European Community (Budget)

Part of the debate – in the House of Commons at 9:04 pm on 2nd July 1980.

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Photo of Mr Donald Anderson Mr Donald Anderson , Swansea East 9:04 pm, 2nd July 1980

For me, the budget settlement of 30 May was a positive step. It is certainly an improvement over the pre-existing situation. No one can gainsay that, whatever queries he may have about the small print. I hope that my hon. Friend the Member for Newham, South (Mr. Spearing), who made a noise, will listen to the rest of my speech. He may then make a different sort of noise. However, it is only fair to begin by saying that it is a positive step, but not a cause for jubilation.

Judged by the criteria that the Government set themselves towards the end of last year as they approached the Dublin summit and before the Prime Minister set out on that steep learning curve that eventually culminated in Brussels, it has not been a major success. We remember the hostages to fortune that the right hon. Lady gave at that time by talking about "our money", despite international commitments to the contrary, allegedly aiming for a "broad balance", and it being made clear by the Government that there was to be no trade-off between our just demands on the budget and the other areas of contention between ourselves and our European partners. Clearly, that linkage resulted. The whole package was described as a comprehensive settlement in the communiqué following the Brussels meeting, and linkage was a fact.

The ghost at the feast following the celebrations on 30 May was that the principle of United Kingdom membership was still a live issue. The agreement on 30 May bought time for two years—the currency of the agreement—and probably for the subsequent year. If the European Governments cannot use those two or three years profitably and wisely to ensure that major changes are not made within that period, we shall have the difficulty of being on the eve of an election in this country and there will be all sorts of unfortunate pressures to make the principle of EEC membership part of the election campaign. That will be at a time when many other issues may be paramount, when people will be searching for scapegoats, and when the fault may be not in the EEC but in ourselves.

Because the system, particularly the CAP, was manifestly working against our interests, as part of the Brussels settlement we received the budget equalisation element and new resources for infrastructure projects within assisted areas of this country, with the emphasis particularly on financial assistance to the coal industry.

I have already said that there clearly was a linkage between the budget settlement, the farm price agreement, the common fisheries policy target date and the introduction of the sheepmeat subsidy. But several basic problems remain. One, which has been mentioned by hon. Members, is the definition of the totality of the cost of membership. I shall not go into that matter, but there was a helpful letter in The Sunday Times on the definition by Mr. G. H. Peters, director of the Institute of Agricultural Economics at Oxford University. It would be helpful if the Government or the Ministry of Agriculture, Fisheries and Food would release detailed estimates under the different headings of the costs of EEC membership to promote a wider debate in this country.

The second obvious matter is that, given the structure of our agriculture, Britain will never benefit greatly from the common agricultural policy. That policy will come under greater strain following the accession of Greece at the end of this year and the accession of the Iberian countries within the next three years. The CAP will suck in more resources, and that will be at the expense of the social and regional funds. It will also be at the expense of making a greater contribution to the less developed countries.

Although the settlement of 30 May may be an advance, it would be naive to assume that it solves the problems of United Kingdom membership. Many questions remain, but, sadly, the Chancellor of the Exchequer did not try to answer them. From the wording of the communiqué, it appears that Britain has undertaken to refrain from disturbing the status quo in the foreseeable future, at least during the currency of the agreement. We have bound ourselves to do our best to ensure that Community decisions are taken expeditiously and, in particular, that decisions on agricultural price-fixing are taken in time for the next marketing season.

In the structural review relating to the financial mechanism we agreed that the basic principles of the CAP would not be questioned. One can discuss what those "principles" are. It has been said that they stem directly from the wording of the Treaty. Perhaps they encompass the custom and practice—the encrustation of practice—that has grown up in the CAP.

It would be helpful to know the Government's attitude to the increase in farm prices. The European Assembly held a debate last Friday and it was said that the decision would mean that the proportion of the budget devoted to the CAP would rise from 75 per cent. to 80 per cent. Do the Government accept that estimate? If so, 80 per cent. of that 80 per cent. will, on past form, be devoted to the disposal of agricultural surpluses.

The increase of between 5 per cent. and 7 per cent. in agricultural prices adds about £300 million to our contribution to the Community. Our farmers, by the same token, will gain at the expense of consumers. Judging by past records, the sheepmeat regime is liable to lead to higher prices. It will have an adverse effect on New Zealand's position. It has a formal veto but, like the nuclear deterrent, it cannot be used in practice. It is likely to lead to sheepmeat mountains.

It is significant that the production levy on fresh milk surpluses has been shelved, at least until February. I did not know what a sacred cow was until I studied the CAP. Faced with the mistakes that have accumulated during the lifetime of the EEC, it is ridiculous that negotiators at the budget settlement could only add to those difficulties and sins. The old Book says: For the good that I would I do not: but the evil which I would not, that I do. The increase in agricultural prices will increase the number of problems. Another question has not been answered properly by the Chancellor of the Exchequer, although we were referred to a written question on the same subject. Does the drawing of compensation funds from the EEC budgets of the years following the years to which they are allocated mean that re-financing—the sums that we are likely to obtain from the EEC budget— is "held hostage" and is dependent on United Kingdom acquiescence on other issues? This is a possible construction of statements attributed to a French Minister. It would be helpful to have a clear indication from the Government whether they accept this construction.

What do the Government envisage to be the areas in the United Kingdom to which the additional resources will be allocated? My hon. Friend the Member for Newham, South has already made the point about the 70 per cent. and the 30 per cent., and the point of additionality. Certainly, coming from South Wales, where we could desperately need such funds, I think that it would be helpful to know at an early stage, given the emphasis on the coal industry both during this budget settlement and at the Venice summit, whether the Government are prepared to envisage additional EEC funds to underwrite the coal industry in South Wales. Of course, we also desperately need funds for our declining steel areas, which decline has stemmed directly from Government policies. The least for which we can hope is that a portion of the additional bounty coming from Brussels will be devoted to the problems arising from the steel crisis in our area.

What structural reforms will the Government promote over the next two years to prevent a recurrence of the crisis that has already arisen? This is a fundamental question. We were given no insight at all in the Chancellor's speech as to the answer, and what he has in mind. How can this House properly carry out its democratic function of debating this settlement if we are not taken into the Government's confidence and given certain guidelines as to the Government's view on this and other key issues?

Over the immediate future there are practical political problems in other member countries. There are the German elections in the autumn and the French elections in May of next year. In the second half of next year we shall hold the presidency of the EEC. Let us hope that by that time we have a clear idea of the structural adjustments that are necessary.

The budget settlement on 30 May, the compromise package, and the Venice summit that followed that are important for Britain in relation to our budgetary contribution and to our relations with our European partners. They are important because there are bound to be fundamental strains on the financial system within the EEC, not only because of the financial crisis that looms next year—the debate about the 1 per cent., and so on—but because of those financial and administrative problems that will be posed by the fact of enlargement. The Government, surely now and particularly before the issue of membership is caught up in a future general election campaign, must produce proof of the benefits of membership and the development of the EEC in a way which is acceptable to the British people. The time has never been better for this. I hope that the Government will start immediately to provide that framework.

I can see no future for this country save in a very close relationship with our EEC partners. If we were to be outside, decisions would be taken that would affect us fundamentally but over which we would have no control. But I find, in the budget settlement and in the other areas, that the British Administration as a whole have to make a substantial propaganda effort in co-operation with our partners.

It is a matter of judgment. If the balance has swung the other way at the end of the period, those of us who fought for Europe will not feel constrained to go all the way if it is clear that the two years plus one year have not been used profitably by us and our European partners and that there has, in fact, been only a postponement of the "big bang".

I hope that this period will give the Government and our EEC partners the opportunity to exorcise from our national psychology the debate about the principle of membership itself, so that the change in Europe in relation, for example, to the movement away from dependency on the absurdity of the CAP and the assertion of a Europe of consumers, as against the way in which the Market has developed so far, can be seen. I hope that we can see developments in a direction that will not ensure that those who all along have held doubts about the fact of our membership will have their position strengthened in the minds of the British public.