The Recall of Parliament: Heath says single currency would end speculation (CORRECTED)

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Indy Politics
CORRECTION (PUBLISHED 26 SEPTEMBER 1992) APPENDED TO THIS ARTICLE

SIR EDWARD HEATH, the former Tory prime minister, brought yesterday's debate alive by telling the Commons that the European Community single market, due for completion in January, would require the development of one currency, one economic policy, one government and one state.

He warned the Prime Minister that the development of a single currency by the Germans, the French and the Benelux countries could come much more quickly than most people expected. The Prime Minister should take account of that, he said. 'We don't want again to be left on one side.'

He told MPs the issue was not flaws in the exchange rate mechanism, but how to deal with the massive scale of speculation. The answer to that was one currency.

Ron Leighton (Lab, Newham North East) intervened to say if that was so, did one currency not mean 'one economic policy, one government, one state'?

To 'oohs' and 'aahs' from both sides of the house, Sir Edward said: 'The single market is going to require the development of those things. That's quite plain to everybody. The form those things will take has yet got to be examined and decided. That's the point. You must have an overall control with a single market.'

Peter Shore, the anti-federalist former Labour Cabinet minister, said later that Sir Edward had 'blown the gaffe' on the basic intention of the Maastricht treaty.

Sir Edward had opened by saying the nation was suffering from 'shock and much confusion' after recent events. He said John Major had been 'absolutely right' to resist calls for a referendum, to reaffirm that he believed in Maastricht and not to exclude a return to the ERM.

But he warned Mr Major over his behaviour on Europe. 'There is already, I am afraid, a belief in the Community that Britain has taken the presidency to run the Community and to change the whole Community. That is bringing resentment and also counter reaction to the proposals.'

As the debate centred increasingly on Maastricht rather than - as billed - on the economy, Tony Benn, the former Labour Cabinet minister, rose to accuse the Commons of 'failing to speak for the people it represents'.

Announcing that he would launch a national petition for a Maastricht referendum today, he told the Commons the plan would 'sweep the country'.

Those insisting that Parliament should decide were attempting to take away from the people the vote that the Chartists and suffragettes had struggled for. 'It will not work,' he said.

A Commons vote on Maastricht would be decided not by what MPs believed, 'but by two Johns - because party discipline determines the vote'.

If MPs alone tried to decide on the Maastricht treaty, 'the next thing to be undermined will not be the currency, but the reputation of the chamber'.

Paddy Ashdown, the Liberal Democrat leader, said the Government's 'fundamental credibility to govern this country has, even this early in a Parliament, been destroyed. They will not be trusted again. The sooner they go, the better.'

The 'debacle' of Black Wednesday stemmed not from short-term problems, but from government actions long before that made Britain's position in the ERM 'simply indefensible'.

Urging the Government to enter a single currency, he said Britain risked being in the third tier of Europe. There was 'no refuge' in a floating pound which would produce only the freedom to devalue 'the freedom to suffer inflation, decline and boom and bust'.

Kenneth Baker, the former Cabinet minister and Tory party chairman, said last week's events had 'torn a gaping hole in the Maastricht treaty' and he hoped that the search for a replacement for the ERM would not be too vigorous. Any new system was likely to be inherently unstable and a stable system would mean a single currency and government.

There would clearly have to be significant changes in the powers of the Commission to accommodate the Danes, and Britain might well want the same changes.

John Biffen, the former Cabinet minister, said Germany would become increasingly interested in countries to its east, not in financing the convergence of Spain, Italy, Portugal or Greece. Maastricht, which was anyway 'on any count unacceptable', would become irrelevant. Britain should turn to its neighbours and say 'up with this we will not put'.

Sir Peter Horden, Conservative MP for Horsham, said he hoped Britain would rejoin the ERM as the best long-term guard against inflation. But Sir Terence Higgins, the former chairman of the Treasury select committee, doubted any exchange rate mechanism could work while Germany had an independent central bank committed to internal interests.

CORRECTION

In a report of Thursday's Commons debate, an intervention during Sir Edward Heath's speech was wrongly attributed to Ron Leighton, the Labour MP for Newham North East. It was, in fact, made by Nigel Spearing, Labour MP for Newham South. In some editions of yesterday's paper it was incorrectly reported that Richard Shepherd, the Conservative MP for Aldridge Brownhills, voted against the Government. He abstained.

(Photograph omitted)

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