Europe: this far and no further: Opt-outs will not save us from federalism, argues Norman Lamont. The 'party of the nation' must guarantee Britain's right to stand alone

ALL MY political life, I have been a supporter of our membership of the European Union . . . (But) At Maastricht, John Major, Douglas Hurd and I faced demands from our European partners for a common foreign policy, a common immigration policy and a single currency. It showed me how different our aspirations are from those of our partners.

We seem to have joined a club very different from that which we had in mind in the early Seventies. Then, almost all the emphasis was on economics: the need for access to a larger market and the need to achieve economies of scale.

But the forces for political integration in Europe have proved far stronger than was foreseen in 1972. Treaty aspirations dismissed as 'rhetoric' have been translated into the reality of a European Union with political and social functions extending far beyond those which the EEC had in 1972.

We deceive the British people and we deceive ourselves if we claim that we are winning the argument in Europe. I speak as someone who spent a whole year negotiating the Maastricht treaty and who has closely followed what has happened since then. There is no argument in Europe. The only question at Maastricht was how much Britain could swallow and what special arrangements could be made for us. There is not a shred of evidence at Maastricht or since then that anyone accepts our view of Europe.

The Prime Minister has described moves towards a single currency as having all the potency of a primitive rain dance. With respect, I fear that this is wishful thinking. All the signs are that convergence conditions for a single currency are likely in the next few years to be attained in a core group of countries, and these countries remain as determined as ever to press ahead towards the creation of a federal Europe based on a single currency.

The Maastricht treaty makes clear that a single currency would require national governments to give up considerable powers over their own taxes and budgets. A single European currency would thus be a gigantic step towards the creation of a European government and European state.

All these issues have caused great difficulties for the Conservative Party, and would for a Labour government. The opt-out from the single currency that I negotiated at Maastricht has put this issue on one side for the moment, but it is only for the moment.

The next round of Euro-integration is starting up. It will culminate in the Inter-Governmental Conference in 1996. The plain fact is that the 11 other members want a European Union that is a European state, whether they express it in these precise terms or not.

I want to set out a strategy which I believe would enhance Britain's interests, maintain our constitutional right to govern ourselves, and put our relationship with our European partners on a basis that permanently removes the source of tension between ourselves and the rest of Europe and within the Conservative Party.

The only position around which the party can be united is opposition to any further moves towards European political integration. An ever-increasing number of opt- outs will not be a solution to the problems we face.

Last month the German Christian Democrats and their Bavarian sister party, the Christian Socialists, published their thoughts on what Germany wants from the IGC. In this document, the CDU issues a rallying cry for the creation of a federal Europe. We would have to ask which British interests are being served by being part of a federal Europe.

'A nation's policy is determined by its geography,' Napoleon once said. It is better to proceed from facts rather than aspirations. Britain is not at the heart of Europe; it is on Europe's western edge. Geography is important. So is history. Britain does not need European integration to underpin our democracy in the way the CDU believes is necessary for Germany. Still less do we need European integration to prevent us going to war.

I believe that the nation state is here to stay and that attempts to create a federal state that supersedes sovereign nations are dangerous and doomed to failure.

We should recognise that Europe is more important to France and Germany than it is to us. The European Union has been and will continue to be created in their image and not in ours. All Britain can do is slow the pace or mitigate the direct consequences that European integration might have on Britain. It is time that we recognised this and aimed for objectives that enhanced British interests, rather than merely attempting to minimise aspects of European integration that we don't like.

This means looking at all the options, ranging from membership of an outer tier to participating solely in the European Economic Area. One day it may mean contemplating withdrawal.

Today, the advantages of our membership of the EU are remarkably elusive. As a former Chancellor, I can only say that I cannot pinpoint a single concrete economic advantage that unambiguously comes to this country.

The main benefit that used to be claimed was access to European markets. However, members of the European Economic Area enjoy this benefit, too. The real danger is not that we will sell too little to Europe, but that we will concentrate on Europe to the exclusion of the greater opportunities for increased trade in markets such as Asia that are growing much faster. As one of my more enthusiastic pro-European colleagues wrote recently: 'Believe it or not we sell more to Belgium than to China.' That is precisely the problem.

When one comes to list the disadvantages of the European Union, these are all too easy to elaborate. The most obvious are ones where there are direct costs to the taxpayer, such as the Common Agricultural Policy. The indirect costs are more significant. Europe is a high-tax, high-spending area burdened with government regulation and consequently with high unemployment.

Lastly, and most important of all, our continued membership of Europe means that, reluctantly, we are participating in a process leading to a political goal that most politicians claim they do not want and which is certainly not wanted by the people of this country. Unless this central reality is acknowledged, the issue of Europe will continue to dominate our politics and poison the Conservative Party for many years to come.

It is nonsense to suggest that Britain cannot be viable on its own. There is no reason why Britain should not be as viable as are Australia, Canada or Japan - all countries separated from the main markets to which they sell. Nor is there any connection between size and wealth. Some of the richest countries in the world are small and medium-sized countries.

I do not suggest that Britain should today unilaterally withdraw from Europe. But Britain is on a collision course with its partners unless we can find a means of resolving the different aspirations.

One alternative would be to say at the 1996 IGC that we do not want to participate in any further political development in Europe. Britain would simply declare 'here we stand' and 'no further'.

A second alternative would be to seek membership of the European Economic Area rather than of the Union . . . There would be freedom of goods, services, persons and capital. But we could scrap the CAP and negotiate our own trade agreements. We would also withdraw from the European Parliament.

A third, more considered alternative would be for Britain to set out to negotiate an outer-tier community membership. This could be devised to involve only the free trade parts of the Treaty of Rome. While this would have similarities to membership of the EEA, it would be preferable in that it would give outer-tier members an equal say in the trading rules that apply to them.

None of these alternatives is without its problems, but they are infinitely preferable to the present situation.

The 1996 IGC will force Britain to make a fundamental choice. The lesson of Maastricht is that the Conservative Party will not go any further down the road to a federal Europe.

The role of the Conservative Party is clear. The Conservative Party is the party of the nation. It is not the party of Europe. It is only the party of Europe when Europe serves the nation. We need to redefine Britain's relationship with the European Union to remove those aspects which work against Britain's interests and reduce our ability to govern ourselves. Let Labour oppose us in 1996 - and then let the people decide in 1997.

The writer is MP for Kingston upon Thames and a former Chancellor of the Exchequer. This is an edited form of a speech given to the Selsdon Group at the Conservative Party Conference in Bournemouth yesterday.

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