The EEC, which has evolved into the EU, was introduced by people who claimed we could “pool” our sovereignty. This they said would make us more powerful. I have often written and spoken about the dangers of confusing power with sovereignty. Today I want to explain why you can only have one sovereign. It is time for the UK to choose whether it wishes to enjoy self government through the UK Parliament or whether it does now wish to be governed by the EU as Commissioner Reding and others have asserted.

The experiment with twin sovereigns or shared or pooled sovereignty is breaking down from both sides. UK democrats are increasingly frustrated at a range of decisions made for us by the EU. A majority in the UK wants self government so we can make our own decisions about benefits, energy, welfare and borders amongst others. At the same time the federalists, mainly in the Brussels government but also among some of the other member states, are frustrated that the UK is still a “difficult” partner, querying too many EU decisions, seeking to slow down the necessary march to more federal power and seeking to prevent more unanimous and majority decisions at the EU level.

So called pooled sovereignty or shared power only works when both so called sovereigns agree on strategy and tactics. In the EU that means the junior members, the national governments, have to accept the view of the senior member, the EU, that on the big calls the EU is in charge. The EU for example settles budget deficit levels, imposes VAT as a general EU tax with control over the level of the imposition, controls borders and now imposes a common Convention of Human rights. The member states have to go along with a continuous process of more and more decisions and power going to Brussels. In other words, EU sovereignty is not pooled or shared. The ultimate sovereign – that means the only sovereign- in the EU model is the EU. This will become increasingly apparent as the EU completes the process of expanding the range of its activities and the extent of its powers through its vast legislative programme.

Mr Justice Mostyn has recently set out how the EU sovereign now overrules the UK Parliament. Parliament under a pro EU Labour government decided that some elements of the EU Convention on Human Rights were unsuitable for the UK and left them out of the UK legislation. The Labour government thought they had secured a Lisbon settlement that avoided the EU Convention becoming UK law. However, the senior Judge now concludes “it would seem that the much wider Charter of Human Rights is now part of our domestic law”. Something we did not want is now directly acting despite Parliament’s wishes.

On 20 November 2013 The European Scrutiny Committee of Parliament under the tenacious chairmanship of Mr William Cash produced a most important unanimous report. They concluded:

“Not only do we recommend a strengthening of the scrutiny reserve, we conclude that now is the time to propose the introduction of a form of national veto over EU legislative proposals, and then to explore the mechanics of disapplication of parts of existing EU obligations, notwithstanding the European Communities Act 1972”

This conclusion is necessary and wise. It is directly in line with the promise made in the July 1971 White Paper on our membership of the EEC. In that again the government wisely said:

“All countries concerned recognise that an attempt to impose a majority view in a case where one or more members considered their vital national interests to be at stake would imperil the very fabric of the community”

They understood then that you cannot have two sovereigns. They also understood that democratic legitimacy and ultimate power had to rest with the member states. Tomorrow I will look at how the UK Parliament could reassert this essential truth.

I would like to thank Commissioner Reding for her honesty is reminding us that the aim of the EU project is a United States of Europe. As I have frequently pointed out before, they have got a long way towards creating one. It is not a superstate I want my country to be part of. We need a new relationship with the emerging USE.

The Commissioner thinks the unelected Commission (she just happens to be a member of it) should be the government. She thinks the European Parliament should be the equivalent of the House of Commons. She thinks there should be some new Senate for national politicians from member states to be the House of Lords. It’s generous of her to leave us that emaciated role in our government.

It is time that the media asked our leading European enthusiasts if they share their Commissioner’s vision. If they do not, how will they stop her and the many in Brussels who think as she does, from doing just that? It is time the Leader of the Opposition, Mr Douglas Alexander (Shadow Foreign Secretary) Mr Clegg and the other main pro Europeans were asked to confront the reality that the EU is evolving quickly into the United States of Europe. Why do they think that a good idea? Why haven’t they been honest about this obvious development? What do they think the UK should now do, given the unpopularity of the emerging USE with a majority of the British people?

The pro Europeans in UK politics have regularly briefed the press and made speeches saying they need to make the case for the EU, claiming it is good for the UK. They have never set out in detail just how many powers have already gone to the EU. They have not explained the growing tensions in our relationship, all the time we rightly stay outside the Euro when most of the rest are plunging headlong into more federal arrangements to preserve the currency. It is time they were asked to explain just how much Europe we already have, how much more they would like, and what they think of Mrs Reding’s refreshingly honest vision of where the logic of EU development takes its members.

Yesterday’s unemployment figures from Euroland made more depressing reading. 19.24 million people are out of work in the Euro area. The unemployment rate of 12.1% is much higher than the US at 7% and the UK at 7.4%. Non EU countries in Europe have lower rates, with Norway at 3.3% and Iceland post crisis at 5.4%.

Within the zone Greek unemployment at 27.4% and Spanish at 21.7% are particularly bad. Germany remains competitive both within the zone and outside and has much lower unemployment. The totals are up 452,000 on a year earlier, and up a little on the previous month.

Worse still is the position of young people under the age of 25. 3.57 million are out of work in the Euro area. The rate of young person unemployment is a shocking 57.4% in Spain, 54.8% in Greece, 41.6% in Italy and 36.5% in Portugal. Even in France one in four young people are out of work.

Unemployment in the rest of the EU is lower than in the Eurozone, which suggests that some of the high level of unemployment is down to the features of the Euro. Unemployment is however, quite high throughout the EU on average indicating that all is not well with the policies pursued by the region. High regulatory costs and dear energy are two of the features that limit economic progress.

The odd thing is the apparent acquiescence of so many voters so far in this dreadful situation, and the complacency of the European establishment faced with this tragedy. It is extraordinary that over half of all young people under the age of 25 can be out of work in some countries, yet no major action is triggered likely to make a bid dent in the totals of the young unemployed.

The European countries that have stayed outside the Euro, and the USA that also experienced a banking crisis, have used monetary and exchange rate policy to get more people back to work and to stimulate more activity. The Euro was saved from break up by the European Central Bank’s decision to lend large sums to the troubled Euro banking system, and more recently has been helped a little by ultra low interest rates. The endless delays in coming to a judgement about who will pay the bills and who will back the overstretched sovereign and banking borrowers is delaying a vigrous recovery, and is ensuring more young people remain out of work for longer.

The Uk used to enjoy plenty of wage inflation. It was called the “British disease” and went with too many strikes, frequent devaluations to keep us in  world markets, permanent decline of large nationalised industries like steel, coal and railways, and  large accompanying job losses in those state leviathans. The cash pay rises were soon eroded by price rises.

After the Thatcher Union reforms and the privatisation of much of the old nationalised industry estate the extremes of wage inflation and the accompanying poor performance were eliminated. The UK entered a “NICE” period, when  cash wages rose modestly, productivity improved and former nationalised sectors like telecommunications and energy grew with more jobs being created. Real wages rose each year.

The Great Recession of 2008 changed all that. The UK lost 7 % of ts output in a year. A new era was ushered in with low cash increases in wages, and falling real wages. This was bad for the last two years under Labour and has continued at a lesser pace under the Coalition. Productivity has been weak.

Some commentators have called this the productivity puzzle. I have never thought it much of a puzzle. Part of the reason for the decline was the big losss of output, which makes companies less efficient. Many companies do not cut their workforce in line with the loss of output. Part has been the decline of North Sea oil output, a very high value added sector. Part has been the loss of high end profitable activities from the City as people have diverted high earning areas of their banks and businesses to lower tax jurisdictions in Asia, Switzerland and the low tax islands of the world in response to 50% Income Tax and 28% CGT rates.

There is one additional issue I have not so far raised, which I would like to ask about today. That is the decision of the past government to invite in up to  5 million new people to the UK over  little more than a decade. The UK has a workforce of around 30 million, so the increase in the potential workforce from large scale immigration must have had some impact on the UK labour market. More than 2m jobs have been taken by people born overseas.

Business likes the ability to recruit people from around the world, and likes a plentiful supply of good value labour. Employees of UK companies already settled here need income levels that sustain a reasonable lifestyle in one of the dearer locations in the world.

The issue is one of balance. Allow too little migration, and business might find it difficult to set up or continue here without access to the affordable skills they need. Let in too many new people, and you must depress wages and make it more difficult for unemployed people legally settled here to find a job. Part of the issue of wages is tied up in the potential supply of labour. Over the last decade the UK has had an unprecedented expansion of its labour supply, which is part of  the background to stagnant wages.

   Yesterday’s speech by the Chancellor rightly identified the need for more spending reductions compared to current plans, to eliminate the structural deficit during the next Parliament, following some reductions in this Parliament.

    The prelude to the speech was the Prime Minister’s statement that the triple lock will continue for another five years if a Conservative government is elected in 2015. This provides for an uprating of the State pension by prices rises  or wage rises  or 2.5%, whichever is the higher. As a result Ministers were naturally asked if the Pensioner benefits like free tv licences and heating allowances were also safe, and effectively confirmed they would stay.

     This leaves the Treasury with its aim of getting more of the reductions from welfare benefits having to do so by tackling non pensioner benefits. The Chancellor points out that the  big savings on pensions come from raising the retirement age, which needs to be done as people live longer.

            So today I want to ask for your opinions on what more could and should be done to curb the ever rising welfare bill? It has been going up by more than wages this Parliament, despite the fall in unemployment, as a result of upratings that have exceeded wage growth by a considerable margin, and by the continuing eligibility of a large number of people for various kinds of benefits.

           There are two big issues to consider. The first is eligibility. I would still like to see a longer time period that a new migrant has to complete before qualifying for UK benefits. I think more of the benefits should be contributory, where people have to demonstrate they have a contribution record to UK NI for a sufficient period, or have been in full time education in the UK as British citizens in the past to cover individuals who have been unable to get a job or who are incapacitated and unable to work.

           The government can also consider what range of benefits should be available to young people. At what age or point in their lives should young people qualify for state  financial and housing assistance to have a home of their own?

            The second issue is the rate of increase in benefits in payment. This government has upgraded benefits by inflation at a time when real wages were falling. Was this the correct approach?  Should benefits in future continue to  be protected against inflation?  I am not myself in favour of cutting the real value of benefits, but should there be any upper ceiling? Is a £26,000 cap fair, or is that too high?

          The BBC has been full of stories that last year was the hottest on record in Australia. That must have been a bit of climate breaking through. It has not been so full of the figures for England in 2013, which show we had a very cold spring, and an overall temperature performance down on previous years. That must have been a bit too much weather.

            The latest development of climate change theory appeared on the Today programme, with a scientist telling us there is a 20 year lag between generating more greenhouse gases and the frequency of extreme weather events. Apparently the latest storms are partly the result of greenhouse gases emitted in the 1990s, though the scientist agreed there have always been “extreme events” or bad weather. His concern is that extra past greenhouse gas means in 20 years time more frequent storms. He did not forecast future temperatures.

          Nor have we heard much about the continuing struggles of the scientists and journalists on the MV Akademik Schokalskiy, transferred to  a Chinese ice breaker. It has just been mid summer in the Antarctic. The party apparently  expected to find evidence of retreating sea ice as global warming takes hold of a once inhospitable and icy cold south. Instead they ran into record levels of ice, and the ice packed hard around their ship and then around the ice  breaker. It sounds as if the midsummer Antarctic is having a bad dose of weather as well.

           More interesting is the news that the EU is turning  against the green policies that are meant to provide the antidote to too much global warming. We read of a Competition investigation into German windpower, examining it to see if the subsidies are excessive and if  the exemptions for German industry unacceptable. This follows hard on the heels of the announced investigation into the proposed contract to buy forward electricity from a  new nuclear plant planned for the UK. Does this mean the EU itself is now no longer so concerned about greenhouse gases?

               The EU looks as if it is getting itself into the position where it places member states in an impossible situation. They are not allowed to continue with much coal or oil based generation of power under one set of rules, but are then challenged for seeking subsidised energy from dearer renewable sources in an effort to comply with environmental legislation. The UK too is going to have to look at the high subsidy levels paid for renewables.

          Energy is fast becoming the big issue which will cause electors to query their EU government, as well as condemning the actions of energy companies. The last Labour government welcomed the EU policies and put us under them. The Coalition has carried on with the EU requirements.

               Surely the message of the bad gales of the last few days is that we need to adapt  more, so that more homes and businesses are protected from tidal surges and from the bursting of  river banks.  Whatever the cause, all agree we have just had some bad weather and may well have more bad weather in the future. Where too many homes have been built on floodplain we need better drainage. Where the coast is subject to sea attack we need better defences. Where rivers can struggle from too much water we need better management  of where the excess water is run off or parked, away from homes and businesses.

            In UK politics you get used to being interviewed most of the time from the left. Those of us who believe that free enterprise can offer us more jobs, prosperity, choice, the chance of financial security through savings and pensions, are constantly made to answer questions about why we do not support higher taxes, higher public spending and more regulation of the private sector. The questions are often dressed up as wanting us to take more from the rich, but in practice the schemes require taking more from the prudent and those in the middle of the income bands as well as those at the top. They can also cumulatively act to limit entrepreneurship and divert jobs abroad.  There is an undercurrent in some  public debate that if you do not support a bigger role for the state, whatever the current size of the state might be, you are not a caring or understanding person.

             In practice most of us on the Conservative side of the argument want to live in a society where there is decent state provision for those who are unable to work to support themselves, or who are going through a bad patch in their lives and need help. The issue between the Conservatives and the two main left of centre parties is not over whether to have a welfare state or a health service free at the point of use. It is over the extent, the best way of getting value for the money spent,  the eligibility, and the best way to help more people to support themselves.

            On this site one of the refreshing things is that much of the criticism of me comes from the other side of the argument.  It is refreshing if it is fairly put and not labouring points that have already been answered long since. So today let me explore what limits I think the UK wants and expects to be placed  on a free enterprise society. I do so as an MP who has a duty to represent all my constituents and to understand where a large majority  wish to see  limits imposed on markets and freedom.

            The first constraint on free enterprise and freedom which we all agree is the rule of law. I think all accept that individuals and businesses have to work within a framework of law, that condemns theft, violence, fraud and other malpractice.  You cannot have a flourishing free society paradoxically without a system of criminal law,  and without enforcement and punishment for the minority who want to undermine a free society  by misbehaviour.

           The second demand on free enterprise is to pay some tax to provide for common services which individuals and companies would not supply for themselves – like police and defence – and to pay for welfare for those in need. I accept the UK choice and tradition that health care is supplied free at the point of use and have always spoken and voted for it. I want the country to be generous to the disabled and those in real need.

              The third constraint on free enterprise which some criticise me for supporting is to have border controls to limit the numbers entitled to come and live and work here. My main reason for this view is the existence of a decent welfare and benefits system. If we have an open door policy towards countries that have much lower incomes than the UK average we run the risk of imposing too much strain on our public finances and welfare system.  In a welfare state with reasonable benefit levels it is also important  to maximise the number of locally created  jobs that go to established residents here, to keep the welfare bills under control. In summary, I do not think you can run an open borders free labour market with the rest of the world if you wish to run a welfare and income top  up policy that is generous by world standards at the same time.

             A difficult fourth constraint is the range of measures government does need to take to prevent private interests  doing damage to the wider public interest. Like my socialist critics I of course recognise that some businesses can profit at the expense of their neighbourhood or customers. Much of the potential damage can be taken care of by a strong competition policy, giving customers more choice to avoid companies that behave badly. But it may  also require planning, environmental, health and safety and other  legislation as well to tell business what is expected and to offer some sense of security to the public.

            Again the debate here between Conservatives and socialists is not an all or nothing debate. It is a debate over how many bad things do need specific regulation or law, and whether individual regulations are effective. It is often a debate over both the total volume of these instructions, and the way some regulation can achieve the opposite of what was intended. More box ticking and form filling does not prevent financial crashes, as Labour found out to our cost.  

           Yesterday the media took me on a trip down memory lane. The past is a different country.  1984 was a year of struggle. Mr Scargill forced through a miners’ strike seeking to stop the Coal Board closing pits when they judged them to be uneconomic.  Mrs Thatcher saw the challenge as a continuing one from the Union movement to an elected government.

        It is difficult from today’s vantage point when there are different demons and tensions, to remember the intensity of the fears and worries on both sides of the Union dispute. Union action had prevented the 1960s Labour government from reforming industrial relations as they saw fit, and had helped speed the end of that government. A miners’ strike had finished off the Conservative government of the early 1970s prematurely. Finally, public sector unions brought down the Labour government of the 1970s, ending its authority and its mandate through the winter of discontent, 1978-9.  Margaret Thatcher had no wish to confront the miners, and backed down from doing so in her first Parliament as PM. By 1984 she decided there was no choice but for an elected government to make a stand against union power. If the choice was Mr Scargill dictating terms or the elected government making judgements, most people knew where they had to stand.

          In my role as her Chief Policy adviser I sought to prevent the use of troops to move coal or otherwise be involved in civil matters. I advised  to keep the Cabinet out of negotiations with the miners. The dispute had been framed by Mr Scargill, who insisted the Coal Board should have  no right to close pits on economic grounds, and by Mr Macgregor, the Coal B0ard Chairman, who insisted management had to be able to manage the industry as they judged right. I felt that if Cabinet members became involved in detailed discussions between employer and miners it could intensify the bitterness of an already very bitter dispute and lead to more muddle and threat for the country. The issue of closing uneconomic pits was not one for politicians, who rightly delegated commercial decisions to the NCB.  My hope was enough miners would see that Mr Scargill had chosen the wrong issue at the wrong time of year to inflict another defeat on the Coal Board and indirectly on the government. Instead the bitterness increased as some miners went to work and others did not.

         I was able to offer some help to the government as they sought to keep the lights on, by working with the electricity industry to maximise the use of nuclear and oil to reduce the claim on coal stocks. I  wanted to avoid a three day week or mass lay offs of people in other industries owing to a shortage of power. There were enough miners families in misery without plunging many more workers into the same situation. The sad truth of the industry was a long continuous decline under Labour and Conservative governments. 410 pits were closed between 1960 and 1971-2, mainly under Labour.

               At the end of the dispute I tried to get the government to offer the miners the right to work a pit the Coal Board claimed was uneconomic for themselves, as I was suspicious about some of the pits the Coal Board wished to close. I wanted a magnanimous aftermath. John Moore the privatisation Minister worked up some proposals but they got into the press before they were fully thought through or cleared with the PM, so the whole  idea was lost.   It was not until I was in the Cabinet myself that I was able to help one group of miners do just that, at Tower Colliery. They demonstrated that free of Coal Board control it was possible, at least in their case, to run the pit for longer .

           During 1984 I offered Mrs Thatcher direct advice on a wide range of domestic topics, sending her papers to help with each day’s meetings when she was in London. . It is curious that the  memo I wrote which has excited attention was not designed for the PM herself, but for the Policy Unit members. It was a fairy tale version of what I thought would happen to the Stock Exchange once the government told them they needed to reform themselves and remove their restrictive practices. The official advice I gave on the topic does not seem to have seen the light of day, probably because it was  not  written mainly  for fun as the fairy story had been.

         Peter Oborne in his column  has referred to the absence of a piece of advice on the main privatisation programme. The principal paper which got Mrs Thatcher interested in a substantial programme was retained  by her and not filed with the official papers as she liked the paper I wrote and wanted to keep  it as a reference. It has found its way into the Churchill College archive in Cambridge directly from her own papers. There was plenty of other advice offered by myself and other Policy Unit members on the general privatisation programme.  but that will need researchers to find it amidst the voluminous papers of a busy government.  

          I see that in Scotland there is criticism of so called “secret cuts” to the Scottish block grant. There were no secret cuts. The Treasury proposed a cut on  the grounds that Scotland got favoured treatment, which the Prime Minister rejected. The Scottish block grant that was agreed was reported and debated fully in the normal way!

The Prime Minister’s favourite phrase is that we are in a global race.  It’s not a phrase I would have chosen myself,  as images like this can bring in irrelevant or misleading thoughts to people’s  minds. However, his phrase does get across two very important truths which do have a big bearing on our situation. I support the intentions behind the use of the saying.

The phrase reminds us that if we want to carry on enjoying  the first world living standards we are used to, we have to compete successfully in the global marketplace. It reminds  us that the world does not owe us a living. There is no global social security system to top up our incomes to the levels we want. We have to earn our lifestyle in an increasingly competitive world market.

The message is usually tempered by more positive and helpful messages, and needs to be.  If we are all in this race, people need reassurance that the government will be on their side and will help them to win it. The purpose behind policies to promote better schools and better training is to equip more of us to find productive employment at better salaries so we have a better lifestyle.  The idea behind welfare reform is to ensure people who cannot get jobs are looked after, whilst there is a better incentive for the many who are capable of work to get a job and contribute to producing the output the nation needs to earn its living standards.

The Prime  Minister has been especially active in helping the business community to export. He has led the way in showing the opportunities in the large Asian markets, at a time when the UK’s traditional goods markets in Euroland have been under pressure from falling demand. He wishes to get across the need for the UK to widen its base of goods and services for sale, and widen its markets abroad so we  tap into the faster growing emerging economies.

The problem remains that the UK’s ability to compete properly in  this global race, particularly in the production of goods, is being impaired by high energy and other costs imposed by the EU government as well as by domestic policies adopted in the previous decade. The UK is also having to battle against heavy handed but unsuccessful EU regulation of services  pushing more of the UK’s success story in global markets offshore from the EU.

The UK also suffers from the political attacks of those who dislike any success. Now the economy is recovering critics are out and about condemning the rise of London, disliking the recovery of financial and business services, and objecting to any house price rises.