1. Which are the Core Values of the Labour Party, which we cannot afford to compromise?

The fundamental values of the left are not difficult to define. We believe that, as far as possible, we should organise society on co-operative rather than competitive principles. We recognise that efficiency requires a market approach to many economic activities, but we think that the consequent inequalities should be smoothed out as much as practical. We believe that we should try to make wealth, income and life chances as nearly equal as can, in practice, be achieved. We know that full employment is a necessary though not sufficient requirement for the good society. We believe in a strong and well funded welfare state, with benefits generally being universally available as of right rather than on a discretionary or means tested basis. We strongly advocate internationalism. Above all, we believe in the right of the people to decide who their political leaders should be, and in their right to vote them out of office if they do not perform satisfactorily.

How are these basic aspirations to be reconciled with the Single Currency? The fundamental problem with European Monetary Union is that it is not designed to establish the kind of economic environment in which aspirations like those set out above can be realised. The regime in which the Single Currency operates is controlled by bankers, not by democratically elected representatives of the people. The primary aim of EMU is to produce low inflation, not high rates of economic growth and full employment. The constraints on reflationary policies, set out in the Maastricht Treaty and the Stability Pact, are designed to curb public expenditure, not to increase it. The result is an economic policy framework which entrenches inequality, and which institutionalises bureaucracy and lack of democratic control.

The deflationary policies associated with the advent of the Single Currency are a threat to the welfare state for the very obvious reason that welfare expenditure requires exactly the kind of funding which the Maastricht Treaty and the Stability Pact are designed to prevent. In particular, the Single Currency regime rules out increases in expenditure at just the time when they are needed most, which is when the economy is turning down, and unemployment is rising. Much of the relative success achieved by advanced economies since World War II has been due to the effect of counter-cyclical increases in social and unemployment expenditure as growth rates falter. The result, however, has been increases in public sector borrowing which are now ruled out of order. The inevitable consequence is that the welfare state then becomes increasingly underfunded and undermined at the very time when it most required.

4. What has been the Impact of the Single Currency on Cuts in Services?

No crystal ball is needed to see whether the Single Currency will produce cuts in services. The run up to the advent of the euro at the beginning of 1999 shows the impact of the disciplinary framework required by European Monetary Union operating across the European Union. Every country now in the Single Currency has had to make painful reductions in welfare expenditure to meet the Maastricht criteria. The consequences have been strikes, demonstrations, marches and unrest even in EU heartland countries such as Germany and France.

During the 1950s and 1960s, there was a huge increase in the standard of living in all West European countries. This was accompanied by a marked reduction in inequality in the distribution of wealth, income and opportunities. Full employment, the spread of universal education up to university level, and the development of comprehensive welfare states were the reasons. Since the 1970s, the situation on equality has slowly unravelled. Over the last 25 years, in the EU the rich have become much richer, those on middle incomes have seen their standard of living rise broadly in line with national income, while the poor, at least relatively, have become significantly poorer. The biggest single generator of increased inequality has been the huge rise in EU unemployment.

At the beginning of the 1970s there was almost no unemployment at all in Western Europe, nor had there been for the previous 20 years. Jobs were available for almost everyone, and inflation averaged no more than about 4% per annum. Since the 1970s there has been a remorseless upward trend in the proportion of the labour force out of work in the EU. Unemployment, on the official ILO figures, peaked at almost 11% in 1996. It has now dropped back to just under 10%, but seems very likely to be back on an upward trend in 1999. Germany alone has 4.5m people out of work. Over a third of all those in Spain under 25 are without a job. Why has this happened? The reason is simple. It is the way that EU economies have been run. There has been too little money available to be spent to provide everyone with a job. And why did this happen? Mostly, because of previous attempts to lock European currencies together in the Snake in the 1970s and then the Exchange Rate Mechanism in the 1980s and early 1990s. During these periods, none of the other EU economies could compete with Germany's industrial strength and low inflation rates. As a result, they all had to adopt deflationary policies. This is exactly the danger the Single Currency now brings in train.

A key test for any civilised society is the extent to which the benefits to which citizens are entitled are universally available, and theirs as of right. When there is sufficient growth to maintain full employment, so that almost everyone contributes through the tax system, the number of potential claimants is relatively low. Welfare aspirations then usually rise no faster than the national income, and universal benefits are generally achievable. As growth slows, unemployment rises and dependency increases, this condition becomes harder and harder to achieve. As more benefits then become means tested and discretionary, the universality principle becomes eroded. The welfare state then becomes increasingly a safety net for the poor and destitute rather than a means for everyone to share in life's good and bad times together.

It is very hard to see that these deflationary developments have much to do with what most people would decide was best for them and the societies in which they live, given the choice. The problem is that the structure of the EU precludes such a choice being available. Power rests in Brussels with the unelected Commission, in Frankfurt with the unelected European Central Bank, and in Luxembourg with the unelected European Court of Justice. EU institutions were designed from the beginning by technocrats, who made no bones about their distrust of democracy. They deliberately left control in the hands of unelected and unaccountable officials rather than politicians, who could be voted out of office if they failed to deliver. Shorn of any effective countervailing forces, this is why Brussels bureaucrats can relentlessly extend their power and influence, whether or not the results are what ordinary people want.

9. Has the Lack of Accountability got anything to do with the Corruption in the EU?

It is well known that power corrupts, and the EU is no exception to this universal rule. Recent scandals in the Commission are typical of what happens in all power structures where there is inadequate transparency, democracy and accountability. The waste of money on fraudulent agricultural schemes, the nepotism and corruption which is clearly evident in the highest reaches of the Commission, the inadequate control and lack of satisfactory accounting for large sums of money, which leads to the European Court of Auditors admitting that some 10% of all EU funds are regularly misappropriated, are the price we all pay. Democracy does not stop those who have been in power too long from misbehaving themselves, but at least we, the electors at national level, still have the power to turn out governments which do not meet with our approval.

Everyone in the Labour Party understands the internationalism which motivates many Party members, perhaps unthinkingly, to support the European cause, and, in particular, all the moves towards EU integration, of which the Single Currency is the most important single development. Internationalism on its own, however, is not enough. There are many other core values which need to be succoured and nurtured. This is why there is a dangerous paradox looming for those who rank the supposed immediate requirements of internationalism above all other needs. This is that the neglect of so many other of Labour's traditional values, which the requirements of the Single Currency may entail, will before very long undermine the good relations between European states, and cause the rise of just the kind of nationalism and racism that Europe needs least. If rising unemployment, increasing inequality and a weakened welfare state, are the price we have to pay for European Monetary Union, as deflationary policies bite deeper and deeper, beware the advent of political developments which are exactly the opposite to those for which the Labour Party has always aspired.