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Denzil Davies: If we were outside the EU, we would be outside the Euro-taxation area. In theory, after the treaty is accepted, it will be possible for 14 countries to accede to enhanced co-operation on taxation and the United Kingdom's veto will be of no avail. Without enhanced co-operation, if 14 countries declare their determination to harmonise taxes, the United Kingdom would in theory—it might be difficult to exercise in practice—have a veto that would stop that happening. In future, we could not stop 14 of 15 countries harmonising their taxation regimes.

Mr. Campbell: No more than we could stop 14 of 15 countries harmonising their taxation regimes if there were no European Union. Sometimes, I get concerned: once upon a time people looked for reds under the beds, now it appears that they are anxious about finding tax inspectors wearing European colours.

Mr. Cash: I say this with great respect—as the right hon. and learned Gentleman knows, I have in the past agreed with several points that he has made on the treaty—but the fact is that he is missing the point. In the current context, we are dealing with a legal framework. It is not simply a question of people wanting to co-operate with each other; we are talking about a single institutional structure, as I am sure he is aware. He should reflect on the comment he has just made. It is not merely a question of people deciding that they might come together; it is all part of the drift towards one single framework and one autonomous structure. I am sure he understands that.

Mr. Campbell: I do not accept that. I pray in aid not a member of the Commission but Mr. Bolkestein, who is the Commissioner with responsibility for taxation. During the general election campaign, he made it perfectly clear that as far as he is concerned there is no question of harmonisation of either income tax or corporate taxation. The hon. Member for Stone says that, by virtue of enhanced co-operation, circumstances will be created in which the UK gives up its veto—but that applies to every other country that is currently in the same position as the UK. The suggestion that we are dealing with a matter of stealth, foolishness or deception does not stand up.

Mr. Cash: It is a matter of gravitational pull.

Mr. Campbell: We should be far more concerned with the terms of the treaty than with some illusion of gravitational pull.

For the reasons that I have given, I regret to say that I cannot support the amendment.

Mr. Connarty: I, too, commend those who have made maiden speeches in this part of today's debate. The speech of my hon. Friend the Member for East Lothian

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(Anne Picking) was exactly in the tradition that I expected from a member of Abe Moffat's family—Abe was a famous miners' leader from Fife—although she also paid all the normal courtesies to her constituency and the Members of Parliament who represented it formerly.

To the hon. Member for Westbury (Dr. Murrison) I confess that my only connection with Wiltshire is that of having been on the parliamentary armed forces scheme with the other Wiltshire MP, the hon. Member for North Wiltshire (Mr. Gray). We went to Northern Ireland with the combined battalion that contains the old Wiltshire Regiment, whose members were most hospitable. I am sure that we shall learn more about the medical side of the Army from the hon. Member for Westbury. He painted such a wonderful picture of his constituency that I was going to find out where it was and book a few days' holiday there. I wish him well in the House.

I must be starved of the experience of listening to the hon. Member for Stone (Mr. Cash) rail against the European Union. We have served on the European Scrutiny Committee together, and I have had the joy, pleasure and great entertainment of going round applicant countries with him, hearing him rail against the EU saying, "Don't do it." It is like going round with a Free Kirk minister who says, "You're doomed, you're all doomed." It is a joy to realise that he is still on the same theme and I look forward to the next few years on the European Scrutiny Committee with him, hearing him go on about his one theme which, basically, is that it is all a conspiracy.

I thought to myself, "What is that about? Is it against co-operation?" My right hon. Friend the Member for Llanelli (Denzil Davies), who in some ways spoke in support of the hon. Member for Stone, said that no one was against co-operation, which was a good thing. So, was the hon. Member for Stone against integration? All that co-operation is plainly laid out in paragraph 11 of article 1, which the amendments aim to remove and which reinforces the process of integration. However, the hon. Gentleman told us that he was against fragmentation. I just do not understand; he is against integration and fragmentation. I realise from one or two of his interventions that he thinks there is a conspiracy; that is what it is all about.

Mr. Cash: I am always grateful for the opportunity to spar with the hon. Gentleman, as we have often done in debate for many years. The real problem is that I am against political union, and I am particularly against political union that is going to implode, which is bad for everybody, including those who are in favour of it. That is my simple answer.

Mr. Connarty: The Wee Free minister image comes to mind again; we are all doomed because the Union is going to implode. However, I do not see any evidence of implosion; I do not think that other EU members do either. In fact, they see prosperity brought about by co-operation, which is what those provisions in the Nice treaty are about. The amendments are designed to remove paragraphs 11 to 15 of article 1 from the provisions incorporated under clause 1 and to remove paragraph 1 of article 2, which is the framework that provides a belt and braces safeguard for those who may be concerned that some co-operation is unnecessary in small groups and can be achieved across the EU.

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In fact, as has been pointed out, the amendments would remove the ability of any group of eight countries or more to co-operate on any issue, to analyse, structure and put together the mechanisms for co-operation on areas such as those mentioned by my hon. Friend the Member for Preston (Mr. Hendrick), including drugs and crime. Clearly, if enhanced economic mechanisms are involved, that may well be welcomed by a number of member states. If the treaty becomes workable and is appropriately structured so as not to cause the great chaos and problems that certain states may have feared and which may have caused them not to join the original eight, they can join later at any time under article 1, paragraph 12. A state can therefore join if it sees that the treaty is working.

What is wrong with that? If, at the end of the day, the United Kingdom sees 14 member states put together an enhanced commercial arrangement but stays outside, that is entirely its decision; no one will force or drag it in. As we have seen with the hon. Member for Stone, nothing seems to be a sufficiently strong magnet to draw him to join what he sees as a political conspiracy. Something similar applies to countries: if a country does not want to join, it is not required to do so. Paragraph 12, which would be removed by the amendment, says that enhanced co-operation will be undertaken

after it has been decided, following the normal procedures adopted by the EU's full membership, that it would take too long to set in train arrangements acceptable to a country wanting to make progress on any issues.

That will have to be tested. Is enhanced co-operation a last resort? It is not a first resort; the provision is not saying that, as from day one, everyone will go off, get into little groups of eight countries and get on with their own little schemes. It will be subject to great consideration.

Mr. Cash: To reply briefly to the hon. Gentleman, the example that the right hon. Member for Llanelli (Denzil Davies) has already given about tax regimes is extremely apposite. An enhancement of so-called single market arrangements for tax under the enhanced co-operation provisions, which will create a congregation of tax regimes, is bound to have an adverse impact on those countries in the single market that do not have the advantages, or disadvantages, of other tax regimes. The fact is, enhanced co-operation will have an impact, which is why so many of us object to it.

7.45 pm

Mr. Connarty: I shall talk a little later about article 2, paragraph 1 which, of course, would be removed by the amendments. When arrangements are considered by the Council following a recommendation by the Commission, qualified majority voting by the full Council will clearly be required. A majority on the Council must therefore consider the arrangements necessary before a group can go ahead. We in the UK should not be afraid of that. If we stopped being frightened of the EU—this Government are probably not as frightened of it as the previous one—and took a lead, we might find that some arrangements are to our advantage.

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Denzil Davies: My hon. Friend mentioned that those arrangements can be carried out only as a last resort. That is correct—it is what the treaty says—but if the UK is to maintain its veto and announce that it is maintaining its veto on direct taxation changes, the case rapidly becomes one of last resort for other member states. Because there are vetoes on taxation changes, the Commission has produced a paper and sent it to the Council. The situation with taxation is getting close to last resort, which is why enhanced co-operation between as many countries as possible is desirable.

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