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Lord Stoddart of Swindon In the gracious Speech the Government said that their policies were well placed to weather the international financial storms and to emerge stronger from them. I hope they are right. I do indeed believe that it is possible for them to be right provided they follow the economic and industrial policies which are suitable for Britain and which put Britain's interests first. My noble friend Lord Shore emphasised that point and wondered whether our Government was doing that. As it happens, I have with me Council recommendation 11393/97 which seeks to bring an end to the situation of excessive government deficit in the United Kingdom. It says, "It hereby recommends that the Government of the United Kingdom should put an end to the present excessive deficit situation as rapidly as possible". That seems to me to be the same as an instruction under the Maastricht Treaty and smacks of the sort of instruction we used to receive from the IMF in 1976. But, of course, it was lending us money. The difference is that we regularly give the European Union and the European Commission around £2.5 billion to £3 billion every year. Therefore my noble friend was absolutely right to draw attention to the fact that our policies do not appear to be putting business interests first, but putting those of Europe first.
As other noble Lords have mentioned, it is true that there are serious problem ahead, especially in relation to the balance of trade, which reached a huge deficit of £2.5 billion in September of this year and, indeed, after taking invisibles into account, £1.5 billion. That deficit can be managed over the medium and long term provided British industry, especially manufacturing industry, is given help and encouragement. In the short term that deficit will be cushioned by inward investment which continues to flow into Britain.Indeed, investment flows into Britain in greater volume than into other European countries. The United Kingdom accounts for 34 per cent. of overseas direct investment into the EU. There must be good reasons why people want their trade to come to this country as opposed to going to other countries in the European Union. Those reasons are, of course, that they find the business and industrial environment in this country better than it is on the Continent. It is therefore extremely important that we do not adopt policies, practices and regulations emanating from the European Union which will hinder business and industry and curb their desire and ability to expand and maintain their operations in the United Kingdom. The noble Lord, Lord Cooke of Islandreagh, who has experience of these matters, outlined the difficulties which small and medium businesses in particular are experiencing. But he is not the only one. No less than the chairman of Rolls-Royce warned that United Kingdom firms, including Rolls-Royce, could move abroad to escape industry costs and regulations imposed by the European Union. Industry does not need those regulations; it needs the freedom and encouragement to expand in this country so that our people are given jobs. That ought to be a priority of Her Majesty's Government.
I want to turn to taxation. We heard a little about that this afternoon and I am going to say a little more. Indeed, over the past week a great deal has been said in the newspapers about tax harmonisation in the European Union. They have been described by Joyce Quin, the Minister for Europe, the Chancellor of the Exchequer and other people in this House this afternoon as "scare stories". Unfortunately, in the past those scare stories often proved to be accurate and the British people found themselves faced with a fait accompli about which they could do nothing.
That is the problem. Newspapers running those articles and reports have no doubt been reading the Commission document 398Y0106(01). That was the conclusion of the ECOFIN council on 1st December 1997 laying down tax measures covered by the code on taxation and setting up the group to assess tax measures that may fall within that code. It will, of course, be widened. Once we have a code, from then on it will be built on. That has been the experience so far, and that, I am sure, will be the experience in the future. We know that once the Commission starts down a road it is never satisfied until it reaches the end and controls it.One of the taxes the European Union wishes to impose upon us is the withholding tax. It will do this country a great deal of harm and lose many jobs. A failure by the Chancellor to state absolutely and unequivocally that he will veto that tax has led to fears that we are on the road to damaging tax harmonisation in that respect. As Aneurin Bevan so aptly said, "You don't have to gaze into a crystal ball when you can read an open book"; and there are many books to read about the activities of the European Union over the past 25 years since we have been members.
Then, of course, there are the statements of European leaders, particularly the new German Chancellor, the German Finance Minister and the German Foreign Minister. Mr. Schroder, the Chancellor, said in his inauguration speech that he wanted a federal Europe along German lines. There is no mistake about that. Mr. Lafontaine, the Finance Minister, wants high government spending and harmonisation of taxes. He is quoted as saying a united currency needs a fair and equal tax framework. There is no doubt about that; he said it. We cannot argue with him. Of course, Mr. Fischler, the Foreign Minister, believes that Germany should be at the heart of a new European political entity and he is quoted as saying, "We ought to work on a common constitution to turn the EU into an entity under international law".
In plain English that means a country called "Europe". Those are not scare stories. Those people are serious about European political as well as economic union. It does not matter what they call themselves--whether it be CDU, SPD or Green--the ambition is the same; that is, a European superstate under German suzerainty. As I said, it is there. Time and time again Kohl said it, and now his successor is saying it. The person has changed but the policy remains exactly the same as it was before. Taxation, monetary policy and central planning are the building blocks of such a European superstate. It is not the newspapers that raised these issues that are the scaremongers. They are doing their duty in raising awareness about what is going on in the European Union and telling people about it.
The House of Commons should be particularly concerned about the demand for euro taxation because its power derives from its ability to grant or withhold supply. If it once loses that power, it will become completely redundant. Indeed, we should not be worrying ourselves about the hereditary Peers; we should be concerning ourselves with the future of the House of Commons and its powers over the Executive. In case noble Lords think that I am scaremongering, they should read the reply to a Question to Lord Tebbit on 2nd November in column WA28. In effect that makes absolutely clear that once a Minister has decided--and he does not have to have the authority to decide--to support a tax measure and it becomes a measure in Europe, that cannot be overturned by the House of Commons without the House of Commons committing an offence. It would be illegal under European law. That, in effect, removes the right of the House of Commons to bring Ministers to account and to decide what taxation is to be.
That is a serious matter. The House of Commons must take it seriously. We know only too well how the creeping competence of the European Union has taken over much of our government and decision-making. The Prime Minister--who declared in the Sun newspaper in March 1997, just before the election, that he was a British patriot--should, at the summit in a couple of weeks time, prove his patriotism by declaring firmly and unequivocally that taxation is not a matter for the European Union but for the British House of Commons, and that he will veto any attempt to extend the powers of the European Union any further into the realms of taxation. Further, he should reiterate firmly that Britain does not want, and will not be part of, a centralised European superstate. If he does that, he will find that he has much support in the country.
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