Major says Brussels meddling must be stopped

JOHN MAJOR imposed a further condition for British ratification of the Maastricht treaty yesterday when he said that legislation would not return to Parliament until EC leaders curbed Brussels meddling in domestic issues.

At the start of a special two-day Commons debate on the sterling crisis and the slender French referendum majority for Maastricht, the Prime Minister reflected the Cabinet's continuing commitment to a 'leading role' in Europe.

But Mr Major told MPs that while the public knew it was in the national interest to stay in the EC, they feared the increasing tendency of the Commission to intrude in domestic affairs.

'So we need a definition - a settled order - of what is for national action and what is for Community action. We need clear criteria by which Community proposals will be judged.'

He added: 'When we are satisfied that such a system has been put in place, and when we are clear that the Danes have a basis on which they can put the treaty back to their electorate, we shall bring the Maastricht Bill back.'

Negotiations on that fresh British precondition will begin at next month's special EC summit, to be held in Birmingham. But even with the support of the German Chancellor, Helmut Kohl, the range, scale, and detail of the operation could yet stall parliamentary enactment of the European Communities (Amendment) Bill until the end of next year.

However, in a strong Commons debut as Leader of the Opposition, John Smith chose to ignore Maastricht. Ridiculing Mr Major's previous claims about recovery and the strength of sterling, and his rejection of devaluation, Mr Smith said: 'He is the devalued prime minister of a devalued

government.'

Mr Major said sterling had been forced out of the exchange rate mechanism last week by the overwhelming force of the speculators' attack, and repeated that the problems of the ERM would have to be sorted out before the pound could re-enter. That would not be a speedy process; British interests would come first. He added: 'We will examine the practicality of returning to a reformed exchange rate mechanism, and we will then make a judgement of whether that is a workable system, and then whether to join.'

He said that while it remained his ambition 'to bring inflation down steadily but surely during the lifetime of this parliament', monetary policy could not be the same outside the ERM. A range of monetary indicators would be used, and he warned: 'Nobody should believe that a floating exchange rate is a free meal, always allowing interest rates to fall to a very low level.'

Norman Lamont, the Chancellor, told the House that he would set out the 'precise detail' of his monetary framework shortly - a reference to his Mansion House speech on 29 October. But he said: 'The strictest control of public expenditure, including public sector pay, is at the top of my policy agenda.'

But even some of Mr Major's closest colleagues conceded last night that it would 'take time' to get a replacement monetary policy right. That gap in government policy was exploited by Mr Smith, who cited a speech made by Mr Lamont on 10 July, in which the Chancellor had said that all alternatives to ERM membership were 'illusory and destined to fail'.

Adding mockery of the Chancellor to his earlier ridicule of the Prime Minister, Mr Smith said it was difficult to know which of Mr Lamont's scorned alternatives was now government policy, and called for a programme of investment in manufacturing, housing and construction along with a sustained commitment to education and training.

Mr Major had earlier attempted to pre-empt Mr Smith's onslaught, praising the Labour leader's consistency in supporting sterling's 1990 entry into the ERM - when Mr Major was Chancellor - at a central rate of DM2.95, and in backing the call for ERM reform.

But the Prime Minister also went out of his way to attack Lord Tebbit and Baroness Thatcher in a way that brought gasps from the Tory benches.

Replying to Lord Tebbit's charge that he had 'dragged' sterling into the ERM two years ago, the Prime Minister said that Lord Tebbit - someone who 'likes to bite your ankles even if you aren't walking up his pathway' - had lost many battles with Lady Thatcher. 'Yet despite this, according to Lord Tebbit, even my formidable predecessor - whose convictions and firmness of purpose are everywhere admired - was somehow 'dragged' into the ERM by her new Chancellor. Ah yes, I remember it well.'

A motion supporting Government economic policy later received a majority of 26, with eight Tory abstentions.