NB: THIS TRANSCRIPT WAS TYPED FROM A TRANSCRIPTION UNIT RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT: BECAUSE OF THE POSSIBILITY OF MIS- HEARING AND THE DIFFICULTY, IN SOME CASES OF IDENTIFYING INDIVIDUAL SPEAKERS, THE BBC CANNOT VOUCH FOR ITS ACCURACY. ........................................................................ PANORAMA EURO VISIONS: FORTRESS BRITAIN RECORDED FROM TRANSMISSION: BBC-1 DATE: 8:06:03 ........................................................................ GAVIN ESLER: Good evening and welcome to Panorama live from the vaults underneath the Treasury where, a few floors above, the Chancellor has been putting the finishing touches to the speech he is to go give tomorrow, one of the most important political decisions the people of Britain have ever faced. Gordon Brown has been deliberating whether the time is right to join the Euro. Many of you have contacted Panorama and said this is a debate uniquely full of passion and spin but woefully short on facts. We've been asking for your questions and views and we've been putting them to politicians and journalists known for their straight talking. Our cameras have also been out and about in major European capitals – Paris, Berlin, Dublin and Stockholm, and we've also been reflecting opinion across the UK from Newcastle to Edinburgh and Cardiff. Here's a flavour. LONDON UK MAN: What are the real benefits for the man in the street to go into Europe. NEWCASTLE UK WOMAN: When I think, good gracious, that we fought to free the French and the Dutch, and now… you know.. they're taking us over! STOCKHOLM SWEDEN MAN: It would definitely gain strength with Great Britain within the currency unit. EDINBURGH UK MAN: I don’t think Europe needs us as much as we need them. BERLIN GERMANY MAN: Sooner or later, if Europe grows, I think Britain will join. DHARSHINI DAVID We'll be hearing more of your views throughout the programme. Now as well as our discussion here in the studio you can send us a text message to 07940 24 24 24. And you read what other people are saying on Ceefax page 155. We have also been looking at the papers both here and across Europe and it's not just the Euro that's making the headlines, it's also the new European constitution that has got the newspapers going. "It's a blueprint for tyranny" claims the Daily Mail. "It will destroy Britain's independence." And this from The Sun: "Blair surrenders Britain to Europe." The rather more pro European broadsheet, the Financial Times, sees things the other way around. "No more Mr Nice Guy on Europe" it pleads as editorial. "Tony Blair must take on rabidly Europhobe price. But how do the Europeans see us? Well Italy's popular right leaning Corriere Della Sera asks: "Has Tony Blair mislaid his own road map, the one that was supposed to lead the UK into the heart of Europe?" Gavin. GAVIN ESLER: Well it's clear from may emails and messages that the Euro is a question not always of facts and figures but of raw emotion. Viki Anstis, for example, of Richmond writes: "How are we going to see ourselves as unique if we adopt the Euro? If you take away the pound we become just another country. It's what makes Britain great." While David from Cheshire take the opposite view, he says: "It's a strange public viewpoint that Sterling somehow makes Britain British. Is Rome any less Italian because the locals pay for their pasta in Euros?" Michael Portillo: MICHAEL PORTILLO Shadow Chancellor, 1999-2001 Well I think having your own currency does give you a certain amount of independence, and if you are not issuing your own currency and you're not setting your own interest rates, that is an important loss of your freedom of operation. Setting our own interest rates is extremely important because it enables us to create the right conditions for economic growth at home, and I think the worry that many people have right now is that because there's one interest rate for the whole of Europe it can't possibly be right for everyone simultaneously, and it's too high at the moment for Germany which has got 4 million unemployed, and it's too low for Ireland on the other hand which have got inflation. ESLER: But many of the comments we've heard are that it's a gut feeling. It is a gut feeling for you too, though, isn't it? The economics could never be right for you. PORTILLO: Well I have enduring reasons why I'm against joining the Euro and one of the enduring reasons is that the point I've just made about the interest rates not being suitable for different places at the same time is an enduring reason. It's lasted a long time and I don’t see it ever changing, and a chap called Professor Moley, who used to be a director of the Bundesbank, has made that point today. But I think it is also, it is true, that one of the things that makes a nation I think is the ability to issue its own currency, it's one of the things that we traditionally associate with nationhood is the ability to issue your own currency. ESLER: Clare Short, you probably take Gordon Brown's view on this as I understand it. How do you argue… CLARE SHORT Labour Cabinet Minister, 1997-2003 I argue that we've got to go on the economics, that whatever the arguments people have and the emotions people have about Euro, if the economics said it's absolutely it's absolutely beneficial to the British economy and we'll be damaged if we don’t, then I think we'd have to go for it and the people would probably go for it. But I think the economics say not yet and there are big problems. ESLER: Okay, but how do you argue with somebody like the leady we heard there who's very worried that we'll be taken over by the Dutch, the French and the Germans? I mean this is a gut emotional reaction. SHORT: But I don’t have to argue with her because this isn't the time for the argument. I think if the economics had said yes, then we would have had to have a real national debate and there would have had to be political leadership and it would have been difficult because of all those strong Euro sceptic feelings, and in the 97 Parliament I thought it would be probable that by this Parliament it would be in our interests. It absolutely isn't. The state of continental European economy, the state of the German economy is very bad. The European Central Bank is too deflationary. I'm sure it's not right for Britain now. ESLER: Okay, well as well as the politicians we've also invited two journalists who are known for their influential columns; Trevor Kavanagh is political editor of The Sun which campaigns strongly to keep the pound. He once described Tony Blair's vaulting ambition to become the first elected Emperor of Europe. Here's an email for you Trevor Kavanagh. Peter Rendl from Coventry says: "Why all this emotional outrage? Money is just money whether you pay for something in Euros or Pounds." TREVOR KAVANAGH The Sun Well I think it's much more important than that, and even if you agreed with the idea that what we want is a united Europe, I think that the way that the politicians who have created it have gone about it is the wrong way. They've incrementally added to their powers. They've done it in an undemocratic and unrepresentative way. They are remote and unaccountable. ESLER: Okay, but money is what he's saying. I mean it doesn't matter what you pay for your petrol or your groceries in, does it? KAVANAGH: Well I think it does, and it's a very difficult question. If the argument is going to be as simplistic as that, that all you're worried about is the money that you're paid, then you're not very interested in the politics that Clare says we shouldn't be talking about at this point in time anyway. I think we should be on a regular basis because this is why so many people simply do not know all the arguments. ESSLER: Okay. We're also joined by the Guardian columnist, Polly Toynbee who is pro Euro and has argued the entire debate is skewed by what she calls: "… a profoundly dysfunctional British press, mostly controlled by three rightwing men, Lords Rothermere, Black and Rupert Murdoch. Polly Toynbee, an email for you from Bryony who says she's British living in America. She says: "I think it's part of our heritage and culture to have our own currency. If it ain't broke – don’t fix it." POLLY TOYNBEE The Guardian I don’t know what you mean by our heritage and culture. I mean the idea that Jacques Chirac is not imbued and passionate about his own heritage and culture, or indeed all of the other countries right across Europe. This is the time when this country actually has to decide who we are, who we think we are, and where we think we belong. In this globalised world you can't just float along as a little item on your own. You actually have to join one side or the other, and I think we have to face up to the fact that either we are full, good Europeans at the heart of Europe, participating in that block and making it work, or otherwise we will drift along on the coattails of America perhaps, as Conrad Black wants us to do, join NAFTA, very week, you couldn't call it partners at all, a sort of feeble 51st state. If we want to maximise our power, our sovereignty, we do it best by having our maximum influence in Europe where we would be a strong voice if only we would make the jump and finally decide this once and for all. ESLER: Okay, well lets move on and hear some more of your thoughts. DUBLIN IRELAND WOMAN: Personally I think Britain are… they're trying to hold onto the great British empire that's long gone. You know.. the history of colonialism that's not really relevant anymore, and that if they're going to be part of Europe they should put two feet in and go in altogether. STOCKHOLM SWEDEN MAN: I think the British they are emotional about this question. More and more so. They think more about… the emotions are saying about how big Britain was before. They don’t think so much about economy. NEWCASTLE UK WOMAN: We're just going to become a little island and we're going to lose our identity. CARDIFF UK MAN: I think that we're the greatest country in the world and we are because we're independent, and that's the way I would like to stay to my children and my grandchildren. EDINBURGH UK MAN: I think we are British, I think everyone is aware of that. I don’t think currency will make any difference. DUBLIN IRELAND WOMAN: I think that Britain should really consider coming on in. I mean if it's just a case of the coins with a figurehead on it, then you're not losing anything by minting a Euro coin. STOCKHOLM SWEDEN MAN: The Swedes would like to have the Krona still, so… and that was the same argument all over Europe a couple of years ago. All others have abandoned their currency in favour of the EMU. LONDON UK WOMAN: It's kind of fun when you come and visit to see the Queen's head on the money and that kind of stuff. I feel it's of part of the tourist experience, we like that. STOCKHOLM SWEDEN WOMAN: When this generation is gone and the next comes in, it's a natural. It's their way of living and then they will think oh you know, back in the ancient ages they had their own currency. They will laugh about it. ESLER: Mark Mardell, our chief political correspondent joins us now. Apart from the lady who thinks we're kind of Disneyland with coins, what are the kind of extremes of this argument, there are also some very strongly pro European people and some very, very strongly anti-European let's get out now people. MARK MARDELL BBC Chief Political Correspondent Yes, because the liberal democrats and quite a lot of Labour MPs and a handful of Conservative MPs think Gordon Brown should be saying tomorrow lets go in there, lets hold a referendum as soon as possible. And I think a lot of the politics of what we've been seeing over the last few weeks and certainly we'll see over the next few days, is really trying to reassure those people it's not as bad as you think. They're going to feel very, very disappointed, very, very let down by Tony Blair and Gordon Brown and so it's trying to reassure them. On the other extreme you've got UKIP – UK Independence Party – and some Tory MPs who would really like us to get out of the whole experience, get out of the European Union and be as one of those ladies said: "Be an independent nation on our own again." Now the 'patriotic' word comes up quite a lot in this. I heard Gordon Brown today mention it. The Guardian, we've got some of tomorrow's newspaper front pages here, the Guardian has it on its front pages as Gordon Brown saying today he wants to build a "…patriotic pro European consensus." The Prime Minister in Warsaw recently talked about: "Patriotism isn't anti Europeanism." Are both sides in this debate are going to play a patriotic card. MARDELL: Well yes, but it's clearly more important for those who want to go into the Euro to play that card, and Viki from Richmond said that the pound is what makes us great. Now I don’t actually think the British people have the same sort of attachment to the pound as say the Americans have to the dollar, but it is clearly a hugely important symbol. For those who feel that Britishness is constantly being chipped away at, that we're getting too European, we're losing our identity, it's a very, very important symbol for them. So it's important for those pro-Europeans, pro-Euro to overcome that and say no actually it's a patriotic thing to go into. It's a sort of 'chocolate doesn't make you fat' argument where you've got to put in advertising. ESLER: I wonder, Trevor Kavanagh, what you thought about… tone of some of the comments there suggested – it wasn't a scientific survey of course but it did suggest some of the older people are much more attached, passionately attached, talking about you know.. we fought in the war. Some of the younger people seem much more pro Euro. Do you agree with that? KAVANAGH: Well actually I think you're right about the older people but it's very interesting that quite a lot of the 30 something's are very keen on keeping the pound, and they're not economically literate, they're not just saying this is the Queen's head on the pound and that's what we want sentimentally, they have learned the lessons of the last ten or eleven years in which Britain has actually flourished very successfully outside the Euro. They remember, some of them, the period of negative equity which was brought upon us by being effectively members of the Euro. ESLER: Polly Toynbee, briefly on that thought. Do you think young people are more pro European? TOYNBEE: I think they are. I think they travel more, I think they they've got their heads screwed on. I think… PORTILLO: I think pro European is different to being pro Euro like… TOYNBEE: Well I don’t think there is because the real agenda… SHORT: I think the argument…. TOYNBEE: …. the real agenda of some, and the people who are campaigning in this really ferocious way, the real agenda is to employment tribunal us out altogether. KAVANAGH: This absolute rubbish. I would like a chance to come back on that. Polly's own newspaper is split down the middle, totally schizophrenic, you've got The Economist, which is a respected journal, which really wants to be in Europe but simply cannot abide the way that the European Union is being run at the moment. You've got Sweden which is about to have a referendum. They're almost certain to turn down the chance of joining the Euro and so on right through. The Trade Union movement is predominantly against the single currency; 25% of the backbenches of the Labour Party are against it. Clare herself… TOYNBEE: 50% want to go in right away. Why are you quoting 25%.... SHORT: Well who says that? I don’t believe that personally. There's two arguments here. One is about the Euro now, and I actually think the evidence is overwhelming that it's not the Euro now, and a lot of the clips have been: "But do you like Europe or not." And then partly it's should European people be nice to each other? And of course young people travel and say yes to that. But behind that you've got Europe's institutions which are very, very inefficient and I thin the people of Europe are going off the regulation of the sausages and the ice cream and so on. So which Europe? We don’t want to leave Europe, but let's look at how we… TOYNBEE : …as disingenuous as his is. SHORT: It's not disingenuous. TOYNBEE: He wants to get out altogether. KAVANAGH: Now I don’t. TOYNBEE: You're merely making an anti European argument. SHORT: I'm not. Don’t accuse me of being disingenuous. I'm talking my truth. And my truth is, having worked for six years to try and get reform in the development policy of the European Union, that the institutions are grossly and alarmingly inefficient. I'm very in favour of enlargement. I think what Europe meant for the Balkans to join democracy, to stop having ethnic hatred with the best of what Europe is, and I'm in favour of that, but it's going to test the institutions to their roots to keep working in an enlarged Europe and we need to reinvigorate Europe, get it more balanced about what it is. Stop trying to make it into a super European campaign, patriotic or otherwise. ESLER: I want you to leave that now and look…. SHORT: Well it's about what I think. I'm not in a campaign. I'm saying what I think. ESLER: Clare, we're going to leave that for just a moment because we want to hear a little bit more of those famous five tests of what the substance of all this is. Dharshini: DHARSHINI: Thanks Gavin. Well it's clear from what I found in the papers that many Europeans feel that we've become detached from all things European. Here's just one example from a German equivalent to the Financial Times – Handelsblatt: "The Iraq War has let the British drift away from their European fate" it says. "Nothing could help better to re-establish Tony Blair's European credibility than a clear signal for the Europe." But of course for Tony Blair and the Chancellor Gordon Brown, they insist it's a matter of economics and not politics, and that's what the five tests are about. Many of you have emailed us asking us to give you just the facts. So here briefly are those five tests. THE FIVE TESTS 1 'Convergence' with Europe? The first test, which is a crucial one, is what's become known as 'Convergence'. Now the health of the economy tends to vary of course. There are always ups and downs. This is to see whether or not our economy is marching in step with other Europeans countries. 2 'Flexibility' in economies if things go wrong? Second: there's got to be enough flexibility in the way that the economies are run to adjust if things do go wrong. How would all the economies cope with a single interest rate. 3 More or less attractive to foreign investors? And a third test is for an investment and whether joining the Euro would make us more or less attractive to investors. 4 Better or worse for City and financial services? Fourth: how would the City of London's position, as Europe's leading financial centre, be affected if we joined the Euro? 5 Effect on jobs and economic growth? And last but certainly not least, there are jobs and economic growth and how any entry to the Euro will affect them. ESLER: Dharshini, in your day job you're going to be back here at the Treasury tomorrow. What do you think Gordon Brown is going to say? DHARSHINI: Well word on the street is he's going to turn out and say well actually one of these tests is likely to have been met, the one about the city. Two more, probably the ones on flexibility and investment, he could say well actually we're close but not quite there. But two others, the big ones, convergence and jobs, well we've still got some way to go. ESLER: Now we've been hearing a lot tonight about the costs of going in. What about the costs of staying out? DHARSHINI: Well this is where the facts get rather tricky to look at. On the one hand the pro-Euro group tell us that in actual fact if we don’t go in we miss out because we're not doing as much trade with the rest of Europe. That could cost us up to say 14 billion pounds a year according to one study. On the other hand, the anti Euro group tell us if we stay out, well we're actually better off because we don’t have to deal with a single interest rate. So you've got to pity poor Gordon Brown here, working up on those four floors above us, having to sort of weigh up all this evidence. But of course he's also said that these tests have to be passed in a clear and unambiguous way. But this is where emotional attachment and politics so often come in. JOBS TEST PRO EURO: 'since launch of Euro, Britain is losing 3,500 jobs every month' Take the jobs test. The pro-Euro camp says that we lost 3 ˝ thousand jobs every month by staying out of the Euro. ANTI EURO: Since launch of Euro, Britain has created 25,000 jobs every month' On the other hand, the anti Euro campaigners claim that since the Euro was launched in January last year. Britain has been creating 25,000 new jobs a months. And what about that convergence test? Well we need our economies to be in step with each other so lets just take the housing market for example. PRO EURO: 'Home ownership and mortgage debt similar across Europe' Well, the yes campaign says the level of home ownership and mortgage debt are pretty much the same on both sides of the channel. ANTI EURO: 'UK is four times as sensitive to changes in interest rates' Whereas the no campaign says: "Look at all our short term variable rate mortgages." That makes us four times as sensitive to changes in interest rates as they are on the continent. ESLER: Well to help the Cabinet members get through all this stuff, Gordon Brown helpfully offered some homework, documents from the Euro amounting to twice the size of Tolstoy's War and Peace and with about as many jokes. Clare Short must have been absolutely gutted not to receive such a treat. But judging from the emails we've received, many people are intensely suspicious of this whole process. Simon Ladd, for example, of Enfield writes: "Why should we trust the British government on the Euro? Aren't they the same people who asked us to trust them about finding weapons of mass destruction in Iraq? Clare Short, do you trust the Prime Minister on this question ? SHORT: I think that for Tony Blair this is his second big legacy question and he's promised a lot of people that we'd go forward to a referendum, and therefore it's led by the politics rather than the economic interests of Britain. I trust the Treasury and Gordon Brown more to go on the economic interests of Britain. ESLER: Isn't the implication about…. SHORT: And I think that all this stuff on the Cabinet is just window dressing. It's between Gordon and Tony and the rest is a piece of nonsense. ESLER: Okay, well on a piece of nonsense, looking at tomorrow morning's newspapers: "Mistrust – the price of spin and lies" says Millie Phillips in the Daily Mail with a picture of Gordon Brown and the Prime Minister. The Express has a similar idea: "Today they (the government) will announce that we're not yet ready to join the Euro. Tomorrow they'll start to campaign in earnest for the country to do just that. It reeks of hidden agendas. I mean is this a bit of a carve up frankly, and the Brown Blair rivalry continues behind the scenes. SHORT: Well I think we had a policy of going on the economics but all the stuff in the press and the division between Gordon and Tony has all been about the other promises that Tony made and his sense of this legacy and wanting to do the Euro thing, and I think that's all noises off, and the economics say not yet, and we're not going yet, and all the rest is blather. And we'd need the trust, which is damaged, if the economics said yes against the mood of the people, that would have been very difficult politically but it would have been the duty of the government, but that isn't where we've got to go. PORTILLO: I think the five tests really are a lot of phooey. I mean the five tests don’t have to be answered in a piece of documentation twice the length of war and peace, they can be answered more or less as Clare has answered this evening, to say the time isn't right. We can see perfectly well that Germany is doing badly. Nobody in this country is going to think we want a piece of what Germany has got, and that was the proposition maybe 6 or 7 years ago that Germany was doing well, we weren't doing so well. People were going to want to have what Germany had. So I think the Cabinet was perfectly well able to reach a conclusion on that matter. But what likes behind it, I think, is that Tony Blair, after Iraq, finds himself unhappy that he's sitting on the American horse. He really wants to be with the Americans and with the Europeans, and rather unfortunately he's found himself only with the Americans. And it's going to be very difficult for him to reassert his position in Europe and possibly the leadership in Europe of a group of countries that actually don’t like the way that France and Germany are running Europe, unless Tony Blair can get us into the Euro. ESLER: Trevor Kavanagh, you write about this in tomorrow's Sun. I've got your copy here: "Jubilant Gordon Brown will officially crush Tony Blair's crusade to dump the pound today. I mean do you see this entirely through the prism of Blair and Brown rivalry? KAVANAGH: Yes, and the attempt to put a friendly face on it is completely artificial. We have seen and heard detailed accounts from both sides of the strength of feeling that's been exchanged in the last few weeks and months, right through from the beginning of the year over the question of the Euro. Tony Blair came back from Iraq so buoyant after what he saw as an overwhelming victory and a popular one at home at that point, that he felt like taking Gordon Brown on, and there was a possibility that he was, at one stage, briefly contemplating the possibility of shifting him to another department if he didn't play ball. That of course has gone by the board, as all the problems of weapons of mass destruction have shifted him to one side. But the rivalry between them on this one issue is enormous. ESLER: Polly Toynbee, there's another email I'd like to get to hear from George Christofides of London, it's a similar theme. He says: "The five economic tests as Michael Portillo was suggesting were created to give the government a get out jail free card. Entry has always been a political decision. I mean is there a unanimity on that? Do you agree it was a political decision? TOYNBEE: Absolutely. I mean of course there are times when it's much more difficult than other times to make that jump. But the ERM done it the wrong time. It so happens at convergence we are far more converged than most of those countries were at the time they actually joined. I mean we are so close, we are absolutely there. The idea…. ESLER: Just remind us what happened to them. TOYNBEE: What's happened to them since? ESLER: Yes, they've gone into recession, haven't they. Well, they were going into recession anyway. Either we were told we couldn't join because… SHORT: Germany… much worse than us. TOYNBEE: Either we were told we couldn't join because Germany was so terrifyingly strong it would crush us. Now we're told it's not strong enough. German unemployment has actually fallen steadily since it joined the Euro, you know.. it may have unemployment problems, it's nothing to do with the Euro whatever. We are all but converged. The question is, do we dare do it? No, because the sixth test is The Sun test, until – and it'll never happen – until the government gets brave and decides that it can face up to the majority of the newspapers who've run just three people, two of them foreign proprietors, have run a campaign to keep us out of Europe and to get us out of Europe if possible. Until the government gets brave enough to face up to them we wont be able to do it. And they look across…. PORTILLO: Polly, you are a journalist of the left, if our economy were in the condition that Germany's economy is in, you would be saying: "Increase public spending and cut interest rates" and that's precisely what the Germans cannot do because they're in the Euro and they're signed up to this so called growth and stability pact that prevents them from spending government money sensibly when they're in recession. ESLER: Clare Short… that will always be true though, wont it. So when you're saying that the economics have to be right, they'll never be right if you're using the German analogy – never. SHORT: Well no, the European Central Bank, I mean a lot of people are saying, and in fact it's now talking about changing its own terms of reference. You could change the Maastricht criteria that restricts public expenditure ??, and you could give the European Central Bank less deflationary terms of reference, and I think some kind of reform of those things is an absolute pre condition for the Euro being better managed. MARDELL: The Stability Pact is probably not that long for this world, is it. I think a lot of governments don’t like it and it may well go, so those arguments may not be with us all the time. TOYNBEE: Let's be realistic about how much of a straightjacket it is. Eleven out of the twelve countries in it already spend much more than we do. Most of them are more… have higher debt than we have. So the idea that we're somehow going to enter into some appalling straightjacket just isn't true. Also, when it comes to interest rates, there is a greater difference in the economy between the north east and the south east of this country than between us and the rest of Europe. So the idea one size fits all, we already live with interest rates that damage the North and please the South East. I mean this is a much lesser jump than what we're already straddling ourselves. PORTILLO: Well I think if we went into the sort of recession that Germany has gone into, we would very quickly come up against the limits because even a Conservative government would want to start spending money big time in order to help the people who were unemployed. And Germany, remember that a few years ago, thought that these limits were absolutely sensible, has found that in practice they're stifling the economy, and remember, it's not only the public spending, it's also that you can't set your own interest rates so you cannot respond sensibly to what is happening to your economy. TOYNBEE: We'd do much better to have their interest rates to deal with our overheated housing in the South East ourselves which is our own local problem. If that's the only thing holding us back, that's insane because it's what's bugged our economy all along. It's a local problem that that needs a local… KAVANAGH: The nature of the Stability Pact, whether it's short lived or otherwise, and one size fits all interest rates, leaves the employers in Germany with one alternative which is to shed labour, and that's the reason why…. TOYNBEE: But they haven't shed labour, they're own…. KAVANAGH: …. Germany has. That's the reason why Germany has 10% unemployment and we have five. TOYNBEE: Their unemployment has gone down though since they joined the Euro. KAVANAGH: But it's going up. It's going up now and…. TOYNBEE: The Euro has not made it worse, no, downwards. MARDELL: Because the politics of all this feeds back into what you're calling the sixth test, the public opinion, is that of course Gordon Brown has got Tony Blair completely over a barrel. Trevor was talking about the possibility, which certainly did go, I think, through the Prime Minister's mind of moving Gordon Brown. It could do in future. What happens if he moved in, Gordon Brown resigns and starts making the sort of arguments that Trevor and Clair are making. KAVANAGH: Which he would. MARDELL: Which he would. TOYNBEE: He absolutely would. MARDELL: So I mean the Prime Minister knows and is, I believe, furious about this, but he can't do anything about it. He can't shift the Chancellor for that very reason. ESLER: Just on that point, do you think he regrets ever having talked about this referendum at all? MARDELL: Whether or not he regrets it, it was just the practical politics as John Major had promised one so he had to promise it. I don’t think any politician really could make such a momentous decision without asking the people, particularly when…. PORTILLO: Well he intends to make another momentous decision without consulting the people which is he intends to approve the new constitution of the European Union. EURO VISIONS: PASSING THE TESTS? ESLER: We'll get on to that in just a moment. Michael Portillo, because one of the really striking things about your comments is that once you strip the five tests of the language that economists use, they are about the things that affect all of us - our jobs, pay, standard of living and so on. Again, simply undisputed facts are hard to come by. But here are some more of your comments. EDINBURGH UK MAN: I think the tests, although they've been mentioned from time to time, I don’t think they've been gone into exhaustively, and I think once that's been done, that's when you put it in a manifesto, or alternatively in a referendum, so that the people can make a reasoned judgment. NEWCASTLE UK MAN: If we give up the pound we'll have no rights over taxation. Our economy and investment will disappear into what is a big European monolith. PARIS FRANCE WOMAN: It's really important to have the same money so that you can travel wherever you want, and it's much more easier and I think that it would make you feel more integrated into European Union and it would be really better for us French people when we go there not to have to change money. STOCKHOLM SWEDEN WOMAN: I think it's a greater risk for the bigger countries like Britain and also Sweden, and I think we have more to lose on the Euro. NEWCASTLE UK MAN: Personally I'm worried about what will happen to our savings for example, and how that would work out in relation to other currencies. CARDIFF UK WOMAN: I'd like to know whether price would be rounded up as they were in other countries, if things would be more expensive with the Euro and whether wages would be the same. DUBLIN IRELAND WOMAN: As regards Britain joining in the Euro I think they should take their time because I think for Ireland we join very quickly and everything else seems much more expensive. BERLIN GERMANY MAN: I think it was good for Germany to have the Euro but the first time the people weren't too excited about it. But now, as it gets clear that the Euro is very stable and hard currency, we are pretty happy about it. STOCKHOLM SWEDEN WOMAN: I think that the economist within Europe are not in the same face, they are not harmonised, and therefore I think that each country has to make their choice what do they think is the best for them. NEWCASTLE UK WOMAN: The majority of people aren't well enough informed about the Euro, and therefore I think they'd be swayed easily by perhaps the tabloids, and therefore make decisions based on the wrong things because a lot of people don’t know how the economy works and what benefits are going to arise from joining the Euro in that respect. ESLER: Trevor Kavanagh, let's deal with this tabloids thing once and for all on the programme. I mean some people who have written to us say people have been led by the nose, misinformed by the tabloids. How do you respond? KAVANAGH: Well this is the sort of thing that Polly repeatedly stresses in her columns in the Guardian that we're out to mislead the public, to effectively prepare the ground for pulling out of Europe, and I'd just like to nail that once and for all. We do not want to pull out from Europe, we do not advocate that. We have specifically stated on many occasions that we must remain in Europe. But what we do believe is that we must make the best of what we regard as a bad job and reform Europe, which is a backward looking institution and make it a forward looking institution which can deal with the problems of the 21st Century. ESLER: Some people, though, think you scare people by the nature of what you say. You wrote in The Sun in May: "Tony Blair is about to sign away a thousand years of British sovereignty." I mean whatever Mr Blair might do, there hasn't been a thousand years of British sovereignty. We've only been going as a British nation for 300 years. It's wrong. KAVANAGH: Well one way or another we had to get this story into the… This is a major issue. The constitution is a major issue. In order to bring the focus of public attention to bear upon it we brought into the whole issue, back to the Magna Carta, the sort of things that made Britain what it is, which is a proper democracy in which the people hand to the governments temporary power whereas in Europe the governments allow the people to have a certain amount of rights until they decide otherwise. Now that is a thousand years of freedom and that's what we're saying. ESLER: Not British freedom though, not British sovereignty. KAVANAGH: Well I mean you're talking… you're splitting hairs here really. ESLER: What, that 700 years is neither here nor there. I mean it's not… a big hair. KAVANAGH: No, the Magna Carta was quite a long time… ESLER: Okay – quite a big point. Polly Toynbee, the problem from your point of view is that there hasn't been a single opinion poll nationwide in Britain ever, that says we're in favour of the Euro. TOYNBEE: No, I think that's true. I think people have had very little information. I think the misinformation that's been put out by the majority of the Euro sceptic press has been grotesque. Very little is written that's balanced or sensible. It's about.. you know.. Brussels is making us have straight bananas, straight cucumbers, and fishermen in hairnets. I mean the Euro myth making is fantastic, and funny. It would be funny if it weren't…. KAVANAGH: Well the straight bananas one which you keep accusing us of is actually right. We didn't use that story for years because we thought it was a myth, and then we discovered it's absolutely true. ESLER: Straight bananas in the street. But Polly Toynbee, the point I'm trying to get at here is, that this is in tune with what many British people believe is true – is it not? Do you accept that? TOYNBEE: Well British people also say they feel they know very little and they're very confused, and it is indeed a very complicated subject which in other countries has been debated in a fairly sober way in their newspapers, in their press, and it hasn't been here. People have not had the opportunity, I don’t think, to have facts put before them and to think about things as they are because they've had this blast at them all the time. You're going to lose your sovereignty, we are going to lose out national identity, dumping sterling, dumping the pound means the end of Britain as we know it, and of course people get scared because that's all they ever read. ESLER: Aren't people also baffled… a lot of people again have said to us: "We don’t understand the facts. These economic questions are very difficult. Why don’t you politicians sort it out?" SHORT: Well I think that's right, but never underestimate the people's intuition about their own interests. I remember the referendum when Harold Wilson was in power about staying in and it ended up with people debating it on buses and things, and we ended up with a decision that was different than the original opinion poll position. So people are perfectly capable of making their judgments. But I think this is over and finished with. The economics say no. So although people are arguing and some people don’t like Europe anyway, we're not going to have a big debate here because we're not going to go for it and I think… ESLER: For how long? SHORT: And I think a lot of the noise in the media… ESLER: Do you have a sense of how long people are saying no for, that the economics are saying no? Do you have a sense of how long we'll have to wait on this? SHORT: Well I mean we all understand that the sort of fig leaf for Tony Blair is that there could be a referendum in this Parliament. I just think in timescales then that isn't possible. We're going to hear a lot about that. PORTILLO: One of the difficulties I think is that the scare stories that were mounted the other way around, the scare stories about how terrible it would be if we were left out, of course become much less convincing as we are out. I mean the City of London has not gone into a terrible decline. We're not finding that our trade is being cut off. We are finding still that we're getting lots of inward investment, and so all the scare stories that were mounted. TOYNBEE: Hang on a minute, the inward investment has dropped from 28% to 19% of our share of European… PORTILLO: It's still the best in the European Union. TOYNBEE: But it's dropped… PORTILLO: Hopefully it will rise again. TOYNBEE: No, it has dropped. The last official figures show that we used to get… SHORT: No, there's been two reports. One said down, the other said the opposite. TOYNBEE: The actual official figures show that when we.. when the Euro was started, we had 28% of… which was amazing – of inward investment into the whole of the Euro zone, now we only get 19 and it's dropping. PORTILLO: Polly, business at the beginning was scared but now it's not. Business just is not scared. TOYNBEE: That's not true. PORTILLO: The city is not scared. TOYNBEE: That's not true. A huge number, particularly in manufacturing… MARDELL: But surely this is what will happen eventually is that the politicians will argue, Labour will eventually argue that the economics is right, and that will blow away a lot of the arguments about patriotism and our role in Europe and role in the world. If people think their jobs are threatened, if people think that the economics will be good for them, that is what they believe will persuade them. ESLER: Okay, let's move on to another area. Dharshini. DHARSHINI: Thanks Gavin. Now all the debate in Europe has now rolled into another debate about the new European constitution. Let's just briefly run through some of the key points. The draft constitution states that the European Union should have a full time president and a foreign minister, that's in addition to the present system where there's a commission president. THE NEW CONSTITUTION Full time EU President and Foreign Minister Common European asylum and immigration policies EU to get formal legal status to sign international agreements No plans to harmonise tax rates No plans to have majority vote on EU foreign policy Europe would take a common policy on things like asylum and immigration, and as a body the European Union will have the legal status to sign international agreements, and those are the things in the current draft, and it's probably worth reminding ourselves what's already been taken out. Plans to harmonise tax rates across the EU have been shelved, and out too, are plans to decide foreign policy by a majority vote of European countries. If there's a situation like Iraq where different European countries disagree, well there'll simply be no European policy on it. Of course the papers have been going to town on this too. The Daily Mail calls it a blue print for a super state, and it's holding a mock referendum. The Sun, and of course Trevor Kavanagh's newspaper, says it's the biggest political betrayal in our history. The Mirror is taking the opposite view. "Eu're wrong" it says. "The new blueprint for Europe is a good deal for Britain." And The Guardian, which Polly Toynbee writes for, is equally in favour: "It will threaten only the bigot, the thief and the tyrant." it claims. Meanwhile some European newspapers are complaining the constitution has been watered down too far: "In the end, Europe goes where the British want it to go." says Italy's left leaning La República. The draft constitution has renounced all its ambitions. Gavin: ESLER: Well one big overarching question for many of you in all of that is what is the end result of all of this? Is Britain fated to an ever closer union with Europe? Michael Portillo, it is, isn't it. Whatever your views on this, it seems inevitable. PORTILLO: Well I think one of the problems that the British have with all of this is that the British are used to joining clubs and they have rules that never change in a hundred years. And the European Union is not a club, it's a process. The idea of the founders and of most of the member states, is that it should change every few years, it should be constantly evolving into something which is an ever closer European union, and I think that is one of the fundamental reasons why the British tend to be unhappy with it. ESLER: There's a very interesting email we received from Anni Bales from London who welcomes the idea of an ever closer union. She writes: "My values are much more in tune with our European neighbours values, and I can't bear the American neo-conservatives. I choose Europe." On many issues British people are closer to European views of issues, big issues. PORTILLO: They may be. I'm not sure that that would apply to everything that I could think of. I mean for example I think our attitude about the freedom of the press is rather different from the attitude that you would have in France. Certainly our attitude to what is the role of the individual and what is the role of the state. You know.. do we give up power as individuals because the state is more important. That would be very different from one part of Europe to another, and I think that is one of the real difficulties that we'd have in the longer run because many of these ideas depend upon the notion that one day we Europeans would all be able to elect common institutions, a common parliament, common president, and actually I think many of our specific political values, specific political values are at variance from country to country. ESLER: Clare Short, do you find this? I mean are we closer… a big debate about how close we are to America on many things and because of the war and so on, are now close to Europe and obviously on the war you were much closer to what Europeans thought. SHORT: I think on lots and lots of attitudes.. social attitudes and what kind of society people want, British people are more like the people of the rest of Europe and I think the Iraq debate demonstrated that. I think British people don’t want to be flung to a new country called the United States of Europe, and I feel some of the pro Europeans want Europe to be a countervailing super state to the US of A and I think we need a more thorough debate about what kind of Europe. I want to be part of a Europe where people can travel and that we cooperate and have a big single market and lots of cultural cooperation and so on, but I don’t want to be a competing great power. I want some counterbalance in international politics, but so what we mean by Europe I think needs more thorough discussion and I've got to find myself agreeing with Trevor Kavanagh which is extraordinary and historic. No, but what kind of Europe, let's make the institutions more efficient for the wider Europe, let's cooperate between people, let's have an efficient economy, but let's keep local some of the powers that are better exercised locally, and some should be exercised through global institutions rather than making Europe a competitor of…. ESLER: On your big point though, I wanted to pull up a couple of emails that we've had. One is from Ray Newton from Edinburgh who says: "Britain must join the Euro and play a full part in developing Europe as a countervailing influence to the global dominance of the United States." Paul Page from Ulm, Germany says: "Bring on a European super state" he says "let's rule Europe with a coordinated army and a President." You don’t quite go that far, do you Polly? TOYNBEE: Oh I don’t think so. I mean I think everybody wants to retain as much local decision making as one can within… while still having an efficient monetary union, an economic union, I think what really matters though is where we feel we fit in the world, and I think that European is essentially social democratic when there is always going to be right and left, right across Europe, but on the whole it is very different, particularly to the way America has gone recently. Neo-conservative America moving further and further to the right, there is a sort of Wild West model of capitalism – Devil Take the Hindmost - which is not European and I think we feel at home with the way Europe does things, I think we feel much closer to that and that's where we really belong emotionally, spiritually, historically and this is the decision we have to make, and there isn't really a middle way on this. SHORT: And we those people, why do we have to join a super state to be that? TOYNBEE: It's not a super state. It's not in any way joining a super state, and this is an absolute myth. How can it be a super state? People talk about Brussels as if it were vast, but the entire bureaucracy of Brussels, 23,000 people for the whole lot, is the same size as Surrey County Council. White Hall alone has 450,000 people. KAVANAGH: It is a super state in the sense that it is remote, it is unaccountable, it is bureaucratic and it is to a very significant degree corrupt, and it's only three years since the entire European Commission was forced to a man to resign. They're all back in position again more or less and doing the same old thing. But the thing that we would agree with Tony Benn on, and there are not many things we would agree with him on, is that in Britain, you still have the power, if you elect a politician, you can chuck 'em out. You can't do that in Europe and you certainly wont be able to do it once we sign up to this European constitution. ESLER: Well I want to just finally in the few moments we have left, to ask where we think we'll all be on this issue say by the time of the next election which has to be called by 2007, will we be in the Euro? Definitely out or still dithering? What do you think Michael? PORTILLO: Well we will be where we are now because I don’t think in the end that Tony Blair can get the referendum before the next election. I think he would dearly love to have it, and there's a sort of paradox here, the reason he wants to be in the Euro is that actually there's a large group of countries in Europe, particularly with the new ones coming in from the East and Central Europe who would like to take the middle road that Polly Toynbee says doesn't exist. But there is a middle road between Europe and America. It's called the sort of Anglo Saxon arrangement of the economies, it's more liberal markets, it's lower taxation, less…. ESLER: But they will have to join the Euro - I'm sorry to interrupt on that – but the new accession countries will be in the Euro. PORTILLO: Well they wont be in it immediately. ESLER: Not immediately but they will be in it, they've signed up to that. PORTILLO: Well, they've signed up to saying they will but we'll see whether they do and over what time table. SHORT: I believe in the next election we wont be in. We'll be promising a referendum about whether to go in. We'll be saying it depends on the economic interests of Britain but there will have been a much bigger argument about the political arrangements for the EU because of the convention. So the European argument will have shifted. But I think on the Euro we’ll be in exactly the same…. ESLER: Do you think Prime Minister Gordon Brown will take us into the Euro? SHORT: Who knows? But I think if you go on the economics… Well, it depends then on how the Euro is managed. If the economy of Europe started to prosper and Britain was doing less well, I think the argument would shift. But there's no sign of that at the moment. ESLER: Okay, Polly? We've got less than a minute left. TOYNBEE: No, I don’t think so, I think we should have a mighty referendum including the constitution and the Euro and say right, now let's decide once and for all. We've made this mistake for so long, we've been dithering for so long. Let's finally decide in this country that we are full members of Europe. ESLER: Trevor Kavanagh: KAVANAGH: Well I'll bet you a hundred Euros now that we still have the pound in ten years time because I can't see the point at when Tony Blair is going to be able to change, or any other Prime Minister is going to change that position. ESLER: A hundred Euros, so we'll see how the bets go. Okay, well that's all we've got time for but the debate continues now over on BBC Radio 5 Live with Edwina Currie. So call now if you want your say. The number is 0500 909 693. That's it from Dharshini and me and everyone here in the bunker under the Treasury. Thanks for watching. Goodnight. Next week on Panorama, while the world's attention was diverted by the Iraq War, inside Zimbabwe Robert Mugabe's repressive ways escalated unchecked. Fergal Keane reveals the extent of the regime's tyranny and asks - will anyone stop Mugabe? _________ www.bbc.co.uk/panorama CREDITS Presented by Gavin Esler With Mark Mardell With Clare Short MP Michael Portillo MP Trevor Kavanagh Polly Toynbee Production Team Lesley Boden Kim Capocci Emma Hill Ginny Williams Graphic Design Sue Palin Key Yip Lam VT Editor Boyd Nagle Film Research Kate Redman OB Unit Manager James Bonnar Camera Supervisor Keith Bradshaw Sound Supervisor Keith Mayes Set Design Christopher George Lighting Director Richard Dellow Vision Mixer Derek Morrison Floor Manager Joe Tumulty Assistant Producers Janette Ballard Tom Gillet Edward Havard Calum Walker Producers Claire Hughes Diana Martin Sam Woodhouse Director Rob Hopkin Programme Editor Alexandra Henderson Deputy Editors Andrew Bell Sam Collyns Editor Mike Robinson 18 _____________________________________________________________________________________________ Transcribed: 1-Stop Express Tel: 020 7724 7953 Fax: 020 7402 8434 E-mail: onestopexpress@hotmail.com