Eec (Regional Development)

– in the House of Commons at 12:00 am on 27 February 1975.

Alert me about debates like this

Postponed Proceeding on MotionThat this House takes note of Commission Document R/2055/73, taking account of further developments brought to the attention of his House,

resumed.

10.10 p.m.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

At a few minutes before seven o'clock I reminded the House of the origin of the regional development fund of the European Economic Community and the decision made by the Heads of Government of the Community during the Paris Summit in December to give reality to its principles. I was asked about the size and distribution of the fund's benefits. I said that for the first three years the fund will amount to 1,300 million units of account. That is about £550 million. Italy and Ireland are to be the principal beneficiaries and the United Kingdom is to receive almost 28 per cent. of the fund—namely, approximately £150 million. That is, of course, the gross figure. As the fund is financed out of contributions from the EEC Budget, including our own contribution, the net gain is appreciably smaller. It is impossible to calculate exactly, but it seems likely to amount to approximately £60 million.

That is a small sum compared with the £500 million which the United Kingdom spends each year on assistance to industry. However, it represents a modest transfer of funds from the Community to the United Kingdom. It will take its place alongside the benefits that we receive from the Social Fund, the European Coal and Steel Community and the Agricultural Fund.

At the Paris Summit last December the Prime Minister made it clear that for the United Kingdom at least the operation of the fund depended upon the construction of proper regulations governing its use. It is these regulations which we debate tonight. We debate them as an essential part of the scrutiny procedure of the House. Part of one of the documents now before us refers to the Regional Policy Committee which will consider regional matters within the Community. A note about its function appears in paragraphs 8 and 17 of the new explanatory memorandum. It would have been possible to have reached agreement on that committee's terms of reference at the meeting of the Council of Foreign Ministers on 11th February, but I reserved the British Government's position so that the House should be given an opportunity to comment on the proposals before they pass into Community law.

At that meeting I made a second point which I wish to report to the House. The object of the Community's regional development fund is to assist investment and thereby create or maintain jobs. That is obviously the central aim of our own regional development policy, a very large part of which consists of the regional development grant system. Regional development grants in Great Britain are available for the renewal of plant and machinery as well as for the creation of the new physical capital. They are paid automatically on qualifying expenditure in qualifying areas. It is because of that that we find some difficulty in relating each regional development grant to the number of jobs it has either created or preserved. It was proposed—I refer again to the meeting of the Council of Ministers on 11th February—that payment from the regional development fund should be limited to projects which could demonstrate a definite connection between investment incurred and jobs created or maintained.

No one within the Community doubts that regional development grants are eligible for reimbursement from the EEC's fund. Somehow the gap has to be bridged between the knowledge that our own grants qualify for assistance and the technical difficulty of demonstrating their relationship to employment creation or employment maintenance. I made it clear to the Council that a practical solution has to be found which enables regional development grants to qualify under the Community scheme without the British Government being obliged to mount an elaborate administrative effort to match each grant to a specific number of jobs created or maintained.

I referred to the Council on 11th February specifically because it was on that occasion that I insisted that the House should have an apportunity to debate these matters before we came to a final conclusion. I know very well that the Scrutiny Committees of both Houses had before them draft regulations for the regional development fund for many months before the discussions to which I referred in Brussels on 11th February.

The documents still in front of the Scrutiny Committees were adopted by this House last summer, and in theory those documents still lie upon the table. Since they were first prepared the fund and the proposals for its administration have changed. Because of that I submitted to both Scrutiny Committees a new explanatory memorandum which described the present proposals for the organisation and government of the regional development fund. The new document is not simply a list of the changes which have been proposed since last year. It outlines the proposals for the fund as they stood immediately before the Council or Ministers three weeks ago. It describes the document on which the Council of Foreign Ministers and its subordinate committees have been working.

The annex to that document includes actual draft clauses which may become the articles of management of the fund. But although the document includes these clauses the text of the annex is issued on the authority of the British Government, not the Community. The initial Community document which it resembles in extraordinary detail remains confidential to the Council. It has not been published and it remains our policy to submit to the Scrutiny Committees only documents which are published. On this occasion, however, we have described the position the Council has been asked to adopt because we believe that it was right to do so, thus enabling the House to make its judgment and express its opinions on the management of the fund before its rules, conduct and procedures are decided in Brussels next Monday or Tuesday.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I am not, but I am interested to hear why my hon. Friend thinks I should be. I must make it clear that in making this document available in an unusual way to the Scrutiny Committee we are doing so without the establishment of any precedent. Our rule remains—it is a rule of the House, and a good rule—that the Scrutiny Committee examines published documents before the point of submission to the Council of Ministers. That is a rule which we should, in general, stick to.

Photo of Mr John Roper Mr John Roper , Farnworth

My right hon. Friend said that the policy is to present documents to the House on their point of submission to the Council. Does that mean on the point of their initial submission or on the point of their ultimate submission?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

By that I mean on the point of their initial submission, assuming that they are at that point published. Those are the two criteria—that it is initial submission and that they have been published.

Photo of Mr John Davies Mr John Davies , Knutsford

Would that apply, for instance, to a document which was already five years old?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I think that the right hon. Gentleman has some specific document in mind and I am far too cautious to comment on a particular document, the nature of which the right hon. Gentleman knows but which I do not. If he gives me notice of the point I shall examine the document he has in mind.

Photo of Sir Peter Kirk Sir Peter Kirk , Saffron Walden

By the term "making public", does the right hon. Gentleman mean making public to the British public or to the European Communities as a whole? The annex to which he refers has been public in the European Parliament for about 18 months.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

There are established in statements by my right hon. Friends the Foreign Secretary and the Leader of the House the criteria by which we judge when documents should go to the Scrutiny Committee. My simple point is that those criteria must, by and large, be observed.

On this occasion, because of the importance of the subject and because we wished to meet the needs and wishes of the House, we came to this arrangement. I give the assurance that in future—I think it is conducive to the orderly conduct of business—we shall maintain those rules, although it is right this evening for the House to discuss the regional development fund before my right hon. Friend and I decide on Monday or Tuesday how it should be ruled and governed.

I turn, therefore, to the new document, which was submitted to the Scrutiny Committee. In a number of ways it is a substantial improvement on the document describing the regional development fund, which was debated a year ago. For instance, the detailed definition of "qualifying areas" which appeared in the earlier document has been radically changed and replaced by a more general formula, which appears in paragraph 7 of the new explanatory memorandum. The new definition of "qualifying areas" applies to those benefiting from national systems of regional aids.

That definition is in sharp contrast to the precise—some would argue over-precise—manner of defining qualifying areas which had appeared before in Community documents. That more general definition is much more acceptable to the Government than the previous complicated list of specified districts. It enables the Government to determine boundaries in which both national and Community assistance can be received. As a result, all areas which the Government choose—I emphasise "which the Government choose"—to make eligible for assistance under our own regional policy will qualify for Community aid.

In the distribution of the limited Community funds we may choose to give priority to the development areas, to the special development areas and to development areas in Northern Ireland. Essentially, that choice will be ours, and the intermediate areas will not be excluded.

Photo of Ian Paisley Ian Paisley Leader of the Democratic Unionist Party

I am sure that the Minister is aware of the Dublin Government's attitude towards Northern Ireland. Will the Minister give an assurance that the Government will be entirely responsible for regional aid to those areas around the border of Northern Ireland which are inside the United Kingdom?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

Let me make it clear in the most transparently simple terms. If the rules governing the regional development fund which are now proposed are accepted, the British Government will determine the areas into which that aid goes. The sum of £60 million will be available to be spent in those areas, on the application of the British Government. The choice will, in a very large measure, be ours. It will be a gift horse which will be required to run on a specific track, but the track will largely be determined by the British Government in their own designation of the areas which might receive benefit. Therefore, by almost any standards, the flexibility which the Government believe to be right, and which the House has insisted upon on previous occasions, will be endorsed if the rules are approved by the Council of Ministers on Monday.

Photo of Mr Edward Leadbitter Mr Edward Leadbitter , Hartlepool

Since the Government intention has been declared, and since it is important to the areas which we have already discussed, will the Minister give a further definition? The Minister said that the British Government may decide on the areas, and he has said, with reference to the matter raised by the hon. Member for Antrim, North (Rev. Ian Paisley), that the British Government will largely decide. Those are somewhat vague terms. Will the Minister be more precise about what he means?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I shall try. We have established the fact that all areas in Great Britain that are designated by the British Government as appropriate for grants are automatically eligible for grants from the Community. That seems to me to be no constraint. Since the Community grant is appreciably smaller than that which will be devoted to development areas, it will not be spread over the entire area of British technical assistance but will be spread according to the applications we make on behalf of the British development areas for receipt from the Community fund. In those matters the initiative and the determination of the areas to benefit will be decided by the British Government. It is as simple as that—

Photo of Mr John Nott Mr John Nott , St Ives

Will the right hon. Gentleman give way?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

No. I must ask the hon. Gentleman to allow me to complete my speech—

Photo of Mr John Nott Mr John Nott , St Ives

This is a crucial matter—

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I will give way to the hon. Gentleman but, knowing my own limitations, I fear that I cannot explain it more clearly than I have already three times.

Photo of Mr John Nott Mr John Nott , St Ives

I am sure that it is clear to the Minister, but those of us who are in these designated areas are anxious to know whether a given project in one of these areas is eligible for a direct application to the Community for assistance. Is it essential that this project is channelled through the British Government, or can an organisation which is prima facie eligible go direct to the Community if it is within one of the designated areas which the British Government have agreed?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I know the hon. Gentleman's views on these matters, but he is taking free enterprise to extraordinary extremes. The object of all development grants is to promote projects in special designated areas according to rules laid down by national Governments and supported by the Community. In that condition, clearly the national Government would have to take the initiative.

There are a number of issues which the national Government have to decide, such as the question whether grants are additional to national assistance or subsumed within it. All these are specified in the rules governing the scheme and, if the hon. Member for St. Ives (Mr. Nott) will read the submission, he will know that that is the way and that has to be the way.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I have given way on six consecutive occasions. I think that I owe it to the House to complete my speech.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

Will the right hon. Gentleman give way?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I will do so, but this must be the last time.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

My own county council wanted to get in touch with the London office of the European Commission to ask whether certain projects that it had in mind were worth proceeding with in the hope that they would be eligible for aid. They included a study of the county, giving disablement training to adults, and solving the drift from certain of our areas. Would it be worth proceeding with them?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

The authority within the hon. Lady's constituency is best advised to apply to Her Majesty's Government. The entire tenor of what I have said is the establishment of the proper relationship between Her Majesty's Government and the Community. Therefore, the initial application for advice should be made to the Government, who will then. I am sure, advise her whether she and the organisation in her constituency are eligible for national assistance—

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

It is the county council.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

Whatever it is—and whether that national assistance is likely to be increased or augmented by the Government's application for assistance under the regional development fund.

Photo of Mr Bob Cryer Mr Bob Cryer , Keighley

I am not a member of the Opposition. I am on the Minister's own side.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I am so astounded by that remark that I can do nothing but slump into my seat.

Photo of Mr Bob Cryer Mr Bob Cryer , Keighley

When my right hon. Friend says that the British Government will be responsible for the regional programme, does not Article 6 suggest that this will be only until 31st December 1975 and that then investments will benefit from the fund only if they form part of a regional development programme which is part of a programme towards economic and monetary union? Does not that suggest that that will be subject to the will of the Commission after 1975?

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I hope that that is the last intervention. It does not imply that at all. It implies that there have to be rules for the scheme which meet Community criteria. The regional development fund is not simply a device to allow the Government of Federal Germany to provide money for Great Britain, Italy and Ireland. The object is to meet some Community needs and therefore there have to be Community criteria against which it is matched. But I hope that my hon. Friend will not be worried about the prospect of saying to the Community, "Here you are with money to spare. Here we are using and operating a regional policy of our choice. Will you augment us as long as there are certain minimal rules to which we shall subscribe in order that those benefits come in our direction?" To be worried in those terms seems to elevate theory above practice—

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

I am also on the right hon. Gentleman's own side.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

Nothing would give me greater pleasure than to allow the right hon. Member for Battersea, North (Mr. Jay) to give me support. But I owe it to the House to complete my speech in order that other hon. Members may make theirs.

In those terms, I continue with what I said about the rules governing the fund. Clearly the new rules are much more acceptable to the Government than the previous list of complicated, specified districts. All the areas which the Government choose to make eligible for assistance are qualified for Community aid. We will have to make judgments ourselves within that qualification, but that is the basic principle of the operation of the fund, and one which we very much welcome. The preservation of our own priorities in the application of regional policy remains our crucial objective.

If our requirements are met—the preservation of those priorities of our own—we shall be glad to see the fund established and shall welcome the assistance it gives in the solution of our regional problems. If the rules are right the existence of the fund will in no way diminish our ability to implement the regional policy of our choice. The existence of the rules will simply mean two things.

The first is that there will be proper financial control over the management of the regional development fund. We all support that. Secondly, there will be the creation of a fund which has a proper Community purpose. That is essential, because the regional development fund is not, I repeat, simply a device which enables the richer members of the Community to subsidise the poorer members. It is a Community institution whose rules must give it a Community objective. Our obligation is simply to make sure that those rules, while serving the Community purposes, do not hamper the implementation of the regional policy that we judge to be best for the United Kingdom. Having said that, I know very well that any reference to the regional policy judged best for the United Kingdom will inevitably raise in the minds of many hon. Members a separate problem concerning the co-ordination of regional aids within the Community.

Hon. Members will have read in the newspapers that we have today received from the Community a document proposing a way in which regional aid in member countries ought to be co-ordinated. It is a document which the Commission has been discussing in great detail with member Governments over the past six months. It would be wrong—worse than wrong; it would possibly be out of order—for me to go into that matter now. But I do make two points, with justification.

The first is that that document will be debated by this House. Secondly, the freedom to conduct the regional policy which we consider appropriate to the needs of the United Kingdom remains a cardinal renegotiation objective. That does not mean that we reject the idea of co-ordination in these matters. Indeed, each member nation has a great deal to gain from a policy which prevents wasteful competition, the bids and counter-bids in attempts to attract investment resources into areas of high unemployment. But we believe, and we insist, that the rules must be so constructed that the needs of British regional policy, as judged by us, can be met within them. That is a matter for future debate.

What is clear this evening is that we are on the point of establishing a successful regional fund. Among the Community members there is a desire to see that fund set to work at the first opportunity. Certainly the Governments of Italy and Ireland believe that its operation is of the greatest importance. We understand their wish and we share their desire to reach agreement on the text of the regulations at the first opportunity. That opportunity is Monday and Tuesday of next week, when the Council of Foreign Ministers meets. Providing our points are met, particularly our point about the eligibility of the regional development grants, it is our intention to see the regional fund given practical life on that date.

10.35 p.m.

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

I start by saying that I am glad to be back, since it is five or six years since I played some part in European debates. I have some sympathy with the right hon. Gentleman, as he has now become, because in that period he was taking many difficult orders in a different Department and was confronted with a problem similar to that which he may yet be seen to have tonight—namely, that he had to do a better job of convincing his own side than of convincing ours.

Having said that, may I be quick to shower one or two compliments around the House? My first would go to the right hon. Gentleman and to the Foreign Secretary, who spoke in such a relaxed manner in our earlier debate, on the way in which they have been conducting their negotiations with Europe. The Foreign Secretary has gradually come to espouse a cause which some years ago I for one doubted whether he supported. I congratulate both right hon. Gentlemen on the support which they are now giving to Europe.

I would also offer my congratulations to my hon. Friend the Member for Saffron Walden (Mr. Kirk) on the immense work that he does as leader of what is at this point the British delegation to the European Parliament, although it is made up solely from the Conservative Party. Whether hon. Members present tonight are for or against the EEC, one thing that no one would doubt is the diligence and care with which our parliamentary representatives in Brussels and Luxembourg look after the interests of this House.

Third, we are indebted to my right hon. Friend the Member for Knutsford (Mr. Davies), as well as to other hon. Members of the Scrutiny Committee, for the immensely valuable job they do in wading through enormous numbers of documents and alerting us to those which we should debate.

The Conservative side of the House generally welcomes this document. It and the regulation that I hope it foreshadows are very much better than the proposals that we had a look at some six months ago. The document is very much simpler. Instead of a whole series of rather complicated regulations, we have one consolidated regulation which is very much easier to understand. I think that it will also prove much easier to administer than the previous one, which had a whole series of different maps and rules.

I welcome it also because the details of how the fund is actually to work—with the regional fund committee having a general oversight and the new management structure being provided—are all spelled out. I believe these arrangements to be reasonably practicable and businesslike.

We are naturally bound to look at this matter almost exclusively from a British point of view but one of the things which slightly saddened me in our earlier debate is that very few hon. Members, particularly on the Government side, seemed to recognise that we are in a Community. This is a situation which may yet change, I accept, but we owe it to ourselves to look at these matters not only in a British light but in terms of the European Community as a whole, of which we are a member. I am glad that the Minister himself took that point.

Looking at it from a strictly British point of view, one can welcome the regulation for three main reasons. First, the establishment of this fund is something that successive British Governments have sought for a long time. My right hon. Friend the Member for Sidcup (Mr. Heath), my right hon. and learned Friend the Member for Hexham (Mr. Rippon) and my hon. Friend the Member for Saffron Walden have sought the fund for a long time, and have negotiated hard and skilfully to achieve it. The right hon. Gentleman and his right hon. Friend the Foreign Secretary have done so, too. At long last the original idea which was enshrined in the Treaty of Rome and which has gone through some very difficult passages along the way is now at the point of being realised. We can regard that as a useful British achievement.

The second reason why I welcome it is that it will provide some tangible assistance to this country. As the right hon. Gentleman fairly said, the total—some 1,300 million units of account—is much less than we would have hoped. The day may come when it will be more. As the right hon. Gentleman also very fairly said, although this works out in principle to some £150 million over the three-year period, in practice, taking account of our contributions, the net benefit to Britain will be only about £60 million, or some £20 million each year. I doubt, however—perhaps the Minister will correct me if I am wrong—whether it will be paid out over a narrow three-year period. It will probably spill over into a fourth and possibly even a fifth year.

The sum of £20 million a year is certainly not riches. It is certainly much less than we would have wished, and very much less than I hope one day to see. Nevertheless, it is all gain. Much of it is foreign exchange, across the balance of payments. It will do much good—and, never let us forget that we would not get it at all if we left the European Community. That point deserves to be stressed.

It is also fair to put this fund in the context of the many other forms of assistance which we are already getting from membership of the Community. I mention only a few. The grants for the coalmining industry from the European Coal and Steel Community, Very large sums of money have been made available to help redundant miners and I hope that that is recognised by both sides of the House. Substantial grants for the steel industry have been obtained from the European Coal and Steel Community. About £9 million, for example, has been made available to help redundant steelworkers. I hope that hon. Members on the Government side of the House will recognise that these are tangible gains to Britain from Europe.

I might add—although perhaps I should not stray along this path—that we have benefited from cheaper food for the British housewife in a number of instances—such as bread, sugar, beef, for some, and butter. Thanks to the operation of the monetary compensatory amounts by the CAP, the British housewife has been protected from the adverse effects of the decline in the value of the pound.

There are, therefore, tangible and real benefits which Britain is already deriving from its membership of the European Community. We have here in this fund the beginning—no more—of another range of real benefits for the people of this country.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

I admit that the hon. Gentleman was making a throw-away remark, but if he will draw things about agriculture into an industrial debate, he must not mind being corrected. If he claims that the CAP is allowing us to have cheaper food for Britain than we would get by buying on world markets, why does the EEC insist on maintaining the levy? Either it is because some third country food is cheaper or, if it is dear, it has the effect of making it dearer. Why are we paying £300 a ton, for example, as a tax on top of the price of New Zealand butter? It is time that this kind of nonsense stopped. I do not believe—very few people involved closely with this matter believe it—that that claim is any longer valid.

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

I think I should be wise not to be tempted far along that road. If the hon. Gentleman will forgive me, I shall not pursue his argument for the moment.

I say simply that it is the fact that we are now obtaining cheaper food in those particular categories within Europe than we could possibly obtain from without. Therefore, I recognise, secondly, that this fund holds the promise of tangible gain.

The third reason why I welcome the prospect of this new regulation is that it is a demonstration of the Community's essential flexibility, its willingness, and its power to adapt its institutions and its arrangements to the very varying needs of its members and to the different pressures of time and events.

Very often, the Community has been portrayed on both sides of the House as a rigid unmoving monolith. This fund proves this is not true. After a great deal of argument, after a great deal of horse trading, after difficulties of accommodating the needs of some countries who need to be helped and the diffidence of others to provide that help what has emerged is an arrangement that reflects the essential flexibility and adaptability of the Community's institutions, its ability to make arrangements to meet the national needs of its members. I believe this flexibility, this ability to accommodate itself to circumstances and needs, is one of the most important aspects of the Community that have emerged in the negotiations on this matter.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conway

My hon. Friend referred to the net value of the benefit of this country as £20 million per annum, and the Minister referred to a total net intake of £60 million. Does my hon. Friend agree that that is a low net figure, considering that we start with a gross figure of £150 million?

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

With respect to my hon. Friend, I think that he slightly misheard me. I said that if from the £150 million over the three-year plus period one subtracts the contributions which we shall be making to the Community during that period, the net figure which we shall receive will be about £20 million per annum, or a total of about £60 million over three years.

I return to the point I was making, which is that the flexibility of the Community has been demonstrated, and I think I am entitled to remind the right hon. Gentleman that this was precisely what my right hon. Friends foresaw when they were negotiating the arrangements for British accession. It is right that I should once again quote the 1971 White Paper, when the then Government said: The Community has 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. I believe that it is precisely because the Community is flexible and is willing to find equitable solutions to meet the needs of its members that the right hon. Gentleman and his colleagues have been able to negotiate improvements, which we too would have done.

I turn to some of the technical points within the regulation on which I hope the Minister will help when he replies. There are some welcome phrases in Article 4. It says that the fund may contribute to the financing of investments which are economically sound in undertakings that are competitive. I welcome those words. What a contrast they make with the language of the Secretary of State for Industry in the Industry Bill under which he proposes to disburse British funds in an entirely less prudent fashion.

Photo of Mr Edward Leadbitter Mr Edward Leadbitter , Hartlepool

On a point of order, Mr. Deputy Speaker. This is a limited debate, and a number of back bench Members with considerable experience of this subject are waiting to speak. Is this a matter for the two Front Benches, or for the House as a whole?

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

Hon. Members will appreciate that the debate must end at 11.30 p.m. The Chair does not have the power—though I sometimes wish it had—to limit speeches. This is a matter which calls for co-operation and good will between hon. Members.

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

I assure you, Mr. Deputy Speaker, that I shall manage to confine my remarks to a shorter period than that taken by the right hon. Gentleman, and I shall be helped if Labour Members will allow me to get on.

I wish to deal with Article 4 and to say to the Minister that I very much welcome the requirement that this investment should be in projects that are economically sound and in undertakings that can show themselves to be competitive. With respect to what the right hon. Gentleman said, it is not a gift horse. There has to be a reasonable demonstration that the projects to which assistance is given are sensible and prudent.

Under Article 5 the Commission is expected to look at the consistency of the investment with the general regional policies of the nation in question. That also makes sense. I welcome such phrases as co-ordination of contributions from the Fund and references to the consistency of the development, and so on. How is all that to be achieved? I understand that when projects go forward they are to be monitored, and that this monitoring is to be done in the first instance by the national Government. But on occasions mixed teams of officials from the national Government and the Commission will examine the expenditure to see that it is prudent. I welcome that, but the Minister should come clean with the House on the question precisely how that monitoring is intended to be done.

Article 8 deals with the way in which applications for assistance are to be made. Who exactly can apply? The Minister suggested that it would be the Government alone. I am sure that he is right, but in the case of the Social Fund, under the European Coal and Steel Community, it is not only through national Governments that applications are made and money is paid out. I also believe that applications for assistance from the European Investment Bank may be made direct, and not only through the national Government. Is that not also the case in FEOGA? It may be that the right hon. Gentleman would prefer to take advice on those questions. If so, perhaps he could write to let me know exactly who can make applications. If it is exclusively the Government, we might want to consider the matter again.

In Article 10, concerning monitoring, it is stated that the competent authorities of that member State shall carry out audits on the spot". That is right. However, I should like to be sure that the House will be informed of the conclusions reached when assistance is given to local projects. My last detailed point concerns the Financial Regulation. Will the right hon. Gentleman assure the House that the arrangements for the annual budget of the fund will be communicated to the House as well as to the European Parliament?

I end as I started, by welcoming the regulation. Much of our debate has been rightly concerned with how much money we shall be able to get out of the Community because of our embarrassed circumstances. It is reasonable that we should do that. But I hope that the time has come when those who believe that the European Community is right for Britain and for Europe will get off the defensive, and stop just excusing and defending what we are doing, and get on to the offensive, and say with pride that we are taking part in a great human undertaking which is immensely worth while.

Europe is not just economics. I suspect that our debates will be read by members of the European Parliament and people in other Governments. I hope that it will not be said that the only interest of the United Kingdom in Europe is how much we can gouge out of it. I am interested in what we can contribute as well as what we can take.

10.55 p.m.

Photo of Mr James Lamond Mr James Lamond , Oldham East

Although I am not a strong supporter of British membership of the EEC, I fully recognise the value of what this document outlines. I cannot accept the invitation of the hon. Member for Bury St. Edmunds (Mr. Griffiths), who suggested that we should look at the matter not merely from a British point of view but from an EEC point of view. I wish to look at it from the point of view of my constituency, which I think is equally valuable in a debate of this sort.

The question of regional development aid has aroused great interest in Oldham. After a considerable struggle during the period of office of the Tory Government, the area was given intermediate area status, which was very valuable. I shall not be churlish and say other than that. I give full credit to the then Tory Government for it. However, now the Oldham local authority is anxious to ensure that the area is not placed at any disadvantage by the new regulations. Only the other day it wrote to me in the following terms: It was pointed out in the economic development sub-committee that, whilst the situation was at present somewhat uncertain, with regard to the EEC regional policy general principles had been discussed during the Prime Minister's visit to Paris late in 1974 and it was anticipated that the likely outcome would be that some £140 million of aid would be allocated from the EEC fund to development areas over a three-year period". That hope has not been entirely realised. The £20 million per annum about which we have heard tonight is a small recompense and small advantage to set against our membership. Nevertheless, I recognise that there is something in it. [An hon Member: "It is net"] Yes, net. I am prepared to concede that it is of value, and we in Oldham look forward to sharing in it.

The letter continues: Whilst some 28 per cent. of this aid would be earmarked for the U.K., it was expected that the criterion for aid would clearly be the level of patent unemployment". That is the telling phrase. The economic development sub-committee in Oldham was afraid having looked at a document containing a list of areas which would benefit, that Oldham would not enjoy these advantages. I am glad to say that we have made a considerable advance from that point. I welcome the change in the regulations to the effect that the areas which are recognised by the British Government as deserving of aid will still qualify. However, I was a little disturbed when I heard later that the Government would consider whether these areas should benefit.

I hope that my right hon. and hon. Friends will bear in mind that there are criteria other than unemployment levels which should be considered. Members representing constituencies in the North-West will confirm that in times of unemployment in areas which are dependant on the textile industry, for example, many women lose their jobs or go on short time and this is not reflected in the unemployment figures because many of them do not register as unemployed but merely go home and wait in the hope that business will pick up in the textile mills.

The economic development sub-committee in Oldham wishes the Government to take into account dereliction in the area. I hope that dereliction will be put forward as a reasonable criterion next week and that it will be pointed out that in the North-West industrial areas which have suffered greatly from dereliction because they were perhaps the first industrially developed areas in Europe are now behind the times and require considerable assistance in order to catch up with areas which are being helped merely because they have high unemployment rates.

I welcome this. I am sorry that the amount is so small and I take the point that my hon. Friend the Member for Keighley (Mr. Cryer) made, that it is not a guarantee for the future, that there is a date in the document, the end of this year, by which time some changes must be put forward, firm proposals about criteria which may not agree entirely with what we are discussing. I plead with my hon. Friend to bear in mind other considerations such as unemployment statistics.

11.0 p.m.

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness

I want to say something of a critical nature, but basically the first thing is that we should all welcome the important and significant step which has been taken by the Community. The Community has, for the first time, accepted that resources should be shifted from the rich areas to the poorer areas.

The sum of money at present allocated is, I agree, small, but the basic decision has been made and it is of great importance. The Community, in passing it, runs against the argument which one heard from those opposed to our entry during the long debates about the Bill in 1972, that somehow or other the Community would wish to interfere with and stop British regional aid programmes.

What is significant about this is that it is hardly deniable that there will be great economic centralising forces in Europe—the golden triangle of Paris, the Ruhr and London, which is a reality—but that the regional fund offers to Britain an opportunity of correcting that centralising force from the Community's funds as well as from within our own resources. This is an important matter, whatever the broad-minded, tolerant, open-minded hon. Member for Renfrewshire, West (Mr. Buchan) may say from a seated position.

I did not much care for the pattern of the Minister's speech, although one perhaps understood the reason it was so fashioned. First, he said, we are to receive 28 per cent. of the allocated £550 million, not 27 per cent. or 29 per cent., but 28 per cent. exactly. I am not sure on what basis it is possible, if we are talking about a shift of resources, from the richer to poorer areas of the Community, to make a tight allocation on a national basis in advance in that way. I do not think it is the best way of doing it because I am personally against the juste retour, against the allocating of regional policy or money from the regional fund in terms of "We are going to get just a bit extra and the balance of advantage which would otherwise be denied us."

If we look carefully at Article 4(e) we see that it says, it is now specified —and the Minister made much of this being an advantage— that assistance from the RDF may be used to supplement or reimburse national aids". I imagine that the Treasury has been hard at work on this and that it regards the regional fund as a means of bringing to Britain the money she has been spending on the CAP, but if the regional fund is meaningful in terms of giving financial assistance to the less-well-off areas of the Community, in my opinion it should not be used as reimbursement but always as an additional sum of money to that country—certainly not as reimbursement of something which would have been spent otherwise in any event. If not, there will be no shift of resources and we shall not achieve our objective.

The Minister—to applause from the Government benches—emphasised that the disposal of the regional fund money which would come to the United Kingdom would be through, and only through, the British Government and would follow, and only follow, the determination of the British Government as to what was and was not appropriate. That is all very well, but if a regional fund operating throughout Europe is to have the effect of shifting resources from rich to poor areas, it should be administered on the basis of objective criteria which apply to every country. If it is to be based upon each individual country's own interpretation, there will be variations from one country to another and we shall not achieve our objective. I hope that the Minister will convey to the Council of Ministers who will be meeting on Monday and Tuesday that it is a question not simply of basic criteria—employment, sparsity of population, average wage levels, emmigration and so on—but also of the Community as a whole looking at the administrative geographical patterns within the various countries.

No doubt the regional development committee which will be set up will assist in this. When the Minister made one of his periodic statements to the House I asked him a question about it. He is a very calming Minister, and he said "Do not worry. The regions of England, Scotland and Wales will be taken care of"—or words to that effect. The regional development committee is to consist of two civil servants from each country plus, on an ad hoc basis, various extra officials. I am not convinced that that will be a helpful method of allowing the regions to express their needs on a Community level.

I am not sufficiently idealistic to believe that what we say tonight will have a galvanic effect on the meeting on Monday and Tuesday, but I ask the Minister to emphasise that Article 4 should be relatively broadly interpreted. We must not say that the money is to be spent purely on economic matters and exclude altogether expenditure on education, cultural facilities and so on. Those facilities are important in under-developed regions if we are to produce the right environment to attract the people who are able to create the wealth and persuade them to stay and be happy there. Regional development is essentially not a question of economics but of providing for people a reasonable social environment in areas where free enterprise does not do so.

My criticism of the Ministers approach is that unless there is national acceptance of supranational rules, the regional fund will have no Community meaning. I was sorry that the Minister seemed not only to be moving in the opposite direction but to be emphasising it, but perhaps that is merely part of the character of the debate rather than the character of the Minister's own views.

The Minister said that the debate is being held because he wanted us to have some say in the final decision that is to be taken on Monday and Tuesday. Alas, I do not believe that we shall be able to change anything very much. However, perhaps what we say today may count, as each thought counts in these matters, towards some future amendment of the operation of the fund. I hope that that operation will move in the direction of objective criteria rather than intra-national bidding.

11.11 p.m.

Photo of Mr David Marquand Mr David Marquand , Ashfield

I find myself in considerable sympathy with the hon. Member for Inverness (Mr. Russell Johnston) in a great deal of what he said. I find myself in this debate in a curiously divided frame of mind. I speak as someone who voted in 1971 in favour of entering the Common Market. I did so not because I liked the structure of the Common Market as it then was but because I thought that it was right to try to change it from within in a Socialist direction. I believed in the building of a Socialist Europe. I thought it was possible to achieve a Socialist Europe only if we were in the Common Market. From that point of view I must say that I am somewhat ambivalent about my right hon. Friend's speech and the document that has been presented to the House.

I believe that the sort of Europe that I want to see can be achieved only if there is a strong and supra-national regional policy that is operated, as the hon. Member for Inverness said, according to objective criteria from Brussels. I do not believe that we can create a Socialist Europe if our sole concern is to get the greatest possible return for this country. We can create a Socialist Europe only if we are as concerned about the poverty and unemployment in Southern Italy as we are about the poverty and unemployment in Northern Ireland. With great respect, I am a little concerned that my right hon. Friend seems to be concerned solely with the interests of this country.

Photo of Mr Robert Ellis Mr Robert Ellis , Wrexham

Does my hon. Friend agree that apart from getting a Socialist Europe, the greatest return to this country would result from a supra national arrangement for the whole of Europe?

Photo of Mr David Marquand Mr David Marquand , Ashfield

I believe that that is so. I shall develop that point later.

I am sure that we all agree that the size of the regional development fund is far too small. It does not begin to measure up to the dimensions of regional imbalances and inequalities in the Common Market. I find it regrettable that in the renegotiation exercise that my right hon. Friends have been conducting since the Government came into power they have not devoted more effort to increasing the size of the fund and less effort in achieving some of the other objectives set out in the Labour Party's manifesto. It would have been more important and more valuable to Europe and to us if some of the negotiating muscle that they have directed to other areas had been directed towards the fund.

None the less, it must be conceded that the regional development fund, although disappointingly small, is an extremely important step in the right direction. It marks a crucial change in the philosophy of the Community. The philosophy underlying the Rome Treaty was one of competition and of very little or no supranational intervention in economic activity. That philosophy has shown itself to be ineffective and to have led to increasing regional inequality in Europe.

By proposing the setting up of even a small regional development fund the Commission has shown that it has broken fundamentally with the philosophy which underlay the Treaty of Rome, and that is an extremely important step for the Community to take in its development. It is a small step but it is a step in the right direction, and it is one which I believe a Labour Britain in Europe could push even further in that direction.

The regional policy committee is in some respects far more important than the fund. All of us who have been interested in the regional policy of this country—I represent an intermediate area and many of my hon. and right hon. Friends represent intermediate and development areas—must surely by now acknowledge that the spending of money by government is only a very small part of regional policy. A whole lot of other policies are needed by government if jobs and opportunities are to be steered into areas that need help. In this country, for example, I would say that the industrial development certificate has been far more important as a way of steering investment into the assisted areas than is the money which is spent by central government. The regional policy committee in the enlarged Community can develop similar instruments on a European level.

I ask my right hon. Friend the Minister when he goes to the Common Market next week to press that the regional policy committee should look not only at the disbursement of money but at all the other ideas put forward in the original George Thomson Green Paper on regional development some time ago, particularly the idea of a congestion tax for overcrowded areas. I hope he will look, too, at the idea of some sort of European investment bank which would steer investment to the areas which need help.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

I agree with what my hon. Friend says, but he is not describing the aim and purpose of the proposal. The document says that it is to give a high priority to the aim of correcting the structural and regional imbalances which might affect the realisation of Economic and Monetary Union and it has nothing to do with rich and poor areas.

Photo of Mr David Marquand Mr David Marquand , Ashfield

My hon. Friend has raised an extremely sensitive question. It is the existence of regional imbalances within Europe that makes it impossible to achieve the ideal of European monetary and economic union. All of the participants in the Paris summit agreed to that.

Photo of Mr John Nott Mr John Nott , St Ives

On a point of order, Mr. Deputy Speaker. Since the hon. Gentleman is taking up a fairly considerable amount of time when many other hon. Members want to speak, may I ask that he address himself to the House generally rather than to his hon. Friends. In that way we should at least be able to hear what he is saying.

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

I agree. I was about to draw the hon. Member's attention to the fact that this was not a dialogue between himself and the hon. Member for Ren-ferwshire, West (Mr. Buchan).

Photo of Mr David Marquand Mr David Marquand , Ashfield

I apologise, Mr. Deputy Speaker. I was misled by my hon. Friend. He raised an important point and I thought that I should at least try to reply.

The establishment of the regional development fund is important for Europe and for the United Kingdom. I urge my right hon. Friend, when he is in Brussels next week, to make sure that it is used in a European and not simply in a Gaullist, way.

11.21 p.m.

Photo of Mr John Davies Mr John Davies , Knutsford

The object of these debates is to inform the Minister of the feeling of the House. I shall have very little to contribute to the debate because of the time factor. So far two Government back benchers and one Liberal Member have been called. I am the first Conservative Member to be called. It is past belief that that can be considered an adequate way of impressing on the Government our views on the vital matter of regional policy. We have only to see how many hon. Members are present to realise how many people are concerned about the matter. Therefore I feel that the arrangement is unsatisfactory.

The hon. Member for Inverness (Mr. Johnston), correctly in my view, drew attention to the extraordinary importance of the words to supplement or to reimburse". Although "gross" refers to the regional development fund, and "net" refers to the contribution to the budget of the Community, in terms of the amount allocated it is the larger figure of £60 million per annum which is available for us. Will the Minister say what is the Government policy on the matter?

It would be unusual if the intentions underlying the fund—we are all concerned with its inadequacy—were so far reduced as simply to devote the net figure, after the deduction of the Treasury discount, for the purposes of the regional policy.

I make no apology for referring to the co-ordination of regional aid since it has been stated in the Press and elsewhere that the two issues must go hand in hand. Some members of the Community insist that the co-ordination of regional aid should be agreed at the same time as the regional development fund. I should like the Minister to give us his assurance that next week, when he deals with the regional development fund, we shall have a chance of debating the question of the co-ordination of regional aid.

All areas in receipt of national aid now qualify for aid from the fund, but some preference will be given to national priority areas. I wonder whether that is entirely wise. Many intermediate areas in this country can suffer more in times of adversity than the development areas. There is a problem in the North West where we have recently seen Merseyside converted into a special development area, with dramatic effects on the rest of Lancashire, which the Conservative Government went to some pains to help. I hope that the preference for the national priority areas will not prevent the Government from making an objective judgment as to the place in which the need is greatest.

11.25 p.m.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

With your leave, Mr. Deputy Speaker, and that of the House, I wish to make four points in reply to the debate.

First, I do not intend—and that is why I did not seek to rise earlier—to try to answer the matters of individual concern, because it would be wrong to impose any further on the time of the House. I paid the penalty for allowing nine interventions in my earlier speech, although I warned about the last two, and I am sure that the House will not expect me to take more time in answering individual questions, although I propose to do so in the next few days in letters to the hon. Members who raised them.

I must say to the hon. Member for Bury St. Edmunds (Mr. Griffiths) to whom I offer my congratulations on his appearance on the Opposition Front Bench to deal with these matters, that the points which I shall be making to him will be matters of explanation rather than correction. I am sorry to disappoint him about that, but they will be clarification rather than withdrawal and correction.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

I made the mistake of giving way too often earlier, and I propose not to do the same in the remaining four minutes.

Photo of Mr Bob Cryer Mr Bob Cryer , Keighley

On a point of order, Mr. Deputy Speaker. In an earlier intervention, the Minister said that my point elevated theory above practice. My point of order is to ask whether these documents are binding legal documents ultimately or whether they are merely guidelines which have no statutory definition or interpretation whatever.

Photo of Mr Myer Galpern Mr Myer Galpern , Glasgow Shettleston

I am afraid that that is not a point of order. I am not a Member of the European Parliament.

Photo of Mr Roy Hattersley Mr Roy Hattersley , Birmingham Sparkbrook

No and, with respect to you, Mr. Deputy Speaker, even if you were a Member of that exalted body it would not affect the condition of these documents which go to the Council of Ministers on Monday or Tuesday of next week and, subject to the approval of the Foreign Secretary and the other Foreign Ministers will, if there is unanimous agreement on them, become the prevailing law of the Community, which is why we ask the House of Commons to let us have its judgment and comments about them before next Monday.

I have three remaining points to make. The first concerns the areas to which the right hon. Member for Knutsford (Mr. Davies) and others referred. I understand the right hon. Gentleman's point. My only point was that the judgment as to the use of these grants and as to which areas are most appropriate will remain in this House and with the Government. If the right hon. Gentleman believes that they have been used in areas less appropriate than others might be, it remains open to him to raise them with the Government and to make his criticisms to us.

Then there is the right hon. Gentleman's point about whether it is to be used as an addition to the grants made nationally or whether it is to be used to obtain for the Treasury what he described as reimbursements. That remains a matter for national decision. Again, it is for this House to explain to the Government its views on whether these should be additional grants or whether they can save Treasury expenditure. For my part, I believe that they should be additional grants, but I have to make it clear that that decision remains with the Government, and that decision has not been taken.

I make one final point to those who suggested that I was being less than enthusiastic about the Community objectives of the fund and that I talked in narrow, nationalist terms about its benefits. I had the privilege in the Council of Ministers in December of making the statement, which amongst others, began to realise the concept of the regional development fund. I said that I believed that the Community could not exist, according to its beliefs and principles, if the least wealthy areas in its boundaries were not assisted by the most wealthy areas. That is essential to the principles on which the Community was founded.

But, every time that we, as a country with one of the lowest gross domestic products, ask for an extension of the fund, we ask the more wealthy nations to subsidise us, and there is a limit to the speed at which that can go. I want to see the speed increase. I want to see economic convergence. As one of the countries which number among the least wealthy in the Community, it is in our interests to converge with those countries at the top of the scale of gross domestic product per head. But there is only a certain speed at which that can go.

I believe that tonight's proposition represents that speed, and that we ought to welcome it.

Question put and agreed to.

Resolved,That this House takes note of Commission Document R/2055/73, taking account of further developments brought to the attention of the House.