Europe

– in the House of Commons at 12:00 am on 11th June 1974.

Alert me about debates like this

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Thomas Cox.]

4.11 p.m.

The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan):

I welcome this debate. I think that it will be a chance for me not only to state the position which the Government have taken up but to listen to the views of the House, because it is very important that in the difficult months that lie ahead I should be sustained by most of the House—indeed, by a critical House and, I hope, by an informed House. f shall, therefore, begin by discussing the role of Parliament, where it stands in this matter, where it should stand, and what is the rightful place that we should ask it to assume.

First, a number of changes have already been announced but may not have engaged the attention of every hon. Member. There are to be more debates on the subject both of the renegotiation itself and of the European Economic Community's progress in general, naturally according to the wishes of the House as to when they should take place.

Secondly, there is to be a slot at Question Time in which Questions will be able to be addressed specifically to Ministers on this matter. I understand that the first of these slots will be on 26th June.

Thirdly, I have assumed the responsibility of making a prior announcement in the House of the forthcoming business of the Community and of the Commission in the month ahead, so that, subject to the whims of changing business, 1 should, for example, on 26th June be able to tell the House of the business that is likely to take place in the Commission and the Community in the month of July. If I am unable to do it personally, my hon. Friend the Minister of State will assume the responsibility.

Fourthly, the Government intend to produce six-monthly reports on affairs inside the Community and the Government's attitude and reactions to them. We hope to produce the first one in the autumn so that it will be available for debate when we return after the Summer Recess.

I am glad to see the right hon. Member for Knutsford (Mr. Davies) here because he, as Chairman, has undertaken a most responsible and important task in accounting to the House through the Scrutiny Committee which has been set up. This was announced by my right hon. Friend the Leader of the House some time ago, but perhaps I might remind the House of what the Committee's task is.

The Committee contains a number of doughty warriors on both sides who will be scrutinising the affairs of the Community. I do not think that the right hon. Member for Knutsford will have an easy time as Chairman of the Committee, and I am grateful to him for undertaking the task. I think that he and the Committee need the support of the whole House, because they will be undertaking one of the major responsibilities that this House has of scrutinising the proposals which are to be made and which would, in due course, become binding upon us.

I want to say what the Government's approach to this matter is and to make one or two comments on the work of the Committee itself. As soon as the Government receive texts from the Commission on its proposals, we shall try to transmit them to the Committee within 48 hours so that the Committee will know what it is that the Commission is proposing to do. That will be followed as quickly as possible by a memorandum, either stating the Government's view or giving information to the Committee on a purely factual basis about the nature of the proposals so that the Committee itself can take this into account when it is deciding on whether to call Ministers or persons before it. That memorandum will be the responsibility of a Minister, either my hon. Friend the Minister of State or one of the Departmental Ministers responsible for the particular business concerned.

So the Committee will have the information on which to make up its mind about whether issues are important before those issues reach the stage of decision in the Commission, and it will be for the Committee to advise the House. I hope that the House and the House authorities will give the utmost assistance to the Committee in the matter of staffing and other requirements that it has.

Because of the lapse of time, the Committee already has a substantial backlog of proposals. I do not know how it will get through them all, but once it has overcome the backlog, although it will mean continuing hard work for the members of the Committee, it will be in a position, if it is provided with the services, to be able to report to the House on any matter that the Commission proposes to take a decision upon and that it thinks the House should know about. Obviously, there will be a number of small matters, but the Committee will, I am sure, develop its experience and will not necessarily trouble the House with them. But the principle is important if the sovereignty of this House is to be maintained in the areas in which we want to see it maintained.

As I dare say the right hon. Member for Knutsford will tell us if he catches your eye, Mr. Speaker, the Committee has recommended one of the draft decisions as an important matter for discussion by the House. It is a draft decision on guidelines for economic policy. It is not for me to speak for my right hon. Friend the Leader of the House, but there is a moral obligation on the Government to ensure that the matter is discussed. Already, since the Committee has recommended the draft decision as an important matter for discussion, my right hon. Friend the Chancellor of the Exchequer has put a heavy reserve on the subjects in the Council of Ministers so that no decision will yet be taken about it. This is the sort of way in which we should be approaching these matters. It combines common sense with a proper degree of supervision, and it may be that the Committee will want to develop its own policy and its own methods in various ways.

For myself, I am open to listen to this kind of representation, because one of the things I am determined upon is that the Commission, which is at the moment accountable to no one, shall be brought indirectly into account to the House through this kind of procedure, and it will be our fault if we do not pronounce on these issues before decisions are taken on them.

Perhaps I may say something in passing as a result of the three months' ex- perience I have had of this subject. One of the interesting things is the way in which the Council of Ministers proceeds by consensus. Apparently, a "Luxembourg compromise" was reached as a result of President de Gaulle adopting what I think is called a blustering and hectoring attitude—language which would never pass my lips, of course. As a result, there is now an attitude that the Council of Ministers cannot reach conclusions on these matters unless there is a consensus, so our position is covered on that aspect.

We must give the right hon. Member for Knutsford all the support we can. I look to him and the Committee—both sides of it—to warn, advise and tell the House, allowing us to reach conclusions on these matters before they come up for decision. That is giving Parliament its proper place.

Photo of Mr Neil Marten Mr Neil Marten , Banbury

If the Foster Committee, as we call it, decides that something should be referred to the House, can we have an assurance from the Government that no Minister at the Council of Ministers or anyone else in the Commission will finalise anything until the House has had a chance to discuss it?

Mr. Callaghan:

I hope that that will normally be the case. It would be against the policy we are following that it should not be in the case. If there is an urgent matter about which we know the Council wants to take a decision in, say, a fortnight or so, the House will probably feel it would not be improper if the Minister got in touch with the Committee and said "This issue is urgent; will you please consider it urgently and tell the House whether you regard it as of importance that it should be held up or not?" Then we shall have to consider it again. It is possible to put a reserve on. That would have to be the case. We do not want to put on reserves unnecessarily on small issues that are not of particular concern.

Photo of Dr Dickson Mabon Dr Dickson Mabon , Greenock and Port Glasgow

To take this a stage further, the Committee held three meetings. Its first report recommends two major debates. It would not be unreasonable to imagine that the Committee would be reporting regularly. Therefore, it would seem that the Lord President of the Council and Leader of the House would be the man to tell whether we should have a debate once or even twice a month on these very important matters. Is that what my hon. Friend envisages, with the Lord President—that we shall hold these debates regularly once or twice a month?

Mr. Callaghan:

That depends on what the Committee reports. It depends on the amount of work it gives us. If it says there are a number of issues of importance, clearly they must come before the House. The House ought to reach a conclusion on the issues before Ministers go to the Council. It will not be automatic but it should be the normal and general rule. If the House wishes to do it this way I would envisage that a lot more time will be spent on discussing these issues than has been the case so far.

Photo of Dennis Skinner Dennis Skinner , Bolsover

That may well be. Has my right hon. Friend had a look at the people who are represented on that Committee? Has he taken into account the factor, as I have done, that some of us can have little faith in its composition in view of the fact that it is heavily weighted pro-Common Market? If we are to pay any attention to its findings we must change its composition. We must also change the Chairman.

Mr. Callaghan:

That is a matter for the House, not for me.

I know that any Committee on which my hon. Friend is not represented clearly cannot be a representative committee.

Before I spell out our attitude on renegotiation I want to make one or two further points. One matter has borne on me day after day; namely, the concern of the British people to be consulted about this issue. This was the biggest mistake made by the Leader of the Opposition during the course of the discussions and negotiations he held. He never secured the full-hearted consent of the British people in this matter. I do not know now what is the attitude of the Opposition but I should like to ask the right hon. and learned Gentleman the Member for Hexham (Mr. Rippon), who is to speak, whether he agrees that the British people should be consulted about this matter at the end of the negotiations. Does the Conservative Party believe that this issue should be put to the people, or not? It would be valuable this afternoon if we were to have a clear indication of its view on this matter. It cannot be said too often that with this Government—

Mr. Edward Health:

If the Foreign Secretary will cast his mind back to the 1970 General Election, the present Prime Minister said he would not support a referendum of the people on this matter. He did not believe the referendum was a proper constitutional device in this country. In 1971 he agreed with me, as Prime Minister, that it was not right to have a referendum.

Second, so far as the election was concerned, we made it plain that we were going to negotiate and that if we were successful in the negotiations we would put it to Parliament to carry the necessary legislation. When the right hon. Gentleman says there was no consent, there was a majority, whether he likes it or not, of 112 in this Parliament in favour of entering the Community. Those are the facts of the case.

Mr. Callaghan:

It is a well-known feature of defeated generals that they always insist on fighting the last war. I have no doubt that the reminiscences of the Leader of the Opposition will appear in due course and will be fully annotated and textually correct. I am now asking a question about the future. Is it his view that the British people should be consulted at the end of the renegotiations about the result, whichever method is adopted, in whichever way it is done? If the right hon. Gentleman wishes to express his view, let us hear it, first, on the question of principle: should the British people be consulted or not?

Photo of Mr Edward Heath Mr Edward Heath , Bexley Sidcup

Will the Foreign Secretary say what he wishes the British people to be consulted about? They have been consulted at a General Election about entry into the Community, and this Parliament sanctioned it by a majority of 112. Sixty-nine of his own party supported it, and 20 abstained. They are sitting on that fence. One of his distinguished colleagues, the Secretary of State for the Home Department, supported it wholeheartedly. What are the British people to be consulted about in this case?

Mr. Callaghan:

The right hon. Gentleman clearly does not wish to answer the question. I fully understand his embarrassment about it, but I promise him the question will be asked many times between now and the time when the country is again consulted. The question is very simple. This is now a period of renegotiations in the Common Market. I do not know whether they will be successful or not. I hope they will be successful, for many reasons. At the end of the day, when the conditions are known and published, does the right hon. Gentleman believe that the British people should be asked to express their view about the result as to whether we should remain in the Common Market? That is a simple question. [HON. MEMBERS: "Answer."] The answer is clear.

Mrs. Winifred 'Ewing:

Mrs. Winifred 'Ewing(Moray and Nairn) rose—

Photo of Mr John Rodgers Mr John Rodgers , Sevenoaks

Sir John Rodgers (Sevenoaks) rose

Mr. Callaghan:

I fully understand that the hon. Member for Sevenoaks (Sir J. Rodgers) should be the Leader of the Opposition, but he has not got there. When he has I shall be glad to give way to him on this point.

Photo of Dr Winnie Ewing Dr Winnie Ewing , Moray and Nairn

Does not the Minister agree that the trouble with this question and non-answer is the word "consult" and that the whole trouble is that the British people are disillusioned about the word "consult"? They have been told that they would be consulted, with propaganda, paid for by the taxpayers, issued through the post offices. There is disillusionment. Cannot the Minister say what he means by "consult"?

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

Before the Minister answers, may I say that if hon. Members wish to catch my eye later on, these interventions do not improve their chances.

Mr. Callaghan:

Is that an encouragement not to give way?

The answer to the hon. Lady has been given many times. The form of consultation will take the form of a referendum, as stated by my right hon. Friend the Prime Minister, or of a General Election. We shall have to wait and see how the circumstances develop on this issue.

I am sure the Opposition want to cover the embarrassment of their Front Bench. I do not blame them for cheering. In my first speech I spelt out the major objectives in our renegotiations. In a later speech I clothed them with more detail, with the exception of European union, economic and monetary. If it is the concern of some of my hon. Friends, I shall return to these points later.

Let us see what points I covered and match them against the manifesto and the programme on which we fought the General Election. First, the election address said that there must be: irer methods of financing the Community budget". I said in my speech that the impact of the present system is unfair on the United Kingdom, and that the negotiation terms of entry were fundamentally inequitable. It is in the interests of every country to find a solution that takes account of the economic differences between States. If an essential requirement of our renegotiation is to be met we must ask the Community to find such a solution. I said that because our estimate is that by 1980 the net contribution of Britain to the Community will be between 700 million and 800 million units of account. The unit of account is based on the dollar, and that could mean £300 million plus, depending on the rate of exchange.

Photo of Sir Peter Kirk Sir Peter Kirk , Saffron Walden

With great respect, the unit of account is the exchange rate for the old dollar at $280 to the pound.

Mr. Callaghan:

I am much obliged to the hon. Gentleman, but he will find that it still comes out at about £300 million.

The basic principle on which we insist in these negotiations is that it is not right that resources should be transferred from the less well off to the better off in the Community. At this stage in the Community's development, the Government are not asking that net resources should be transferred from the better off countries to the less well off countries, but we are certainly not intending to accept the reverse; namely, that there should be a net transfer from the less well off to the better off countries. That is what is happening. Whether the exchange rate is $280, $2.40 or $2.20 to the pound, the result is the same. There will be a net transfer to countries which are better off than ourselves. That is a fundamentally inequitable position. It is one that was accepted, but we cannot accept it now. It has to be renegotiated.

Now I turn to the common agricultural policy. What did we say in the election address? We said: Major changes in the common agricultural policy, so that it ceases to be a threat to world trade … and so that low-cost producers outside Europe can continue to have access to the British food market. Let us watch prices. Let us see where they are. If the right hon. Gentleman thinks that prices will remain at their present level I shall be surprised.

I said that criticism of the CAP has been particularly strong in Britain both because we are a large importer of food and because membership of the EEC has weakened our ties with traditional suppliers. The major areas in which the United Kingdom wishes to secure improvements are in the cost of the CAP, which should be reduced in real terms, and there should be speedy improvements in the marketing regimes for some major commodities. It does not make sense to take a large quantity of British beef off the market, freeze it, put it in store and then watch the price of the remainder go up, to be followed in turn by a reduction in the amount the housewife buys. Those were the simple unadulterated truths that I was trying to utter to the Council of Ministers last week.

The changes we propose would do much to ensure that the CAP is not an instrument of excessive protectionism or a threat to world trade. There is a strong case for improved terms of access for many kinds of foodstuffs from countries outside the Community. We need satisfactory and continuing arrangements with New Zealand, and I spelt them out.

As regards sugar, we remain firmly committed to the offer of access on fair terms to 1.4 million tons of sugar from the developing countries of the Commonwealth after the Commonwealth Sugar Agreement expires. It is our view that everything I have suggested is compatible with the basic principles of the CAP and with the treaties.

Let us match that against the words of the manifesto. Is there any disagreement or quarrel? Is there anything wrong with it?

Photo of Mr Winston Churchill Mr Winston Churchill , Stretford

Mr. Churchill (Stretford) rose

Mr. Callaghan:

I do not think criticism is coming from the hon. Gentleman but from another quarter.

Let us see what we said in the election address. We said: The economic interests of the Commonwealth and the developing countries must be better safeguarded. That is partly dealt with, and my right hon. Friend the Minister of Agriculture, Fisheries and Food will be dealing with it in the Agricultural Council.

Apart from those major changes that affect Commonwealth countries, what else? I called for an extension of tariff quotas for a small number of products of importance, for example, some canned foods. Then, as a permanent solution in the forthcoming multilateral trade negotiations we could include an offer to make substantial reductions of tariffs on these products as well as on certain industrial products of importance to those countries.

As regards the developing countries in the Commonwealth, attention is concentrated at present on the group known as the associable countries or ACP countries —African, Caribbean and Pacific States. Negotiations have been going on between them and the Community for some time to make a new agreement. There is likely to be later next month a meeting of Ministers of the Community and the ACP countries in which we shall certainly take part. What I call for is the need for free entry for their industrial products and the need for generous treatment for their agricultural products, including, if necessary, tariffs on levy-free quotas. There is a need for evolution of Community burdens of aid. That view has already been put forward in the Development Council by my right hon. Friend the Minister of Overseas Development. We need to take into account all the developing countries, not just the ACP countries, and to have a more balanced distribution of trade on a world basis.

For the countries of South Asia we need to improve the Community's generalised preference scheme and to implement the Declaration of Intent. We need special regimes for Bangladesh and India in respect of jute and coir.

I ask any hon. Member who wishes to criticise whether he thinks that list matches up to safeguarding the economic interests of the Commonwealth and developing countries.

Photo of Mr Winston Churchill Mr Winston Churchill , Stretford

The right hon. Gentleman referred to the Labour Party's election manifesto, which contained the words— low-cost food producers outside Europe". Will he name two or three of them?

Mr. Callaghan:

No, sir, because they do not exist. Time marches on, a factor which we take into account even if the Leader of the Opposition does not recognise it. As the result of the combination of drought and bad harvests world prices have moved up.

Photo of Mr Richard Body Mr Richard Body , Holland with Boston

Mr. Richard Body (Holland with Boston)rose

Mr. Callaghan:

Let me deal first with the hon. Member for Stretford (Mr. Churchill). It would be foolish and shortsighted for the Opposition or anyone else to assume that world prices will always remain at their present level. On the other hand, we shall not have a continuation of droughts and bad harvests. In that case the difference between world prices and Community prices will become more important.

We should not try to shelter behind droughts and high prices. The principle to be followed is that there should be alteration in the regime and structure of the Community along the lines.I indicated earlier. In that way, whether world prices are high or low, we should avoid excessive protectionism in the Community and benefit the consumer as well as the producer. That is what we are trying to do, and those are the changes that should be made in the CAP.

I come now to regional and industrial policy. The election address referred to: The retention by Parliament of those powers over the British economy needed to pursue effective regional, industrial and fiscal policies. What did I ask? I said that we required powers to be able to pursue effective regional and industrial policies. We recognise the value of rules within the Community to ensure that one country in attempting to solve its own problems does not create problems for the others. We fear that our plans for British industry, including the steel industry, may be hampered by unduly restrictive interpretations of the treaties, and as part of the renegotiation we shall seek assurances on this score.

I turn to regional aid—and I am summarising what I said on all these matters. We said that the co-ordination of rules on regional aid had a useful part to play. The rules must be broad enough in scope to cover all types of aid that may be required. It will be necessary from time to time, arising out of our past experience in this country, for us to vary the level of aid and the definition of areas where particular problems arise, such as steel closures. We may also need to exceed whatever ceilings are agreed. These matters are essential to us as an element of the renegotiation.

That is the situation on those issues. 1 ask any hon. Member who cares to do so to get up and say whether that is inconsistent with the policy put forward by the Labour Party at its annual conference and by that party at the General Election, the party for which the people of this country voted.

Mr. Callaghan:

Before I give way, may I ask whether either of my hon. Friends is seeking to raise the question of capital movements or harmonisation of VAT or issues of that sort? I said that I should come back to those matters.

Mr. Callaghan:

I shall come back to that.

Photo of Mr Ronald Atkins Mr Ronald Atkins , Preston North

I thought that my right hon. Friend had given me my cue. He is now trying to take it away again. Why did he say so little about the sovereignty of the British Parliament, which has always been a matter of importance for the Labour Party?

Mr. Callaghan:

I thought I began my speech by outlining a series of proposals, which were challenged only on the ground of composition of the Committee and not because of the way in which these matters were to be carried out. To look at these matters fairly—I say this to all those who do not want to get out of the Common Market at any price—it is up to the House to probe them. By using the procedure and arrangements laid down by the Lord President, the House can take control of these matters. [Interruption.] I shall be very surprised if I am now to be told that that warrior, my right hon. Friend the Member for Battersea, North (Mr. Jay), has finally deserted and has given up his position on the Committee and has been "bought" and tainted.

Photo of Mr Douglas Jay Mr Douglas Jay , Wandsworth Battersea North

Can my right hon. Friend answer one simple question? Does he stand by everything he said in his speech on 1st April?

Mr. Callaghan:

Yes. Certainly there is no contradiction between the two matters, except in the minds of commentators. I fear that some hon. Members and some members of the public are more concerned with the headlines than they are with the content. I have gone through the content and I defy anybody to point out to me where there is any difference between the two.

One of the difficulties—this is a matter to which the Community should turn its attention—is that the Press does not attend the meetings. All that happens is that after the meeting one is asked about these matters in the lift and one tries to give an impression of what has gone on during the brief journey from the thirteenth floor down to the ground floor. That is no way to report these matters. I see the difficulties, but I ask commentators to study the text.

I turn to the question of how this work is to be carried out. First, as regards the common agricultural policy my right hon. Friend the Minister of Agriculture will be taking on board these important changes and will be handling these matters in the Agricultural Council. As regards trade and the negotiations with the Protocol 22 countries, those matters will be dealt with in the Council of Ministers. The question of aid will be dealt with in the Development Council by my right hon. Friend the Minister of Overseas Development. She is to attend a meeting on Thursday. Regional assistance and the rules in regard to regional aid will be dealt with in the working party which has already been set up and which is now beginning to move ahead. All those issues will be brought together in the months ahead as the procedure goes through.

There is one matter which I should mention, and that is the budget. I have already said that this arrangement is inequitable. Because the Council proceeds on a consensus, it would have been possible for an amendment to be tabled to stop any reconsideration of this matter. But that reconsideration was not stopped. The Commission has been asked to make an inventory of what has been happening to Community finances in the past and also to look ahead to Community finances between now and 1980. It will report back on the facts as it finds them and the Council of Ministers will discuss this matter to see what solution can be arrived at. I do not know whether we shall get a solution. I do not know whether a veto will be imposed. All that has happened so far is that we have made a minor piece of procedural progress which is worth while. The Commission has not said "No". It has not said "Yes", either, and there is no euphoria on my part in terms of the tough months of negotiation that lie ahead.

The only thing that could wreck proper consideration would be the prospect of the Tories being returned to power at a General Election, when these matters would be quietly forgotten. The Conservatives are regarded in Europe as a soft touch. Anybody can get anything they like out of that lot on the Conservative benches. If there is an incentive to the British people to ensure and stabilise the support of the Labour Government, then this is it.

I promised that I would deal with one or two other matters. I refer first to the harmonisation of VAT, which has caused concern among some hon. Gentlemen. The first stage is under discussion in the Community and there are draft proposals about coverage. We take the line that provided the Community accepts zero rating for food and other items, we would consider favourably the harmonisation of coverage. I must say that no agreement is yet in sight and there are no proposals for harmonisation of rates. I have no intention of yielding on the point relating to zero rating. It is not conceivable and would not be in accord with what we said in our manifesto which was carried into our election programme. That is the position on harmonisation. The proposals have been put forward and we are not yielding on the matter of zero rating for particular items. I hope that the situation is covered for the moment.

It may have escaped the attention of some of my hon. Friends and others that the question of capital movements was covered by my right hon. Friend the Chancellor of the Exchequer in his Budget speech on 26th March. My right hon. Friend said that he had altered the arrangements for investment in the European Economic Community. Arrangements had been made in the 1972 Budget under which firms were able to obtain a ration of £1 million of official exchange for a project in any one year. My right hon. Friend altered that situation. He said that for the time being such investment must be financed, in the main, without official exchange. The existing rules for investment in the non-sterling area will therefore apply to the EEC also. We have informed the Commission of the European Communities and the other EEC Members of what we are doing. "—[OFFICIAL REPORT, 26th March 1974; Vol. 871, c. 287.] Articles 109 and 108 both provide for action of this kind to be taken. The Chancellor took such action and it has been discussed in the Commission. Therefore, in terms of capital movements, in so far as we are dealing with either direct or indirect investment, there need be no concern. If the reference is to the flows of oil moneys which are now saturating the markets and overflowing all our boundaries, nobody has yet found an answer how to control that situation. That is one of the big problems that face us at present.

Photo of Mr Norman Atkinson Mr Norman Atkinson , Haringey Tottenham

I do not want unnecessarily to delay my right hon. Friend, but he will appreciate that in this debate we shall be taking up many of the points which he is now making. One of the points relates to the flow of capital. Does he not accept that the Treasury has already indicated that the arrangements announced by the Chancellor of the Exchequer come to an end at the end of December this year? This has been confirmed by Conservative Members who attend meetings in Europe. But there are other difficulties, underlined by the fact that my right hon. Friend said that the Labour Government had no intention of amending the treaty. This is an important matter, which we are now discussing.

Mr. Callaghan:

It seems to me that my hon. Friend is making his speech now. What we said on the matter of capital movements is set out in the manifesto: We need an agreement on capital movements which protects our balance of payments. I imagine that my hon. Friend does not assume that our balance of payments will be in balance by the end of the year. If they are not, I can assure him now that there will be no likelihood of these restrictions being lifted.

Photo of Mr Norman Atkinson Mr Norman Atkinson , Haringey Tottenham

We do not yet know the Commission's conditions.

Mr. Callaghan:

We do not know the Commission's conditions because we do not need to know them. We inform the Commission of what is required under our balance of payments situation and what we shall do under Articles 109 and 108. There can be no doubt about that, and that will remain the position. I hope that my hon. Friend will look at the matter fairly and not raise scares which do not exist. When a country is in balance of payments deficit to the extent that we are, there is no doubt of its powers to restrict flows. That is a power that we require. It is a power that my right hon. Friend the Chancellor of the Exchequer has taken without challenge. It is a power that he will continue to have.

Photo of Mr Norman Atkinson Mr Norman Atkinson , Haringey Tottenham

Does not my right hon. Friend accept that it is within the Commission's power to issue directives on the terms under which we would then manage our economy in these circumstances, and that, when the Opposition join in the debate, they will contradict some of the things that my right hon. Friend has said?

Mr. Callaghan:

I do not accept that. What I am ensuring is that the procedure does not go ahead in this way. I do not accept the fears that my hon. Friend expresses.

I turn now to some more general reflections. It is true that we do not propose to renegotiate the treaties. We did not say that we would. This was not a hare raised by us. It will not be found in the Labour Party manifesto, and it is that that I clutch to my heart, whatever anyone else may say. I can promise the House that I know this section of it better than anyone else in this Parliament, and I shall continue to adhere to it.

We are not renegotiating the treaties. When I started out on this road, I thought that we might have to. I thought that it would be necessary to propose some amendments. To cover myself and some of my more sceptical right hon. and hon. Friends, I put in a reservation saying that I might have to propose some alterations to the treaties. It stands in my second speech. I said that the basic document was that of 1st April, 1974. That is the basic document in which we say that I may have to propose changes in the treaties. But why should we go out of our way to make trouble if our objective can be secured without it? I have never believed in making trouble for anyone. I am the mildest and most conciliatory of Members when dealing with these issues.

If we have to renegotiate, why should we adopt a process requiring the ratification of nine Parliaments, including our own, with all the prospects which might ensue, if it can be done without? [An HON. MEMBER: "Let us just get out." I must rebuke my hon. Friend. He is a worthy upholder of party policy. He would not have me depart one inch from it. He knows the party policy, and I shall stick to it.

I turn to some further general reflections on the issue, and the first of them relates to the Commonwealth. When we debated these issue in 1970 and 1971, we said that the result of entry into the Community would be to weaken the links with the Commonwealth. That has happened. There is no doubt that, as a result of our entry, the Commonwealth has succeeded in diversifying its markets. It has found different markets, and it is for that reason, among others, that New Zealand for example has not been able to deliver her full quotas to this country— —

Photo of Mr Edward Milne Mr Edward Milne , Blyth

Before my right hon. Friend leaves the Commonwealth—

Mr. Callaghan:

I have not yet finished with the Commonwealth. I will strike a bargain with the hon. Gentleman. If he is willing to wait until I have completed what I have to say about the Commonwealth and I have not dealt with the matter that he wishes to raise, I shall gladly give way to him then.

I have endeavoured to consult all the members of the Commonwealth on this. We have sent out telegrams and messages, and we have their reactions. A number of members of the Commonwealth feel that the spread of diversification has gone so far that not much can be pulled back. Others have ties of blood, sentiment and history with us and would like to see a pulling back if it could be secured. Others, frankly, are more concerned to see their relations with the Community broadened than to keep a market with Britain.

All these factors have moved on since we discussed these issues in 1970. I regret that the Commonwealth has diversified in this way—[HON. MEMBERS: "Why?"]—but we forecast that it would.

I am asked why I regret the diversification. I regret it because I believe that the Commonwealth is a force for good and that its ties should be maintained as closely as possible. Since being at the Foreign Office, I have tried and I shall continue to try to strengthen the ties with Commonwealth countries.

Photo of Mr Edward Milne Mr Edward Milne , Blyth

My right hon. Friend has made precisely the point about which I wanted to ask him. If it is possible to renegotiate with the Community in the way that he has outlined, despite the changes in Commonwealth trading arrangements, it is equally possible surely to renegotiate these matters with the Commonwealth. The purpose of renegotiation is on that basis.

Mr. Callaghan:

Yes, it is possible. We are discussing with the Commonwealth countries, and we will continue to do so, whether they are willing to re-enter into long-term arrangements with us or with the Community as a whole, and at what level of prices they will be willing to do so. That is an essential part of our discussions.

As to whether the views of the Commonwealth have been properly repre- sented and as to whether I have done the job that I was given, I make one quotation in my own defence: The New Zealand Prime Minister Mr. Norman Kirk said … he was pleased that Britain was seeking satisfactory 'continuous' arrangements for New Zealand trade with Europe. Commenting on the statement made by the British Foreign Secretary, Mr. James Callaghan, in Luxembourg "— that is the speech— on the renegotiating of British terms of accession, Mr. Kirk said it was the first time that New Zealand's case had been put so clearly and emphatically. 'It was all the more emphatic because it was coupled with renegotiation'. So he is in no doubt, and Mr. Chirac is in no doubt—

Mr. Callaghan:

He is in no doubt about the fundamental questions that we are raising and about the difficulties that we shall find.

Photo of Mr Raphael Tuck Mr Raphael Tuck , Watford

May I raise with my right hon. Friend one matter which has been worrying many of us? Mr. Chirac said on 5th June that the French regarded the common agricultural policy, which my right hon. Friend wishes to renegotiate, as "untouchable". What answer has my right hon. Friend to that?

Mr. Callaghan:

My right hon. Friend the Minister of Agriculture has already altered the basis of the CAP by what happened within a month of going back. The Italians themselves put on import deposits on agricultural produce. I do not rejoice in any of this because it means that there could be nationalist solutions for problems stretching over a wider area.

I say to my hon. Friend the Member for Watford (Mr. Tuck) that if the political will is there, we can get these changes. If the political will is not there, we cannot get them. That is what the party said that we should set out to try to find. At the end of my voyage of exploration, I do not know the answer with which I shall come back. But it will be a fair answer, because I shall not say one thing to the Council of Ministers and another thing to my right hon. and hon. Friends. My hon. Friends think that I never budge. They should hear what I say to the Council of Ministers. We must be absolutely honest and straight about this matter. There is nothing that I have said this afternoon that has not been said in another place.

Finally, I return to the point made by my hon. Friend the Member for Watford. We have a new President in France— President Giscard D'Estaing. We also have a new Chancellor in Germany— Chancellor Schmidt. They are new men. I believe that there is a growing realism about what is possible. The phrase-making of the last few years—the kind of words that went into such phrases as "European Union" and so on—will be abandoned. The people will begin to try to find practical solutions to common problems. Heaven knows, there are enough of them—problems of inflation, monetary markets, Euro-Arab dialogue, United States-European relations, and relations between Europe and the USSR. Canada is asking for discussions with the Community. Yesterday, in the Council of Ministers, I was able to ask that they should examine their own records in relation to sanctions against Rhodesia in order that we may try to get some common approach on them and to make sure that the sanctions are uniformly applied, especially in view of the developments taking place in Southern Africa. In all these issues it is important that we should regulate our relations with Europe.

The Government are working for successful renegotiations. We are not working to fail. I do not know whether we shall succeed. I have never made a secret about that. I do not know with what answer we shall eventually return. I believe that it would be in European interests if we succeeded. It would be in our interests if we succeeded. If we cannot succeed we shall have a hard decision to take and the British people will have to be put fully in the picture about it. I believe that it is on this basis that we must conduct the whole of our discussions.

It would be a great blow to Europe if we were unsuccessful. As to whether it would be a blow for us economically, that is a dubious question. I am not wholly convinced about that. Politically, however, it would be a blow for Europe as well as our relations with Europe. It is in that political sense that it is probably as important to work for success as it is in the economic sense. As my right hon. Friend the Secretary of State for Trade pointed out yesterday, the financial benefits of our trade last year have not been clear to be seen so far. We shall have to see how that matter goes. As to the small change of gossip—as to whether they want us out, and the reports of anger, and hopes that we leave, and so on—we can dismiss all of them.

There are big issues at stake and big prizes to be won. I do not know whether we can succeed. We shall do our best. But, on the basis of the negotiations conducted so far, if anyone were to vote against the basis on which we started them, he must be either deaf or just plain cussed. We have been putting our position very fully and clearly. We have stood by what we said we shall do and we have continued to do that. If we succeed we shall do what, in our manifesto, we said we would do—namely, join in building a new and a wider Europe.

5.3 p.m.

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

The Foreign Secretary's speech at Luxembourg was generally recognised as constructive and statesmanlike. I am afraid that there were times this afternoon when his performance was not exactly what one would expect of a Foreign Secretary reporting to Parliament. We, as a House, ought to take note that there are grave dangers in entangling weighty issues of foreign policy in party-political disputes of the kind with which the Foreign Secretary was manifestly dealing this afternoon.

The Foreign Secretary asked to be sustained by the House in his negotiations. I assure him that he will be, provided that he makes it clear at every stage of the negotiations that what he is concerned with is the defence of British interests and Commonwealth interests, and not simply party interests.

I think that the whole House will, however, be grateful to the Foreign Secretary for what he told us about the arrangements that the Government propose for debates. Questions and reports. In that regard, he is following the procedures which the previous Conservative Government introduced and contemplated for the future. We would also all want to pay a warm tribute to what we may collo quially call on this occasion the Foster Committee.

What the Foreign Secretary made clear was that there already exist the safeguards for Parliament that we always said were there throughout the long discussions on the European Communities Act. We said then that arrangements could be made for ensuring that Parliament would know about and could express opinion on any matters that came before the Commission or the Council of Ministers and could express a view before final decisions were taken. It is rather extraordinary, after all those long debates, to hear the Foreign Secretary saying that he has now discovered the Luxembourg Agreement and can assure the House that sovereignty is not an issue in this regard. One of his hon. Friends intervened to say that what we are concerned about is the sovereignty of Parliament. That is really relevant to the question of consultation with the people.

In our election manifesto in 1970, in which we said that we had a commitment to negotiate, no more, no less, we said that after the negotiations, provided that we were satisfied that the terms negotiated were fair, we would put them to Parliament. It is interesting that at that stage—whether there was a Labour Government or a Conservative Government—the present Prime Minister, whether as Prime Minister or Leader of the Opposition, always said then that Parliament was the proper forum for these discussions and that he was against even a consultative referendum and would hold to that view no matter if there were even 20 public opinion polls against him. In the result we had a majority of 112 in the previous Parliament in favour of entry on the terms then negotiated, and 69 members of the Labour Party voted on that basis, including two members of the present Cabinet.

Now the Foreign Secretary says "What of the future?". The consultation with the people through Parliament must be a continuous process. It is not sufficient to have just one consultation about one stage in the negotiations. The Foreign Secretary would not say whether there was to be a referendum or a General Election. He said that we should wait and see how the situation developed. That was probably the best answer that anyone could give, because it is the Government who will have to come forward at the appropriate stage and say what they think should be done. We are probably closer to a bipartisan view of this matter than we have been for a very long time. Perhaps we shall be all agreed on what to do and there will be a unanimous recommendation to the British people. But in any event, this particular matter on the form of consultation with the British people through Parliament continuously is a matter which we shall no doubt debate further.

When the Government have made up their minds whether they are to consult through a General Election, in the more conventional way, or through a referendum, they will have to tell Parliament what sort of legislation they contemplate. We shall have to consider, as the Prime Minister always said that we should have to consider, the constitutional implications of importing the referendum into our constitution and the effect that it would have on the sovereignty of Parliament. The Italians have referenda, but not for taxes or treaties. The French have a referenda system because the President said that being directly elected he had the right to consult people over the heads of the French Parliament. We shall have to consider this matter. What sort of questions would be covered? Would the Foreign Secretary say that the British people ought to be consulted about nationalisation or about capital punishment, or a whole range of other issues? We would have to consider the matter, and it is for the Government to make proposals about the way in which questions to the people must be put.

For our part, we on the Opposition side of the House have always made it clear that we stand for the sovereignty of Parliament and that, I hope, must always be sustained by consultation in the appropriate way with the electorate.

Photo of Dr Dickson Mabon Dr Dickson Mabon , Greenock and Port Glasgow

I do not understand the right hon. and learned Gentleman's last remark. If the Conservative Party—it is a perfectly respectable position to take— by saying that it respects the sovereignty of Parliament, means that it does not believe in referenda, does that mean that there would be opposition from the Conservative Party to a referenda Bill produced by the Government?

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

We must await the Government's proposals. This matter raises very serious constitutional issues, which have been recognised on both sides of the House and were the subject of debate and a vote in the previous Parliament. But one Parliament cannot bind another. Equally, no referendum could be final and binding, and if it was consultative the final decision would rest with Parliament. The sovereignty of Parliament rests upon the will of the people and the expression of that from time to time in a General Election. If we import some new concept into our constitution we shall have to discuss it very carefully in the House. We can only do it, as the Foreign Secretary said, if we wait and see how circumstances develop. At present, the chances are that things may go very well, if the right hon. Gentleman sticks to the views he expressed in Luxembourg last week.

The Government's attitude, as far as one can now judge, can be put simply. They remain in favour of the principle of entry. They want the Community to succeed, to grow and to develop, but they are not satisfied about some of the terms. They now say "We can negotiate within the framework of the treaties". In other words, the negotiations now in hand are exactly those that the treaties contemplated.

I find it encouraging, as there are 1,500 pages of treaties, 650 relating to the Act of Accession and the protocols and all the other documents, that the Foreign Secretary can say that he can see no reason why all that negotiation—and it took a long time- should not be left intact. He says that there are only four or five issues —we can ignore one which he said for the moment we could put on one side, because it was still a matter for future discussion—which represent the limits of the negotiations that he has in mind. That is a great step forward.

It is now clear that in the Government's judgment, which must be a collective view binding not only the Foreign and Commonwealth Secretary but the Secretary of State for Trade and the Secretary of State for Employment, the proposals put forward, if accepted, would not require changes in the treaties. Therefore, it is not possible to negotiate in good faith unless one is proceeding on the principles which the House accepted when the Prime Minister spoke in the House on 8th May 1967. One cannot negotiate in good faith unless one accepts the basic principles of those treaties, because otherwise one would have to say "I believe only in withdrawal, and there are no terms which could be found acceptable."

That is a great advance in the view of some of those who took part in the debates in the last Parliament. What we are really talking about now is basically how we can ensure the implementation of the terms on which we joined. That is true even of the Community budget proposals. The Foreign and Commonwealth Secretary now says—this was perhaps his toughest point—that in respect of the Community budget the negotiated terms of entry were fundamentally inequitable, and that experience has reinforced that judgment. Quite apart from the fact that large numbers of his party voted for entry on the basis of the terms then negotiated, there is a misunderstanding of what was negotiated and what the treaty provides. Our contribution to the budget was one of the central features of the negotiations leading up to our accession. Our purpose then was to settle what was described in paragraph 43 of the Labour Government's 1970 White Paper, which referred to the transitional arrangements under which we approach paying our full share of the recently agreed Community financing arrangements". We were concerned that the application of those arrangements should be equitable.

We said in paragraph 91 of our own 1971 White Paper: From the outset the Government recognised, as did their predecessors, that it would not be possible to seek to make fundamental alterations in the system of providing funds for the Community. That is why I say that even the fresh look which it has been agreed should be taken at the Community budget, and at the burden which it imposes on individual countries, cannot be regarded as a renegotiation of the terms of entry, as those terms themselves include the very safeguards needed to take account of continually changing circumstances, whether in relation to capital movements, balance of payments or whatever.

Apart from the express provisions of Articles 6, 108 and 109 of the Treaty of Rome, under which the late Italian Government were proceeding, provisions which relate to action that can be taken to deal with the balance of payments and similar problems, it was always understood during our own negotations that estimates of our contribution to, and receipts from, the Community budget in future years were necessarily tentative and depended on a large number of unpredictable factors.

That was a great difficulty in the conduct of the negotiations—trying to assess what the position might be even through the transitional period, let alone the years thereafter. We set out in the White Paper the nature of the difficulties that arose, and the way in which the Community budget was likely to change. In paragraph 95 we said: it is impossible to foresee the likely size of our VAT contribution. The size of this contribution (if any), would be a function of the size of the Community budget and of aggregate receipts of levies and duties from all member countries. We also said that there might be changes in activities as a result of industrial and regional policies. We concluded: Thus, in the Government's view, neither our contribution to, nor our receipts from, the Community budget in the 1980s are susceptible of valid estimation at this stage. It was for that reason that the Community declared to us during the course of the negotiations that if unacceptable situations should arise the very survival of the Community would demand that the institutions find equitable solutions. This arose because when I put forward our estimates as to what would happen in the future the Community representatives said "You have underestimated the benefits and exaggerated the cost. You have underestimated the receipts. This is all very difficult." They put this phrase into a Commission document, and I seized on it and said "I am prepared to agree with you that, as it is very difficult for all of us to see what the likely position will be as far ahead as the 1980s, there must be procedures to ensure equity at any point in time between one member of the Community and another, to ensure the balance of advantage."

The Foreign and Commonwealth Secretary says that experience has proved that the terms were fundamentally inequitable. In fact, the experience of the first two years shows that the Commission was right and that we had exaggerated the burden on our balance of payments. The Financial Secretary to the Treasury said yesterday that the figure of net cost in 1974 would be £80 million. I think that it was £75 million to £80 million in 1973. But in our White Paper and in our negotiations we contemplated a 1973 net cost of £100 million and a 1974 net cost of £115 million. That was partly because we underestimated the amount we would receive from the Social Fund, which amounted to £24 million last year, or one third of the total amount available.

We also based our figures, as we could only do then, on what was our percentage of the Community's total gross domestic product, which then stood at about 19 per cent.

The idea was that we had a key by which we moved up to our full contribution, based on our notional GDP, assuming it remained the same. We had the five years' transitional arrangements and a further two years, and then we would make our full contribution. We always envisaged that as the Community developed there would be other purposes on which Community funds would be spent, such as the industrial and regional policies, from which Britain could expect to receive back money commensurate to our contribution to the Community's budget. We were not saying that there should be a just retour—that everything we put in must automatically come back out—but we said that those factors would have to be taken into consideration when we framed the budget, and that we should have a continuing British interest and concern in the size and shape of the budget.

A great deal of what the Foreign and Commonwealth Secretary says about the industrial and social policies and the size and shape of the budget is not in dispute. What we did not envisage, and what will no doubt be a matter of some dispute and discussion not only in the Community but in the House, is that the Socialist Government would suggest to the Community that by 1977 our share of the Community GDP would be about 16½ per cent., and by 1980 be 14 per cent., even after taking North Sea oil into account—that in effect our individual standard of living would be so far below the average for the rest of the Community. Indeed, an estimate that the British GDP per head of population will decline from 80 per cent. of the Community average in about 1977 to 65 per cent. in 1980 is a savage comment on declining British prosperity.

I, for one, am not prepared easily to assume that, even supposing that the Community is prepared to agree that that is a correct figure. In effect it means that the Government are saying, "We assume in our estimate that by 1980, considering that some people will be below as well as above the average, the average British citizen will be little more than half as well off as his German or French counterpart". That is a very severe assumption.

If it were true we would be entitled to say that this was an unacceptable situation, of which the Community would have to take account in framing the budget. There may be something to be said for the solution which the Foreign Secretary put forward, of taking account in the budget of the special problems of countries which have a below-average gross domestic product per head of population. That is a fair point to make. I was glad that the Foreign Secretary made it quite clear that he was not talking about a system just for this country but that it had to be a system for the Community as a whole, applying to all members. That is the right Community approach.

It allows for the changing circumstances not only of ourselves but of other countries too. As I told the House on 25th October 1971: The balance of advantage between the nations in those Communities is constantly changing. That is why we cannot make estimates of what the position will be, in mathematical terms, in the 1980s."—[OFFICIAL REPORT, 25th October 1971; Vol. 823, c. 1251.] 1 always stood firm by the assurance we were given by the Community that it would have regard to changing circumstances as we moved forward. The Chancellor and the Foreign Secretary can give their views about the cost of remaining within the Community but I hope that they will also give the House the cost of withdrawing. We must set the present cost of our contribution to the budget— about 06 per cent, of our total national Budget—against the undoubted benefit of permanent unrestricted access for our exports to a market of 300 million people. That is what we have called the dynamic effect from which we would benefit. It could not be quantified because it would not take place in the early stages. That is why we had to have these transitional arrangements.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

The right hon. and learned Gentleman has spoken so many times about the "dynamic effect". When will this be witnessed by the people of this country?

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

That is what I was explaining and what I have often explained in earlier debates. One of the reasons why we asked for the special transitional arrangements was that we said that whatever the dynamic benefits would be we could not make a quantitative estimate. They were quantified as being possibly equal to ½ per cent. increase in the gross domestic product, which would bring us £1,100 million a year. That does not necessarily affect the balance of payments except in so far as it is an export-led movement.

We assumed that the benefit would come later and that it would be a growing benefit. What the Foreign Secretary and the Government can do is to consult industry and ask for its views. ICI, for example, increased its exports to Europe last year by some 98 per cent. Industry can give the figures to the Government and the Government must tell us what they think of the value of the opportunities of exporting to this important and growing home market. If we were to withdraw we should have no guarantee of an offer of association on the basis of a free trade area. We could be faced with tariff barriers or quota restrictions. There is no reason to suppose that if we behaved badly the Community would necessarily be prepared to treat us as a special case, like Norway. We cannot just go back into EFTA. It has its own association arangements with the Community.

Whatever the effect on the balance of payments according to the recent report by the National Institute for Economic and Social Research none of the United Kingdom's balance of payments difficulties can be attributed to EEC membership. There is no simple answer there. If we contemplate within the Community this declining standard of living what. then, is the Government's estimate of the position if we were to move outside it?

The Foreign Secretary spoke about consultations with the Commonwealth countries and I hope that we will hear more of that. I trust that that will be put in a document and the House will be kept fully informed as to whether the Commonwealth wants us to withdraw, to negotiate particular agreements within the framework of the treaties or whether it wants us to see that the treaties are implemented. We shall want information about the views of industry and agriculture on the developing position.

The second point emphasised by the Foreign Secretary was the common agricultural policy. No one has ever taken the view that that should remain unchanged forever. There must be here, as elsewhere, this constant process of negotiation within the treaty. This is the problem 1 find with this so-called renegotiation exercise. It assumes that it is possible to start a renegotiation within the framework of the treaty and then to reach some final solutions which will last until the 1980s. I do not believe that is possible.

The position now is as it was stated by the Prime Minister on 8th May 1967 when he said that the common agricultural policy was not negotiable. We have to come to terms with it, he said. We could only influence it if, but only if, we were inside the Community.

The whole House will be glad that the Foreign Secretary has recognised and acknowledged this. I quote from his statement in Luxembourg, when he said that: it can provide an assurance of supplies at known prices in a world where both prices and availability can be unpredictable. In consequence, what the Government are now proposing, in their own words, are: actions consistent with the broad principles on which the policy is based. That is no more than we negotiated and no more than is in the treaties which Parliament ratified by passing the European Communities Act.

As we made clear in the debate of 19th March, my right hon. Friend the Member for Grantham (Mr. Godber), when he was Minister of Agriculture, had already proposed modifications to the Community to take account of this need for a proper return to efficient producers as well as taking account of the impact of the policy on taxpayers and consumers alike. These are complementary considerations. There is no dispute between us on that.

My right hon. Friend had emphasised to the Community the same points as the Foreign Secretary. He dealt with what we would need to discuss in our future negotiations, including action to contain the costs of the common agricultural policy and to deal with surpluses. On this question of costs, although we may have a key for our contribution, and it may be a certain percentage of the budget, there are advantages in being a net con tributor. Then we do not have the same incentives as the recipients to agree the total amount that is to be distributed. 1 have never thought that a British Government would be without resources in saying that before the budget was agreed the terms of the treaty and the undertakings given to us about industrial, regional and social policy should be honoured.

The Foreign Secretary talked about whether the Community would veto us. There is another side to this. We are now members of the Community. We are not like people trying to join a club from which one blackball excludes. We are members of the club and we can say something about the way we think it ought to be run. I hope that the Foreign Secretary will be doing that, but not for one renegotiating period. I hope that he will do it during the brief time he holds his office and then, when he hands over the torch to this side of the House, I have no doubt that our Foreign Secretary, whoever he may then be, will carry on the same process of defending British and Commonwealth interests.

We have the same feeling that the right hon. Gentleman has expressed about farm surpluses, but it is worth bearing in mind that the so-called 100,000-ton beef surplus is, for this large Community, no more than three days' supply.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Does my right hon. and learned Friend not think that it might be a good thing to renegotiate the transitional period for British agriculture now? It would not only be of benefit to British farming but might actually halt the price rises on food which are in the pipeline now that European food is a good deal cheaper than food in the rest of the world?

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

That is a good example of the way in which circumstances change. I was pressed by agricultural interests to have as long a transitional period as possible. They wanted seven years. When I settled for five I was accused of betraying them. Now they wish they had not had a transitional period at all. That is an indication that the process of negotiation—once the treaties are accepted, and the Government accept them—is a continuous process in which regard must be had to changing circumstances.

There is a great deal in what the Foreign Secretary said in Luxembourg about the need for securing speedy improvements in the marketing regime of some major commodities. We might start with our own farmers, because unless the Government do something to improve their position then surely the danger is of a beef shortage rather than a beef surplus. The Minister of Agriculture conducted the current round of negotiations, and there will be a round each year, not just one renegotiated round which will take care of everything. At the moment the Government have opted out of the intervention system. The urgency at the moment is to reintroduce some form of guarantee for our beef producers. Next year the problem may be different, but the Government have a wholly false conception of what the negotiations are all about.

Photo of Mr Thomas Peart Mr Thomas Peart , Workington

The right hon. and learned Gentleman will know that the problem in Europe is that the intervention policy has not succeeded.

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

The Government have opted out, and all we are saying is that there is an urgent need for action to help our producers. Next year it may be different, but the matter could be dealt with within the framework of the treaty and the common agricultural policy because the Foreign Secretary has just told us so.

Here again, what if we withdraw? It is a dangerous illusion to think that we can ever revert to the era of free access to cheap food from the Commonwealth and the rest of the world. There was an article recently in a publication called West Africa in which the authors said that the Labour Government were proceeding on the wrong basis and that the era of cheap food from the Commonwealth had gone out with neo-colonialism. If the Labour Government withdrew from Europe, they said, they would find they had cut themselves off from the countries of Africa rather than forming a new and closer association with them. There is no quarrel with the Foreign Secretary's concern to ensure that the terms of entry are fully implemented according to the needs and wishes of the Commonwealth countries, but there is a risk of undermining existing firm agreements reached under the treaty if it is suggested that those agreements are not firm.

We have to see that agreements we made for primary products and sugar and for New Zealand are implemented. British representatives at the European Assembly have been pressing the Commission about this and about the safeguarding of the quantities. They have made a great deal of progress. I wish they could have had the support of Labour Members. In the Assembly we can also influence what the Commission does. The Foreign Secretary talked about the harmonisation of valued added tax. We talked in the White Paper in 1971 about a contribution from the value added tax fund, but we certainly got nowhere near harmonising it. We always said that we would not impose the tax on food and we never did. The Chancellor of the Exchequer has weakened that argument by imposing it on food. As a result the Foreign Secretary went to the Community in April and said that we did not want harmonisation of value added tax on necessities. We would press for the clarification that that does not mean harmonisation on food. We are entitled to press for that as a country.

Mr. Callaghan:

I think I misunderstood the right hon. and learned Gentleman. I made clear in my speech that we have no intention of departing from that principle in any way.

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

I was not intending to press the Government on that, but we are entitled to press the Community on it as part of our case. There is nothing to suggest that we have to renegotiate things which are already contemplated by the treaties. We should be doing everything we can to ensure that the Commonwealth developing countries get association agreements under Protocol 22 of the Treaty of Accession. As the Foreign Secretary said at Luxembourg that is the best way of meeting the interests of those countries.

Protocol 22 not only set out the options for association, but stated clearly that an enlarged Community would have as its firm purpose the safeguarding of developing countries dependent on primary products, particularly sugar. The Conservative Government, both during and after the 1970-71 negotiations gave an assurance that it would be our firm policy to ensure that the Community proposal would be implemented so as to provide a secure and continuing market in the enlarged Community, on fair terms, for the quantities covered by the Commonwealth Sugar Agreement in respect of all its developing member countries. We said we would regard that as a specific and moral agreement and we expect the Foreign Secretary to insist that it is implemented. On some of these matters I should be a little rougher than the Foreign Secretary, who was like a cooing dove.

As for the Asian Commonwealth, there was a declaration of intent. We did not expect there to be any problems for at least two-thirds of their exports to Britain, but we attach great importance to the assurances by the Community that it would not only strengthen but extend trade with the Asian Commonwealth. India has an agreement and we hope that Bangladesh will reach an agreement about its jute. I think we can best serve the Commonwealth by seeing that those agreements are implemented.

On the developing Commonwealth countries it was recognised before the negotiations began that there would be no particular problems. Those countries had other markets in the world, particularly in their own parts of the globe. Nevertheless, quite apart from the special and crucial arrangements for New Zealand we took steps to ensure dutyfree entry into Britain for a whole range of exports from Australia, Canada and the rest of the developed Commonwealth. We negotiated in Protocol 16— this is relevant to what the Foreign Secretary said in Brussels—arrangements to deal with problems that might arise in specific cases concerning agricultural products. A footnote to the protocol notes that these specific cases so far as can be foreseen at present will be confined to butter, sugar, bacon and certain fruit and vegetables but the provision is not limited in any way. This concept, which is built into the treaties, of not attempting to foresee the future in every detail, is at the heart of what the Foreign Secretary is now arguing on our behalf in Luxembourg. I would say that the terms of entry were right on the assumptions that could then be made, and given that we had to join the Community as it then existed. The treaties provide for a continuing process of negotiation, a process which would have been impossible had we been outside.

Finally, the House will have noted, I hope with satisfaction, the concluding passage of the speech in Luxembourg by the Foreign Secretary on 4th June. He said: Quite distinct and separate from the problems I have been discussing is the feeling that there exists among Community members a diminished unity of purpose, a growing divergence in our economies and a readiness to seek nationalist solutions to problems which demand common and joint action. That is why I agree that the Foreign Secretary was right to say that with the Budget and everything else there had to be solutions which maintained a fair balance of mutual advantage between all members as circumstances developed. As the German Chancellor is reported today as saying, with all the dangers of inflation which beset us isolationism is no solution for any country in Europe today. It follows from what the Foreign Secretary said that it is all the more important for Britain to try to bring a renewed sense of urgency to the development of the Community and to work within the Community for that purpose. This is a tremendous advance on the attitude the then Opposition were taking when we were negotiating entry and when we were debating the terms of the treaty in the House.

We must welcome the Foreign Secretary's assurance that in addition to proposing solutions which can be reached without disrupting the treaties the Government have chosen to play a full part in the ongoing work of the Community. That is a considerable advance on some of the things which have been said before. I hope they will extend in due course to sending a full delegation to the European Assembly where we can exercise a British influence on the development of European affairs.

Above all, let us never forget how right our present Prime Minister was when he said in Strasbourg in 1967, Over the next year, the next 10 years, the next 20 years, the unity of Europe is going to be forged and geography, history, interest and sentiment alike demand that we play our part in forging and working it". That is as true today as it was in 1967.

5.40 p.m.

Photo of Mr Douglas Jay Mr Douglas Jay , Wandsworth Battersea North

One fact which has clearly emerged from the debate is that the Conservative Party still has no intention of allowing a final decision on this issue to be taken by the British electorate. In fairness, however, I say to my right hon. Friend the Foreign Secretary that his speech in Luxembourg on 4th June will have to be spelled out in much more detail than we had today before he will convince the House or the electorate—or indeed, the Labour Party—that the speech faithfully carries out the party's election manifesto, as I am sure he is sincerely anxious it should.

For instance, in his speech on 4th June my right hon. Friend said virtually nothing about the legislative sovereignty of the British Parliament, though he did today. Yet at this moment—although it would not be thought so from the speech of the right hon. and learned Member for Hexham (Mr. Rippon)— regulations, directives and decisions are being promulgated every week by the EEC Council and the bureaucratic Commission in secret, without approval by any elected body, which claim the force of law in this country. In some cases, indeed, they claim to be legally in force before they are even published.

This is legislation by decree by the Executive, and this has never been accepted by the electorate and ought not, in my view, to be accepted by the House—

Photo of Mr Norman Atkinson Mr Norman Atkinson , Haringey Tottenham

And not by the Labour Party.

Photo of Mr Douglas Jay Mr Douglas Jay , Wandsworth Battersea North

. Lord Denning— not I—has just said that the Treaty of Rome is like an oncoming tide; it flows into estuaries and rivers, it cannot be held back. Compare that, incidentally, with what I regard as one of the most glaring falsehoods of all by the Leader of the Opposition's 1971 White Paper in which it was stated that there would be no surrender of essential national sovereignty. Let me give an example. The Council of Ministers of the EEC has just promulgated one of those authoritarian decrees. It is, for those hon. Members who are interested, R 1253/74 (FIN. 306), which covers the main lines of economic, budgetary, monetary and fiscal policy in this country in 1974. I have it here and I should not have thought that there are many hon. Members who have even read it so far. I am advised that this directive claims the force of law, and that if my right hon. Friend the Chancellor of the Exchequer introduces the wrong sort of Budget later this year he could be hauled before the Common Market Court at Luxembourg. That nonsense is wholly contrary to the election manifesto, which binds the Government. The relevant passage here will be well known to my right hon. Friend the Foreign Secretary, because he quoted it in his 1st April speech and quoted some of it again today. The manifesto said that one of our main objectives was the retention by Parliament of those powers over the British economy needed to pursue effective regional, industrial and fiscal policies.

That is wholly inconsistent with the directive with which we are now threatened. That pledge in the manifesto cannot be carried out unless the new settlement for which we are negotiating contains a clear declaration that the Brussels decrees have no force of law in this country unless approved by the British Parliament.

My right hon. Friend the Foreign Secretary spoke today about the so-called Scrutiny Committee of this House, of which I have the honour to be a member. But nobody should complacently imagine that this legislative torrent from Brussels is being happily and smoothly unravelled by this Committee dealing with European secondary legislation. The Committee is doing its best, but there are dozens of these legislative decrees pouring out of the Brussels sausage machine week by week at a rate which makes it extremely difficult, at any rate with existing resources, to deal adequately with them, unless the House gives far more attention than it has done to the fundamental problem. I give as an example the fact that regulations and directives of the Commission, which are far more numerous than those of the Council, are not yet being examined at all.

I am sure that the efforts by my right hon. Friend the Foreign Secretary are well-meant; but they will not satisfy the British people if he continues to assume, as he almost seemed to be assuming on 4th June, that the Budget payment to the Brussels farm relief funds is the main prospective burden on the British economy. It is important, but the Budget burden is at present about £100 million a year and is likely to rise to between £300 million and £400 million. But the burden of the common agricultural policy and the trade deficit with the Six is already over £1,000 million and will in all probability rise further. It is these latter burdens which have to be removed if this country is not to decline into a third-rate Power.

We were promised in propaganda from the Opposition that the "huge home market"—that was the phrase—of the EEC would restore our economy. Here it is our trade with the Six—not with the Eight—that matters, because we already had free trade with Denmark and Ireland. Our trade with the Six showed a negligible deficit in 1970; a deficit of over £1,100 million in 1973, and a deficit of £538 million in the first four months of 1974. That is a rate, this year, of about £1,600 million a year. The only thing which has been dynamic so far has been our trade deficit with the Six—and that is the great home market for which we were asked to sacrifice the right of a democratic people to govern and legislate for themselves.

More serious is the common agricultural policy itself. The burden which it already imposes on our standard of living and balance of payments is not merely already serious, but is bound to get worse unless we free ourselves from it. I am not at all satisfied that my right hon. Friend's proposals are as fundamental as the manifesto promised. It is conventional with pro-marketeers to argue that the common agricultural policy no longer matters because some EEC prices are lower than world prices, but I believe that people who repeat this are out of date and out of touch with the facts. Since February of this year world wheat prices, which matter most, have fallen faster than almost at any time this century. The fall in wheat prices, as the Economist recorded on 25th May, is now nearly 50 per cent. since February. On 2nd May world wheat prices fell below the EEC threshold prices, and at that point of course import levies are automatically imposed to prevent the consumer benefiting.

The Economist says this week that world grain prices—not just wheat—are now below the EEC support prices and small import levies have come back on in the last two months.

This precipitous fall in wheat prices, which has refuted a great deal of silly and ignorant talk in recent months about cheaper food being gone for ever, is, of course, due, as many people predicted, to the United States' decision to cancel all restriction on grain acreage. As a result, though the Canadian and Russian prospects for 1974 are uncertain, the United States' grain acreage this year is higher by 50 million acres—more than France's entire arable land—and this year's United States wheat crop is expected to be 20 per cent. or 30 per cent. higher than the last.

It is not just wheat. The basic feeding stuffs—maize, barley and soya beans— have all fallen substantially in price since February.

Therefore, it is increasingly true every month that the common agricultural policy is depriving the British people of cheaper food. The New Zealand Trade Minister said categorically recently that New Zealand could now supply this country with cheaper lamb, butter and cheese if allowed to do so. But she could not do so unless we amended the Treaty of Accession which lays down hard and fast the exact quotas and amounts. As for beef, the Economist—again, not I—rightly said, on 4th May: The snag with the working of the Nine's present beef system is that low-price beef is entering the Community from outside at the same time as large amounts of home-produced beef are disappearing into EEC stock piles. The same is true of flour and bread, as I could expound if there were more time.

In any case, if anyone still argues that food prices are lower and likely to remain lower in the EEC than outside, why do we have to impose all these import taxes and intervention buying and hoarding? Anyone who sincerely believed this story would be in favour of dismantling this whole ghastly apparatus of restriction.

The truth is, of course, that none of us knows—certainly I do not—the future of world prices. All we know is that inside the EEC they are bound to go up. Therefore, the only prudent course for this country—still the world's greatest importer of food—is to be free to take advantage of either outcome. To be irrevocably bound to the least probable hypothesis is a national folly.

The Labour Party's election manifesto which has been so much quoted today, and which I know is dear to my right hon. Friend's heart, was therefore abundantly justified in laying down as a major objective major changes in the common agricultural policy, so that it ceases to be a threat to world trade in food products and so that low-cost producers outside Europe can continue to have access to the British food market. When the promised referendum comes, the electorate will certainly want to know whether that pledge has been fully carried out.

Therefore, the Government must not make the mistake, for which the present Prime Minister rightly criticised the previous Government, of failing to prepare an alternative policy to adopt if results acceptable to the British electorate cannot be obtained in these negotiations. There is obviously at least a 50-50 chance that they will not be obtained, in view of the bleak French reaction to my right hon. Friend's proposals which has already been quoted today. If the CAP is untouchable, I do not see how a fundamental reform is possible.

The alternative—the practical solution, as the right hon. and learned Member for Hexham called it—for those who are not blinded by prejudice, is for this country to rejoin the EFTA group of countries who have greatly prospered outside the EEC—Norway in particular—and which have or will very soon have a 100 per cent, industrial free trade area with the EEC, including ourselves.

Of course, a desperate propaganda effort is now being made to argue that, for some obscure reason, this country could not rejoin that group. That is pure fiction, and those who argue it do not understand what it means. We already have, or soon will have, 100 per cent, industrial free trade with both the EEC and the EFTA countries. The EFTA countries certainly wish to maintain it with us. It is interesting that even in Denmark the latest opinion polls show a 60 per cent. to 25 per cent. majority in favour of Denmark's withdrawing from the EEC if Britain did.

The assumption apparently is that the EEC would somehow try to prevent this.

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

Will the right hon. Gentleman try to answer one of the questions which comes up? Even supposing that one could recreate EFTA, which may be difficult, if this 100 per cent. free trade area existed, how would that affect the balance of payments argument that he is always advancing?

Photo of Mr Douglas Jay Mr Douglas Jay , Wandsworth Battersea North

It would affect it because if we fundamentally reformed the common agricultural policy our costs of living and labour costs would be much lower. That is the answer; if the right hon. and learned Gentleman does not understand that, after all our debates, he never will.

If it is assumed that somehow the EEC would prevent such a move as I have described, that would mean that the EEC, or part of it, would have to raise its industrial tariffs against the United Kingdom, alone of the 17 or 18 countries involved. That is a proposal so absurd that even the French Prime Minister would not propose it.

Even if this were to happen—this is another point that the right hon. and learned Gentleman does not seem to understand—the EEC's common external tariff on industrial goods after the Kennedy Round is only, on average, 7 per cent or 8 per cent. and is likely to come down further in the new GATT negotiations starting this year. It is no longer a major factor in the world trade situation. The picture of British exports being savagely hit by this low tariff are just as mythical as they were in the case of Norway, when huge unemployment was predicted if she stayed out, and exactly the opposite has happened.

Photo of Mr Neil Marten Mr Neil Marten , Banbury

Does the right hon. Gentleman also recall the 1970 General Election? He may have read the Conservative manifesto on this very subject of remaining outside, which said: We can negotiate with the EEC, confident in the knowledge that we can stand on our own if the price is too high. Since then of course there has been an enormous increase in the potential of North Sea oil. That strengthens the judgment of the Conservative Party in 1970 that we could stand on our own.

Photo of Mr Douglas Jay Mr Douglas Jay , Wandsworth Battersea North

I occasionally agree with the hon. Member, and in this case I agree with him that the Conservative Party was much wiser in 1970 than it is today.

Secondly, we should retrieve what we can of the damage done to Commonwealth trade by the 1972 settlement. Much damage was done, but the countries that really matter to us—Australia, New Zealand and Canada—have been markedly restrained, so far, in raising tariffs against our exports. The damage could accordingly soon be halted and reversed, if we acted with adequate decision and speed, and with anything like the effort put into the EEC policy in recent years.

Therefore, our long-term objective should be a genuinely liberal trade association throughout Western Europe, wider and looser than the present EEC, but including it, with industrial free trade all around, more outward-looking towards the rest of the world, and with no compulsory common agricultural policy or legislative decrees from Brussels, except for those countries which wished to accept them. Such a truly West European grouping could, if that were generally desired, be held together by some overall ministerial authority, perhaps through OECD or NATO, which we could all support and which would be genuine, not enforced, European unity.

I believe that that is what the British people would prefer—certainly the Scandinavian countries also would, and, I suspect, many others in Western Europe if it were really put to them. The present British Government therefore will be very unwise if they do not prepare actively for this alternative. For the British people have the right through the ballot box, if they wish, to reject any other solution.

6.0 p.m.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet Chipping Barnet

I was intrigued to hear the right hon. Member for Battersea, North (Mr. Jay) talking about an industrial free trade area. My mind went back to 1957 when we tried hard to establish precisely that. It was probably at that time the best solution, but it did not come off. I am afraid that the world has moved on a great deal since 1957 and that the considerations are now rather different. For Britain now to leave the Community would be a disaster in political terms and probably in economic terms. It is a different matter leaving a community, with all the consequences involved, than trying to get into a community, as we tried to do during long years of negotiation.

On looking back on the history of our negotiations with Europe since the early 1950s it has been a long, a mixed and sometimes a sad story. It was sad when we first in 1953, I think, underestimated the significance of the Messina Conference and underestimated the impulse among the Six to form a genuine community. We then tried to form an industrial free trade area. That foundered for two reasons. The first reason was the opposition of France. It must be remembered that when we started our negotiations we had the assurance of both the French and the German Governments that once the Treaty of Rome was in operation they would join with us to form a free trade area that could embrace the whole of Western Europe.

During the long period of negotiation the French situation changed. We started the negotiations with a French Government that wanted to say "Yes" but had not the strength to do so. We finished with General de Gaulle. He wanted to say "No", and he did not lack the strength to do so. The other reason for the failure of the initiative for the free trade area was the genuine feeling of those who most strongly supported the concept of the Community of Six that such a Community would be drowned in a wider community of a loose free trade area character. For those reasons the attempt to set up the sort of free trade area to which the right hon. Member for Battersea, North referred failed all those years ago.

Photo of Mr Douglas Jay Mr Douglas Jay , Wandsworth Battersea North

Does the right hon. Gentleman agree that the main difference between those years and now is that the industrial free trade area between the EEC and EFTA is now in existence?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet Chipping Barnet

There is more to it than that. When the free trade area negotiations failed, we formed EFTA. Let us remember the purpose of forming it. The first purpose was to achieve a widening of the area of freedom of trade. That was very small in comparison with the whole European concept. The second purpose was to avoid the further fragmentation of European trade. The third purpose, and perhaps the most important in the minds of our EFTA partners, was to provide a bridgehead from which we could further negotiate with the Six for a pan-European solution. It was always part of the EFTA concept that EFTA would help us to go forward and to evolve a situation that would cover the whole of Western Europe.

We cannot go back now. I do not think we can reconstitute EFTA. The predominance of the British economy and the position of Denmark in economic terms in the constitution of EFTA do not allow a reconstitution. Nor is there a chance of getting agreement from the other Western European countries for the sort of industrial free trade area which we would like. They have always thought and they would think now, and especially France and Italy, that such a concept would be entirely to the benefit of the United Kingdom and not to the benefit of themselves.

Further, I do not think that we can contemplate the possibility of re-creating another Commonwealth trade system. The Foreign Secretary has recognised that the trade pattern of the Commonwealth has changed fundamentally with total diversification. Any attempt to try to recreate the old Commonwealth system would not be attractive to the Commonwealth. That is particularly so when it is suggested that all we can offer the Commonwealth is a faltering economy. The Minister of State for Foreign and Commonwealth Affairs was talking about that matter recently.

If we came out of the Community we would be alone in a world in which the strength and influence of the great Powers in both political and economic terms is becoming increasingly decisive.

Photo of Mr Neil Marten Mr Neil Marten , Banbury

Will my right hon. Friend explain what he means by being alone? What are all the other independent countries in the world doing? Are they all alone?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet Chipping Barnet

We should be alone in the sense that we would have no special relationship with any European trade partners. We should be alone in political terms. The voice of a powerful country within a large group is infinitely more likely to carry weight than the voice of an equally powerful country speaking alone. That is the situation we must face. If we opt out of the attempt to achieve a collective European voice and a collective European economy, we will have few friends left in Western Europe. If the reasons for our opting out of the attempt to achieve European unity arise from party political considerations within this country, we should not re-create a friendship in Western Europe for a long time. It appears now that if we decided to move out it would be for such reasons.

It is apparent from what the Foreign Secretary said that the Government now accept the principles, the workings and the wording of the Treaty of Rome, including the position and effectiveness of Community law and the relative position of the sovereignty of this Parliament.

It is essential in the interests of these long-term matters that the purpose of Her Majesty's Government should be understood. Certain doubts are created by talking about a referendum and the linking of a referendum with a General Election. There could only be an election on this issue if the Foreign Secretary failed. He is attempting genuinely and openly to reach agreement with the Community. If he succeeds and if there is an agreement, what is the purpose of having an election? All the parties would be in agreement. There can only be a referendum when the parties take a different view. If the Foreign Secretary succeeds—my right hon. and hon. Friends profoundly hope that he will do so— he has made it clear that he and his colleagues will recommend that the United Kingdom should remain within the Community. In those circumstances the leaders of all the parties would be making the same recommendation to the electorate.

Of the issues which have been raised by the Foreign Secretary, it is clear that the budget contribution is obviously a genuine and definite matter. I was shocked to hear of the arguments advanced about the predicted poverty of this country in 1980. The Minister of State is reported in The Times as saying that by 1980 we shall be one of the poorest countries in Western Europe. Of course, by that time North Sea oil will be flowing.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet Chipping Barnet

No doubt it will smell the same and cost the same. Is it right in the interests of our negotiating position to decry our economic prospects? We are seen to be doing so not because of any lack of confidence in ourselves but because of the strange extrapolations of an American think-tank expert who occasionally appears on the Western European scene.

The second range of matters which the Foreign Secretary is discussing are not so definite and not so concrete. They include agricultural policy, trade policy and economic policy. There are included a number of matters which are to be identified in the context of a growing and developing Community policy. Having accepted the framework of a common agricultural policy, the Foreign Secretary must recognise that the policies which he is dealing with are changed from time to time as conditions such as world prices and supplies change. As such matters change, the reaction of the Community will change.

It is all very well to say that we want definite concessions on trade, agriculture and economic matters and that if we do not get them we shall withdraw. But can we be sure that certain matters will take place in one year, two years or three years? Can we always claim the right to withdraw if we do not get our own way, or should it be made known that the Government, on having reached what they consider to be a satisfactory position of renegotiation, accept the whole concept of Community discipline and Community decisions in the light of the Luxembourg declaration to which the Foreign Secretary referred? These are matters on which the attitude of the Government must be made clear not only in Europe but in this country and within the Labour Party.

One matter which the Foreign Secretary mentioned only briefly in his European speech but which seems to be of fundamental importance is the question of economic, monetary and political union. Where do the Government stand on that? I see that there has been argument in the last day or two about the use of the word "union". This argument, to my knowledge, has gone on for 15 to 20 years. Apparently it is because "unity" and "union" in the English and French languages do not mean the same thing. Constant misunderstanding arises from that. What do the Government believe to be the right concept of the Community in the long term? Do they believe, as many members of the Community believe, in union in the full sense? Do they believe that there should be general progress through concerted action to common action? That is what the Community is about. If the Government do not accept the principle of progress through concerted action to common action, are they genuine in their desire to have a meeting of minds with the rest of the Community?

The touchstone is a common currency. Do the Government accept a common currency as a particular policy? After all, if we have a common currency it needs a common economic policy, common institutions to manage that policy and common political authority to oversee those institutions. Where do the Government stand on this? Do they accept a common currency, with all its consequences, or do they not?

Photo of Mr Roger Moate Mr Roger Moate , Faversham

Is my right hon. Friend saying that he favours a common European currency and common economic policy plus political union?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet Chipping Barnet

I have always made it clear that 1 believe in concerted action through to common action, which will have to be over a long period. But I believe that it will, over a period, come to fruition. What we are entitled to know is the attitude of the Government on these matters. It is no good expecting to have effective negotiation unless all the cards are on the table face up.

We on this side of the House hope that the negotiations will succeed. We believe that the Foreign Secretary is proceeding on the right lines. If he continues to do so, we believe that he will get a sympathetic hearing from our European partners and that we will be able to return with a triumph of negotiation, although perhaps it will be a disappointment in party political terms to Members on the Government side.

Mr. Callaghan:

Will the right hon. Gentleman refer to paragraph 6 of my speech of 1st April, in which I set out clearly the Government's attitude on the whole question of economic and monetary union, including permanent fixed parities to be achieved by 1980? He will find the answer there.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet Chipping Barnet

Did that appear in the right hon. Gentleman's second speech?

6.13 p.m.

Photo of Mr John Cronin Mr John Cronin , Loughborough

The right hon. Member for Chipping Barnet (Mr. Maudling) took my right hon. Friend the Foreign Secretary to task for suggesting that Britain might have a relatively low standard of living in 1980. The right hon. and learned Member for Hexham (Mr. Rippon) made the same point. They should both bear in mind our situation at present in relation to the other members of the Community. As I understand it, we have a lower gross national product per head than any other country in the Community except for Ireland and Southern Italy. The suggestion that we might be in some real difficulty in 1980 has considerable foundation because the other countries will not be standing still between now and then. We must make the provision which my right hon. Friend very sensibly made in his statement.

I congratulate my right hon. Friend on his speech last week and on his amplification of it today. We must all admire the strict and rigid way in which he has held the Labour Party manifesto to his heart and how it has emerged from his lips in a most palatable form. I am always uncomfortable in praising my more distinguished colleagues because it might indicate that one has a special interest. At the same time, if my right hon. Friend achieves the renegotiation which he has in mind he will probably go down in history as one of the great Foreign Secretaries. But it is a big "if". There are many stumbling blocks to the negotiations.

One must also be grateful for the rather precise arrangements which are to be made for parliamentary control in the negotiations. Of course they are not perfect and do not satisfy quite a few hon. Members. Nevertheless they are a genuine and substantial advance in getting a real say by this House in the negotiations.

But one or two things in my right hon. Friend's speech rather disturb me. He said that politically it would be undesirable for us to leave the Community. I think that the majority of hon. Members would say the same thing. [HON. MEMBERS: "No."] I accept that there is a strong minority of hon. Members who would disagree, and I accept their view, but it is fruitless to argue it now. I still maintain, however, that the majority of hon. Members would agree on this point with my right hon. Friend. [HON. MEMBERS: "No."] Possibly they are not in the Chamber at the moment.

I am rather concerned, though, when my right hon. Friend says that he is not certain whether there would be any real economic disadvantages in our leaving the Community. He may be right. I hope that my hon. Friend the Minister of State will pursue this point in more detail later.

First, what disadvantages should we have from losing the removal of tariff barriers and of non-tariff barriers, which I think are important? My right hon. Friend the Member for Battersea, North (Mr. Jay) pointed out that there was a considerable deficit in our trade with the Community countries last year. I think he might agree with me, however, that most of the deficit was due to the floating of the pound, an exceptional situation. I suggest that in terms of the volume of trade we broke roughly even with the Community. I want to know what forecasts there are of the extent to which trade is likely to increase during the next two years.

There have been some suggestions of alternatives—for example, that if we leave the Community we can start up a free trade area with the EFTA countries. But if successive British Governments have spent 10 years negotiating to get into the Community and as soon as we are in we break the Treaty of Accession —that, in bald terms, is what it means— what country will regard us in future as serious negotiators? That is a matter of considerable doubt. The idea of starting another free trade area with the EFTA countries seems to be dubious. What interest would they have in going ahead with us? How would it help?

The Commonwealth countries are also negotiating their own arrangements with the Community. Until recently France made it a point that there should be preference in the EEC for members of the old French community. If we leave the EEC, France will insist again on that situation. We may then find that there is discrimination against us by Commonwealth countries.

Again, what interest would the eight members left in the Community have in a free trade area with us? How would it help if we left the Community in a blaze of odium? What incentive would there be for them to enter into arrangements with us to have a free trade area? All this is very doubtful.

What my right hon. Friend is proposing today, and what he proposed in Luxembourg, is diametrically opposed to the interests of France, and France will unquestionably be the stumbling block in the negotiations. How is my right hon. Friend to get round that? I do not think it is possible to overestimate the aptitude which the French possess for having their cake and eating it. Let us look at the way they treat the United States. The United States is almost a political outcast to France, yet France depends on the United States for its defence. That is a typical example of how the French get away with the most unreasonable positions.

Somerset Maugham once said that the French regarded themselves as being the most intelligent, cultured and civilised people in the world and that the most intolerable thing was that they were completely right. Perhaps not everyone will agree with that, but I think that my right hon. Friend will have his work cut out in dealing with the French.

There are only two ways of coping with the French. One is to show that any package deal which my right hon. Friend gets will produce a net advantage to them. The other way will be to show that worse will befall them if they do not fit in with the terms he is negotiating. But I cannot imagine that the French will feel disturbed at the prospect of our leaving the Community, thereby leaving them and the Germans as the dominant forces in it. I cannot imagine that my right hon. Friend can frighten the French by inducing the Germans to contribute more to the Community budget, because Germany in the long run will always back France rather than ourselves as the winning horse.

That might well be a strong card in the Foreign Secretary's hands in our vote on the common agricultural policy price-fixing next year. That might well be an inducement. He must produce positive inducements to the French to overcome their objections. One objection is the fear that the French have of economic domination of Europe by the United States. That might be an unreasonable fear but anything which can reduce that fear would help. I suggest that a common Community policy instead of a policy in association with the United States of America with regard to the Arab States might do something to assuage that fear.

It might be helpful if my right hon. Friend the Foreign Secretary were to make proposals to ease the financial difficulties of the French balance of payments in the face of the approaching oil crisis. We are feeling the effects of an adverse balance of payments now, as probably are the Italians, but the French will feel it soon. One could draw money from the International Monetary Fund. Surely it would be better if in consultation with the French we could set up some sort of reserve fund in Europe which was exclusive of American help. The French Government would regard this as an attractive proposition.

Germany is seriously worried about her future with regard to oil imports. An assurance to Germany that North Sea oil could be flowing into the German refineries would be an inducement to Germany to assist us in our negotiations.

Photo of Mr Gordon Wilson Mr Gordon Wilson , Dundee East

Is the hon. Gentleman aware, having read the Brown Book issued by the Government, that the reserves of oil in the North Sea, although great in many respects, are very small by comparison with the world's oil re-reserves and are insufficient for us to concede in any way? One might talk about this, from the British as well as the Scottish point of view, in terms of getting rid of sources of oil which it might be necessary to conserve under the ground or on the sea bed for future generations.

Photo of Mr John Cronin Mr John Cronin , Loughborough

I accept the hon. Gentleman's point. There will be surplus oil to export to Germany at a fair price with fair advantages to Scotland as well as to the rest of Britain. A further point is that this will be helpful from the negotiating point of view and in increasing defence solidarity. Defence constitutes a great worry for Europe.

I suggest to the Minister of State that if in future we agree to send Labour Members to the European Parliament at Strasbourg, that will again be a useful card to play. I would suggest that a package deal consisting of these advantages—these carrots held in front of the EEC rather than any stick—would probably obtain at least a large part of the terms which the right hon. Gentleman wishes to negotiate.

With regard to the time relationship of the negotiations to a General Election, it is self-evident that the Government, with their present situation in the House of Commons, cannot speak with a strong voice in the EEC. I suggest that the Minister of State and the Foreign Secretary should put all the pressure they can on the Prime Minister to ensure that we have a dissolution and the return of a Labour Government with a substantial majority—because that is what would happen—before proceeding to any advanced stage in the negotiations.

6.24 p.m.

Photo of Sir Peter Kirk Sir Peter Kirk , Saffron Walden

Although I am sorry that the Foreign Secretary has had to leave after listening to a great deal of the debate, I am relieved because otherwise I would undoubtedly have been moved to join my congratulations on his speech to those of the hon. Member for Loughborough (Mr. Cronin). That would not have done him any good at all with the grim-faced crew behind him who clearly did not enjoy any of it.

It was a remarkable speech of a kind we have learned to expect from the Secretary of State. Nobody is better at concealing his retreats as advances than he in all the offices he has held. This would appear to be the situation again. The House will not be surprised to hear it. I welcome it very considerably.

Before getting down to the details of renegotiation, I suggest that it would be helpful if when he replies the Minister of State could give us a little clarification about the Government's general policy with regard to ongoing Council business. This seems to be slightly schizophrenic.

We have the very welcome decision of the Government to join with the other Governments of the EEC countries to increase the powers of the European Parliament. This is something for which I have been pressing and working fairly hard for some time. Indeed, the proposals now accepted are roughly those put forward by the Conservative group in the European Parliament last October. It is true that the implementation of those parts of the proposals which require treaty amendment must go hand in hand with renegotiations. I see no harm in that. There is a great deal of work to be done. We can get down to it now.

It seems curious that these additional powers, though granted to Members from the Conservative and Liberal Parties, are still apparently to be denied to the Labour Party Members. I hope that the time will not be long before they join us in these very important matters, particularly of the control of Community expenditure, which is something about which we feel strongly.

But at the same time as the Council last week accepted that, at the Council of Social Affairs Ministers yesterday the Under-Secretary of State for Employment—this was the information I had before leaving Strasbourg last night— blocked the redundancies directive, which seems to us and seemed to the Government to be something worth having. It was blocked on the rather specious grounds that they were re-examining the whole question of redundancies.

There is no reason why the Under-Secretary should not have let the directive go through as redundant workers in the eight other countries of the Community will now be deprived of the Community protection which they would otherwise have obtained. They should enjoy these benefits now rather than have to wait until a further Council meeting later this year or early next year. It would be helpful if we could know what the scope of ongoing Council business which is liable to proceed is to be, and what will be liable to fail. Hon. Members here who are also members of the European Parliament— there are a few—would agree with me that it would be helpful for us to get an idea of the things on which it is worth while continuing our work and what is liable to be chopped by the present Government.

The remarks of the Foreign Secretary concerning the parliamentary scrutiny committees are extremely welcome to us who work in the European Parliament. I hope that my right hon. Friend the Member for Knutsford (Mr. Davies) will not overlook the fact that the work of scrutiny does not take place entirely within the confines of the Palace of Westminster. Not only does the European Parliament exist for the purpose of scrutiny and of controlling the Commission—the Foreign Secretary said that the Commission was not answerable to anyone, but it is answerable to us—but there are similar bodies in other Parliaments of which we have considerable knowledge. It is useful perhaps for this House to know the way in which, for example, the committee in the Folkcting in Denmark is looking at a particular directive at a given moment to see whether there is any general Community approach within the national Parliaments to these problems.

The relationship between Community institutions and the national Parliaments has been very badly neglected both during the days of the Six and since the expansion of the Community in January 1973. I hope that this is something to which my right hon. Friend's Committee will be able to give a great deal of new impetus. As I say, we have a slightly schizophrenic approach. Whether it depends upon which Minister attends which Council and upon the nature of the subject is not clear, and we would welcome clarification.

One thing that is clear after the second Luxembourg speech of the right hon. Gentleman is the scope of renegotiation, which is obviously a matter of real concern to the House and the Government. What is most interesting is that all four of the major problems raised by the Government both in April and again last week were—and are still—the subject of what one might call renegotiation within the Community institutions before the change of government this year. There is nothing new about any of them.

The question of the size of the British contribution was raised as long ago as last July in the European Parliament by a former hon. Member, Mr. Rafton Pounder. We have been working on that. It will not have escaped the Government's notice that recently, in line with what the Foreign Secretary said, we secured with some difficulty the writing into the Community directive on harmonisation of value added tax a provision on zero rating—the work of my hon. Friend the Member for Kensington (Sir B. Rhys Williams)—which again is a matter of considerable importance in renegotiation.

In the same way, the idea of the right hon. Member for Battersea, North (Mr. Jay) that nothing has been done about the CAP is untrue. The Foreign Secretary pointed out that the Minister of Agriculture—some of us think rather unwisely—has suspended one part of it in so far as it applies to this country, and the Italians have dealt with it in a cavalier fashion by their import deposit scheme.

In October Mr. Lardinois, the Agricultural Commissioner, produced a scheme for reform of the CAP which, although in my view it did not go far enough, nevertheless showed that the word "untouchable" was used by the French Government in this context incorrectly. Like so many words used by the French Government, it was used more to signify a brisk exchange of cannonade than to signify that they would not advance on the battlefield. The French have always been good at marking out beforehand the ground they will not give, but at the end of the day one usually discovers that a bargain has been made.

On the question of Commonwealth access, we wrote into the sugar directive the 1.4 million tons which was not explicitly promised by the Community to the previous Government when they were negotiating but was the subject of the curious French phrase "aurait à coeur" which no one has been able successfully to translate into English. We wrote that in, but were in some difficulty when there was a shortfall of 300,000 tons in delivery from the Caribbean. It will be difficult to persuade the Community to keep an on-going figure of that size unless we can be assured of effective deliveries of cane sugar into the Community.

Equally it will not have escaped notice that we have secured a good implementation of the joint declaration of intent with India in the form of the Indian Agreement, which was welcome by the Indian authorities concerned. As my right hon. and learned Friend the Member for Hexham (Mr. Rippon) said, it is important that we should keep going the negotiations with Bangladesh and Pakistan, although Pakistan is no longer a member of the Commonwealth.

All these things have been going on. Regional policy, I suspect, is the most difficult problem of all, although it is not difficult in the sense of the undertakings that the right hon. Gentleman is trying to secure. I do not think he will find much problem there. It is true that the previous administration said during the negotiations that they intended to phase out special aid for the regions in the form of the regional employment premium, but that decision was reversed before the previous Government left office. I do not think that will be the major stumbling block. The major stumbling block will be to get the regional fund off the ground at all. A major mistake was made—I have said this before in public—by my right hon. Friends in not taking the modified sum when it was offered and building upon that. If we had done that, we could have built up a regional fund from smaller beginnings into something very much more effective.

Now we are in a difficult position over regional policy, because unless we can get the guidelines absolutely right and the areas strictly defined we shall be asking some of the wealthier countries of the Community to undertake what is becoming almost an open-ended commitment if things proceed as they are at the moment. Nevertheless, even on that the process of renegotiation was well under way before the change of government.

All that has happened is that the Secretary of State in his two Luxembourg speeches has formalised what had been an unformalised but on-going process in which many people were involved. That is part of the lesson that the Community is in itself a living and flexible instrument. Even if it is going through rather a bad time at the moment, there have been distinct signs over the last week or 10 days since the meeting between President Giscard d'Estaing and Mr. Schmidt and at the Finance Council meeting last week —at which the Chancellor of the Exchequer made a notable contribution— that the Community is beginning to recover from the paralysis which has lasted for some time and which, I suspect, came more from national difficulties than from anything inherently wrong in the Community structure.

To me the surprising thing—this is possibly where I might join hands with some hon. Gentlemen on the Government benches—about the renegotiation is the modesty of the Government's proposals. There are many other things which in the process of on-going renegotiation desperately need to be done. A major effort is needed in institutional reform which will be of vital importance. Despite what the Foreign Secretary said, we need to make some progress towards economic and monetary union. Unless we do, there will be no eventual solution to the type of monetary and currency problems which Western Europe faces.

We need a more effective social policy. We need urgently to examine the whole question of migration and the rights of migrants within individual countries. There is a vast range of topics which I am surprised the Government have not brought up which would be of benefit to this country and to the Community.

The problem for the Government was that at the time when they drafted the Labour Party manifesto, which the Foreign Secretary clutches to his bosom like a security blanket, they had not fully realised the real nature of the Community, and that is where the difficulty about the referendum comes in. The Government refused to take part in the institutions. They did not see that there was not a time in the development of the Community when one could say "We have now reached a point at which we must take a decision." That time was at the time of joining, and there will not be a time during the process of renegotiation.

During the whole process there will always be on-going current business on which Parliament or the people should be consulted. For that reason, my view of the referendum—I think that my right hon. and learned Friend the Member for Hexham probably shares this view—is the same as that expressed by the Prime Minister in a television programme on 28th May 1970, when he said: I think it is right that it is … Parliament which should take that decision with a sense of full responsibility, with a sense that reflects national views and national interests. He added: I should not change my attitude on that". That is the caveat we have learnt to expect from him.

He expressed that view because it is an on-going business, something that does not divide itself into chapters time-wise or even section by section. It is almost impossible to slice it off and say "At this point we ask somebody to take a decision". One can ask the House to give a judgment on the views expressed by my right hon. Friend the Member for Knutsford and his Committee. Occasionally one might ask the members of the European Parliament to assist the House in its judgment. The process is one coherent whole that cannot be divided. That is where the referendum argument is wrong. The election argument is a different matter. No Member of Parliament has been thrown out because he voted to join the Common Market.

Photo of Sir Peter Kirk Sir Peter Kirk , Saffron Walden

Only one member of the European Parliament was defeated at the last election, and the results of that election did not show any popular desire to sweep into office the only party who put renegotiation on its platform. The election question is a different one from the referendum question. The referendum question is an impossibility.

I do not want to detain the House very long but I think that when considering these grave matters we should be aware of one fact. We did not join the Community for purely economic reasons. Some of us did not joint even primarily for economic reasons. It was the Prime Minister himself who in a speech at Strasbourg in January 1967 quoted Wordsworth: High Heaven rejects the love of nicely-calculated less or more. The danger of the sort of negotiations which the Labour Government are now carrying through as reflected in the "nicely calculated less or more" may affect the great line of European unity which we are trying to develop and which attracted not just 160 votes in the last Parliament but a majority of over 400 in the previous Parliament when the then Labour Party first applied for membership. That great line will get lost in the details which we have been discussing today.

The basis of the Community is political. That has always seemed a somewhat shocking statement to some Labour Members, but the basis was political. The reason why the Coal and Steel Communities were chosen in the first place was that those were the fundamental industries which ensured that anything other than unity between Germany and France was impossible from then on. It was designed to be a political instrument —designed to set an example to the rest of the world as to how countries could work together without war; how they could surrender some of their sovereignty in pursuit of a greater sovereignty, greater influence and greater economic strength. This was what it was all about. This was what we fought for over 20 years or so both in this House and outside it.

Photo of Mr Arthur Lewis Mr Arthur Lewis , Newham North West

That was what Hitler did.

Photo of Sir Peter Kirk Sir Peter Kirk , Saffron Walden

Hitler tried to do it by force. We are seeking to do it by consent. The hon. Member for Newham, North-West (Mr. Lewis), who is a member at the Council of Europe, is contributing to the process. Just how much he is contributing is difficult to say, but he is making a contribution. That is what we are doing and shall succeed in doing. For this reason, although the renegotiations themselves are nothing dramatic, it is essential that they should succeed and that they should be backed by this House and the country.

6.44 p.m.

Photo of Sir Arthur Irvine Sir Arthur Irvine , Liverpool Edge Hill

I still feel great concern about the basic issue of public consent and popular consent to the whole proposal of our entry into Europe. I felt somewhat disturbed by what seems to me to have been a breezy assumption throughout this debate that that consent is present or indeed that it will be forthcoming. I am far from sure that that is the case. If one has an honest doubt about the state of public opinion, on a matter of this importance, it is one's duty to declare it in this House.

My impression of the last election was that public opinion was more strongly against entry into Europe than I had expected. If that state of opinion is not reflected in our handling of the issue here, we shall be in trouble. The distrust of parliamentary processes will get out of hand. That distrust took the shape at the last election of a large, forlorn Liberal vote. It was a forlorn vote but it expressed the distrust felt by so many people in our parliamentary processes. Next time, unless we are careful, that vote might assume a more anti-parliamentary shape.

We must have at all costs a genuine and honest reference of this issue to the British people. With Mr. Enoch Powell wailing and howling in the wilderness of Ulster, and with the voices of my right hon. Friends the Members for Ebbw Vale (Mr. Foot) and Stepney and Poplar (Mr. Shore) subdued in office, we must ensure that the public concern on this issue is properly voiced and protected in this House.

In recent days we have heard talk about certain matters having priority in renegotiation. That is the direction which discussion has taken. I feel no objection in principle to that, but I feel the need to be satisfied that the result of so doing will not be to detract from the clarity and comprehensiveness of the question that is to be put to the people in the referendum.

It is said that priority should be given in renegotiation to certain matters— namely to the Community budget, the common agricultural policy, EEC policy towards the Commonwealth and regional policy. It is said that these matters can be dealt with by way of changes in policies in preference to proposing changes in the treaties themselves. That is how the matter has been put, and it needs careful watching. One has to be careful not to introduce something that will blur the issue which many Labour Members insist shall be put to the nation.

It is the larger questions of economic and political union and those relating to the powers of this Parliament that matter. These are the questions which create the greatest public anxiety. I do not underrate the importance of the matters to which it is said that priority in renegotiation should be given, but the larger questions of economic and political union are what the people are worried about. We shall make a mistake if we underestimate the worth and quality of opinion on issues of this scale when they are expressed by the British people. It would be the biggest mistake of our lives if we adopted such an attitude.

We must be told whether these larger matters can be dealt with by changes in policies or whether they need something more. On which side do they lie of the line dividing changes in policies from changes in the terms of the treaties themselves? We cannot usefully have a referendum on only part of this vitally important issue. It must be "Yes" or "No" to the whole question of joining Europe. We cannot take it bit by bit. We cannot have a "neverendum" instead of a referendum. The public will not put up with that situation. The British people feel that they have been pushed around too much already and they want this vital question put to them and put to them straight.

I wish to emphasise that it is in the interests of both sides of the controversy that this issue should be put to the people as a whole with clarity. The pro-Europeans among us must recognise the importance of consent being clear and that they gain nothing by flannelling this or any other issue. The people must decide knowing what diminution of status, power and influence of the British Parliament is proposed, if any. They must make their decision knowing whether a further encroachment on our common law is proposed and whether our judges will have to interpret not only statutes of the British Parliament but also enactments of the new Community law transmitted in eight different languages. All these matters must be comprehended and their significance understood if any reference to the people is to be worth while and if any referendum and the result of it are to have weight.

For my part, I will accept the decision of the British people on this great issue. In many respects it is a narrowly-balanced issue. But there must be a clear answer to a clear question. The choice must be spelt out honestly. On a matter of this scale of importance, we must have done with the miserable business of being all things to all men. We must avoid the over-cleverness which is so closely akin to stupidity.

6.51 p.m.

Photo of Mr John Davies Mr John Davies , Knutsford

I want first to take up some remarks made by the Foreign Secretary about the Committee which has now taken on the arduous task of scrutinising the vast amount of work coming through in the forms of proposals and papers from the Community. In doing so I pay tribute to Sir John Foster and his Committee who were the original authors of this formula and system and whose recommendations have very largely been accepted by the Government.

I want also to thank the Foreign Secretary for his words of support. From my very initial encounter with the work that the Committee has to do, I know that all the members of it feel that they will need the most active support both of the Government and of the organs of the House of Commons if they are to cope with the immense task with which they are faced.

There are at the moment some 200 outstanding proposals for legislation with which the Committee will have to deal and upwards of 100 other documents comprising consultative statements and the like. Very many of them constitute matters of first-rate importance to the House. I think the House knows that throughout, both when I was a member of the previous administration and now, I have always been anxious that the House should have opportunities to discuss and debate these matters. I am glad that we now have this possibility.

Reverting to the main topic of the Foreign Secretary's speech, it may appear a little provocative in today's conditions to offer him my compliments. They are comparative only. I compliment the right hon. Gentleman on the translation of the tone of his remarks to the Community from the somewhat overbearing and truculent ones which appeared to be contained in his statement of 1st April to the much more winsome remarks in the right hon. Gentleman's interesting and long document, which I have had the opportunity to study in the greatest detail.

In order to respect your injunction to hon. Members to be brief, Mr. Speaker, I do not intend to go over the whole of that wide-ranging paper or to repeat what has been said already: that to a large degree the elements of renegotiation were matters already within the negotiating procedures of the Community. There is remarkably little difference from the kind of work with which I was customarily engaged when I had that responsibility in a variety of different forms within the Council of Ministers.

There are, however, certain differences and they are differences to which I wish to make brief reference. The Foreign Secretary sets aside—this has been repeated with different nuances by hon. Members on both sides of the House— questions of economic and monetary union and political union. They are issues with which the right hon. Gentleman will have to deal separately, and the implication of the reports of his meeting yesterday is that he at least does not subscribe to the principles of these objectives.

There is a difference here. Those of us who have been actively involved in the pursuit of our membership of the Community are definitely committed to the principle of economic and monetary union and to the principle, implicit in that union, of a European union with a time limit fixed to it. There is, therefore, that substantial difference. To a degree, however, it is a distinction without very much difference.

Every step along the path to that ultimate objective has to go through the mesh of agreement and consensus to which reference has been made already. Every step has to be argued out and, in our present context in this House, has to be argued out after having had the benefit —if it be such—of being scrutinised previously as to its relative importance to the affairs of the country. So I do not think that the difference, which seems substantial, is really so substantial.

The previous administration believed, and I still believe, that to be engaged in a great venture without having an avowed objective and purpose, with something at the end of it to which we are committed, is seriously to undermine the purpose with which we attack the problems that we hope to solve. So I make no excuse for maintaining my commitment.

In the four main areas to which the Foreign Secretary referred, again there are certain nuances of difference. There is first the contribution to the Community budget. It is clear that we would have preferred to be able to put forward firm proposals based upon the assurances to which my right hon. and learned Friend the Member for Hexham (Mr. Rippon) referred, the impossibility for the Community to conceive of a situation in which circumstances had arisen which were so adverse to a member country as to create great difficulties, and the Community's assurance that in those circumstances the necessary redress would be forthcoming. We prefer to rely on that kind of argument.

The Foreign Secretary prefers to rely on some revision of the formula itself, if he can attain it, which at this stage must be based upon little more than "guesstimates". There is a vast area of differential which can be arrived at in working out these matters, and the work that the Commission has been called upon to do will demonstrate the wide range of the brackets within which these matters can be assessed. There is here, therefore, a wide difference.

In terms of the common agricultural policy, a great deal has been said already of the matters that were under discussion. My right hon. Friend the Member for Grantham (Mr. Godber) was deeply involved in them, and I think that there is very little difference between the objectives which he hoped to attain and those to which reference is made in the Foreign Secretary's paper.

However, there is some difference in the apparent regime envisaged in the right hon. Gentleman's paper and the very basis of intervention as a means of ensuring the continuing support of agriculture. Some real concern has been expressed about the right hon. Gentleman's aspiration towards some kind of differential pricing between countries. Our own farming community will see it as the thin end of the wedge, the objective of which is to keep our farmers at comparatively low levels of remuneration, and one fear is that this will result in an even further erosion of the confidence of the farming community, which is so important at present.

Photo of Mr Hamish Watt Mr Hamish Watt , Banffshire

Does not the right hon. Gentleman agree that the CAP is so diametrically opposed to the interests of our farmers as to be quite ridiculous? At present, when we should be stimulating our dairy trade instead of cutting its throat, the CAP is going the other way about it and asking our dairy farmers to go out of milk production. Surely the CAP is so diametrically opposed to our interests that we must give it up.

Photo of Mr John Davies Mr John Davies , Knutsford

That may well be the hon. Gentleman's view but it is certainly not the view of the National Farmers' Union, which holds the diametrically opposite view.

On trade and aid matters there is not a jot of difference. There is the intention to bring forward somewhat the Protocol 18 discussions about New Zealand, but the Foreign Secretary would be fooling himself if he imagined that as a result of that he is to have access to a wide range of cheap foodstuffs from the Antipodes. That is unlikely. However, this is a modest change. As for the rest of the aid matters, whether they be sugar, Protocol 22, the General Scheme of Preferences, or other matters, including Mediterranean matters, which have been going on for so long, there is little or no difference between what the Foreign Secretary seeks and what we were seeking in our negotiations.

On regional industrial matters there are some differences. I was concerned to find very little in what the Foreign Secretary had to say on 4th June which was a direct determination to move ahead with the creation of a Community regional policy. I say that from the point of view of not only our own interests but also those of the Community itself. It seems to me that the Community should be moving forward into wider fields of policy, and the regional policy was one of them.

I am concerned too, in the same matter. lest the Foreign Secretary's insistence upon ensuring that we have a free hand to deal with our regional problems should weaken his resolve to support the Corn-unity's search for some general control of regional aids. The House will well realise that if the Foreign Secretary's forward estimates were right and if we are to see a very serious deterioration of our relative prosperity in relation to that of the Community, an enormous importance resides in trying to ensure that there should be adequate control on these regional aids, otherwise the more wealthy countries will simply outbid the poorer countries for investment projects. I hope that in regard to that matter the Foreign Secretary will take those points carefully into consideration.

As regards the general problem, the Foreign Secretary has lumped together a whole series of different things, most of which were in course, and he has presented them as a renegotiation package. I do not blame him for that. That was implicit in his manifesto undertakings. I do reproach him, however, for the manner in which it was done. The throwing down of the gauntlet, which seemed to be the case earlier in the year, followed by what at least some people seem to imagine at present as a throwing-in of the towel, was a very damaging blow. It hit both our own interests and those of the Community at the same time.

It hit those of the Community because the Community was then going through great difficulties, and this was yet another added and very serious burden. It hit our interests too, because it has not entirely enhanced the position that we can hold in the Community of Europe. It has weakened our purpose and our contribution. It has weakened it in circumstances of the greatest gravity. I do not know whether people have as yet taken on board in the industrial world generally—or in the developing world, indeed—the immense consequences involved in the transfer of resources of the nature with which we are being faced over current years. It looks as though we are moving over, on present calculations—which may well be much below reality in the years to come—about 50 billion or 60 billion dollars a year out of our hands into the hands of those who hitherto have had little experience of handling these vast balances of sums.

This really frightening prospect has great dangers for the world because it deprives the industrialised countries of the very means of investment which they so much need to ensure the future. It holds out great threats too, because the use of the monetary forces involved in these transfers is such that it can gravely threaten the monetary stability of individual countries and, indeed, whole systems. We are approaching something of an unknown situation in the economic problems of the world which will in their turn be increased by the natural tendency of individual countries to protect themselves against the inroads of these problems before they consider the impact of their protective systems on others. I am therefore very anxious about the prospect that the next years will face us with problems of a most overwhelming and difficult time in economic terms.

It is just at this time that the countries which will manage either to survive or to contribute to the survival of others will need to be both strongly productive countries themselves, essentially countries armed with massive reserves, and able and willing to move forward in the displacement of the energy problems they are now facing. I do not believe that individual countries of Europe have that capacity. In order to overcome the very major difficulties with which they will be faced, they have an absolute need to concert their plans in this regard and to contribute from their respective wealths towards the safeguarding of not only their own continental interests but those of developing countries which are still harder hit.

At present, therefore, with these problems so close on the horizon, to have in any way jogged the elbow of the Community—perhaps more; to have rocked the boat of the Community—was un-wisdom itself. I hope that the conversion that 1 detect in the present documents is evidence of the realisation of the Foreign Secretary that this is so.

7.7 p.m.

Photo of Mr Arthur Lewis Mr Arthur Lewis , Newham North West

On a point of order, Mr. Deputy Speaker. I have been a Member of the House for long enough to know that one never criticises the Chair. I am not doing that now, but I should like to ask for an explanation. It has always been my belief that the Chair tries as far as possible to give preference to Privy Councillors when they rise to speak. That has been the position today. But I have noticed that my right hon. Friend the Member for Jarrow (Mr. Fernyhough) never seems to gain this privilege. May that matter be looked into?

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. I think that the hon. Member may assume that whoever occupies the Chair tries to be fair as far as possible. Mr. Norman Atkinson.

Photo of Mr Norman Atkinson Mr Norman Atkinson , Haringey Tottenham

The right hon. Member for Knutsford (Mr. Davies), speaking on the radio recently, said that Western capitalism was heading for the precipice. He said that as a result of that it was necessary to strengthen the Communities and our role within the European Community and, in particular, our position within the Commission. I take it that that was the point he was making—the strengthening of the whole situation and our economic relationship with Europe as a whole. I want to take up that question and one or two of the remarks made by the hon. Member for Saffron Walden (Mr. Kirk). It is a pity that he has left the Chamber, because he would have been able to tell the right hon. Member for Knutsford that it was precisely because of the facts outlined in his analysis of Western capitalism that brought about the Common Market, and that would have given him adequate explanation of some of the queries that he seemed to pose in his remarks about the Communities.

I want to deal with three of the matters raised during the speech of my right hon.

Friend the Foreign and Commonwealth Secretary and some of the objections of some of us on the Government benches to the position which now seems to be taken up by the Labour Party. We seem to be at political variance with many of the recent decisions alleged to have been taken collectively by the Cabinet on these matters

The first issue is the diminution of this country's sovereignty. We have spelt out three matters which are important in this regard—capital movement, import restrictions and competition policy as practised within the Community. We have had what has been described as a very modest approach by my right hon. Friend the Foreign and Commonwealth Secretary. Earlier this year my right hon. Friend the Chancellor of the Exchequer made a speech in which he said that there were restrictions on capital movement, and that he had reversed the policy enunciated by the previous Chancellor—the right hon. Member for Altrincham and Sale (Mr. Barber). But the point is that it is a temporary reversal. It is generally recognised that it is in conflict with Article 108, and it is acknowledged that at the end of the year whatever limited restriction is placed on the movement of capital will disappear. From the end of the year, such movements will be completely free. That is of great concern to many of us, because the outflow of United Kingdom capital to the EEC countries is increasing monthly.

The last accurate Government figures to be published were for 1971, when it was suggested that the amount involved, excluding oil, was £267 million. It is estimated that in 1972 it rose to £950 million, and I am told that for 1973 we can expect the figure to be about £800 million. We can see what is likely to happen to the outflow in the future.

The right hon. Member for Knutsford knows full well that the major British manufacturers will want to export much more of their capital in the years ahead than they have so far. That is a serious problem for the British Government if they are serious about wanting to maintain democratic control over our economy. The right hon. Gentleman knows the size of the likely figures for this year and next year. We need rigid control if they are to fit in with the policies outlined.

With our balance of payments deficits being what they are, we are in a position similar to that of Italy. If the Commission is prepared to allow some flexibility to Italy, the same may apply to us. If my right hon. Friend the Foreign and Commonwealth Secretary agrees with some of the Commission's conclusions and the measures it believes should be taken for the Italian economy, does he believe that they should apply here? If he is prepared to accept that kind of advice from economists attached to the Commission, and the recommendations they are about to make for Italy, does he think that we should be hamstrung in a similar way? I am certain that he will not carry the majority of Labour Members if that is the basis of the proposals he will have to make to correct our balance of payments deficits.

The Common Market competition policy is in direct contradiction to what we have said as a party. Is my right hon. Friend opposed to the concept of monopsony, such as we have set out in our policy for aircraft manufacture, gas production and so on? If he is saying that we are not entitled to practice monopsonic policies, he must recognise that there are conflicts. Someone is telling lies about the matter. We say clearly in our policy statement that we do not wish to allow foreign competitors to move into certain areas where we want a democratically-controlled State monopoly. That is our purpose as Socialists, and it is in direct conflict with the treaty. Therefore, we have fundamental objections to the idea that we can accept the treaty in total.

I return to my right hon. Friend's speech and the matters that alarm us. To me, it represents a tremendous shift from the mood and the feel of his 1st April declaration. There was some cheering on this side of the House when that declaration was made, but I believe that since then the Foreign Office has got to work, and my right hon. Friend is yet another victim in a long line of casualties who have suffered as a result of the treatment meted out by the Foreign Office. My right hon. Friend may well go down in history as one of the best Foreign Secretaries we have suffered over the centuries, as has been suggested by the Opposition. I do not want to detract from the accolades which have come from the Conservative benches, but I am worried by the shift in policy and what is alleged to have happened in the Cabinet.

The Leader of the Opposition has seemed to object to the fact that a document prepared by my right hon. Friend the Secretary of State for Industry somehow found its way into the National Executive of the Labour Party. The right hon. Gentleman thought that it was wrong that papers should be submitted in that way. He felt that they should come through the House. On that point I believe that there is a great weakness in the British Labour movement. There are gaps in our democratic practice. My right hon. Friend the Foreign and Commonwealth Secretary wears three hats, being not only a Minister but Chairman of the Labour Party and its Treasurer. He has to decide which hat he will wear at which time.

Mr. James Callaghan:

So that is what the speech is about.

Photo of Mr Norman Atkinson Mr Norman Atkinson , Haringey Tottenham

My right hon. Friend may continue to make his comic remarks, but he is custodian of conference policies. Like many other members of the Labour Party, I would expect my right hon. Friend to be serious in that function as chairman of the party. I am surprised that, as chairman, he has never discussed the speeches he made on 1st April and 4th June, both of which are landmarks. Major statements of policy have never been discussed by the National Executive of the Labour Party or by a monitoring group specially set up by the NEC. I believe that my right hon. Friend refused to submit any papers to the NEC. That represents a weakness in our democratic practice and what we should like to see existing between the Labour Party at its National Executive level and the Labour Party when in government and represented by my right hon. Friend.

Photo of Sir Alec Douglas-Home Sir Alec Douglas-Home , Kinross and West Perthshire

What the hon. Gentleman is telling us about the Labour Party is very interesting, but will he turn his mind to the interests of the country for a short time?

Photo of Mr Norman Atkinson Mr Norman Atkinson , Haringey Tottenham

Yes, but the Labour Party happens to be part of the country. It is an integral part of our democratic system, just as the Conservative Party is an integral part of our political system. If we are to talk about the wholehearted consent of the British people, that must involve the political parties, if our political system depends on the kind of organisation we have come to recognise.

It seems strange that the Foreign Secretary, as Chairman of the Labour Party, has never consulted the Labour Party about a major statement of policy which purports to represent the party policy. The second feature about the shift between 1st April and 4th June is the setting up within the Cabinet of a European strategy sub-committee. This is an interesting arrangement. I am told—not directly by members of the Cabinet— [Interruption.] I am being very honest about that. I am not told directly by members of the Cabinet, but it is common knowledge that this statement to which I have referred has not been collectively discussed in the Cabinet.

It was submitted as a series of papers to this strategy sub-committee set up by the Cabinet. In my opinion, apart from what is happening in Europe and the effect of the Commission upon our so-called power-sharing arrangements there is a diminution of democratic practice in this relationship between the Labour Party and the Cabinet. We are now getting élite policies.

Mr. James Callaghan:

I do not know which of the hobgoblins I should try to disperse. I shall certainly not discuss the Cabinet. As for the Labour Party, perhaps I can tell my hon. Friend that it was I who proposed, from the chair, that there should be this monitoring committee. It was my idea that we should keep these matters under review. It is quite untrue to suggest that I have not been willing to submit papers. The general tenor of my hon. Friend's remarks is as completely inaccurate as was his earlier comment, some weeks ago, that I was called to Windsor Castle to assist in the formation of a coalition Government. These remarks today are just about on a par with that rubbish.

Photo of Mr Norman Atkinson Mr Norman Atkinson , Haringey Tottenham

I do not want a party debate on these matters. However, I remind my right hon. Friend that it was he who told me that he was going to Windsor Castle

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. There are so many hon. and right hon. Members who wish to speak that it might be advisable to leave Windsor Castle for the time being.

Photo of Mr Norman Atkinson Mr Norman Atkinson , Haringey Tottenham

1 find it a little incomprehensible that a right hon. colleague of mine should say that it was I who set about the idea that he had gone to see the Queen to discuss the formation of a coalition Government. Nothing of the kind. It was he who told me about this. I have no knowledge of his movements.

We are deeply concerned about this shift. I am sorry to have prolonged what hon. Gentlemen opposite have called my interesting remarks. I believe that they are germane to the argument. We are committed to a referendum, and I remind my right hon. Friend of the origin of the phrase which he quotes in the party document. We have taken the trouble to reproduce this in the Notice Paper because that was the only way we could get down a statement on policy. The statement says that in view of the unique importance of the decision"— that is relating to the whole question of our position in the Community— the people should have the right to decide the issue through a General Election or a Consultative Referendum. My right hon. Friend knows only too well that had it been convenient to devise some mechanics whereby a referendum could have been combined with a General Election we would have done so. That was the origin of this. There must be a Labour Government if there is to be a referendum. The Conservative Party has already said that it would not allow a referendum because it is not part of its policy. The commitment is loud and clear. If there is any going back on that there will be serious discussions in the Labour Party.

My right hon. Friend says that he is honest and straight in his approach, and I totally accept that. We must be honest and straight about our promise to the British public that we shall allow them to say "Yes" or "No" on the question of continued membership of the Community. That can be done only through a referendum. We ought to make it clear to everyone that the Labour Party, if elected in October, or whenever the election may come, is 100 per cent. committed to the idea of a referendum.

If the recommendation to accept is to be based on the outcome of the negotiations and is not to do with the treaty, a Labour Government will obviously recommend continued membership. The outcome of the discussions will undoubtedly be successful. It cannot be otherwise. We are bound to say that we have succeeded in our attempts to renegotiate, we have reached a compromise, we have saved the nation so much money, and that therefore we are asking the people to say "Yes" to continued membership. That method will have to be challenged.

If we go along the road mapped out by the Foreign Secretary that will be the end when it comes to the referendum. We cannot introduce fresh matters about the inadequacy of our Community relations or the question of the treaty. We should be talking only about the outcome of the renegotiations. Many of us stick on this because the treaty is at variance with our requirements for the creation of a Socialist policy. Many of us passionately believe in the need to transform society. We do not believe it is possible if the treaty remains intact. Yet my right hon. Friend raised no objection—he agreed—to the terms of a statement put by the right hon. Member for Chipping Barnet (Mr. Maudling), who said that accepting the treaty without amendment and accepting Community regulations and directives with consequent loss of sovereignty was now the position of the British Labour Government.

The Foreign Secretary did not object to those words. If there is no objection forthcoming our suspicion that there has been a shift in the Cabinet and in our leadership is confirmed. If, as the British Labour Party, we accept the treaty without amendment throughout the negotiations and the period leading up to the referendum and accept that we are obliged to obey Community directives with consequent loss of sovereignty, matters have altered. If that is now our position it is a long way from the conclusions which I believe we reached at our last annual conference, when we endorsed the 1972 statement. That is what worries my hon. Friends and I most, and why we shall have to have some straight talking about where we now stand and the direction which is now plotted for us by the Foreign Office and others who support its line.

I do not want to detain the House any longer—[HON. MEMBERS: "Hear, hear."] Hon. Members on the Opposition benches may say "Hear, hear", but some of these matters are of vital concern to our whole function as a political movement, because I believe there should be absolute honesty and consistency in the things we say and do and in the way in which we behave in this House. I agree with my right hon. and learned Friend the Member for Liverpool, Edge Hill (Sir A. Irvine), that people are becoming afraid of this place because of its inadequacy, because there is a loss of honesty and because it no longer seems what people thought it once to be. We have to restore that credibility. We have to tell people openly and as honestly as we can just where we stand. We have to tell the British Labour movement that the conclusions it reached at its annual conference are the guidelines which set the direction we must follow as individual Labour Members of Parliament.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

We have one and a half hours left for back benchers' speeches and 20 right hon. and hon. Members wishing to speak. I urge hon. Members, therefore, to think of their colleagues.

7.33 p.m.

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness

I shall be brief. What we are witnessing is not really a fundamental renegotiation of the treaty by the British Government with our other partners in the Community but a fundamental renegotiation within the Labour Party of its attitude to Europe. Virtually the whole of the Foreign Secretary's speech was very much directed at his back benchers rather than at the House as a whole. This seems to me to be a very dangerous game to play and to present a very dangerous situation and is very depressing in view of the enthusiasm with which the progressive elements in the Community welcomed our entry and looked to us to give the EEC new impetus.

There are four aspects with which I wish to deal. I start with the four items which the Foreign Secretary mentioned as the principal questions for renegotiation: the budget, the CAP, trade and aid, and the regional and industrial question. There is certainly no one on the Liberal bench, and I doubt whether there are many hon. Members elsewhere, who would oppose what the Foreign Secretary is seeking to do. It was quite properly said by the hon. Member for Saffron Walden (Mr. Kirk) that in effect we are seeing not fundamental renegotiations but on-going renegotiations which would have taken place in any event but which have been given this somewhat special title and emphasis which have had other unfortunate effects, as the right hon. Member for Knutsford (Mr. Davies) cogently pointed out.

Therefore, it is not what the Foreign Secretary said that is interesting but rather what he has not said. In particular, economic, monetary and political union were not really dealt with in the second Luxembourg speech. I recollect that the Foreign Secretary intervened during the speech of the right hon. Member for Chipping Barnet (Mr. Maudling) to say that he could not go on repeating everything all the time, but it is interesting to note what he actually said in Luxembourg on this question. He said: There is a fifth question about the future of economic, monetary and political union to which added point has been given by recent events which have affected individual members of the Community. We discussed these matters at our recent meeting … I shall not pursue them today, except to say that as I understand it, the position on these matters is that a great deal of further work and discussion will be required before any further decisions can be taken in pursuit of these general aims. We are very ready to continue with these talks in order that we can all elucidate, in a constructive spirit, what content it may be possible to give to them. That last sentence is splendid and mystical and it is difficult to see what it means, but if" constructive "means anything it presumably means that the Government very much accept—much to the annoyance, I would have thought, of hon. Members like the hon. Member for Tottenham (Mr. Atkinson)—that economic, political and monetary union are desirable and necessary aims of the Community.

Mr. James Callaghan:

It would indeed be boring if I kept on repeating everything. I have already said to the right hon. Member for Chipping Barnet (Mr. Maudling) that he should read paragraph 6, and I now add paragraph 7, of my speech in Luxembourg of 1st April. If the hon. Member will not read it, perhaps he will allow me to do so in order that he will not have to pursue this hare. I said: Economic and monetary union … a rigid programme including fixed parities … dangerously over-ambitious: over-ambitious because the chances of achieving by 1980 the requisite degree of convergence of the rates of growth of productivity and wages rates, of investment and savings, seem to us to be very small: dangerous because of the impossibility for any country, particularly a country with a relatively low growth rate, to manage its own economy efficiently and provide for full employment and so on; much new thinking is going on in the Community on the subject". I then used another phrase: intention of transforming the whole complex of the relations of member states in a European Union by 1980. What does this mean? Is it to be taken literally … change which is quite unrealistic and not desired by our peoples, certainly not by the British people. How much clearer must I be than that?

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness

The Foreign Secretary may be trying to persuade us in his persuasive fashion that there is no difference in emphasis as between the two Luxembourg speeches, but objective observers would note the change in tone and would indeed note the change in tone as between the part of the speech I read out and the part which the right hon. Gentleman read out. I am worried that the Labour Party is liable to box itself in. The Community, I believe, is meaningless in the long term unless there is a movement towards political, economic and monetary union. If those do not come about, there is no point in going on with the EEC. I was seeking to elucidate precisely what was the Foreign Secretary's view, while I understand his difficult political situation.

Perhaps I may quote someone else, not a Liberal, whom I heard speak in the European Parliament last November, because the third point I would make about the Foreign Secretary's speech is that it lacked vision. What is the right hon. Gentleman's vision of Europe, his concept of where we are going? He said that we now had Schmidt and Giscard d'Estaing and that things would be more practical and less romantic, although that was not his word. The great politician in question said: The goal is clear. It is, as I have put it from time to time, a sensibly organised European government which in the fields of common policies will be able to take the necessary decisions and will be subject to Parliamentary control. The European states will transfer to that government those sovereign rights which in the future can only be effectively exercised together; the remaining rights will stay with the member states. In this way we shall both preserve the national identity of our peoples which is the source of their strength, and add the European identity from which fresh energies will ensue. That was Willy Brandt, the then Chancellor of West Germany. The vision of his speech was conspicuously absent from the Foreign Secretary's comments.

My third point concerns the total absence of any reference to democracy and the democratisation of the institutions of the Community. It would appear to me that it would be something which the Labour Party, and a Socialist Party for that matter, would naturally be in the van in advocating, and I do not understand why this is not so.

The Foreign Secretary earlier spent some time posing questions to the right hon. and learned Member for Hexham (Mr. Rippon), but I should like to pose a question to the Foreign Secretary. He said during his speech that he did not know how the negotiations would end— they might end successfully or they might not. A number of hon. Members have pointed out the various alternative options—the enlarged EEC or the enlarged EFTA which the right hon. Member for Battersea, North (Mr. Jay) was advocating, and which was effectively contested by the right hon. Member for Chipping Barnet. [An HON. MEMBER: "NO."] This is a matter of opinion, although in my view the burden of opinion is in one direction.

There is also the question of the Commonwealth and of the special relationship with the United States. I should like to know the Foreign Secretary's view on what alternative policy Britain will have if the negotiations fail. That is a fair question to ask. If there is to be a posing of questions to the British electorate it will be not only a question of whether we are to stay in. The question of what happens to us if we do not stay in is equally pertinent.

Finally there is the question of consultation. I am not, and my party has not been, in favour of a referendum, but it seems more than likely that a referendum will take place since the Labour Party is well committed to it. I cannot see how on earth there can be a General Election on a single issue. A General Election takes place on a multiplicity of issues and it is impossible to isolate one and claim that it is a clear definition. If we have a referendum, what will be the justification for it? It will presumably not be, despite the early day motion relating to this, a consultative referendum. Presumably it would be mandatory, otherwise there would be no point in having it. Presumably the justification for a referendum is that it relates to a special constitutional question and therefore requires special constitutional treatment for which no precedent has been set. I am, for instance, interested in the future of the Kilbrandon Report, in devolution and in changes in the internal constitutional situation within the United Kingdom. Such would logically also be a proper question for a referendum. There is the question of reform of the electoral system of the country. That is a constitutional issue.

The more I think of it, the more it appals me that hon. Members in the House prate about participation and about consulting the public and ignore the gross injustices of the electoral system. The right hon. and learned Member for Liverpool, Edge Hill (Sir A. Irvine) talked about the forlorn Liberal vote at the last election. Six and a quarter million people, because of the obvious injustices of the electoral system, were effectively disfranchised. Members must get the whole question clearer in their minds.

While we on this bench will certainly support the achievement of a fairer adjustment of terms, which is essentially what the Foreign Secretary is talking about, we remain deeply disappointed at the lack of evidence of determination to build a more effective, a more egalitarian and a more democratic community and at the failure of the Government to give their support to those who seek furtherance of these aims, which are those on which we should be concentrating.

7.45 p.m.

Photo of Mr David Marquand Mr David Marquand , Ashfield

You appealed for brevity, Mr. Deputy Speaker, and therefore I shall not begin my speech with quite as many bouquets to my right hon. Friend the Foreign Secretary as I had originally intended. I shall simply content myself with saying that the statement of aims which he put forward in Luxembourg was admirable. It is nonsense to say that it was out of line with Labour Party policy—it was not out of line with the policy on which I fought the last election. Furthermore, the statement of aims which my right hon. Friend put forward in the House this afternoon was also admirable.

But in negotiations of such complexity, it is not enough to have the right aims; it is also necessary to have the right approach and the right method. I am not yet entirely sure whether my right hon. Friend has the right method and the right approach for the negotiations to succeed.

There are two possible ways in which this country could pursue its aims in these negotiations: it could choose the method of what might be called British Gaullism or the method of what might be called Community solidarity. The method of British Gaullism would involve fighting hard for British interests exclusively and arguing the case solely in terms of British interests. The method of Community solidarity would involve fighting no less hard for British interests, but in Community terms which the other members of the Community would be likely to accept and endorse.

I believe that the first method—the method of British Gaullism—would be a recipe for failure. We must understand that in these negotiations we are in a much weaker position than the French were under President de Gaulle. In these negotiations we are asking essentially to pay a lower share of the Community budget. This is right, but it means that the other Community countries are being asked to pay a higher share. There can be no possible escape from that; it is mathematically self-evident.

If we fight our case solely in terms of British national interests the other countries in the Community will be entitled to fight their cases in terms of their national interests and we shall find great difficulty in reaching a successful conclusion. It is therefore essential to adopt the second method—that of what I call Community solidarity, if the negotiations are to succeed.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe

Will my hon. Friend tell me where we have seen this demonstration of Community interest and solidarity in the past 12 months?

Photo of Mr David Marquand Mr David Marquand , Ashfield

I said that I wanted to be as brief as possible, and my hon. Friend has raised a big question. I agree that the Community has not demonstrated much solidarity in the past 12 months. This has been a great disappointment to me, as I voted in favour of entry to the Community. But one reason is that the previous Government were far too Gaullist in their approach to the Community. That is one reason why effective energy and regional policies were never developed. It would be a tragedy if we were to conclude that because the Community now lacks sufficient solidarity a British Labour Government should therefore make the situation even worse, as my hon. Friend seems to have suggested. We must couch our argument in terms which the other members of the Community can accept. That means, if it does not sound too cynical, that at the very least we must pay lip service to the ideal of European unity. It is, in a way, a rather muddled, metaphysical and vague concept. I understand my right hon. Friend the Foreign Secretary with—I was about to say, his English pragmatism, but that would be insulting a fellow Celt and so I should say with "his Celtic pragmatism"—being slightly put off by the misty and vague language sometimes used by our partners in the Community when speaking of these matters. But if we fail to recognise that beneath that fuzzy language there is a deep and passionate desire on the part of millions of people for a better life and for a more international method of settling problems, we shall outrage strong feelings among our partners and we shall be that much less likely to achieve our own national purposes.

The second corollary of pursuing the method of Community solidarity is that wherever possible we should seek to rectify the injustices that we feel to exist in the present arrangements in ways which will strengthen the institutions of the Community rather than weaken them or even leave them where they are. It cannot always be done, but in some areas it can. One of them is regional policy and I was disappointed and surprised that the Foreign Secretary's statement in Luxembourg did not lay greater stress on the need for a large regional development fund. That would, in practice, mean a smaller net burden to this country and it would also strengthen the Community's institutions.

If we argued in this way, our partners —certainly the Socialists in the Community—would find it difficult to oppose us in terms of their own proclaimed beliefs and principles. This is not just a good negotiating tactic; it also happens to be right. If the Community remains as it mainly is at present—nothing but a customs union with a common agricultural policy tagged on to it—it is this country which will suffer most. A mere customs union will simply make the richer areas more prosperous and the poorer areas relatively less prosperous.

It is the least prosperous areas of the enlarged Community which have the most to gain from a strong Community, able to follow interventionist policies designed to correct national and regional inequalities. I should therefore like to see— and in spite of the disappointments of the last few years, there are still people on the Continent who feel this too—a Labour Britain acting as the accelerator rather than as the brake in the drive towards greater European integration.

I am also not quite sure that the Foreign Secretary has fully appreciated —that sounds very patronising, and I apologise for the way I put it—the implications of withdrawal for this country and for the world. I can understand that it would be impossible for him to negotiate in Brussels and say, "I think that withdrawal would be a disaster". He cannot say that publicly in the negotiations—it would not be reasonable to expect him to do so—but when this is put to the British people, in whatever form, it will be essential not only that the Government take a firm view on the position—I was glad to see that the Foreign Secretary committed himself to that in his Luxembourg speech—but also that they should tell the British people what they see as the costs and consequences of withdrawal for us and for the world.

It is a fantasy to think that we can somehow create the industrial free trade area which the right hon. Member for Chipping Barnet (Mr. Maudling) failed to get nearly 20 years ago. That is a mirage. Not only would it be catastrophic for this country if the negotiations failed and we were to withdraw; more important, it would be catastrophic for the Western world. We have taken for granted for 25 years a degree of stability and prosperity in the Western world such as has never been known before in history. We cannot take that quite as much for granted in future.

The Western world is now facing much more acute problems than it has ever faced, certainly since the death of Stalin. If this country were to withdraw from the Common Market—inevitably in an atmosphere of recrimination and failure—the bitterness that would be bound to follow could only encourage the most ugly, dangerous and inward-looking forces, not only here but throughout Europe and the West. We would pay—the whole world would pay—a heavy price.

7.55 p.m.

Photo of Mr Roger Moate Mr Roger Moate , Faversham

The hon. Member for Ashfield (Mr. Marquand) maintained that it would be catastrophic if Britain withdrew from the Community. Other hon. Members have said the same, but they have adduced not one scrap of evidence in support of such an allegation. There is a general view that if the negotiations were so successful as to transform the nature of the Community that would command general support. However, if they fail, Britain outside the Community is likely to thrive and prosper as much as if it were inside it.

How could it be catastrophic to withdraw from a community which is earning us a trade deficit at a rate of £1,600 million a year, which will impose upon us a massive burden, across the exchanges of several hundred millions a year, a community which imposes on us a grossly inefficient agricultural system, the burden of which is likely to grow with the years as the world food situation alters? No one has produced one scrap of evidence to suggest that Britain would be seriously and economically disadvantaged if we were to withdraw.

The only point which is frequently made is that the Community would immediately erect against us the tariff barriers that it has been in the process of reducing. If that is people's judgment of the protectionist nature of the Community, one wonders whether it is the sort of association to which we want to belong. But even that presupposes that the tariffs are really significant. At the time of our entry, the average industrial tariff of the EEC against this country was 8½ per cent. That has now been reduced to about 5 per cent. When we compare that 3½ per cent. reduction with, for example, the effect of devaluation on our competitive position, it becomes clear that the tariff itself is not significant.

If it came to withdrawal, I do not believe that the Community, our European partners—that is what they are and would remain—would resort to protectionist measures which would be just as damaging to them as to us. So the momentum to free trade, either through a negotiated withdrawal or through the GATT negotiations, would remain and would ensure that this country would continue to trade across the world. It is upon world trade, after all, that we depend.

I was particularly glad that the Foreign Secretary commented on Parliament's powers over European legislation. I welcomed what he said about the scrutiny committee, but I wonder whether he is right to be satisfied with the powers that exist. Could he not see whether we could tighten up these matters even further? As I understand it, Commission regulations are automatically binding from the moment that they are issued—possibly even before that, in some obscure way. There is no way in which the scrutiny committee can intervene to prevent that legislation being automatically binding in this country. This is a matter on which the House should be reassured.

We know, too, that that committee is heavily burdened and that it is unlikely to be able to scrutinise all these matters of major importance. Even the most ardent Marketeer apparently does not object to the scrutiny committee being able to intervene in the legislative process. I should have thought it a much greater security for the House if it could by resolution ensure that no Community legislation had any effect in this country until it had gone through our normal legislative channels. That is surely a resolution that would command universal support and would be a helpful guideline, and possibly more than a guideline, to future Parliaments.

The Foreign Secretary referred to the Luxembourg agreement or accord and the insistence that there should be the unanimity rule in the Council for Community decisions. He rightly places great stress on that matter as one of the safeguards for this country, as did my right hon. and learned Friend the Member for Hexham (Mr. Rippon) and previous Conservative Ministers.

It is all very well to place such dependence upon that agreement, but it is not part of the treaty. It is not a rule. If we regard it with such significance then we should seek an amendment to the treaty to ensure that the unanimity rule remains intact. Only today Sir Christopher Soames is reported as calling for an end to the practice of unanimity in Council decisions. He goes on to explain his reasons.

If the rule is not in the treaty, surely it should be. Although Sir Christopher does not speak for this country or for the Community as a whole, his words are a sign of the pressures that are to come to end the unanimity rule. If we believe that an individual country should be able to protect its national interests, as does the Foreign Secretary, apparently, then let us seek a treaty amendment to establish that that control remains permanent. If such a control were permanent, many of the objections that still remain among many hon. Members would recede.

The Foreign Secretary's last speech at Luxembourg does not meet the full sovereignty argument that he and his colleagues have been proclaiming in recent years. The present Prime Minister, during the last General Election, said: But worse, it became the law of Britain that any future decision of the Common Market institutions should automatically become the law of Britain, setting aside, repealing statutes which existed for the benefit of the welfare of the British people. British judges would have no choice. I am sure that the Prime Minister did not believe then that the scrutiny committee would set that right. The sovereignty issue is far greater than that, and it is to that matter that the Foreign Secretary should devote more attention. He should seek to satisfy the arguments that have been put forward from both sides of the House and the arguments which were put forward very strongly in the Labour Party manifesto.

I am not a custodian of that manifesto, but some of my colleagues and I have scrutinised it carefully. We are now talking about an issue on which the British people will make a judgment. They will make a judgment of politicians generally. If there is not a genuine renegotiation I think that cynicism will set in deep in the minds of the British people.

Some of the criticism of the right hon. Gentleman's position has been based on a misunderstanding. It has been assumed that there were two speeches which were totally separate and that the second speech now stands on its own. The right hon. Gentleman has made it clear that his 1st April speech is still the basis of Britain's negotiating position. If that is so, it is a matter of significant importance which makes the general contentment with which the latter speech has been received by certain right hon. and hon. Members seem a little over-optimistic.

The 1st April speech sets out in full terms the Labour Party's election proposals. It goes a long way towards an amendment of the treaties themselves. The right hon. Gentleman retains his 1st April speech as the basis of his case. He has the scope to extend the negotiations far beyond the four points that he made in his latter speech, but whether he has the intention is something which no hon. Member knows, apart from the right hon. Gentleman. To a large extent none of us knows what will happen.

We cannot know how the negotiations will proceed. We cannot know precisely how the French, in particular, will react If the negotiations run into trouble I suspect that it will not be as a result of any of the four points that the right hon. Gentleman has spelled out. Any confrontation is more likely to arise from the apparent unwillingness of the right hon. Gentleman to kneel before the altar of political union, and from what has been called his agnosticism on economic and monetary union.

Many hon. Members who believe passionately in membership of the Community have said what is absolutely true, namely, that the Community is of little use and value unless it has political will. I would argue that because it is a political decision above all, the British people should have the right to decide. From the tone of the right hon. Gentleman's speech there is no will on the part of the British Government to proceed to a political union, and certainly not even to proceed towards economic and monetary union. The right hon. Gentleman has clearly reserved his position on that.

It is on those matters that the Community will realise that it must decide whether Britain is to remain a member. Some of us have considerable respect for the way in which the right hon. Gentleman has managed to please almost everybody so far, with one or two notable exceptions. It is clear that he has a strong negotiating position. It would not surprise me to find that the Labour Party manifesto, to the displeasure of many of my right hon. and hon. Friends, is honoured in full, and that a referendum will be held. The decision of the British people will then be heard for the first and final time on this subject.

The right hon. Gentleman referred to the harmonisation of value added tax. That is a crucial matter. The relevance of that goes to the heart of almost all other considerations within the Community. It embraces economic and monetary union and the question of own resources. The Foreign Secretary has said strongly that the present Government have maintained that they will not change their position on the zero rating of foodstuffs, but by implication he is accepting that harmonisation of the scope of value added tax, with that exception, will proceed. It is, I think, the sixth directive, with the one amendment that was put forward by the European Parliament and presumably accepted by the Commission, that forms the basis on which hamonisation will proceed.

This is alarming. Is the right hon. Gentleman really saying, with the one exception of zero rating, that henceforth a British Government will accept the control of the Community over the scope of value added tax? That is accepting an enormous principle. I do not believe that that is the wish of this Parliament. I do not believe that it is desired that the control of taxation should pass from our control.

One interesting matter bearing on value added tax is that we were assured repeatedly that there would be no question of applying it to food. We were told that we were chasing hares if ever we mentioned that matter, yet in March a report appeared in the newspapers entitled: British victory in debate on Community taxation The report read: Conservative MPs in the European Parliament fought hard and successfully today for the principle of zero rating.… It remains to be seen whether British advocacy will prove as effective within the Council of Ministers. It appears that a threat existed. According to the newspaper report Conservative MPs won a victory in persuading the European Parliament to say that value added tax should not be applied to food. The threat existed, and still exists. That is the situation as it stands under the Treaty of Rome.

We must come to grips with the question of own resources and state much more firmly not just our position on value added tax on food but the broad principle of retaining full and absolute control in this House over all measures of taxation within Britain.

I wish the right hon. Gentleman considerable success. I think that he is playing a skilful hand in his negotiations. We are not sure of the cards that he is playing. That is a sign of great skill. I have a feeling that at the end of the day the hon. Member for Tottenham (Mr. Atkinson) and myself will join in presenting a bouquet to the right hon. Gentleman.

8.9 p.m.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

I take into account your desire, Mr. Speaker, that speeches should be relatively brief. I shall not deal with the speech of the hon. Member for Faversham (Mr. Moate) because with most of his remarks I am in full agreement.

If I had the power to impose penance upon people, I should do so upon a number of Conservative Members. I should place upon them the penalty of reading the speeches they made when they were trying to sell membership of the EEC to the House and the country. We were told that Britain would have a wonderful blood transfusion immediately we entered the EEC and that the sick nation would be made healthy and strong in no time. Yet, following that blood transfusion administered by Dr. EEC, the victim is weaker than before the treatment was started. It is staggering that there is not the slightest sign of humility among former Ministers of the Conservative Government. They are not prepared even now to say that they made a mistake. They are not prepared to admit that they were wrong. They are still talking about the dynamic potential which will in the future become available to us inside the Community.

That kind of promise is no benefit to a man who is dying. Britain was told that if she took this treatment she would become vigorous, strong and healthy. We have had the treatment and we are beginning to see some of the consequences. I wish that those who supported British entry so vigorously would recognise what membership has done for Italy, which has been in the EEC from the start. Why should membership work for us if it does not work for Italy? What problems are there in Italy which are so different from those in Britain?

During the General Election the great cry from the Conservative Government was "Who rules Britain?" We debated that issue in Jarrow. I pointed out that it was not the British Government or the House of Commons which compelled the British steel industry to put up its prices. The decision was made by the gentlemen in Brussels. Yet we are supposed to be wanting to sell exports. How does putting up the price of our steel help our exports?

Again, it was not a decision by this House or by the British people that, at a time when there was an acute shortage of grain, millions of pounds should be spent on denaturing wheat in Europe, some of it in this country. This was at a time when there was widespread hunger in parts of Africa. We were making wheat unfit for human consumption under directions from Brussels when that wheat could have fed hungry people. Any action which leads to things like that being done cannot be supported by civilised, thinking people.

At the end of last year, Ministers in the previous Government announced import levies on food which had never before been imposed in this country. We have had to impose them as a consequence of belonging to the "club". How can we defend putting levies on food at a time when prices are rising astronomically and consumption is declining? But again these were decisions made outside this country. Who rules Britain? We could ask that a thousand and one times.

The right hon. Member for Knutsford (Mr. Davies) was going to get a massive regional fund which would compensate us for the money we had to put into the common agricultural policy. Where is it? That again was part of the propaganda of the Conservative Government. They said that there would be a great regional fund which would mean salvation to the North-East. parts of the Northwest, Scotland and South Wales. The regional fund is no nearer than it was when the right hon. Gentleman was talking about it before the election.

We know what happened. The Germans said that they were not going to bale out Britain. They said it again last week. Bonn will not pay to keep Britain in. It is time that we began to talk to the Germans as they talk to us.

An offset agreement was made under the Paris Treaty of 1954. I wonder how much the shortfall is now. In not a single year since the Paris Treaty was signed have the Germans met their full commitment to the offset agreement. I guarantee that the figure involved must now be between £500 million and £600 million in additional cost to British taxpayers. The Germans say that they are not going to pay to keep Britain in the EEC, yet we have been paying them every year since the Paris Treaty money which they should have been paying to this country because it had been agreed that they would pay the extra costs of the British Army of the Rhine. They have not met their obligation in one single year yet. We should be as tough with them in our negotiations as they certainly are attempting to be with us.

Let us look at one final bit of news. Last Thursday The Guardian reported: The EEC's Ministers of Agriculture agreed late last night to release 17,000 tons of beef for export outside the Community at cut prices. The decision will cost Community taxpayers about £2 million. How in the name of fortune can we defend the Community exporting to countries outside the Community beef at a lower price than it can sell it to us? It is the system, and it is crazy. Of course the British people must be given a chance sooner or later to express their opinion about it.

Photo of Mr Neil Marten Mr Neil Marten , Banbury

I am sure that the right hon. Gentleman will be interested in the following extract from a piece of Conservative Central Office propaganda— shall I call it that?—on the Common Market from 1971 onwards. It says: Next time the prophets of doom"— presumably people like myself— start talking about the cost of joining the Common Market, stop and think. Think of what they don't say. Think of the big, big benefits and exciting prospects—for you, and your family. Perhaps it would be better if we did not take much notice of that. Is it not the case, however, that if we were out of the Common Market we could buy that beef much more cheaply than we can now?

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

The hon. Gentleman is preaching to the converted in addressing me. If we do not agree on many things, we are in broad agreement on this issue.

I come now to a point made by my hon. Friend the Member for Tottenham (Mr. Atkinson). The story was that capital investment would flow like water down the mountainside to Britain if we joined. Dundee was to be made a new city at the expense of Dusseldorf. Of course, we know it has not happened. It has been the reverse. The water has run the other way. No nation intent on having any control of its own destiny can shut its eyes to what has been happening with capital investment. It has been indefensible. Capital expenditure from this country to EEC countries has been 12 times greater than EEC investment in Britain. We were told it would be the reverse.

Unless we make some determined effort to stop that, that will be one of the principles upon which the British people will make a decision. I say frankly that by becoming a member of the EEC, by accepting its laws and by accepting its regulations, we are giving up part of our heritage, part of the liberties and part of the democracy of our people. We have no right to do that till such time as the issue has been put fairly and squarely before the British people. I am satisfied that if it is spelt out in plain and clear language the British people will not be faint-hearted citizens as Opposition Members are. I am sure that the British people will say "If we come out, we shall still survive and once again be Great Britain".

8.21 p.m.

Photo of Lord  Balniel Lord Balniel , Welwyn and Hatfield

I listened to the speech of the Foreign Secretary with a great deal more approval than I read his speech of 1st April. I thought the Foreign Secretary began the negotiations on the wrong foot. There was, I thought, in his original speech, no understanding of the importance of or sympathy with the need of European unity. I thought he was mistaken in that original speech to have threatened to take Britain out of the EEC. Last week's speech was a very major improvement. It is only fair that we should be generous and welcome a sinner who repenteth, because his more recent speech was a major improvement on the original one.

We all know why the Foreign Secretary and the Government have to speak with two voices. It is part of the balancing act which has to go on within the Labour Party. One moment has to be devoted to appeasing the anti-Marketeers and the next moment has to be devoted to trying to preserve and improve that relationship with the greater part of Europe which is fundamental to the well-being of this country. There may be, and from a politician's point of view I accept that there is, strength in this adroitness. It may be adroit, for purely internal party political reasons to shift from one foot to another. It may be for purely party political reasons adroit to harangue and threaten in one speech and a few weeks later to make a speech which is conciliatory, placatory and extremely constructive.

However, I personally do not think it is the right technique in the interests of this country if we are to secure the improvements which many hon. Members and the Government wish to see secured. In a moment of grave difficulty for Europe we do not want ambivalent views from this country or from Europe itself. In these times of economic and political crisis in Europe we should speak with a very clear voice because at the moment Europe is in very bad order indeed.

Photo of Lord  Balniel Lord Balniel , Welwyn and Hatfield

It is in a very bad way. It is perplexed and bewildered with problems, and those problems crowd in one upon another to such an extent that it is probably no exaggeration to say that Europe is in a greater state of crisis than it has been at any time since the last war. No one, not even the most rabid anti-Marketeer, can possibly feel any pleasure at the situation at the moment.

What we see is a grouping of democratic industrial nations striving and struggling to meet great economic and social challenges, and our success and our standard of living will depend on the success of those other European countries in meeting those economic and social challenges.

Each of those countries has been struck by and has had to face the energy crisis and the political difficulties of acting in unison. As industrial countries we must meet vastly increased bills for the fuels on which we depend. We must face the fact that these increased bills have given an additional spin to the inflationary spiral in Europe, which is of a nature we have not seen previously in our generation. Each of us in Europe will face rocketing prices for the raw materials on which our industries depend. Each of us faces rocketing prices for food. There are also monetary difficulties.

We have lost two of the great European personalities, with the resignation of Herr Brandt and the death of President Pompidou.

The economy of Italy, one of the founder nations of the Common Market, is heading straight on to the rocks. The hon. Member for Newham, North-West (Mr. Arthur Lewis) may laugh. As a result of the pressures from the Left and from the extreme Right in Italy it is highly debatable whether the democratic institutions in that country will survive.

In this general picture of the problems of Europe we see the diminution of the strength of NATO. Over and above this we see the threat from this Government to cut our defence expenditure at a time when the Warsaw Pact is growing very steadily in strength.

The balance of power in Europe—as a result of the economic and political disarray and the reluctance of democracies to spend a proper amount in shouldering the defence burden—is shifting away from the Western democracies in favour of the Soviet bloc and the Warsaw Pact. Even with this Government's contribution of added uncertainty a very serious question mark hangs over the future of Europe. The economic threat of uncontrolled inflation is very real. The military threat of an ever-growing mountain of Soviet armaments, far exceeding what the Soviet bloc needs for its own defence, is a very real threat.

I should have thought that sound leadership in these circumstances would have been to provide a degree of certainty and security in Europe. We should build on the achievements of the EEC; we should try to strengthen its cohesion and sense of purpose.

I have no objection to the right hon. Gentleman and the Government negotiating on various aspects of our membership of the EEC, but the underlying threat of withdrawal introduced into these negotiations means that a question mark will exist over the future of Europe for many months to come. If that threat materialised and Britain did withdraw from the Community there would be a political and economic disaster, both for this country and for Western Europe, on a scale which we now find difficult to visualise.

I listened to the hon. Member for Tottenham (Mr. Atkinson). Although he spoke entirely about the interests of the Labour Party—I heard not one word about the interests of our country—there was one point where I did find myself in agreement with him. There has been a major change in the attitude of the Government since the original negotiations on 1st April. It is remarkable how the original grand concept of fundamental renegotiation, about which we heard so much at the election, has dwindled away into a series of requests for changes within the Treaty of Rome. I give a very warm welcome to this change of heart. Almost all the changes which have been requested by the Government are part of the normal business of the Community. Some of them, like the improvement to the common agricultural policy and the new arrangements for the developing countries, had been started by the last Government.

Nowhere in the last speech on the renegotiating process is there any word about the question of sovereignty, which loomed so large in the original debates. Nowhere in the renegotiating process is there a word about the legislative sovereignty of Parliament. The solution to the question of the legislative sovereignty of Parliament is the scrutiny committee which has been set up by the House. Nowhere is there a fundamental attack on the principles of the common agricultural policy. The new policy is to suggest major improvements consistent with the broad principles on which the policy is based. That is extraordinarily similar to the previous Government's policy of trying to secure improvement within the CAP. Nowhere is there further talk about renegotiating the treaty. We are told that all the proposals put forward by the Government can be solved by negotiation within the treaty.

No one will quarrel with the desire to improve arrangements for the Commonwealth, but, again, many of these were in process before. Discussions about the Protocol 22 countries—the Caribbean, Africa and Asia—have been going on for a long time. The arrangements for New Zealand butter were in any case due for renegotiation this year. Talks on sugar have been going on for a long time and are now reaching a decisive stage. India, for instance, has concluded a treaty with the EEC, and many other Commonwealth countries are negotiating similar treaties with the Community.

The crunch will come in the negotiations about our contributions to and the benefits we receive from the Community Fund. I agree with the hon. Member for Ashfield (Mr. Marquand) in wishing that the Government would place greater emphasis on securing a large regional fund, from which we would benefit. The key lies there.

The fundamental mistake that the Government have made is not that they are trying to alter various aspects of our membership; it is that they are damaging the growth of mutual confidence in Europe when European nations should be coming shoulder to shoulder to meet the economic onslaught which will strike them in the next few years.

It is said that the Government do not really believe in their threat of withdrawal. The threat of withdrawal, which is so disturbing to the rest of Europe, has nothing to do with Britain's interests. It has a great deal to do with the interests of unity within the Labour Party. Having introduced this threat of withdrawal on 1st April, the Government are following a dangerous course, which they will find extremely difficult to control as negotiations proceed. For months—even before the electicn—they denigrated the Common Market. For months they have allowed the initiative to rest in the hands of the anti-Marketeers. They have scorned the achievements of the Common Market, they have threatened withdrawal and, inevitably, this has increased the number of anti-Marketeers and has also raised their hopes.

My condemnation of the Government is that they have elevated party unity above Britain's interests. At a moment of grave peril for Europe they have plunged us and our fellow-European countries into grave uncertainty about the future, which will weaken Europe and us for many months to come.

8.35 p.m.

Photo of Mr Dick Taverne Mr Dick Taverne , Lincoln

I shall be as brief as I can. A number of excellent speeches have been made and some of the things I intended to say have already been said better than I could put them by the hon. Members for Ashfield (Mr. Marquand), Inverness (Mr. Johnston) and others.

It is interesting to note that, except for the speech made by the Foreign Secretary, I have not heard from the Government benches any speech which could be said to be the speech of the official Labour Party. On this side of the House speeches tend to be made by those who are in out-and-out opposition to the Common Market or by those who strongly favour continued British membership.

There has been widespread agreement with the approach of the Foreign Secretary in his June statement and with the aims which he seeks to achieve in his negotiations. There is a general feeling that it would be right, proper and consistent—and, indeed, it would enhance the development of the Community in future—if there were a fairer distribution of the financial burdens.

It has been observed by critics and those who have pressed the Foreign Secretary that there has been a shift of emphasis in the Government position. The right hon. Member for Welwyn and Hatfield (Lord Balniel) suggested that the Foreign Secretary spoke with two voices. I do not think that is fair. There has been a shift in emphasis towards staying in the Common Market if possible and negotiation within the existing framework. The hon. Member for Tottenham (Mr. Atkinson) said that this was due entirely to the perfidious and subversive activities of the Foreign Office. I do not know why it is supposed that Ministers suddenly become knaves, fools and weak puppets who can be easily persuaded by the Civil Service. The reality of the situation is probably that there is an increased awareness of and reassessment of the consequences if we pull out of the Common Market.

I have argued in the past that the short-term economic benefits of going into the EEC were rather evenly balanced. In the short term there were some disadvantages which could not be overridden by the certain advantages. It seemed to me that the short-term economic case for entry was somewhat doubtful, but I have no doubt the short-term economic effects of withdrawal would be adverse. If at a certain stage we withdraw from Europe, it would have been much better never to have embarked on the long negotiations, never to have persuaded British industry to look to Europe, never to have caused the redirection of our efforts, and never to have accelerated the decline of our trading relations with the Commonwealth, which was an inevitable consequence of entry into Europe.

I return to the main theme of the criticism advanced by a number of speakers who have referred to the absence in the Foreign Secretary's negotiations of any political commitment to the union of Europe. I believe that the most serious error made by the Foreign Secretary on 1st April was in a remark he made not in the course of negotiations but in an interview when he expressed the view that the Common Market was essentially a commercial arrangement. He saw it as a customs union and he was not interested in the political developments. This was a flaw which may jeopardise his negotiations. It was not a mistake made by the former Labour Government when they applied for entry.

In a number of speeches made at that time, the present Prime Minister emphasised that the European Community was a political concept and that it was to this that the Labour Party was committed. This was evidenced in the negotiations not only with our future partners but also with those outside the Community, such as the Swedes. If the Foreign Secretary looks back at the discussions which the Prime Minister had with the then Swedish Prime Minister, he will find that time and again the Prime Minister in the then Labour Government emphasised the political commitment involved in the Community It was also a part of the agreement with the Italians signed by the right hon. Member for Fulham (Mr. Stewart), who was then Foreign Secretary. Again it was emphasised that Britain was seeking to establish a political commitment.

Why is this political commitment so fundamental. It is the great divide between those who wish to see the Community flourish and those who are fundamentally opposed to it because they resent a political commitment.

If our contribution is to be less onerous, the benefits to others will also be lessened.

The nation that stands to lose most from a readjustment of the financial arrangements is France. Inevitably there is a clash of interests in these negotiations between Britain and France, and we will need allies in this. The allies that we could expect to have had were the Germans, who also would like to see a rearrangement of the financial commitment, and for political reasons the Dutch and the Belgians. Yet it is precisely our potential allies—the Germans, the Dutch and the Belgians—who were deeply shocked, if not horrified, by the kind of offhand remarks made by the Foreign Secretary on 1st April about his concept of the Community and which from time to time have been repeated in a somewhat milder form. Those potential allies were already deeply disappointed by the attitude of the previous Government to discussions about a common energy policy.

What is their approach now? Why should they help Britain in these negotiations? Why should they strive to keep Britain inside the Community? They feel that if Britain is kept in, we shall use our influence to frustrate the progress towards that goal which they themselves want. That is the flaw in the negotiations, and it is why I do not share the feeling expressed by the hon. Member for Tottenham (Mr. Atkinson) that the negotiations will probably succeed. I hope that they will. I do not think we can yet say whether they will succeed or fail. But the negotiations are less likely to succeed because we have alienated our potential allies.

I mention lastly the possibility of a referendum. One of the factors which again shocked the other partners in the Community was not the fact of a referendum, which some nations held, but the readiness with which Britain seemed to be willing to accept offering a referendum to break a treaty. It was the attitude that the treaty was not worth anything. It was an attitude which the other nations in Europe expected least of all from Britain. This indifference to a solemnly signed treaty—

Photo of Mr Neil Marten Mr Neil Marten , Banbury

I do not know whether the hon. and learned Gentleman was here for the Third Reading of the European Communities Bill on 13th July 1972. On that occasion the Labour Opposition's spokesman said that the Labour Party did not consider itself to be bound by the treaties, that it pledged itself at the end of any further negotiations to consult the British people and that the Six must take account of these factors. The Six were aware that this situation would arise.

Photo of Mr Dick Taverne Mr Dick Taverne , Lincoln

Of course it is not a simple matter. It is extraordinary, however, that a British Government should now say that we are prepared to break a treaty because in the past we did not agree with a different Government who signed it. That has been the view of many other Governments which we ourselves denounced—that simply because they do not agree with a treaty which has been signed by their predecessors, they feel entitled to break it. It was that attitude which especially shocked some of our allies.

I hope it will not be supposed that, although there are arguments for a referendum, somehow it is undemocratic to oppose the idea of a referendum on this issue. It was not only the Prime Minister who opposed the idea. It was the policy passed by a two-to-one majority of the Labour Party conference in 1971 that even if the request for an immediate General Election was not met it would still not back a referendum.

A referendum has always been the weapon of those who sought to oppose change. It is also very short-sighted to suppose that what is sauce for the British people will not be sauce for the Scottish people if, later on, the question of Scottish secession arises. If a referendum enables the British people to break a solemn treaty and to leave the Community, why should there not be a referendum whereby the Scottish people may break the Act of Union, if they wish, and thereby control the oil and in this way deprive Britain of the great advantages of all the discoveries on which so many people rely?

I do not believe that democracy consists of government by Gallup Poll or the direct determination by people of very complex issues as opposed to their determination through Parliament. That is true of the European Community treaty, as it is of the Budget and of previous treaties which we have signed. Whenever people have been asked in opinion polls "Do you know enough about the Common Market to decide?" they have always answered "No". It does not seem to me that a referendum is the way in which this matter should be decided. It should be decided by Parliament, as equally important treaties such as that for NATO have been decided.

I hope that the negotiations will achieve for the Foreign Secretary what he is seeking to achieve. It is important, however, for the Foreign Secretary to realise that he has not made it any easier to achieve what he hopes to achieve by refusing to accept the political goal which is what the Community is essentially about.

8.45 p.m.

Photo of Dr Winnie Ewing Dr Winnie Ewing , Moray and Nairn

As the hon. and learned Member for Lincoln (Mr. Taverne) said, one can renegotiate more than one treaty. It may be that, within an entirely democratic framework, some day the Treaty of Union will be renegotiated. I do not think that that is too strong meat for this House, which has seen many radical changes. If it were done within a democratic framework it would not be too shocking to the people of Holland or Germany, or of England. But it may be apposite, this matter having been mentioned, that we should learn a little from history.

Although I rarely agreed with Mr. Enoch Powell, I agreed when he said, "England, beware the case of Scotland". Hon. Members may remember that we entered a treaty, a "common market". We were highly experimental in 1707. There was political unity, monetary unity and economic unity. We retained, in theory, only our legal system. Nevertheless hon. Members should look at the disadvantages. The disadvantages are the double rate of unemployment and the fact that 1 million of our best people have emigrated. Those subjects have not been discussed to any great extent by the House and hon. Members should bear that in mind.

Returning to the matter of the treaty which the Government are trying to renegotiate fundamentally, I should like hon. Members who were Members of the House years ago when I was previously a Member to cast their minds back to the debates in which we tried to find the reason why we were to be attracted into this extraordinary arrangement. In those days it was fashionable to talk of the economic link and to play down political unity and monetary unity. They were not to be discussed. It was the economic argument that was dished up, and the main argument was about growth rates. The other countries had a good growth rate or the prospect thereof. If we were to go in with them, we hoped that in some magical way, like Henry VIII taking a new wife and hoping that some of the youth of the new wife would rub off on him, we would achieve similar growth rates. But the growth rate argument was found to be fallacious. We have heard no evidence that that argument any longer has validity. But it was the argument previously used.

When the growth rate argument was finally crushed, by various sensible speeches from all sides of the House, what emerged from both the Prime Minister at the time when I was previously a Member and the Leader of the Opposition—they are now still the Prime Minister and the Leader of the Opposition, I having missed the turnabout period—was the real motive for taking us into the EEC. That came out in an important debate just before I ceased to be a Member. The real motive was that both right hon. Gentlemen wanted Britain to be great again. The Economist later wrote it up by saying "Stealthily a Super-Power". It was no longer enough to be a great Power. One had to be a super-power, a bloc of some kind, thinking in warlike terms, between the huge millions of America and the huge millions of the Russias. It was a strategic, vainglorious motive. The leader of my party, the hon. Member for Western Isles (Mr. Stewart)—

Photo of Dr Winnie Ewing Dr Winnie Ewing , Moray and Nairn

My hon. Friend has been here just as much as many hon. Members who have been called to speak. [Interruption.] Scotland knows, even if this House is so ungallant as not to know. Sometimes the House is less polite than at other times.

My hon. Friend pointed out that the eyes of a fool were on the far ends of the earth. One million of our people have left my country in 50 years. There are slums in my country so bad that anyone who visits some of them becomes very upset. Lord George-Brown visited the Gorbals and said that he did not know it was so bad, but we never heard any more about it from him when he returned to London.

The Government are interested in trade with Holland. Holland does not have slums like the Gorbals and many other places. The Dutch have not lost a million of their best people in 50 years. The problems in Scotland are not being solved. The eyes of my party are very much on the responsibilities all around us, and they will continue to be before we consider entering into another treaty with no known advantages to us.

We know that the matter is all about politics. It is all coming out now. It is not about a customs union. It will become much more centralised, with much more power of decision in Europe and much more loss of sovereignty to us. It seems to be unfashionable to say anything against it, because those who are in favour of it tend to put it on a pedestal, saying, "We are Europeans". I have always been a European, and I always shall be. Scots law is the same kind of law as they have in Europe. It is different from English law. We always looked to Europe in times gone by for allies, for reasons I shall not mention.

There is nothing noble about the sordid Treaty of Rome, but people sometimes talk about it as if it is noble. What is noble about the way in which the Europeans all acted in the fuel crisis? What is noble about the scramble to get out of the commitment to so-called regional aid? What is noble about Germany's attitude to a new kind of slave worker, to the thousands of migrants from Yugoslavia, Italy and elsewhere, living in dreadful conditions? Is that the great, free movement of labour? I do not find anything noble in that or in France's behaviour over nuclear tests. I do not find very much noble in the state of Italy, in the total lack of conservation of fishing grounds for future generations or in the way in which Italy and other countries shoot every kind of bird, with no thought of their own ecology.

I wish to relate this matter to the peculiar circumstances of Scotland, something that has not been done in the debate so far. The people of Scotland have no voice. They have no say, no seat at the table. When I asked in the House "Who speaks for Scotland?" the former right hon. Member for Dundee, East, Mr. George Thomson, said "I do". That turned out to be a very misleading if not dishonest statement. The right hon. Gentleman did not speak for Scotland. Our fishermen, who have not been mentioned today, were sold down the European river. My predecessor for my constituency, the previous Secretary of State for Scotland, said that I was alarming the fishermen. The fishermen are already very alarmed. They know that on 1st January 1983 the trawlers from Europe, which are not conservationists, will trawl everything from the sea bottom from the coast of the Moray Firth all the way round the coast of Scotland.

In view of the difficulties of acquiring boats and of the costs, fathers are for the first time in a generation saying to their sons "Don't go into fishing." They are voting with their feet. It may seem amusing to some hon. Members but not to Scotland, where the fishing communities keep whole towns and villages alive. I am speaking up for the fishermen. Not a word has been said about them in the fundamental renegotiations. The inshore fishermen of Scotland are in the majority.

It is suggested that the National Farmers' Union is wholeheartedly behind the common agricultural policy. It has had a change of heart in my part of the world. It was misled. The plight of the dairy, beef and pig farmers in Scotland is such that these patient, long-suffering men are now becoming militant. The Kincardine and Aberdeen branches of the NFU have formed a committee. It has agreed that the lobbying of Members of Parliament is no good. What can it do next?

Farmers are doing this out of sheer desperation. When will there be a return to a sensible agricultural policy? Scotland could be self-sufficient in the production of food. It could be a food-exporting country. Yet we have the absurdity of mountains of butter and beef, and our people look in the butchers' shops and cannot afford to buy meat. How long can this situation be tolerated?

I have a few awkward questions to ask about energy. I believe that the EEC energy policy has been formulated and I believe that it is this. The EEC will keep the right to decide the rate of oil exploitation leaving the land mass to collect the revenues. It will decide the rate of exploitation and the rate of royalty. If that is not taking away all control of oil, what is? Whatever is said about oil in the Scottish sector of the North Sea it is undeniably of interest to this House, whatever happens to Scotland.

We should not allow the EEC to get its greedy hands on the oil. That is precisely what it is trying to do, because I suggest that it is EEC policy. Will the Minister say whether that is admitted? If it is not, will he tell us when there is to be an EEC policy?

I come now to regional aid. The citizens of Scotland know that on their doorstep there is this liquid gold which by 1980 will be worth about £1,000 million. When we conservatively estimated the figure years ago at £800 million, we were ridiculed by the Labour and Conservative Parties and by the Press. We have never had an apology. It now turns out that our sums were right. How can we expect the people of Scotland to put out the begging bowl to try to persuade Germany to give us a few million for the A9, for a few schools and a few houses?

In the oil areas the locals will not be able to get any houses. The American employees and other key workers will get them. How can we explain to the people of Scotland that we need regional aid? The regional aid part of the EEC has been a fraud. We must vote against the Government tonight because we are not satisfied that there has been fundamental renegotiation in the true meaning of the word.

If an election sneaks up before a stage is reached with the negotiations which would make a referendum sensible or desirable, can we have the assurance that a referendum will be held? I do not believe that the people in all parts of Britain do not have enough intelligence to make up their minds. I do not believe that they do not understand this because it is too complicated. They understand it all too well. Could we have a little information about this? Is there to be a referendum if an election comes sooner than we dream of?

Photo of Dr Winnie Ewing Dr Winnie Ewing , Moray and Nairn

Can we have an assurance that we shall have a referendum with the ballot paper? The people of Scotland are not satisfied with the treaty. They have no representation under it. A total of 22 per cent. of the people of Scotland now vote for my party and we have just started to break through. This House should take careful note of what I have said about the treaty.

9 p.m.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

The speech of the hon. Member for Moray and Nairn (Mrs. Ewing) had the merit of containing some practical examples, and I shall endeavour in the short time available to me to bring more examples to the attention of the House. It is the first time that a Member for the new constituency of Newham, South has addressed the House. The constituency was formerly part of West Ham, South, which was represented by the present Lord Chancellor for 29 years. The House has become accustomed to his characteristic courtesy, wisdom, precision and clarity—qualities which were carefully noted by his constituents. Mr. Bert Oram, the Member for East Ham, South, made a contribution to the House and to world co-operative movements in which he is now working.

My constituency interest in the Common Market is that in the Victorian area of the constituency, which grew up at the time of the great expansion of the port industry in Britain, there is a large sugar refinery, employing 3,000 people. Due to the EEC treaty and the terms which were negotiated at that time it is possible that over a period that refinery will be run down and those people will lose their jobs. I use that example because it shows something of the character of the Community which is perhaps a little less idealistic than the one Conservative Members have sought to portray. It was the failure of the so-called "bankable assurances" to obtain the same amount of Commonwealth sugar that we had been receiving previously which produced the current situation on Thameside and in Liverpool and Greenock. Increased competition between sugar beet and sugar cane has put the whole situation at risk.

Apart from the situation of the refineries in Britain there is the question of the livelihood of the Commonwealth producers—people whom the EEC is supposed to help. Many hon. Members, including, I suspect, the hon. and learned Member for Lincoln (Mr. Taverne) said that the EEC would enable us to help these people more, but the Commonwealth Sugar Agreement, which is now coming to an end, was the ideal link between the developed world and the underdeveloped world. Who can blame Commonwealth producers now for not sending us as much as they otherwise might? What sort of Community is it that demands that we give up this relationship in order to join?

The Foreign Secretary is engaged in negotiations on this issue. The last Government said that the Australians did not mind our approach over sugar. They have shown, however, that they are willing to send us sugar, perhaps on better terms, and they will be able to act as a buffer if it is possible to vivify the CSA. I ask the Opposition why it is not possible for the EEC, which is supposed to have such a broad and world-wide outlook, to resuscitate the CSA. Not only would that be in the interests of the developing world; it would benefit those whose jobs are at risk in Britain. No amount of regional aid will make up for the loss of work in my constituency, where 25,000 jobs have disappeared in the last few years.

Points made by hon. Members in the debate have been particularly piquant over national sovereignty. It was interesting that the hon. Member for Faversham (Mr. Moate) took up the question of the Luxembourg disagreement. The Foreign Secretary paid some attention to this in his speech and sought to show that it would cover the whole question of national sovereignty. It is not good enough to say that the British people should be dependent for their national sovereignty on an agreement which is in the form of a treaty which the House of Commons has not been able to discuss. Unfortunately, it seems to me that however skilful the Foreign Secretary is he will not be able to get the sort of terms which we shall be able to recommend to our constituents. On that basis we should be compelled to advise them to say "No" to EEC membership.

9.5 p.m.

Photo of Mr Peter Blaker Mr Peter Blaker , Blackpool South

The House will wish me to congratulate the hon. Member for Newham, South (Mr. Spearing), who has returned to the House and who has made his second maiden speech, if that is the correct way to put it. He addressed a question to me about sugar in answer to which I say that the present problem regarding sugar is the shortage of supply. As my hon. Friend the Member for Saffron Walden (Mr. Kirk) said, the Commonwealth has been unable to live up to the quota of 1·4 million tons, and this, at the moment, is what is presenting the difficulty. But there are good prospects—perhaps something will be said about this in the concluding speech—of an agreement which will adequately safeguard the interests of the Commonwealth producers.

A number of hon. Members commented on the difference between the speech of the Foreign Secretary in the Council on 1st April and his speech on 4th June. I believe that hon. Members were right to make those comments. I am not now entering into the question whether one speech was rough and the other dulcet, because I want to draw attention to a different point, which I regard as important.

In the earlier speech the right hon. Gentleman gave the impression that he was speaking from outside the Community and that he was sitting in judgment, on the side-lines, on the Community's performance, whereas in his speech on 4th June, on the contrary, he made clear that he proposes to work for the changes he wants as a full member of the Community, accepting that the Community method is to work together to see if common solutions can be found to common problems. The distinction of which I speak may seem minor to some hon. Members, but I believe it is fundamental. In some types of negotiation it may be a sensible tactic to play hard to get—to threaten that if one does not get one's way one will leave the negotiating table—but what we are involved in here is not that sort of negotiation. I believe that the truth is almost the opposite—that the Government will have the best chance of securing agreement to their proposals if they make as clear as they can their intention to stay in the Community.

I have no doubt that our partners in the Community would greatly prefer that we should stay in but, like the rest of the world, they have immense problems-problems of commodity prices, the quadrupling of oil prices, balance of payment deficits and rates of inflation unprecedented in most countries during this century. I believe that in this situation our partners will feel that what is most required from the members of the Community is a determined attack on these gigantic problems by a united Community.

Important though many of the questions are that the Foreign Secretary has raised, I suspect that if our colleagues are forced to make a choice they may well decide that they prefer an effective Community without us to a hamstrung one with Britain as a doubting partner.

The conclusion I draw therefore is that our negotiating hand will be strengthened the more we can persuade our partners that we intend to play our part in the Community, in a community spirit. I welcome the stress which the right hon. Gentleman places—I hope he will continue to place it—on the fact that Britain will co-operate fully in the Community's current work.

The right hon. Gentleman referred to value added tax. He said that it was already being dealt with in different negotiations and that that was the reason he had not covered it in his speech on 4th June. In saying that, he has put his finger directly on the nature of the Community process. As my hon. Friend the Member for Saffron Walden has pointed out, the Community process is one of continuous negotiation—the evolution of an organic association which is constantly developing.

My hon. Friend mentioned a number of problems which required resolution, including workers' rights, the Parliament, and many others. The life of the Community is a continuous process of negotiation. I would compare it to a continuous piece of cloth which is coming off the loom and into which the members can weave what patterns they choose, and different patterns from time to time. The right hon. Gentleman is cutting up this piece of cloth, saying "It starts here and ends there, and I will call this renegotiation." He now says that this piece of cloth does not include the question of VAT but that it does include the common agricultural policy, trade and aid. and regional and industrial problems.

Why does he include the last three areas but exclude VAT from what he calls renegotiation? Those three matters have been the subject of negotiation for many years. Even the question of our contribution to the budget has already been brought up in the Parliament. It has been the position ever since our entry that it could be taken up at any time, relying on the undertaking in paragraph 96 of our White Paper.

The decision to exclude VAT but not the other three items—setting on one side the question of our budget contribution— illustrates another point. The Foreign Secretary said that the return of a Conservative Government would wreck the process of renegotiation. This betrays a fundamental misunderstanding of what renegotiation, or negotiation, is all about. We have been negotiating on most of the topics that the right hon. Gentleman has described for a long time. He does not seem to have noticed. Is he not aware that when a Conservative Government return negotiation will continue on all these matters and on others'?

The Foreign Secretary claimed that the terms of entry were inequitable from the start. My right hon. and learned Friend the Member for Hexham (Mr. Rippon) dealt with that claim. I am rather surprised at the claim, in view of what the right hon. Member for Fulham (Mr. Stewart) and Mr. George Thomson said about the terms of entry after they were agreed. They made it clear that they would have regarded them as acceptable.

My surprise increased when I looked up what the Labour White Paper of 1970 said about the Agricultural Fund, then, as now, by far the biggest item in the budget: In the negotiations, it will be necessary not only to settle our starting contribution to the fund but also to settle the transitional arrangements under which we approach paying our full share of the recently agreed financing arrangements, which will be changing from year to year. So the Labour Party made it clear at that time that the entry negotiations would be concerned with finding a suitable method of enabling us to adapt to the Community system rather than with altering that system. As we were late entrants to the club, that was a realistic point of view. However, it does not prevent us from suggesting changes now that we are members.

My right hon. and learned Friend also referred to the uncertainty about estimating the budgetary burden that we would face. He referred to the difficulty of judging the extent to which we would benefit from the dynamic effect of joining a Common Market of 300 million people. The right hon. Member for Jarrow (Mr. Fernyhough) referred to that matter in an intervention. The House might like to have its attention drawn to a Written Answer which I received yesterday from the Paymaster-General. It says that in 1973 our rate of growth of gross domestic product was 5·6 per cent. That is only just below the arithmetical average of the Community for that year. In the preceding year, before we were a member of the Community, our growth rate was 3·1 per cent. That was 1·15 per cent. below the arithmetical average for the Community. Relative to the Community average, we made an improvement of 1 per cent. in the first year of our entry. I realise that that is not conclusive—

Photo of Mr Michael English Mr Michael English , Nottingham West

Has the hon. Gentleman read the report of the National Institute of Economic and Social Research, published yesterday, which indicates that an investigation of figures similar to that to which he has referred relating to industries which have had reduced tariffs has shown that there is no connection between those figures and our joining the Common Market? That is not to say that there might not be a connection, but the institute claims that such a connection cannot be proved at the moment.

Photo of Mr Peter Blaker Mr Peter Blaker , Blackpool South

I am not saying that the figures which I have quoted prove my point, but they are consistent with the proposition. I do not think that the institute would contradict that.

Photo of Mr Ernest Fernyhough Mr Ernest Fernyhough , Jarrow

Mr. Fernyhough rose

Photo of Mr Peter Blaker Mr Peter Blaker , Blackpool South

No, I shall not give way. I have already surrendered five minutes.

There seems to be little difference between the two major parties on the common agricultural policy, trade, aid and regional and industrial policy. There are, as my right hon. Friend the Member for Knutsford (Mr. Davies) remarked in relation to the common agricultural policy, one or two matters on which the Conservative Party might not agree, but my right hon. Friend the Member for Grantham (Mr. Godber), as the House will recall, put forward some far-reaching proposals in the Council which were directed to the same sort of reforms as have been called for by the Government.

Our objectives are similar regarding trade with the developing countries. The Foreign Secretary has called for an improvement in the Generalised Scheme of Preferences which was introduced in 1973. Its coverage was extended in 1974 by 40 per cent. That is a continuing process of improvement and we can expect to see the results of this year's review fairly soon.

The total flow of official aid and resources from the Community to the less-developed countries in 1973 was nearly 5 billion dollars. The comparable figure for the United States was just over 3 billion dollars. It was always foreseen that the Community's aid to regional development would be supplementary to national aid and would not replace it. It is much to our advantage that Community aid should be developed if the Government take the view that we shall be one of the poorer members of the Community. I hope they will make an increasing effort to make progress on the regional development fund. I also attach importance to the point made by my right hon. Friend the Member for Knutsford about the controls on regional aid being relevant to a country which expects to be poorer than its partners. If that were not so there would be a danger that we would be outbid by the richer members.

I have a number of questions to put to the Minister who is to reply. My first question concerns the consultations which the Government have had. I imagine that on a question of this importance—the major issue of whether we should remain in the Community— the Government will have had consultations with a very large number of people and organisations and foreign countries. I hope that the Minister will tell the House more than it has yet been told about what consultations have taken place. We know that the CBI strongly favours membership. What can the hon. Gentleman tell us about the consultations with that body? Has he consulted the Association of Chambers of Commerce? Mr. Peter Stedeford, President of the Birmingham Chamber of Commerce, said recently that it would be disastrous economically to contemplate withdrawal. What consultations have the Government had with the Smaller Businesses Associations, the TUC, the NFU and other associations and firms?

What foreign and Commonwealth countries have the Government consulted? We read in the Press that the Americans have told the Foreign Secretary and the Minister of Agriculture that they regard it as important that we should stay in the Community. Will the hon. Gentleman confirm that that is true?

What about the Commonwealth? In reply to me at Question Time yesterday, the Secretary of State for Trade gave the impression that the Government had not consulted Commonwealth countries about whether they would prefer us to stay in. I infer from what the Foreign Secretary said today that there has been consultations, and I am glad that that is so. Is it not a fact that most Commonwealth countries would prefer to deal with the enlarged Community with us still inside it?

What about the EFTA countries? Have we consulted them? Finally, has any of the countries with which the Government have had consultations said that it would prefer us to leave the Community?

The House is entitled also to hear from the Government what assessment they have made of the consequences of leaving the Community. I hope that the hon. Gentleman will have something to tell us about that. Meanwhile I will venture my own assessment. It will be pessimistic, but I hope that the hon. Gentleman will not suggest that by making it I am undermining the Government's negotiating position, because, as I have said, that position will be the stronger the more determined they show themselves to stay in.

I believe that if we were to withdraw, the Community would stay together. I believe that Denmark and Ireland would remain members and that the eight Community countries would put up tariffs against us.

Photo of Mr Peter Blaker Mr Peter Blaker , Blackpool South

That is my assessment. If the Minister of State disagrees with it I hope he will say so, because I want to draw him out. If those countries were to put up tariffs against us we would suffer great damage in what is our largest market, which takes nearly one-third of our exports. I believe that there would be no question of the Community making free trade area arrangements with us as it did with Norway. If I am asked why, I would simply say that we are not Norway. We are much bigger and more important than Norway, even on the pessimistic forecasts that the Government are making, and France and possibly the other Community countries would feel that if we were granted free trade area status that would be to set a precedent which others might want to follow.

Photo of Mr John Davies Mr John Davies , Knutsford

I make a simple inquiry. Is my hon. Friend aware, as I am sure he is, that one of the reasons why Norway had such very good arrangements with the Community was that it had a very good advocate in the heart of the Community—namely, Britain? The problem that I think my hon. Friend is facing is that Britain would be outside the Community with no advocate within it.

Photo of Mr Peter Blaker Mr Peter Blaker , Blackpool South

I am obliged to my right hon. Friend. The only reason for my reluctance to give way was shortage of time.

I believe that the Commonwealth countries would not agree to restore preferences in our favour if it meant, as it might, loss of preferences for them in the Community. The Commonwealth would sell raw materials and food to us only at world prices, and if world prices again went higher than CAP prices we would not have the benefit of the latter. I believe that our industry and our balance of trade would suffer, that the balance of payments, which is expected to be in deficit by several thousands of millions of pounds a year, would take a similar blow, that in international negotiations such as the forthcoming ones in GATT the decisions would be made by the Americans, the Japanese and the Community and that we should have to accept what was decided, however unfavourable to ourselves. All this would be happening in a world whose economy is more uncertain than it has been at any time since the war and in which one would expect nations with economic problems to want to stick together with their friends rather than turn them away.

If we remain in the Community the Government expect that our percentage of the total Community GNP will by 1980 be only 14 per cent. What do they expect it would be if we were outside?

I believe that in the present economic circumstances to leave the Community would be an act of folly comparable to jumping off a ship in mid-Atlantic without a life belt. Perhaps some hon. Members differ from my assessment of the consequences, but perhaps the Minister of State will say whether he disagrees with me and in what respect.

I believe that the political and strategic consequences, which have been referred to by a number of my hon. Friends, would be even more serious. A noble Lord is reported to have said the other day that he was opposed to membership of the Community because he wanted his grandchildren to be free men. With respect to the noble Lord, I believe that he is looking in the wrong direction. Any threat to his grandchildren's freedom will not come from Brussels or from any closer co-operation which may develop, as I hope it will develop, between an association of free nations none of which can be obliged to pool more of its sovereignty than it wishes. [HON. MEMBERS: "Oh!"] It cannot. The noble Lord should be looking not at Brussels but at Moscow, for it is from there that the threat to his grandchildren's freedom still comes. I am not suggesting that the Russians are planning a military assault on the West, but I am suggesting that in spite of the fashionable talk of detente they are still bent on expanding their power wherever they can, preferably by peaceful means.

The House does not have to take my word for this, because there is somebody who can speak on this matter with much more authority than I—Alexander Solzhenitsyn. This is what he says—I should like the House to listen to this— in his "Letter to Soviet Leaders" written last autumn, in the opening paragraph which he heads "The West on its knees": Neither after the Crimean War nor, more recently, after the war with Japan, nor in 1916, 1931 or 1941, would even the most unbridled patriotic soothsayer have dared to set forth so arrogant a prospect: that the time was approaching, indeed, was close at hand, when all the great European powers taken together would cease to exist as a serious physical force; that their rulers would resort to all manner of concessions simply to win the favour of the rulers of the future Russia, would even vie with one another to gain that favour, just so long as the Russian press would stop abusing them; and that they would grow so weak, without losing a single war. That is how the West looks to Solzhenitsyn. I ask the House whether we should be content with that prospect. Solzhenitsyn does not take the view that the Soviet Union has abandoned what he calls its world expansionary role. His whole letter is a passionate plea to the Soviet leaders that they should now abandon it and turn their strength to the improvement of their own country.

The most serious consequences of a British withdrawal from the Community would not be simply the damage done to jobs, earnings and living standards in our country, although that would be serious enough. The most serious consequences would be to risk the political future of Western Europe.

The Foreign Secretary said in his speech on 4th June that he had a feeling that there existed among Community members a diminished unity of purpose, a growing divergence in our economies and readiness to seek nationalist solutions to problems that demanded common and joint action. I do not quarrel with that analysis, but if it is correct it makes the consequences of any British withdrawal even more serious. They could involve a massive blow to the self-confidence of Western Europe and what could be the first steps towards a crumbling of its political will to survive.

The Government have undertaken a renegotiation, whatever that may mean. Whether it is timely or untimely, meaningful or meaningless, they cannot now escape going through with it. I hope they will approach the negotiations in a reasonable spirit and with a determination to stay in the Community, because in that way they will have the best chance of succeeding in their negotiations and of ensuring that what the noble Lord and this House want will be achieved—that our children and grandchildren will be free men.

9.32 p.m.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

The hon. and learned Member for Lincoln (Mr. Taverne) began his speech by saying that virtually and perhaps all Members of the House had made speeches this afternoon and evening which offered virtually no support to Government policy. If he thinks about it he will agree that one of the extraordinary features of the debate today has been the degree of unanimity we have heard for not simply the concept of improving the terms on which we entered the Community but, indeed, the proposals for improvement which are contained in the Labour Party manifesto, which were explained to the Council of Ministers by the Foreign Secretary on 1st April and 4th June, and which he has rehearsed again today as part of our continuing strategy for the renegotiation of our terms of entry. The support has had a variation of nuance. There have been different expressions of hope as to whether the eventual renegotion succeeds or fails. Various hon. Members hoped that we would push ahead with renegotiation in one area or another at various speeds and with various intensities.

From a variety of points of view there has been virtually no one who thought that the Government were wrong to make the criticisms they have made of the Community and its institutions, or were wrong to try to improve those institutions and the way the Community works.

There are a variety of nuances as to how one approaches the almost universally agreed proposals. My belief remains that the best interests of this country would be served were it possible for us to remain members of the EEC. I have never tried to hide or to deny that conviction. I do not intend to do that this evening.

That conviction in no way leads me to believe that the renegotiation on which the Government have embarked is inappropriate, wrong or unnecessary, or, indeed, that the Government should deviate from the policy which they offered the British people in most precise terms at the General Election.

We are all grateful for the discovery that no one in the House has suggested that what was proposed in the Labour Party election manifesto, or repeated in Luxembourg on 1st April, should be abandoned or in any way modified.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

The hon. Lady must listen. She has suggested that they should be extended. If she wishes to tell me that those proposals go too far, I shall sit down while she does so.

Photo of Dr Winnie Ewing Dr Winnie Ewing , Moray and Nairn

My suggestion was that they do not go nearly far enough from the Scottish point of view; they cannot be taken too seriously by people with my point of view.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I am glad that the hon. Lady confirms my judgment. That is exactly what I said a moment ago. She and her hon. Friends will no doubt register their disapproval in the Lobby, but they will be in a small minority, because other right hon. and hon. Members have been almost embarrassing in their support and enthusiasm.

The hon. Member for Saffron Walden (Mr. Kirk) said that this process was all going on before. The right hon. and learned Member for Hexham (Mr. Rippon) talked of renegotiation as a continuous process and said that we were nearer than ever before to a bipartisan policy on Europe. If that is true, I wish that one or both of them would tell the Leader of the Opposition. If The Times newspaper is to be believed—and which of us has the temerity to suggest that anything it publishes is inaccurate?—on 6th June, less than a week ago, the Leader of the Opposition was speaking about renegotiation endangering the lives of other Community members by the uncertainties that the process involved. That is very different from what the right hon. and learned Member for Hexham and some of his hon. Friends were saying earlier today.

Of course, the Leader of the Opposition was wrong. If a successful renegotiation ends with our continued membership of the EEC it will leave the Community a great deal stronger than it was at the beginning of that process. For one thing, several improvements will have been made in the Community's life and institutions which will be of benefit to all its members.

Secondly, as the party policy which I represent will be applied, Britain as a continuing member will by definition be a Britain which is a member with the genuine demonstrated consent of the British people. The Community cannot thrive if some or all of its constituent member States are in the Community without the support or enthusiasm of the people of those States.

While the Leader of the Opposition is wrong in suggesting that our proposals are likely to damage the prospects of the Community should they turn out well, hon. Gentlemen opposite who have suggested that the fundamental renegotiation which is represented by our policy would have gone on had the Leader of the Opposition still occupied the Government benches are equally, or perhaps even more, wrong.

I give a simple example. Is it suggested that with a different degree of determination, with a different exercise that was not published, promised and embodied in an election manifesto, as our promises were embodied, what we propose for reorganising the budget and the budgetary contributions would have been achieved by the Opposition? Our case for reorganising the budget and the budgetary contribution is based upon the principle that it is in the interests of all members of the Community to have a budgetary contribution which makes allowances for those States whose gross domestic product is basically and Fundamentally out of line with the average in the Community. The example we take to justify that contention is Great Britain, and the prospect that by 1980 Great Britain's gross domestic product will be well below the average.

The right hon. Member for Chipping Barnet (Mr. Maudling) complained that we made that fact public and that it did our case no good to explain the statistical fact that we are moving down the gross domestic product table. If we were unable to reveal our position, I do not know how we would be able to renegotiate our budgetary contribution.

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

I hope the hon. Gentleman will say that he is talking about our position on his assumptions. They are not assumptions which we would accept as representing the prosperity which would result from a Conservative Government.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I know that that is so, because when the Leader of the Opposition was Prime Minister he thought it right publicly to rebuke a senior public servant for making the facts public. although he is now clear that the facts which Lord Rothschild thought it right to publish in a speech a few months ago are correct. The right hon. and learned Gentleman has demonstrated that as the Conservatives would be unable to face the reality of the British position in the Community they would have been reluctant to embark upon the fundamental renegotiation which characterises the work of the Labour Party. Everything the right hon. and learned Gentleman does and says demonstrates this fact. He believes that his negotiations were a success and inevitably is disinclined to believe that there can be improvements. We believe that improvements can be made and that renegotiation can be brought to a successful conclusion.

The right hon. Member for Knutsford (Mr. Davies) said in his speech, as he yesterday had the courtesy to tell me he would, that the Community faces many problems as well as those flowing from British renegotiation. None of us denies that to be the case. In the last four months my right hon. Friend the Foreign Secretary and others have tried to play their part as full participating members in the Community in solving those problems.

The hon. Member for Saffron Walden asked about performance in the various Councils of Ministers and asked why occasionally we allowed business to go ahead and on other occasions placed a reserve on Community business. My right hon. Friend the Prime Minister has made it clear that we shall take part in on-going business as full members of the Community so long as that business does not prejudice our eventual renegotiation objectives. That is the point of our policy. Occasionally we, and other countries in their turn, place a reserve on matters passing through the various councils. We did so at yesterday's meeting. However, that is not an indication of our renegotiating position. If our negotiations prove successful and we remain permanent members, we shall from time to time, just like any other Community member, place a reserve on various items. Of the four ministerial meetings I have attended our record of placing reserves on business is not as extensive as some countries have deployed, but is more extensive than others. That is the real interpretation of our behaviour in the Council of Ministers.

Photo of Sir Peter Kirk Sir Peter Kirk , Saffron Walden

What part in the renegotiation was prejudiced by the redundancy provisions which a Labour Minister sought to block yesterday?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

That is the second part of the answer. Any member may seek to place a reserve on an item if that member wishes to consider it further. This will be the case if our renegotiations are successful. What happens is that a member Government says, "We are not ready to take a decision. This does not imply that we do not like the Community but that we require time to think about the matter at hand." It is an eminently reasonable position to take up.

My right hon. Friend has been quite specific about our future performance in the Community. He said last week: If the negotiations are successful and they secure the approval of the British people, we shall be ready to play our full part in constructing a new Europe. That is our policy. My right hon. Friend went on to say: Before we reach that point we have a long way to go. I want to reiterate this evening that at every stage as we go along we shall be guided by our established policy. This is to be a genuine renegotiation. This renegotiation is to be carried out in good faith and will be conducted with every hope of success. The Government will make known to the British people their verdict on the eventual outcome of renegotiation. Finally, and most important of all, at the end of the process the British people themselves must decide where they believe their future destiny lies.

In this debate doubts have been expressed about aspects of the renegotiation policy. It is true to say that the issue of sovereignty, which concerns people as well as Parliaments, has been the main area of concern on the Labour benches. Although my right hon. Friends are anxious to determine the matter, sooner or later it is the British people who will decide. I say again—and I may say this a third or a fourth time before my speech is finished—that that is our established policy, and a policy on which the people must and will be assured.

But the sovereignty issue is an issue about which I admit the European Community poses special problems and creates special difficulties. It does so because in one way the Community poses difficulties which are different from all the others involved in the membership of international organisations. It is its ability and its power to create legislation which governs and binds Great Britain. That is a fact which if it is encompassed properly, means that it works in a complementary way to the decisions of this House but which if it is not encompassed properly means that it works in competition with the decisions of this House. I believe that the Foster Report

Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarvon

If there is a referendum on this issue in due course, will the Government take care to publish the results in such a way that they show the views of Wales and Scotland separate from those of England so that there is no misunderstanding about the attitude of the people of Wales and Scotland?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I do not intend to go through the details of a hypothetical referendum held at the end of renegotiations the outcome of which we do not yet know. It is possible that in February or March we may discover that our majority in a General Election has increased to 30 or 40, and we may wish to increase it to 50 or 100 by having another General Election on this issue.

Photo of Mr Jeffrey Archer Mr Jeffrey Archer , Louth Borough

The Labour Party may lose by 40 or 50.

Photo of Mr John Rodgers Mr John Rodgers , Sevenoaks

Sir John Rodgers rose

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

No, I shall not give way.

I was saying that I believe that the creation of the Foster Committee's scrutiny committee goes a very long way to ensuring that the proper sovereignty which this House needs and must preserve can remain intact. It does so for two or three distinct reasons. First, it offers the opportunity to a very distinguished committee of this House to examine at an early date proposals as they come out of the European Commission. They are proposals which come to it before they have gone to the essential, supreme body of the European Community. The essential decision-making body of the Community is the Council of Ministers, which in effect is the real repository of power within the Community. It is there that the real decisions are made. Before they are taken, it remains eminently possible, thanks to the scrutiny committee, for this House to express its views upon them.

My right hon. Friend the Member for Battersea, North (Mr. Jay) referred to what he described as a directive from the Community — Community document R1253/74 (FIN/306). He said that that substantial document was likely to pass into Community law without this House having prior opportunity to discuss it. With respect to my right hon. Friend, he chose a remarkably bad example. That document has gone to the scrutiny committee, which has announced that it should not be allowed to proceed within the Council of Ministers until this House has debated it. A few days ago my right hon. Friend the Chancellor of the Exchequer told his colleagues in the Finance Council that he could not allow discussion of that document to proceed until this House had had an opportunity to discuss it.

Photo of Mr Douglas Jay Mr Douglas Jay , Wandsworth Battersea North

I know all that very well, but will my hon. Friend now give an assurance that in no case will the Government allow any legislative instrument to proceed further in the EEC if the scrutiny committee has notified my right hon. and hon. Friends that it thinks that it should be examined by this House?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

Certainly. In the case of legislative instruments, any other arrangement would be intolerable. My right hon. Friend will also appreciate that some of his right hon. Friends—notably the Minister of Agriculture—spend almost one day a week carrying out negotiations in Brussels, not necessarily on legislation but on other matters. I am sure that no reasonable Member of this House would wish to prevent my right hon. Friend carrying on discussions in the national interest while the detail of such instruments was being considered by the scrutiny committee. Concerning the legislation, however, I give my right hon. Friend that assurance, willingly and without qualification.

However, there is another aspect to sovereignty which the House ought to consider. In some ways, perhaps it is a more important aspect than the mechanism created in the House for examining secondary legislation through the scrutiny committee. My right hon. Friend the Foreign Secretary said little—perhaps virtually nothing—about the theory of sovereignty in his two speeches to the Council of Ministers, on 1st April and 4th June. But everything that he said was concerned about the practice of sovereignty. I hope that we can discuss our prospects in Europe more in terms of the reality of British membership than the rhetoric of British membership.

I give an example of what I mean by the reality of sovereignty, an example which my right hon. Friend the Foreign Secretary took in a speech he made on Saturday, in which he said: We need to be assured that no inhibitions will be placed on the operation of the regional policy that Britain might think right for British development areas. I believe we will receive that assurance, but when we do, the assurance we receive will not be simply about regional policy; it will be an assurance about sovereignty.

Photo of Mr Keith Hampson Mr Keith Hampson , Ripon

Will the Minister say what is "fundamental" and "renegotiating" about the reference in his right hon. Friend's speech to the Community working party which already exists on regional aids? Is not this a guarantee, and is not "renegotiation" simply a euphemism for what he says is an assurance that his fears can be set at rest?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

If the hon. Gentleman had been a Member of the House before February he would have discovered that no such assurances or determination were displayed by the right hon. Gentlemen who then occupied the Government Front Bench, who told us constantly, and indeed during the General Election, that these things could not be done.

Photo of Mr Geoffrey Rippon Mr Geoffrey Rippon , Hexham

On the contrary, surely the hon. Gentleman knows that assurances were given throughout the discussions that took place on the European Communities Act and the treaties. We believe that we have those assurances from the Community, and it weakens our case to suggest that they were not firm commitments.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

Then let me take another example. [Interruption.] There is no profit in assertion and denial. We shall make no progress there. Let us take, therefore, the example of the CAP. In our renegotiation in that area we say, first, that we must preserve the right of access to traditional markets and that we want a Community regime which makes sure that, irrespective of the movements in terms of world trade and costs of alternative producers, we shall be enabled to make differential pricing arrangements, with some prospects of allowing those commodities into the Community. We say that the Community regime ought to concentrate more on encouraging the efficient and less on preserving the inefficient. The right hon. and learned Gentleman nods assent to that as if he had always advocated and stood for that policy, but it was not until the sort of renegotiation which my right hon. Friend has begun took off with the force, vigour and determination that he showed, that it began to materialise.

I turn to two other points. The first concerns the food price argument, on which I have already touched, and concerns very much the point made by my right hon. Friend the Member for Batter-sea, North in what I would describe as a most powerful speech. My right hon. Friend asked us not to negotiate on the assumption that food prices in the Community, which certainly over the last few years have been appreciably below world levels, would continue at those levels indefinitely.

I say three things about that. First, it is very clear to all of us that the concept of very cheap food from the old Commonwealth and the new Commonwealth is no longer a reality. But the prospect that sometimes the prices of Commonwealth foods may be marginally below Community levels is a possibility. What we struggle to ensure is a regime of agricultural pricing in the Community that makes sure that when the movement is in the direction which my right hon. Friend prophesies, the Community and its members can take advantage of this. That seems to me to be in the interests of the Community and of the Commonwealth, which is supplying those foods.

The other point which we have been most conscious of during the renegotiation is our absolute obligation to ensure that the Commonwealth interests, whether or not its food is cheap, are adequately preserved. I concede the point made by one hon. Member that a good deal of resentment is felt in some parts of the Commonwealth about the concept of cheap food, because they do not regard it as their role and function in the modern world to provide cheap food.

Sometimes we shall preserve the Commonwealth interests by insisting on the importation of expensive food into the Community. I take the sugar example given by my hon. Friend the Member for Newham, South (Mr. Spearing), who I refuse to believe has just made a maiden speech, as he is not only an hon. Friend but an old friend. Our determination to preserve the interests of the Caribbean in particular is a determination to bring into the Community food which is produced rather more expensively than the food produced within the Community. That nevertheless remains our obligation, because we believe that the renegotiation is fundamentally concerned with preserving interests outside the Community where it is our responsibility and inside Great Britain where those interests are properly our concern.

Two of those interests were raised by the hon. Member for Moray and Nairn (Mrs. Ewing). The first was fishing. The Treaty of Accession allowed a derogation with regard to fishing policy within the Community. We are not committed to the Community's fishing policy, which is why my right hon. Friend hardly referred to it.

Photo of Dr Winnie Ewing Dr Winnie Ewing , Moray and Nairn

Can the Government change it?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

Yes. We are about to take part in the Law of the Sea conference at Caracas. It is there that the fundamental decisions about fishing policy will be taken. [Interruption.] If the hon. Lady wants to continue her strident complaints, she must understand that her stridency is not appropriate in a debate on the EEC.

The hon. Lady's second point concerned energy policies. I hope she knows that the Community energy policy is no more than a string of aspirations and platitudes. I suspect she knows that the United Kingdom's energy policy is very different. What she does not seem to know is that neither of those policies remotely resembles the description she gave.

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

Order. If the Minister does not wish to give way, he must not be pressed.

Photo of Dr Winnie Ewing Dr Winnie Ewing , Moray and Nairn

On a point of order, Mr. Deputy Speaker. What is the point of a Minister writing down serious questions on behalf of large populations when he gives no answer?

Photo of Mr Oscar Murton Mr Oscar Murton , Poole

That is not a matter for the Chair.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

There are many points about our prospects in the Community which it is impossible for us to predict. It is impossible to predict whether or not we could enter into another arrangement with other countries in Europe if we left the Community. While my right hon. Friend the Member for Battersea, North is wrong to say that it is rash to insist that we could not, it is equally wrong for him to insist that we could. That remains a matter for doubt, speculation and uncertainty.

But one thing about the entire issue is demonstrable. My right hon. and learned Friend the Member for Liverpool, Edge Hill (Sir A. Irvine) talked about the lack of faith in politicians and about the erosion of democracy because poli- ticians do not keep their promises. With him, I believe that if the Labour Party were to go back on the concept of fundamental renegotiation, followed by a genuine test of the opinions of the British people, which will in all probability take the form of a referendum, we should not only be damaging our party but damaging the concept of democracy in this country.

For that reason if for no other—and there are many other reasons of great strength—we again confirm tonight our serious, genuine policy of renegotiation in the terms so clearly specified in the Labour Party manifesto. At the end of that process, whether it has turned out to be terms on which we can stay in or terms on which we must come out, we confirm, we promise again, we reassert that the final judgment must be given to the British people. It is their destiny we are deciding. It is not possible to say that only the House of Commons is clever and brave or determined enough to make such complicated judgments.

One hundred and fifty years ago somebody talked in the House about trusting the people. That is what we have to do over the EEC.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.