, now combined with a proper social dimension, offers huge opportunities to British business. British businesses such as ICI, British Steel and British Telecom can only gain if competition rules are enforced across Europe. The European Union acts as a powerful magnet to inward investment. And British people--we support this--have been given rights: decent health and safety, equality for women, fair treatment for part-time workers. In our view at least they would gain more were we to join other Governments, Labour and Conservative, in the European social chapter. Britain has enhanced its voice in the world through Europe, especially in trade. It offers, therefore, a range of chances across a range of areas, from research to the environment to technology and infrastructure, to act and co-operate where the nation state is insufficient.

The question is: do the Government still believe that we should be at the centre of Europe in future co-operation, or has their position changed? That is the question in the debate.

Mr. Richard Tracey (Surbiton): Will the Leader of the Opposition clarify one point? In recent years, the party that he leads has changed its mind five or six times on its attitude to Europe, and in his time in the House he has himself changed his attitude to Europe several times. How can Europe or Britain take the Labour party seriously on the matter of Europe?

Mr. Blair: For those who do not know it, this is all set out in the Conservative research department brief. [Hon. Members:-- "Answer the question."] I will answer it. I would prefer to be leading a party that was anti-European and is now pro-European than leading a party that was pro-European and is becoming anti-European.

Mr. Norman Lamont (Kingston upon Thames): Will the right hon. Gentleman comment not just on his party's position but on his own position and the views that he put forward in his election address in 1982 and 1983, when he actually stated that the EEC removed Britain's freedom to pursue its own economic policies? Will the right hon. Gentleman tell us whether that reflected his own view and, if it did not, why could he not have pursued the course taken by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who made no mention of the European Community in his election address?

Mr. Blair: I can think of no one worse to level the charge of inconsistency than the right hon. Gentleman, who took Britain into the exchange rate mechanism and the Maastricht treaty. With all due respect, he is the one who has to explain the changes--

[Interruption.]

I was asking whether-- [Interruption.]

Madam Speaker: Order. That includes the Government Whips.

Mr. Blair: I was asking whether it was the case that the Government's position of being at the centre of European co-operation has effectively changed. I think that it has and, with gathering force, the centre of gravity in the Conservative party is shifting and shifting fast.

Just consider it. The nine Whipless Tory Euro-rebels publish a separate manifesto calling, in effect, for withdrawal from the European Union. What was remarkable was not that document but the reaction to it. Almost immediately the Chief Secretary took to the airwaves to say that there was much common ground between the rebels and the Government. Not one single Minister condemned it. Indeed, at times over the past few weeks, the Euro- rebels have appeared to be almost like some alternative Cabinet. Perhaps in time they will be. Perhaps the fate that awaits the hon. Member for Billericay (Mrs. Gorman) is to become the Foreign Secretary in a future Portillo Government, or the hon. Member for Wolverhampton, South-West (Mr. Budgen) is to become the Chancellor in a future Government. At least, I suppose, that would mean that the top two economic spokesmen in the Government agreed.

Sir Patrick Cormack (Staffordshire, South): Will the right hon. Gentleman give way?

Mr. Blair: Later.

The former Chancellor of the Exchequer has said that we should contemplate withdrawal from the European Union. A former vice-chairman of the Tory party says that he wishes that we had never joined. Daily, there are fresh converts to that cause, most noticeably recently the right hon. Member for Brent, North (Sir R. Boyson). On Monday, another sceptic document was published. It was rewarded with a Prime Ministerial foreword no less, praising it as a lively contribution to the debate. The only people, apparently, who cannot debate Europe, are the Cabinet who have responsibility for it.

Lord Tebbit, Baroness Thatcher: their views are well known. I thought it most interesting that, at the Tory youth conference a couple of weeks ago, when the row was at its very height, not a single Minister was called to defend the pro-Europe position--not one. The Home Secretary went. What did he do? He pandered to them. There was no defence of the Union, no explanation of its benefits. One can tell a lot about a party from the buttons that the politicians press for applause.

There remains, of course, a group of pro-Europeans, but they are increasingly beleaguered. Indeed, Lord Tebbit, when asked whether the nine Tory rebels were not damaging the party, said, "There are nine MPs damaging the party, but unfortunately they are all in the Cabinet." [Interruption.] They may wear the badge with pride, let us say.

The result of all that, at best, is immobility in policy, and, at worst, retreat. That is most clear over the single currency, to which I shall now come.

Sir Patrick Cormack: Is the right hon. Gentleman really seeking to persuade the House that he, surrounded by the hon. Members for Bolsover (Mr. Skinner) and for Great Grimsby (Mr. Mitchell), and by the right hon. Member for Bethnal Green and Stepney (Mr. Shore), leads a united party on Europe?

Mr. Blair: In my speech I shall deal specifically with the issues of division in both parties. But let me tell the hon. Gentleman what the difference is: my position is clear. Is the Prime Minister's? That is most clear over the issue of the single currency. Let us remind ourselves: at the beginning of February, the Chancellor was calling for an open, sensible debate about the single currency and its merits. Is that not right? Within two weeks, such was the disarray that the entire Cabinet was asked to undertake some Trappist vow of silence. We are therefore in the extraordinary position that Ministers, including the chief economic spokesman of the Government of Britain, cannot speak on a vital issue of national importance.

Indeed, let me draw attention to the Secretary of State for Employment, who, the day after the injunction not to speak, attended a Rotary club lunch at the Marriott hotel. I read from The Times : "Mr. Portillo toned down his usual Euro-scepticism so much and refused to comment on so many points, that guests were forced into asking him questions about the food they were eating."

Dr. John Cunningham (Copeland): They probably got better answers.

Mr. Blair: As my right hon. Friend says, they probably got better answers.

These issues do not demand to be suppressed. They demand to be answered and the principles governing them resolved.

Several hon. Members rose --

Mr. Blair: I have taken some interventions from one wing of the Conservative party. It is only fair to take one from the other.

Sir Teddy Taylor (Southend, East): As the Leader of the Opposition rightly pointed out, there are divisions on both sides of the House, as we well know. He accepts that the issue is important. He must also accept that people have changed their minds. Is the right answer, when we are very near the edge, simply to seek the views of the people of Britain as to which way they want to go? In a democracy, is not that the right way to go ahead, instead of throwing things across from one party to another?

Mr. Blair: I am coming to the referendum issue. I have already said that, if progress is made towards the establishment of a single currency, it must be made with popular consent, whether that consent is established by a referendum or by other means. I must tell the hon. Gentleman, however, that a referendum will not ultimately absolve the person concerned of the need to decide what his position is. A referendum is a means of obtaining popular consent; it is not a substitute for government.

The single currency raises three sets of issues--economic, political and constitutional. Let us take them in turn. In the context of the economic conditions, it is correct to say that if there were monetary union without real economic convergence, a single currency would be bad. If economies were locked together when they differed widely in strength and performance, unemployment in the weaker ones might result. If there were real convergence, however, a single currency could have benefits. That is the Labour party's position--and, indeed, following his recent speech, it seems that it is effectively the Chancellor's position.

The political question concerns the issue of popular consent. Again, some agreement is possible in that regard.

The key question, however, is constitutional. Is a single currency, as a matter of principle, inconsistent with our identity as a nation state? Does it imply a federal Europe? Is there, therefore, a constitutional barrier? If there is, we should not join, even if the economic conditions are right.

On that issue, many Cabinet Ministers have expressed a concluded view. The Chancellor of the Exchequer says:

"It is quite possible to have monetary union without political union."

and again, in The Daily Telegraph , that a single currency is not

"a threat to the nation state."

A few years ago, the President of the Board of Trade wrote: "No truly unified market can exist without a single currency. A close association of monetary policies will be needed if the single market itself is not to be put at risk."

Those two views are quite clear. So is the view of the Chief Secretary to the Treasury, who said a few weeks ago:

"I don't want to see a single currency, period, for as far as I can possibly foresee. I would hesitate for an eternity before I came out and said I would vote for a single currency."

When asked whether he wanted a single currency, the Secretary of State for Employment replied, "No." He said:

"A single currency is a long way towards political union. No British Government can give up the government of the UK. That is impossible."

That could not be plainer either. No one would dispute, surely, that those views are diametrically opposed.

Mr. Nigel Forman (Carshalton and Wallington) rose --

Sir Peter Hordern (Horsham) rose --

Mr. Blair: I will give way in a moment. [Hon. Members:-- "What is your view?"] I am about to say what our views are. There is no sensible halfway house, because although the economic issues may vary, the constitutional issue is clear as a matter of principle. It does not alter over time. The question is, given that Cabinet Ministers have expressed concluded views on the constitutional issue--although they differ--which of the two opposing views is the Government's? That is what we need to know from the Prime Minister today.

I will put five questions to the Prime Minister. What is more, at the conclusion of each question I shall answer it and then ask the Prime Minister to answer it. I cannot put it more fairly than that. First, does the Prime Minister agree with his Chancellor that a single currency is not a threat to the nation state? I say that his Chancellor is right; I assume that he says the same. [Hon. Members:-- "Answer."] He cannot say.

Let me put this question to the Prime Minister. Does he agree with his Employment Secretary that having a single currency is a long way to political union, and would mean giving up the government of the United Kingdom? May we have an answer to that? I say that the Employment Secretary is wrong; what does the Prime Minister say? Thirdly--this is a question that he must surely be able to answer--

Mr. Lamont rose -- [Interruption.]

Madam Speaker: Order. The right hon. Member for Sedgefield (Mr. Blair) appears not to be giving way; is that correct? In that case, the right hon. Member for Kingston upon Thames (Mr. Lamont) must resume his seat.

Mr. Blair: I shall conclude this passage and then give way to the right hon. Gentleman.

The Prime Minister has been unable to agree with either of those two Cabinet Ministers. If he is re-elected, can the Prime Minister say whether a single currency will be a possibility in the next Parliament, assuming that the economic conditions are right? It must logically follow from signing the Maastricht treaty that the answer to that question is yes. But what is the Prime Minister's answer? Is it a possibility or not? He cannot say. Let me put another question. [Interruption.]

Several hon. Members rose --

Madam Speaker: Order. The right hon. Gentleman has said that he will give way later. Hon. Members should not persist.

Mr. Blair: Conservative Members say that this is not a quiz, but it is precisely to hold the Prime Minister to account that we called this debate. Anyone would think that I was asking the Prime Minister to do something quite extraordinary. I am merely asking him to agree with his Chancellor. We have a situation, do we not, where I as the Leader of the Opposition can agree with his Chancellor, but he cannot get up and agree with him.

The fourth question is that if the economic conditions were right, would the Prime Minister be in favour of persuading the country that it was right to join a single currency? He must be able to answer that.

Mr. Michael Fabricant (Mid-Staffordshire): Would you?

Mr. Blair: I say yes to that. Is the Prime Minister able to answer the question? With all due respect, that is the position of his Chancellor. That is what the Chancellor said in his speech a couple of weeks ago.

Finally, let me ask the Prime Minister whether he can agree with this statement:

"Some observers hope--and others fear--that economic and monetary union as set out in the Maastricht Treaty will be a step in the direction of a federal Europe . . . I believe that such hopes or fears are unrealistic."

Can the Prime Minister agree with that? I can; can he? Shall I tell the House the author of that statement? It was the Prime Minister. That is the position to which he has reduced the Government. I find it odd that he cannot agree with his Chancellor, I find it strange that he cannot agree with his Secretary of State for Employment and I find it unbelievable that he cannot agree with himself.

The Prime Minister says that he cannot decide this constitutional issue now. But the point is that he decided it then. He was prepared to say expressly that it was not a step to a federal Europe. Now, of course, he cannot say. The truth is that this issue of constitutional principle is being postponed not because of circumstances that the Cabinet cannot foresee. The issue as a matter of principle is there: it is being postponed because the Cabinet cannot agree on it. Members of the Cabinet do not have open minds on the issue. They are not sitting round the Cabinet table wondering about the answer. They have the answer: it is just that there are two different answers for the different factions in the Cabinet.

Sir Peter Hordern: If the Maastricht criteria were met in full, would the right hon. Gentleman sign up to a single currency?

Mr. Blair: If the economic conditions are satisfied, the economic conditions that we have set out for real economic convergence; and if people can be persuaded on the necessary political consent--those are the two conditions--then I say yes. I also say that there is no constitutional barrier to joining. The question is whether that is the position of the Prime Minister. When the Prime Minister speaks, perhaps the right hon. Member for Horsham (Sir P. Hordern) will put the same question to him and see whether he can get a straight answer.

On this point I totally agree with the former Chancellor. He said the other day, and I think that he is right, that the issue of constitutional principle can and should be decided now. If, in truth, there is a constitutional barrier, such a decision makes a dramatic difference to our future foreign and economic policy. Not merely does it render void--indeed, in some sense deceitful--our participation in all the formulation of the institutions for monetary union, but it means that the whole of our future relations with Europe, the United States and others would change. We should prepare for that change now. It would be appalling to drift into a decision that there was, in fact, an insuperable constitutional barrier, without thinking through the consequences of that.

Let me take that one step further.

Mr. Lamont: Will the right hon. Gentleman give way?

Mr. Blair: No.

The Chancellor recently made a speech on the single currency, and spoke about its potential benefits.

Mr. Lamont rose --

Madam Speaker: Order. The right hon. Gentleman is a long-standing Member of the House and he knows that when another Member will not give way, he should not persist. I must ask him to remain in his seat for a while until the right hon. Member for Sedgefield is prepared to give way.

Mr. Blair: If I have time, I shall give way in a moment. Recently the Chancellor gave a speech about the potential benefits of the single currency. Could the Secretary of State for Employment make such a speech? Would he make such a speech? Of course not. Has he made such a speech? Of course not. Have the Chief Secretary, the Secretary of State for Wales, the Secretary of State for Social Security or the Home Secretary made such a speech? They are not people postponing the decision on a single currency; they are merely postponing the fight over which side wins. That is not in the interests of Britain.

Think for a moment that the Government were re-elected. Can anyone imagine the negotiations during the next Parliament and the state of our discussions with other countries in the run-up to monetary union? It does not bear thinking about. One day, our European colleagues may meet the Chancellor; the next day, the Chief Secretary; the day after that, the Secretary of State for the Environment followed by the Secretary of State for Employment. They would need not more interpreters but more psychoanalysts.

Precisely the same problems beset our attitude to the intergovernmental conference. The Government are driven, once again, to raise the phantoms and bogeys of a federal Europe. In fact, there is little support for co-opting the intergovernmental pillar on defence, for example, into the treaty. There is support, of course, for extending the role of the Western European Union. The IGC needs to make progress on closer co-operation on foreign policy and defence. We have long urged that the role of the WEU should be reinforced as the defence component of the European Union and as the European pillar of NATO. The WEU Heads of State and Government might meet at a WEU summit in parallel with the European Council. Those bodies could be strengthened. We do not favour a European army, but we can see a case for greater use of co-operation between European forces. That would be a modest but worthwhile step.

No one wants, or is suggesting that the Commission should run defence policy or that we should give up the national veto. There will, however, need to be change, primarily because of enlargement. A body of 20 members or even 15 is plainly different and requires a different form of decision making from a body of 12 or fewer. The Prime Minister said on the Frost programme that he would oppose and not countenance any extension of qualified majority voting. [Hon. Members:-- "Hear, hear."] I note the cry from the troops behind him. With all due respect, such a stand is absolutely foolish and not in Britain's interests. [Hon. Members:-- "Oh."] Let me give hon. Members an example. On trade or the common agricultural policy, qualified majority voting is plainly in Britain's interests; we do not want small countries to be able to block change that is in our commercial interests. Sir Leon Brittan made that very point the other day. A sensible policy would be to approach such issues, piece by piece, on their merits.

Perhaps most absurd of all was the attack launched on me the other day in an early-day motion signed by 100 Tory Members. They launched it because I am in agreement, on some issues, with Mr. Santer, the European Union President. Who is responsible for Mr. Santer? [Hon. Members:-- "You are."] I am, apparently. Next time, we may be responsible for the appointment of that President, but the Prime Minister was responsible this time. And why? For all the usual reasons. Mr. Dehaene was proposed, but he was then pilloried as someone who would impose a united states of Europe upon us. The Government panicked and opposed him. Mr. Santer stepped forward and was sold to us on the basis that he was something completely different. Literally within 48 hours, he was saying that his views were indistinguishable from those of Mr. Dehaene.

Is it any surprise that in those circumstances our credibility in Europe is close to zero, or our influence minimal? A Danish diplomat was apparently recently quoted as saying:

"When we saw Hurd last time, he could hardly say anything." Or, according to Geoffrey Howe--Lord Howe, I should say--writing in the Financial Times :

"The ratchet effect of Euroscepticism now risks doing huge damage to British interests. For too many months, the debate on Europe within the Conservative party has been shifting destructively in the direction of disengagement and isolation."

That is the view from all around.

Of course, there are differences over Europe in every party. In a sense, it would be a poor reflection on our democracy if there were not because these are questions of fundamental importance. It is right that politicians do not treat them lightly or regard them merely as matters of party, but the view of the Government must be clear. There may and will be debate as to what the policy should be, but there must be a policy. There is only one choice--to be at the heart of Europe or to be in retreat from it. Both are coherent positions, but they take the country in different directions. What is unacceptable is to have no direction at all.

In truth, the Government can have unity without clarity or clarity without unity, but they cannot any longer have both. Now is the time to decide. This decision is too vital to be pushed aside. In that I agree with the Thatcherites and the sceptics. The danger is that their view of Britain in Europe will prevail if it is not challenged. I challenge it, and I challenge it at its fundamental point. Recently, in a robust assertion, the Employment Secretary talked of what he called the defeatism of those who saw Britain's future as lying in closer co-operation in Europe. I say that, on the contrary, what is defeatist is to believe that Britain's identity is so fragile, its character so weak and its will so unimpressive that we cannot co-operate in Europe without destroying ourselves as a nation. I reject that view, and I say that this country should be and can be a leader of nations in Europe. That is its destiny. It should be leading in Europe and it can lead in Europe, but only under a different Government.

The Prime Minister (Mr. John Major): I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: "this House rejects the policy of Her Majesty's Opposition towards Europe, which would destroy United Kingdom jobs, erode the United Kingdom's competitiveness in world markets, place new bureaucratic burdens on business and industry, destroy the veto and diminish the role of Europe's nation states and their national parliaments." In the 20-odd years since we joined the European Community, as it then was, our membership has always been controversial, so I welcome this debate to set out what our policy is, what the choices are and what those choices may mean for this country in the future. None of those choices is easy, none of them is without risks and none is without opportunities, but the belief that those choices are simple, and the belief that those choices can be made without a detailed examination of all their implications for living standards in this country, is not something that I accept. I shall deal with those choices in detail when I come to the question of a single currency later in my speech, as I promise the House I shall most surely do.

Some hon. Members on both sides of the House have always been instinctively hostile to our membership of the European Union. Others are uncritical supporters of the European Union, but most of us in this House--I believe on both sides of the House--believe that we are right to be in the European Union and that it is overwhelmingly in our national economic interest to be so but that we should be cautious about the way in which it evolves in the future. That is my belief and that is the Government's position.

Over recent years, the benefits of the European Union have tended to be taken for granted and many of the negative aspects of the Union have been highlighted. The result has been that the debate over recent years has become more sour and public opinion has become more hostile than once it was to our membership of the Union.

I think that there are essentially three reasons why public opinion has moved in that direction. The first is that people fear, not only here, but out in the country, that some aspects of the Community have changed from the Community that we originally joined. Secondly, they resent in many cases what my right hon. Friend the Foreign Secretary has referred to as

"the nooks and crannies interference"

of the European Union. But, above all, many people fear the direction in which they believe the European Union may go in future. I do not believe that we would be wise to ignore those fears--I shall address them directly in a few moments--but I think that, to put them in a proper context, it is worth recollecting precisely why we joined the European Union in the first place. We joined it because it was in our national interest to join it. It was not idealism or romanticism and it was not just because it seemed an appropriate thing to do at the time. It was a hard-headed decision to join because we saw that membership meant jobs, investment, prosperity and potentially greater influence and would make a contribution to peace right the way across western Europe.

Mr. Donald Anderson (Swansea, East): Will the Prime Minister give way?

The Prime Minister: If the hon. Gentleman will forgive me, I shall make a little progress first.

The United Kingdom is perhaps more dependent on trade than any other large industrial economy. The European Union is the world's largest trading bloc. We trade far beyond it, of course. We have interests in every part of the world, and they are growing interests. We are not dependent on the European Union, but it is a very large slice of our trade and very important to us. We are the world's fifth largest importer and exporter and the Union now takes more than one half of our visible exports. The single market was fought for by a Conservative Government leading in Europe to change the nature of Europe from the heart of Europe.

The choice that the right hon. Member for Sedgefield (Mr. Blair) gave us on the future of Europe was only a partial choice about being at the centre. Being at the centre does not mean automatically agreeing with what everybody says. Being at the centre means fighting to move the European Union in the direction that we believe is right for this Parliament, as we did with the single market, as we did with enlargement, as we did with reform of the common agricultural policy, as we did with subsidiarity and deregulation and as we did with much else.

The single market offers huge opportunities to this country and we are taking them, in car exports, at record levels--

Several hon. Members rose --

The Prime Minister: In a few moments I shall give way to the hon. Member for Swansea, East (Mr. Anderson).

We are taking those opportunities in record earnings from financial and business services, in record levels of inward investment, which have led to more than 600,000 well-paid jobs in the past 16 years that we would not have had but for our membership of the European Union, and in record business and increasing business for the City of London. Nine out of every 10 European cross-border equity deals now go through London. Even the Deutsche bank has moved its foreign investment banking to London from Frankfurt.

Most important of all--a point often overlooked, but it ought not to be by a nation such as ours--the European Union, together with the NATO alliance, has delivered a prize without precedent to those of us in western Europe: 50 years of peace across Europe; the western democracies working together in world affairs to maximise their influence, and war between them made utterly unthinkable. They are huge benefits.

Mr. Donald Anderson: Accepting all that, does the Prime Minister agree that we did not join a static Europe, a Europe which will stand still? We joined a dynamic Europe and the choice for us is either to be part of that dynamism or to be moved into a second category, a second division. Is the Prime Minister prepared, by his negativism, to contemplate that for our country?

The Prime Minister: The hon. Gentleman could not have been listening. Of course it is not static. If we thought that it were static, we would not have been seeking enlargement. If we thought that it was static, we would not have promoted the single market. If we thought that it was static, we would not have changed the position on subsidiarity, deregulation and much else. If we thought that it was static, we would not be promoting the matters in the intergovernmental conference, which I shall come to in just a moment. The question is not whether it is static but what sort of Europe we wish to build in the future.

Dr. John Reid (Motherwell, North): Will the Prime Minister give way?

The Prime Minister: Let me refer-- [Hon. Members:-- "Give way."] I propose to give way. If hon. Members will give me the opportunity to continue, I will make a little more progress. There will be occasions when hon. Members will wish to intervene on substantive matters. The often unspoken fear of many people--we should address it honestly and clearly and examine it--is that Europe might develop into a super-state, an overarching Government with no national veto, no control over our own borders, prescriptive decisions, a single currency imposed and the nation state retreating to a wholly subordinate role. That fear exists out there in the British nation, and we should recognise the fact that it exists.

I am sure that in Europe there are a few people who have ambitions for that sort of European Union; rather more people do not have any such ambitions for it. I for one would find such a Europe wholly unacceptable for this country. I do not believe that it is remotely likely, but, if that were to be the future, it would not be a future that would be suitable for this country.

In 10 months' time, the intergovernmental conference will formally begin. The preparatory work begins earlier, but, in 10 months the conference itself will begin. Frankly, it is too early. It is too soon after the Maastricht treaty, and Governments right across Europe themselves know that it is too soon. The fact that it is too soon reinforces my view that there will be no majority for ambitious plans for centralisation in the intergovernmental conference. There will be no such plans because such schemes would not be ratified not just by the Government but by other Governments across Europe.

Dr. Reid: Does the Prime Minister agree that the timing of the IGC, whether it is too soon or too late, does not alter the fundamental question that he has refused six times to answer in past weeks and as late as yesterday, when he said that he would answer it today? Does he agree with his Chancellor that a single currency is not a threat to our nation state? Will the right hon. Gentleman now take the opportunity to agree fully with his own Chancellor or to dissociate himself from that statement, but, for God's sake, go one way or the other and show some leadership?

The Prime Minister: I indicated a moment ago to the hon. Gentleman that I shall refer at length to a single currency, and I will deal with those issues in my own way at that time.

Europe's pre-eminent task for the coming years will be further enlargement of the European Union--enlargement to bring in the countries of central and then eastern Europe, and to bring in Cyprus and Malta. I believe that that is desirable to spread the benefits not just of the free market further across eastern Europe but of security further across eastern Europe, and to discharge what I believe most people in this country would regard as our historic obligation to the people of central Europe who, in many cases, have suffered so much in the past half century.

That enlargement is now agreed. It is agreed overwhelmingly because of British pressure for that enlargement. What everyone recognises across the European Union is that a Union of 20 or more states--we can now foresee the date when there may be up to 25 or 27 members of the European Union--is bound to be more flexible and less prescriptive than the original tenets of the European Community when it began with a handful of nations. Unbending centralisation will simply not be feasible in a wider Union, and many of the fears that people have about it will be seen to be fantasy fears as the European Union develops.

Mr. William Cash (Stafford): My right hon. Friend refers to unbending centralisation. He is, of course, aware that the Maastricht treaty contains detailed recommendations--indeed, a legal requirement--for a central bank. What could be more centralising than that? If my right hon. Friend rejects centralisation, why does he not therefore make it crystal clear in principle now that he objects not only to a central bank but to the single currency that goes with it?

The Prime Minister: The hon. Gentleman knows of the position in the Maastricht treaty regarding a central bank. He knows that we have the option to decide whether to join a single currency at a later stage. As I said to the hon. Member for Motherwell, North (Dr. Reid), I shall deal with that matter in a few moments.

I shall speak first about the intergovernmental conference, which will begin in just a few months' time. I do not believe that it will make huge changes in Europe. No one can be absolutely certain what our partners will bring forward, but I doubt whether any serious significant changes will be proposed.

However, the conference can and should usefully improve the way in which Europe operates, and we shall present a range of our ideas at the conference. We shall suggest ways of developing the common foreign and security policy, and ways of stepping up the fight against organised crime and terrorism. We shall set out ways of achieving a stronger role for national Parliaments, and more subsidiarity. We shall build on the steps agreed at the Essen summit to crack down on fraud.

Under qualified majority voting, a larger say should be given to the larger states, and we shall set out our plans for that. At the intergovernmental conference we shall also seek to reinforce the democratic authority of the Council of Ministers. For reasons that will become apparent as my speech proceeds, we shall not accept the end of the national veto, or significant constitutional change that would impact adversely on the House.

We shall argue that foreign, security and home affairs must continue to be agreed between sovereign Governments, and must not be collapsed into Community competence. On that basis they can, and in many ways they should, be expanded to the benefit of countries and people throughout the European Union.

Reform of the common agricultural policy is bound to feature, but not at the IGC, for it is not a matter for treaty revision. But it will inevitably happen before enlargement proceeds, because the present CAP is unsustainable as we move towards a larger EU. Europe does not have just one agenda, as hon. Members sometimes seem to assume. There is not one agenda set by others that this country must blindly follow or reject. That is the choice that the right hon. Member for Sedgefield tried to put before people, but it is a false choice. We have the opportunity to set out how we think the Community will develop, and there are areas in which the United Kingdom has led and will lead in future.

The right hon. Gentleman touched briefly on one central matter--the question of defence. The Western European Union, of which 10 European Union states are full members, is both NATO's European pillar and the vehicle for European defence co-operation. The intergovernmental conference will review that arrangement and we shall make our own proposals. I have written today to the European Heads of Government about the way in which we might develop those ideas at the intergovernmental conference, and I have placed a memorandum in the Library.

The approach that we propose is both practical and intergovernmental. Some points are incontrovertible: NATO has been the most successful defensive alliance in history, it must remain the bedrock of Europe's security and its capabilities should not be duplicated. However, we also need a stronger Western European Union so that European countries can take on their proper share of the burden and act effectively in situations in which the United States may not wish to be involved.

Our proposals fall into three parts. First, we must define the tasks that European countries could realistically take on themselves. The defence of member states and major combat operations will of course remain the task of NATO, but the WEU should be able to deal with lesser crises. It should be able to engage in support operations and handle embargo or sanctions enforcement, and it should be equipped for humanitarian operations of the kind seen in Rwanda, and for rescue missions such as the evacuations that we have twice undertaken in Yemen. [Interruption.]

Hon. Members want to know how the European Union will develop; they should listen and find out. Secondly, new arrangements are needed to mobilise European collective capabilities. A separate European force would be wasteful, and might diminish NATO. NATO has proposed that we draw on, rather than duplicate, its own capabilities. We agree that that should be achieved through the concept of combined joint task forces, which NATO developed last year. NATO's resources would then be available on a separable--not separate--basis wherever that was necessary.

Thirdly, we need to take high-level decisions of policy and military action involving western European countries at summit level. That would keep co-operation on an intergovernmental basis, and not on the basis of Community competence.

Sir Nicholas Bonsor (Upminster): I am sure that the House would welcome closer alliances within Europe and closer collaboration in terms of Bosnia-style operations and in the development of our high-technological defence industry in projects such as the European fighter aircraft and the future large aircraft. Will my right hon. Friend allay the fears of hon. Members on both sides of the House that the Western European Union may be integrated into the European Union? Can he assure us that that will not occur, and that the Government's capability to run our defences independently when required will be maintained?

The Prime Minister: I can give my hon. Friend both those assurances. It is necessary to co-operate on an intergovernmental basis, and it will operate on an intergovernmental basis. There is no question of the WEU being integrated within Community competence. It is precisely to make sure that that is the case that we have set out the proposals for greater co-operation, and that is the way in which, intergovernmentally, the Community will develop, not just in defence but on a range of other matters as well. That is the right way for European co-operation to develop.

Let me now turn directly, and at length, to a single currency. I say at the outset that I still believe that Europe would have been wiser in its own interests to proceed first with a parallel currency--a common currency-- which could have circulated alongside national currencies. It would have had the advantage of being market driven and, in my view, would have been far more likely to deliver worthwhile economic convergence. I believe that it was not wise not to proceed on that route. I still believe that Europe may find itself being forced to return to that route as it faces up to the necessity of economic convergence--which, when one comes to seek it, will not be easily obtained across Europe even among a small number of nations-- and when it faces up also to the sheer technical difficulties of introducing a single currency. But we will see what Europe decides as it approaches the possibility of a single currency.

As far as a single currency is concerned, I reiterate today what I have made clear before. Britain will not join a single currency in 1996 or 1997 and, frankly, I increasingly doubt whether anybody will be ready to do so. Europe is not ready for it, and the sooner that is universally recognised, the better. I see no chance whatsoever that the economic conditions set at Maastricht, or the other economic conditions which are also necessary, will be met, and I see no one suggesting that they should be weakened at present.

Quite apart from the other arguments, the economic conditions are absolutely crucial to the success of a single currency. If a single currency were used to bind together artificially countries which were not marching in step economically, the strains upon the economies of Europe would be immense and unsustainable. I have been making that clear since 1990, and I am glad that the Opposition have finally caught up. That is relevant. [Interruption.] I was saying that while the Leader of the Opposition was still saying that he did not want to be in Europe. Those economic points are relevant-- [Interruption.]

Madam Speaker: Order. The Prime Minister is on his feet. He knows that hon. Members are attempting to intervene and I am sure that, if he feels so inclined, he will give way, but it is up to him. He does not need help or indications from Opposition Members.

The Prime Minister: That is relevant because there are huge differences between the European economies. Italy, Sweden and Belgium have Government debts that are at or above their annual national income, whereas in Britain, Germany and France the ratio is only half that. Unemployment is 24 per cent. in Spain, 15 per cent. in Ireland and 12 per cent. in France, whereas it is 9 per cent. in Germany, 8.5 per cent. in Britain and 7 per cent. in the Netherlands. There are also big differences in labour market flexibility, which may leave some countries poorly placed to respond to the shocks that would inevitably occur in a single currency in future.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley) rose --

The Prime Minister: I will give way in a moment.

There is a large body of opinion across Europe that believes that a single currency could proceed around the turn of the century. Clearly, all 15 members of the European Union could not join such a single currency around the turn of the century--there is no chance of the economics being right-- but a core group of countries could conceivably be ready to go ahead then, a small group of nations that, economically speaking, could include the United Kingdom.

If that core went ahead, it would radically change the nature of the whole European Union. At this stage, no one can safely predict what that would mean for those within the core and, equally important, what it would mean for the majority of members of the European Union, who would remain in the Union but beyond that core number of nations.

Mr. Iain Duncan Smith (Chingford): My right hon. Friend clearly laid out where the real problems in the convergence criteria lie, should people try to move down those roads without following them correctly. Furthermore, he pointed out that those are essentially good management techniques. Surely the key factor is that the real problem lies in establishing a timetable that makes people drive to a point that they might not have arrived at naturally. Does he agree that at the 1996-97 intergovernmental conference we should do our level best to take out the timetable mechanism completely and to leave it so that countries may or may not converge?

The Prime Minister: My hon. Friend is entirely right that the timetable is arbitrary but, under the provisions of the Maastricht treaty, the economic criteria set out in the treaty supersede the timetable. If those are not met in 1999, 2009 or 2019, the provisions of the Maastricht treaty are such that no one would proceed. That is not merely the view in this country--it would certainly be the view of the Bundesbank or others.

Mr. Lamont: Does my right hon. Friend agree with Mr. Paul Volcker, the former chairman of the American Federal Reserve Board, and my right hon. Friend Lord Lawson of Blaby that monetary union inevitably means political union, or does he agree with the Chancellor of the Exchequer that it is possible to envisage monetary union without political union?

The Prime Minister: No, I do not-- [Interruption.] With one important qualification: I believe that it is possible to move forward to monetary union without necessarily moving forward to political union, but the qualification depends on the nature and style of monetary union and I will deal with that in a moment. If the core went ahead, it would need to determine very carefully what that would mean for the rest of the European Union. To consider whether we should join that core at some future date means that we should consider the practical implications of joining it and, equally important, the practical implications of not joining and letting other nations go ahead without us.

Let me set out in detail what those implications might be, because I believe that both this House and the British nation concerned in that argument beyond this House need to know the practical implications of what going into the Union or staying out of it would mean for them, their political institutions and their economic future.

Mr. Tony Benn (Chesterfield) rose --

The Prime Minister: First, I shall give way to the right hon. Gentleman.

Mr. Benn: I listened carefully to the Prime Minister's arguments about the possible effect on the Union of two tiers, but has he turned his mind to the effect on the domestic democracy of Britain if two fundamental principles that have existed over many centuries are broken: first, that there is a route through the ballot box for electors to choose the policies and laws under which they are governed and, secondly, that no Parliament can bind its successor? If the right to tax, borrow and set interest rates is transferred out of this country, we face the serious danger that people will lose confidence in the ballot box as an instrument for remedying the problems that confront them.

The Prime Minister: It is an interesting illustration of the unity on the Opposition Benches to have had that point put to me by the right hon. Gentleman.

On his first point about a two-tier Europe and its implications, I think that, with respect to the right hon. Gentleman, he oversimplifies the position of the two tiers. What we are seeing develop--it is not new but has been developing for some time and will accelerate--is not just a first and second tier but a much more flexible European Union that does not base itself simply on one tier or two tiers but is wholly flexible across a range of subjects. That is bound to become more necessary as the Community gets bigger. Frankly, it is both unrealistic and impractical to imagine that 15 nations--soon to be 19 and, within a decade or so, up to 27--will operate inflexibly on the basis of rules determined entirely centrally. That simply will not happen in the future.

Let me consider what it would mean if we were to decide that we were to go into a single currency at some future stage. If we were to join, we would need to lock exchange rates with other members; agree what the single currency should be--perhaps the ecu; and possibly abolish the pound and the Scottish and Northern Ireland pounds. I say "possibly" because--

Mr. Brian H. Donohoe (Cunninghame, South): Oh no, no; you cannot do that.

The Prime Minister: When I referred, a moment or so ago, to some of the practical implications of moving towards a single currency, I had not expected, in trailing my coat, that I would get such a splendid response from the Opposition. But the reality is that one can see the turbulence and difficulty of moving forward in that direction. The relevant difficulties in terms of absorbing the Northern Irish pound and the Scottish pound and just having the pound sterling are absolutely trivial compared with the difficulties of replacing sterling with a single currency across 15 nation states, so perhaps the large number of Scots in the shadow Cabinet might address their minds to the possible--

Mr. John Home Robertson (East Lothian) rose --

The Prime Minister: Ah, I shall give way to a Scot.

Mr. Home Robertson: Can the Prime Minister grasp the fact that Scotland and England have had a single currency since 1707?

The Prime Minister: That is because Scotland and England are part of a single Union, and I am determined that they will stay so.

Mr. Alex Salmond (Banff and Buchan): Surely the question at issue is: could Scotland and England currently have different currencies and still be part of a single Union?

The Prime Minister: If the hon. Gentleman recalls what I just said, he will know the answer to his question.

Let me reiterate the changes that need to be made. They are: locking exchange rates, agreeing a single currency, abolishing domestic currencies, making the Bank of England independent and passing control of interest rates and monetary policy as a whole to an international bank, on which this country would be represented as one among many. Those are the practical implications of going forward to a single currency, and the House and the country should be aware of them.

In addition to that, we should accept the possibility--perhaps even the likelihood, although no one can be certain about that--that a unified monetary policy would require a far greater alignment both of spending and of tax rates. If the House were to proceed with them, such changes would be the most sweeping changes in fiscal and monetary management that the House, with its history of control of supply, had ever considered and accepted in all its long and proud history.

The House knows, from the Maastricht negotiations and the opt-out that I negotiated there, that I am wary of a single currency for those economic reasons--wary of its economic impact and of the serious political and constitutional implications. However, if some of our partners do go ahead, there will be implications for this country in any event, albeit different ones. There is no way in which we can sit out that argument without affecting us in one way or another.

If we go in, we shall have the changes that I have set out, but if we stay out there are other serious implications to consider, and I shall spell them out to the House. No one at the moment can be entirely certain what the implications of staying out might be. We cannot know what the impact of a single currency might be on the pound sterling if the pound were outside it. We cannot know what the impact would be on the reputation and work of the City of London as the pre-eminent European centre if we were outside a single currency. We do not know what the impact would be on domestic or international investment in this country if we were outside a single currency, and we cannot know what the impact would be on employment.

Crucially, no one can possibly know at this stage the way in which market forces would react to the decision either to go in or to stay out of a single currency.

Mr. George Stevenson (Stoke-on-Trent, South) rose --

The Prime Minister: If the hon. Gentleman will forgive me, I shall make a little progress.

The purpose of spelling out those implications is to communicate the fact that at the moment those matters are necessarily unknown. They will become clearer as we move towards the point of decision; that is beyond doubt. We shall be in a position to know more of those. However, as of this moment, the answer to those questions cannot possibly be known, except as a matter of hunch. It is for that reason that I believe that it is in our own national and economic interests to keep open the option of going into a single currency-- [Interruption] --and equally to keep open the option of deciding that it will not be in our national interest to go in.

Several hon. Members rose --

The Prime Minister: I shall give way in a moment to the hon. Member for Stoke-on-Trent, South (Mr. Stevenson).

I make no apologies now, nor will I in future, for deciding as an act of policy, in the interests of the country, that we should not make such a decision without the facts at our disposal to know the right answer. If a future Government decide to go ahead, they will need the consent both of Cabinet and of the House. They may also need the consent of the country in a referendum because, as the right hon. Member for Sedgefield said, we shall need to carry the opinion of the country with us, whichever way we proceed, but most definitely if we decided that we were to go into a single currency.

If a decision of great constitutional significance were to arise over a single currency or, for that matter--although I do not for a moment expect it to be the case--from the intergovernmental conference, a referendum could be necessary; it could be desirable, and I am prepared to keep that option open.

Mr. Stevenson: The Prime Minister has expressed his caution about entering a single currency, but will he answer a question? If the conditions are right and if the criteria are met, would he then agree to join a single currency--yes or no?

The Prime Minister: I do not know where the hon. Gentleman has been for the past 10 minutes--he has clearly not understood a single word. No wonder he is in favour of going in: he does not understand the implications of going in or staying out.

Mr. Tony Marlow (Northampton, North): My right hon. Friend has said categorically that we will not seek to enter the single currency in 1997. He will know that article 109j of the Maastricht treaty states that if we were to join on 1 January 1999 there would be a two-and-a-half year lead time. That means that, to keep the option open, we should have to join the exchange rate mechanism by 1 July next year. Is it conceivable that my right hon. Friend would put such a proposal before the House?

The Prime Minister: I certainly do not anticipate joining the exchange rate mechanism in the lifetime of this Parliament.

Mr. D. N. Campbell-Savours (Workington): The Prime Minister would have us believe that he has not made up his mind and that he wants to leave his options open. Does he not understand that what we object to is the fact that he is prepared to tolerate the activities of members of the Cabinet who have made up their minds? They are saying no, no and no again. How long will he put up with that dissent?

The Prime Minister: I think that the hon. Gentleman will find, when we get to 10 o'clock tonight, that the line that I have set out for the Government will receive the consent of the Conservative party--he need not worry about that.

It is important over the next few months that people understand what this debate means. In recent months--from time to time in this House too--far too many people have been playing off against one another as supporters of Europe, opponents of Europe, nows, nevers, wets and drys and those who have been implacably for or against a single currency. Every phrase has been analysed, every nuance noted, every speech dissected to see whether it represents a shift in one direction or another.

I must tell those concerned that such an artificial tournament is nonsense. I passionately believe that the freedom of choice which I obtained at Maastricht must be fought for and held in the interests of this country. It is by far the best vantage point from which to conduct a single-minded and successful campaign for our national interests in the European Union.

We are going to maintain the option because the decision that may have to be taken will be the single most important economic decision to face this country this century. To take it at long range, without knowledge of the circumstances, without knowledge of the daily details, without an examination of what is happening in the markets or without anything else besides would be folly in the extreme.

Mr. James Molyneaux (Lagan Valley): May I gently chide the right hon. Gentleman for his failure to thank the Leader of the Opposition for his assurance that in the lifetime of this Parliament the Government will not be defeated--unless, Madam Speaker, you are invited to discount nine votes?

May I return the Prime Minister to the point about sovereignty, which he may touch on later? It was always clearly understood that there would be a pooling of sovereignty by all the member nations. May I ask the Prime Minister for an assurance that there will be no horizontal transfer of sovereignty to any other member state on a bilateral basis?

The Prime Minister: From the moment we entered the European Community--now Union--there have always been areas in which we have pooled sovereignty and also to some extent lost sovereignty. But we also gained sovereignty over the actions of some other nations. There have been semantic arguments about that question, but it is a fact that there has been a pooling of sovereignty in some areas. That has not applied to issues of great national concern, and I do not believe that the concerns which clearly activate the right hon. Gentleman are ones that he need worry about. I do not believe that we are going to face the difficulty that he envisages.

I come now to some of the related fears about the Community that I mentioned earlier. Let me address directly some of the fears that people have.

Mr. Blair: The Prime Minister was describing what he saw as the balance of economic advantage one way or another which would progress over time, but if, over time, the balance of economic advantage is, in his view, in favour of entering a single currency, is he in principle in favour of doing so?

The Prime Minister: It is a matter of practice, not principle. What matters-- [Interruption] . It is a serious point. The right hon. Gentleman asks a serious question and he deserves a serious answer. What is relevant is what the practice of entering would mean for Britain-- [Interruption.] Of course, predominantly, in economic terms. We have to make a judgment about what is in the national interest. I repeat what I have said in the past. If I reach a decision that it is in the national interest to stay out, I will stay out. If I reach a decision that it is in the national interest to go in, I will recommend to Cabinet and the House that we go in. But we cannot reach such a decision without having the information in front of us; the right hon. Gentleman has done so. I decline to do so as an act of policy because I believe that we need to make that judgment when we have that information before us.

Mr. Blair: Will the right hon. Gentleman now say whether he sees a constitutional barrier to it? Does he agree with the Chancellor of the Exchequer that it is a threat to the nation state or not? Now let him answer.

The Prime Minister: The right hon. Gentleman is trying to tie this up into tiny little parcels. It is a serious point. What is relevant is what the whole package means for the House, the country and our future. If the whole package says that it is in our interests to go in, we go in, and if the whole package says that it is not, we stay out. But there is no point dancing round semantically on these points. At the end of the day, the only thing that matters is the British national interest. We cannot judge that except in the round. We cannot judge that until we have all the information available and we know the consequences of going in and the cost of staying out. I come now to the fear that I mentioned earlier that many people in Britain have--whether there will ever be what some refer to as a European super-state. In the sense of a European Government, I believe not, and personally I would prefer to leave the European Union before I accepted a European Government, but the degree of integration in Europe is a matter of dispute, not least between Government and Opposition in the House.

Upon some things we are agreed. The Government are not prepared to lose the border controls that we have at present and the Opposition have said that they will support us in that. I hope that that proves to be the case. In any event, particularly to protect our improved race relations, we are not prepared to weaken our immigration and other controls for non-European citizens. The Heads of Government across Europe pledged their word on that years ago and we expect them to keep it. We shall take whatever steps are necessary to that end. The right hon. Gentleman accuses us of divisions. He should look behind him a little more carefully before he levels that charge at us. We know what he has had to say about his Members of the European Parliament, but what is his attitude to his nearly 60 hon. Friends who opposed the Second Reading of the Maastricht legislation? What is his attitude to the 40 who rebelled against his leadership over the European finance legislation?

What is the right hon. Gentleman's attitude to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), who believes that

"the nation state is outdated"

and wants us to

"accept the increased jurisdiction of a centralised European authority"?

Does he agree with his right hon. Friend the Member for Copeland (Dr. Cunningham), who said:

"I personally am in favour of a single currency"?

Or does he agree with his right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), who says:

"I am not a fan of a single currency"?

Not only is the Labour party divided, but the right hon. Member for Sedgefield failed to explain all the aspects of Labour's policy. He promised to, but he failed to keep that promise. I am not prepared to give up Britain's national veto. I am not prepared to give up the right to say no.

Mr. Blair: Neither are we.

The Prime Minister: The right hon. Gentleman says, "Neither are we," but he is. The right hon. Gentleman did not mention that Labour would undermine the veto by making majority voting the rule. The right hon. Gentleman shakes his head but it is in the European socialist manifesto, co-authored by the right hon. Member for Copeland, who said, subsequently,

"We stand by everything in this document."

It is no good the right hon. Gentleman shaking his head and looking embarrassed. That is what the right hon. Member for Copeland said. With whom does he agree--his right hon. Friend the Member for Copeland, his right hon. Friend the Member for Kingston upon Hull, East, socialist Members of the European Parliament or the European socialist partners whom he goes to visit and signs things with so often? Whom does he agree with? Does he agree with himself on this issue? Do we know?

If we gave up the veto we could not only be outvoted on own resources, tax harmonisation, foreign policy, immigration policy, protected areas of environmental policy and any policies which, in the words of the treaty, are deemed

"necessary to attain . . . the objectives of the Community".

[Interruption.] It is a spirited discussion. If it were possible, I would give way to let the right hon. Member for Copeland intervene upon the right hon. Member for Sedgefield, but I am sure that they can discuss it elsewhere.

Dr. John Cunningham: I am grateful to the Prime Minister for giving way. [Hon. Members:-- "Resign."] If anyone should resign around here it is the Prime Minister and his right hon. and hon. Friends.

The Prime Minister should withdraw his allegation that either the European socialist party manifesto or our own manifesto for the European elections last year said that we should abandon Britain's veto. Neither document did so and to suggest otherwise is to tell an untruth.

The Prime Minister: The right hon. Gentleman said that the Labour party would make majority voting the rule. If it is the rule, what else could it be other than the abolition of the veto? He can wriggle and wriggle and wriggle, but he is on the hook and he knows it. Without that veto how would the Labour party protect our interests? The right hon. Member for Sedgefield had some other memorable omissions as well. He did not mention the memorable indication by the shadow Chancellor to have some renegotiation on our rebate. Our rebate was protected at Edinburgh. It saved the country billions, but without the veto it might not be possible to save it.

Neither did the right hon. Gentleman mention those Labour Members of the European Parliament who voted to double the European budget and dramatically increase Britain's net contribution. I do not know whether that is Labour party policy or whether they were simply being infantile again. He did not mention that Labour wants

"to avoid a tax-cutting competition between member states". What does that mean? At the moment British taxes are lower than those of our European partners. Does he want to raise British taxes to higher European levels or does he believe he can negotiate with the Europeans to bring their taxes down to our level when they all have fiscal deficits in their countries?

We know that the Labour party would impose the social chapter and drive out investment and competitiveness. We know that the right hon. Gentleman has said that he will

"never allow this country to be isolated . . . in Europe".

Sir Russell Johnston (Inverness, Nairn and Lochaber): Will the Prime Minister give way?

The Prime Minister: If the hon. Gentleman will forgive me, I will not. I have given way on a number of occasions.

How will the right hon. Member for Sedgefield win battles in Europe that are in our national interest if he is too frightened to be isolated in those battles? Does it mean that he would never be prepared to stand alone, never be prepared to defend any position, any principle, any vital interest, if it would mean offending his socialist colleagues across Europe?

What happens if Europe wants to do something that is genuinely against our national interest? How would the right hon. Gentleman prevent it? He does not want to disagree. He does not want to use the veto. The fact is that the Labour party's policy is one of weasel words and soundbites. It is not a policy for Britain. It is an abject surrender by the right hon. Gentleman.

We have fought for the changes that we want--the single market, enlargement to the east, a new accent on competitiveness and free trade, less new European legislation with national action as the norm and development of the Union through intergovernmental consent. None of that suggests that the Government would be dragged along by others in a direction in which we do not want to go. That may be the stuff of tabloid tales, but it does not stand up to detailed examination of our record.

We are prepared to be isolated and fight our corner, and the House does have to choose--between our hard-headed, commonsense, pragmatic approach to Europe or the politically correct federalist posturings of the Opposition. It should not be a difficult choice and I invite the House and all my hon. Friends to make that choice tonight.