23 OCTOBER 1971, Page 8

2. The EEC end of the beginning

A Conservative

The battle is about to begin. Supposing the Government is still determined to proceed with the business when the current debate is over, it is now clear that the battle will go on for a very long time. The Conservative anti-marketeers have made clear their intention of fighting the legislation which must precede signature of the Treaty of Rome clause by clause and line by line.

The first question to ask at this stage of affairs is whether the prolongation of the business by means of Parliamentary guerrilla warfare is merely sour-faced tactics on the part of the anti-marketeers; or whether it relates to questions of real political substance.

Opposition in detail

The answer to this question has been provided by Mr Powell when he argued recently that the kind of contradiction inherent in the pro-European argument "can be lived with tolerably enough in a conference hall or even in a set debate in the House of Commons. It comes to pieces when confronted with the wording of a clause." The Government has only itself to blame if, after all these years, the case for the Market is not free from internal contradictions, and if the precise objectives set for themselves by ministers are not clear to a sceptical public.

The crucial exchanges will take place on, and the crucial decisions arise out of, the detailed treatment of legislative propositions in Parliament, supposing the Government presses on.

Another question must therefore be asked — what will be the power of the British government, under the terms of entry, to protect its citizens if important aspects of the policy go wrong?

This last is the practical aspect of sovereignty, as opposed to the theoretical.

Monetary policy

The Government has proclaimed its intention of aiming for a monetary union of Europe — that is, a single currency, a single exchange rate, and central control of all European arrangements of the kind now enjoyed by Parliament over the pound sterling.

The capacity to vary the exchange rate is one of the most important practical aspects of sovereignty for, as we have seen in this country in recent years, the whole progress and development of an economy or an economic policy may often be made to depend ultimately on the exchange rate. Further, since the economies of the ten countries — if the Community were to be enlarged — would be quite different from one another both as to character and level of performance, they could not have so deep-rooted and common an interest as always to require the same exchange rate, Inevitably, therefore, in any crisis, the exchange rate solution will be the lowest common denominator. Since, particularly in relation to the common agricultural policy, which imposes special burdens on us which the continental countries do not have to endure, as is admitted in the Government's White Paper, the I3ritish economy will, for the foreseeable future, be the odd man out in terms of burdens and responsibilities, we are unlikely to benefit from the common denominator.

It follows that if the Government retains its attachment to a monetary union, which it must do to enter the Community, it must openly confess its intention of abandining one of Parliament's most fundamental controls over the British economy. This is, in turn, to confess adherence to a degree of political union much greater than has so far been openly admitted. But, even if such a scheme were to be found acceptable to Parliament, it behoves the Government to state clearly what reserve powers it would continue to hold, to protect the employment and livelihood of our people, in the event of the search for a monetarY union proving detrimental, even in the short run, to their interests. No such statement has so far been forthcoming.

The free movement of capital is another proposition which, perforce, the Government has accepted. There are reasons for supposing that the long-term result will be to draw capital from the edges to the centre of the Community — as has happened in the case of southern Italy. Allied to this is the fact that the Community has moved far faster than was originally hoped towards the complete mobility of labour. If one looks at a map of western Europe one can see the mighty concentration of heavy industry in the centre — in Germany, northern France, and northern Italy. In this direction the movement of labour currently flows; and labour has been attracted from the peripheries, and from Spain, Denmark and Britain. into this centre. British industry lies a distance away from this hub. At the same time, we suffer a continued and sustained unemployment problem, which has already had serious Political consequences. Given the very limited degree of reserve powers the treaty allows to member governments in the business of limiting the freedom of capital to move, we are therefore in a situation in Which both capital and labour may be eventually, and irreversibly, attracted to the centre, to an impoverising degree

The pro-Europeans argue that this will not happen, because it has not happened on the continent. :The answer to this is that it has happened there: Italian labour has moved from the south, to the impoverishment of that region; French labour has moved to the north, save where it is retained by attachment to a labour intensive agricultural industry. Britain does not, of course, have a labour intensive agricultural industry. A further point to be made here is that, should the economic growth expected from the EEC materialize, it can Only do so in the same way that growth appeared in the community before, that is, by a redeployment of labour. In their case, this was a redeployment from agriculture; m ours it must be a takeup from unemPloYment. In any event, it cannot be hoped that growth would get under way for three Years or more, given the initial extra burdens we would have to bear. We must, therefore, resign ourselves either to the maintenance of an exceptionally high 9flemp1oyment level for several years, with its profound economic and social consequences; or to a substantial migration of labour to the centre. Alternatively, if by our own efforts we substantially reduce unernployment in the next year or two, we must resign ourselves to losing whatever Prospects of growth there are in EEC Membership. What power will our Government possess to protect us? Again, failing

detailed assurances from the Government, the only resource open to members is to scrutinize the legislation in exhaustive detall, and amend or reject it accordingly.

Regional and social policy

In regional policy and in social welfare policy there is another twist to the story. In both cases, the present policy of the British government is structurally and Philosophically antithetical to that of the EEC. Though the present government has moderated the Labour policy of regional grants, it has — particularly in the recently announced public works programmes — continued the long established British policy of regional subvention. In some respects, particularly in the subregions, present British policies would be actually illegal under the treaty. In any event, the likelihood of our being able to maintain our present level of regional subvention, either politically or economically, during the transition period is small. Again, the question arises : What are the Government's intentions, given the consequences of all this both for unemployment and for social welfare? And what protective measures can be prepared?

Another substantial burden on the economy must come from the Government's promise to protect pensioners from price inflation consequent on EEC entry. Already, this Government has acted to protect pensioners from our current domestic price inflation. The package was, admittedly, not very successful, and the rising cost of living is likely to erode the recent pension increase by the year-end.

The cost of the increase was in the region of £400 million per annum. Where is the money to be found if pensions are to be again increased to meet EEC inflation? If the weekly contributions of workers are not to be again increased — and the last increase wiped out the benefit to the man on average and rather more than average wages, of the Chancellor's tax reductions — there is only one resource from which funds can come, and that is taxation. Since this has so far been a government of its word in policy matters, and since no Conservative election commitment was greater than the commitment to aid the old, it is surely not unreasonable to ask that the Prime Minister and his colleagues, in the full flush of their European faith, will honestly face up to the difficulty involved in both retaining their determination to enter Europe, and their undertaking to the old.

Social harmonisation

But there is another dimension to this problem. The Rome Treaty contains an aspiration to harmonize social policy. The pension legislation recently introduced by the Government is antithetical to the prevailing pattern in EEC countries and especially in Germany. The EEC pattern is much more like the Crossman scheme, abandoned by Labour at the last election, and rightly stigmatized by Conservatives as grossly inflationary. During the Southampton by-election last year Sir Keith Joseph firmly stated the intention of the Government to pursue the aspiration of harmonisation. Does this mean that we adopt the continental pattern, or that they adopt ours? Which is a more realistic proposition? Again, no statement of overall policy has emerged from the Government as a whole; and again it is unlikely to do so in the current debate.

The defence question

Finally, a word on defence. The Prime Minister's assertion, in contradiction to the Chancellor's, is that the fundamental commitment to Europe is political, not economic, and that economic risks are being taken to serve a political end. The word political does not, here, include matters of defence. For, though pro-Europeans are often inclined to imply a greater defence capability for a larger community, we have Lord Carrington's assurance that no defence policies are implied by EEC membership; NATO continues to develop independently of the EEC; and Mr Heath's Defence Procurement Executive is already far advanced on work dealing with the standardization of weapons in use by European armed forces which seems likely to produce the maximum possible advantages in efficiency and common use from the services of different nations. If Mr Heath were to announce that it is his intention to create a single, united European force capacity, with all that implies — a single command, and a single political control, among other things — that would be a different matter. But it is difficult to think that such an announcement would not greatly increase opposition to EEC membership.

While it may be easier to criticize so large a proposal as entry into the EEC than to oppose it, it is surely not without significance that the general argument for entry is so markedly, in its psychological and spiritual constitution, pessimistic and despairing, while the argument against entry is distinguished by its vigour, confidence and hope for the independent future of the country. It cannot, finally, be without significance, that it is the antiEuropean argument that can be presented in detail, with a regard for facts and figures, while the pro-European argument must shift uneasily from political to economic generalities. This country may yet find itself, as at many other points in its history, fortunate in the obdurate courage and regard for the character of their own nation of its people; and fortunate too in that those people have found tribunes in politics albeit still, in the Conservative and government party at least, a minority.