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Mr. Cash: The right hon. Gentleman might even have said that the Commission plotted—rather than spotted—to achieve these objectives. The hon. Member for Rhondda (Mr. Bryant) should remember that we are debating a treaty, which is therefore dealt with in this country by royal prerogative. Our system is to implement the treaty by enacting a Bill, but that means that we, as a Parliament, endorse these wide-ranging arrangements, which have consequences for the electors. That is what is undemocratic. Proceedings on the Bill are guillotined and the public are unaware of what is going on.

Denzil Davies: The point that I am making is that enhanced co-operation is not trivial, affecting only a few areas. Although Ministers have said that the giving up of a veto, which is, in effect, what we are doing, is just a technical matter, it is certainly not in relation to enhanced co-operation. The matter is central. Pressure on member states such as France, Germany, Italy and Spain from the Commission will be greater and greater. This is the first shot.

Mr. Hendrick: Will my right hon. Friend consider the example of Ireland? Ireland took part in a regime of corporation tax which resulted in a lower rate than in many other European member states. The Commission

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accepts that tax competition is healthy and allows it throughout Europe. Lower taxes in Britain than in some of those taking part in my right hon. Friend's so-called enhanced co-operation on taxation would be to our benefit. Why is there pressure for us to join if we can have lower taxes?

Denzil Davies: My hon. Friend mentions the low rates of corporation tax in Ireland, which would have had beneficial effects on the Irish economy. However, when is tax competition harmful tax competition? That would be a good essay for the hon. Member for Stone.

Mr. Cash: I have done it already.

Denzil Davies: The hon. Gentleman has written about that already. Perhaps he has written a book on the subject—I do not know. The question of when tax competition becomes harmful is entirely subjective.

Mr. Hendrick: Will my right hon. Friend give way?

Denzil Davies: I have given way often to my hon. Friend. I am sure that he has some very good points to make and perhaps he will make them later.

Tax competition of the kind that we have seen in the Irish Republic is frowned on. If there is a transitional period, which I think there will be when the Irish lower rate runs out, it will not occur again. The less euro-enthusiasts say about Ireland, the better. The Irish people, who as far as Prodi is concerned are all stupid, are not stupid, and I suspect that they are spotting what is happening. That is one reason—not the only reason—why they voted as they did on the treaty of Nice.

We are not discussing trivial matters. I can understand why France and Germany might want to keep to an inner core of a Europe of six, seven or eight. They do not want to lose that central or federalising impetus, which they felt they had when there were fewer countries, when the Poles and the unhistorical nations of Europe, as Marx described them, enter the European Union. I can understand them wanting to maintain a core, but that core must involve taxation, which is central to economic and monetary union, economic policy and the currency. The pressures will be considerable.

I ask my hon. Friend the Under–Secretary, who will undoubtedly convey this faithfully to my hon. Friend the Minister for Europe when he returns from making the speech to which he referred, to assure us—we have an assurance on the veto—that the Government will never consider entering into an enhanced co-operation agreement in respect of direct or indirect taxation. In the interests of plain speaking, we must be sure that our veto will not be outflanked by the nefarious wheezes dreamed up by those clever people in the Commission.

Mr. Menzies Campbell (North-East Fife): As the right hon. Member for Llanelli (Denzil Davies) said, we have had the benefit of some cracking maiden speeches. In particular, I should like to mention the two that have been made in this part of the debate.

The hon. Member for Westbury (Dr. Murrison) made a speech that one could describe as of a fairly traditional nature. He will clearly be an effective advocate for his constituency. He brought a smile and a certain ironic

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recollection to some of us when he talked about brown envelopes. They have featured in recent political history; let us all hope that they do not do so again.

The hon. Gentleman made several cogent and effective points on defence medical services. I have taken an interest in that area in the past, and just as the hon. Member for Stone (Mr. Cash) threatens everyone that he will send them a copy of a pamphlet, I shall send the hon. Member for Westbury a copy of a document that I was able to produce along with some others. He will find that it is of some interest on the issue of defence medical services. As someone with direct experience, he will clearly be able to give us an inside view of many of the problems that attach to the present standard of provision of medical care for our armed services. I am sure that the House will be the better for that.

The hon. Member for East Lothian (Anne Picking) has left her place. It would be fair to say that hers was a non-traditional maiden speech. However, if she is a scion of the Moffat family of Fife, that is hardly surprising. She made some witty observations and spoke with real affection about her constituency. I shall hold her to account to a certain extent because she now represents several members of my family and I want to ensure that they receive the proper standard of representation to which they are entitled.

The hon. Lady referred with affection, which we all share, to her predecessor, John Home Robertson. Under the conventions of the House, I was never able to call him my hon. Friend, but he was and remains a very good friend of mine. He was, of course, one of those who championed the cause of home rule for Scotland with great effectiveness. It is right that he is now a Member of the Scottish Parliament.

John Home Robertson's predecessor was John Mackintosh, to whom the right hon. Member for Llanelli also referred. John Mackintosh was a great champion of the cause of home rule. He may have been difficult in proceedings on the Finance Bill, but he was a very strong pro-European. There are those who would think that his legacy is best remembered not by the definitive book that he wrote on Cabinet Government, but by his tireless advocacy of the cause of Britain's membership of what was then the European Community.

7.30 pm

My text is taken from the Conservative party manifesto in the last election, wherein it is said:

I imagine that the hon. Member for Stone had some sort of derogation, or perhaps he claimed that, for reasons of national policy, in Stone he did not have to adhere to that statement, but that is the position of the Conservative party. We also have the authority of the shadow Foreign Secretary, who is not with us this evening, who last year said:

Mr. Cash: I am doubly grateful to the right hon. and learned Gentleman, first, for drawing attention to that

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provision, which I put on the front page of the blue paper which I wrote in response to the White Paper produced by the then Foreign Secretary, because I thought that those words amounted to an act of appeasement. Secondly, on the question of my election address, I can assure him that I stated emphatically that we should renegotiate the treaties—indeed, I went further and said that if the other countries did not listen we would have to steer our own course.

Mr. Campbell: I am doubly glad that I gave way to the hon. Gentleman, who has effectively attacked his own party. However, I do not want to intrude on private grief: these matters are ones that the Conservatives will have to resolve themselves, and whoever emerges through the pall of white smoke to become the leader of the party will have to deal with them.

Let me say a word or two about enhanced co-operation. The Nice treaty endeavours to free up procedures first established at Amsterdam. It is worth reminding ourselves why some EU members felt that a mechanism for enhanced co-operation was necessary. To a large extent, it was the result of the attitude adopted by, among other countries, the UK under the Conservative Government. Their attitude was interpreted, rightly or wrongly, as one of wanting to act as a brake on the pace of further integration and they were considered likely to use the veto if any question of integration were to arise. Those apprehensions were justified to some extent when the profligate use of the veto in a misguided attempt to get the beef ban lifted exposed the inadequacy of such an approach. Many member states came to believe that enhanced co-operation was necessary if the EU was to make progress.

It is true that the Amsterdam procedures, which were pretty cautious, have never been tested. It is worth reminding the hon. Member for Stone, who has moved his physical position in the Chamber albeit not his political position, of the existing requirements. They were that enhanced co-operation should not affect the acquis communautaire, nor the interests of participating states; it should be used only as a last resort; it must be within the limits of EU competence; and it should not distort competition between member states. That was established at Amsterdam. The Nice treaty would add to that the requirement that enhanced co-operation should respect the single institutional framework and that it should not undermine the internal market or economic and social cohesion, nor prejudice the provisions of the protocol integrating the Schengen acquis into the EU framework, nor affect the competencies, rights and obligations of non-participating states. It strikes me that when that set of criteria is made to form the basis, the test, the context against which we test enhanced co-operation, the anxiety expressed by right hon. and hon. Members on both sides of the Committee is not justified.

The right hon. Member for Llanelli, when referring to a document prepared by a member of the Commission, said that it represented an effort to outflank. He might have used the words "stealth" or "ruse"—both were certainly offered to him during an intervention. I understand his position to be that, if within the EU a group of countries came together and agreed a common position on taxation—whether income tax or corporate taxation—the UK would have to take some account of that in its own taxation policy. I think that the right hon.

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Gentleman is right about that, but the UK's position would be the same if it was outside the EU—an EU in which several countries determined that in respect of, for example, corporate taxation, they would on a co-operative basis, operate a regime that was common to those countries in a combined effort to attract external investment. The consequences are the same whether we are inside the EU where enhanced co-operation produces the results he says are possible, or outside the EU where several countries have decided to combine.

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