European Union (Accessions) Bill

We have lived in a market economy since the second world war, but the extent of the state’s role in the economy and the degree of public or private ownership is for each country to choose. Since the second world war, we have had a mixed economy, which worked extremely well in the first three decades. I advocate that approach to running our economy even now. It certainly worked better than what has happened since. In many areas of Europe, public utilities and services are still run in a traditional, social democratic, post-war way and they work extremely well. I would argue that case for the UK as well as for Europe. In Russia, after the collapse of communism, there was a rush to privatisation and at the same time the adoption of a hard rouble policy, which caused economic chaos. There was a serious reduction of output and living standards fell. Only when the rouble was floated and the process slowed down did the Russian economy begin to recover. Each country should be able to choose the exchange rate appropriate to its economic needs. One reason that I support the Chancellor so strongly in keeping us out of the euro is that we can choose the exchange rate suited to our needs. Exchange rates are essential springs and buffers between economies. They are necessary; they can be stable, there can be a pegged system, but they should be changeable. That is how we should operate with the new member states. They should not be encouraged to join the euro. While they are weaker, they should be able to decide what is best for their economies—choosing their own exchange rates, interest rates and fiscal balance between tax and spend. Bulgaria and Romania should be allowed to decide what is best for their economies and not told how to run them from outside by the EU. That may lead to problems and voices may call for a return to the old authoritarian system, although that would not be the wish of the democrats in the EU. The EU should not press strongly that those economies operate in a particular way; it should allow them to operate as is best in each case. We should open our markets to some of their goods and allow them to depreciate their currency if that would make them more competitive. We should urge them to adopt proper rules for their workers, such as good trade union standards and employment rights, so that workers have a proper share of the benefits of their developing economies, but we should not insist that they privatise their economies. Recently, I visited Austria and Hungary with the Rail Freight Group to look at rail freight facilities. In Hungary, we spoke to senior figures in the Government and the railway industry about rail freight. The bulk of the rail freight system is still publicly owned and it is doing well. It makes a profit and provides the Government with funds that help the Hungarian people. There is a small private sector that is losing money but there is still pressure to privatise. If the Hungarian rail freight system was privatised and bought up, perhaps by a Russian oligarch with plenty of spare cash, the profits would not go to the Hungarian people. It could go towards buying expensive football clubs in Britain—who knows? At present, the benefits of that publicly owned freight system go to the Hungarian people. That is what we should allow those countries to do, not force them to privatise.