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I beg to move,
That this House takes note of European Community documents Nos. 6863/83 on future financing of the Community, 8822/83 on the Community structural funds, 5500/83 and 8552/83 on the supplementary measures scheme, 8385/83 the preliminary draft supplementary and amending budget No. 2 for 1983, the subsequent draft supplementary and amending budget No. 2 for 1983, the letter of amendment to the draft supplementary and amending budget No. 2 for 1983, and the Report by the Court of Auditors on financial management of Community activities (Official Journal C 287).
This is the first of two short debates on documents relevant to the current negotiations on the European Community's future financing and development. The other documents covered by this debate relate, first, to the so-called supplementary measures which cover the final refunds on the United Kingdom's contribution to the 1981 and 1982 Community budgets; and, secondly, to the supplementary and amending budget No. 2 for 1983, which was reported to the House by the then Financial Secretary to the Treasury on 25 July this year.
I shall leave the details of the agricultural negotiations to the next debate and try to confine myself to the main issues.
This debate takes place against the background of two important changes. The first is the changing attitude of the Labour party. This is the first time for several years that the House has debated the European Community on the basis of increasing agreement between the parties that Britain's future lies in Europe and that talk of withdrawal is a damaging diversion. We all welcome the fact that, even within the Labour party, there is now grudging acceptance of the view that the European policy on which the Conservative party fought and won the last two elections is correct. All seem increasingly to agree that the Community offers real potential advantages, from Scotland to Sicily, from Kohl to Kinnock, and possibly even from Mitterrand to Marlow. If the evolution of Labour policy is more limited than I have suggested, no doubt the hon. Member for Livingston (Mr. Cook) will make that clear during the debate. The House will look forward to a clear statement from him of Labour's policy towards the Community.
The second important background feature to the debate is that there is now widespread agreement throughout the Community of the need for fundamental changes, broadly along the lines for which we have been arguing for several years. There is agreement that the Community's budgetary arrangements must be reformed, that Community spending must be brought under control, that the budget burden must be shared more fairly and rationally, and that it is especially important to bring the common agricultural policy under control.
There is also agreement that we must develop policies that will enable our industry to meet increasingly tough competition from the rest of the world and, above all, to develop policies that will make a reality of what is not yet a common market.
There is agreement that the Community must be enlarged to include Spain and Portugal to broaden and strengthen the basis of democracy in Europe. Economies must be made in existing policies. Even so, it may be necessary to consider an increase in the funds put at the Community's disposal—own resources.
We recognise the importance of new policies and enlargement. In these negotiations we want to make solid progress on the development of Community policies. That is why the Government put forward clear and specific proposals, which were published in the economic progress report in October. The difficulty is to explain not the case for these ideas, but why they were not agreed long ago.
A great deal remains to be done to establish a genuine common market in goods and services. We need a more liberal transport policy, especially for lorries and air services. We must do more to simplify frontier controls, to remove non-tariff barriers and to establish an effective Community policy for coal. We have put forward specific proposals along those lines throughout the negotiations, and we believe that they will make a practical contribution to the economic development of the Community.
Another benefit will be co-operation within the Community by Governments and companies in areas of modern technology where development on a European scale obviously makes sense. The Esprit programme for information technology is a good example.
Enlargement of the Community is important for different reasons. The accession of Spain and Portugal will strengthen democracy in Europe——
Those countries have recently moved to a democratic system of government. Their chances of retaining that system of government will be strengthened by membership of the Community.
I have answered my hon. Friend's repeated question at least three times. We remain firmly committed to the enlargement of the Community for the reasons that I have given.
I shall not give way, because this is to be a short debate. I shall make my speech as short as I can, without interruption.
Negotiations for enlargement should be completed urgently.
Some Community policies — though not by any means all of them—are bound to cost money, as will enlargement. That has led some of my hon. Friends and others to argue that the resources of the Community should be increased forthwith by raising the financial ceiling under which the Community operates.
We have made it clear that we do not accept that case. At the very least, it would put the cart before the horse. Heads of Government agreed at Stuttgart that a decision on future financial requirements could not be taken until the outcome of the many other aspects of the present negotiations was clear.
I know that some hon. Members still feel that the case for lifting the financial ceiling will even then he very difficult, if not impossible, to establish. I agree with those who argue that Community expenditure has not so far been subject to the same strict controls as national expenditure, and that, if it had been, there would still be room below the present ceiling. We have not said — as the Opposition amendment seeks to argue — that we will never even consider an increase in the Community's resources. We have said that, if that is to be considered, it can only be when certain very firm conditions are fulfilled.
Those conditions were stated very plainly by my right hon. Friend the Prime Minister at Stuttgart. My right hon. Friend made it clear we would be prepared to consider art increase in own resources provided we reached agreement on an effective control of agricultural and other expenditure and provided it was accompanied by an arrangement to ensure a fair sharing of the financial burden, so that no country had to pay a share disproportionate to its relative national wealth.
We have stood firmly by these conditions in the negotiations, and we shall do the same at Athens. We have had some useful support from other Governments, particularly the Dutch and German. This underlines the point that our conditions are not an expression of British selfishness. They are no more than is necessary for the future well-being of the whole Community.
That is the justification for our two conditions. The negotations have focused on the detail of how they should be met.
Before the Foreign Secretary leaves the issue of own resources, will he respond to the surprise that was recorded by the Scrutiny Committee that the Economic Secretary was unable to inform the Committee about the form in which an increase in own resources would come before the House? Will it come before the House in the form of a Bill? Will there be a Division at 10 o'clock? Will it, as is normal with treaties, be laid on the Table and be subject to the negative procedure? There would be considerable concern in the House if proper and adequate facilities were not made available for hon. Members to reach such an important decision.
I understand the importance that the hon. Member for Livingston attaches to such a decision. That is one of the features that I have stressed throughout the negotiations. A decision to increase own resources would require ratification by the Parliaments of all the member states. This Parliament specifically would require an affirmative resolution to be considered in both House of Parliament. There can be no doubt about the need for separate national ratification of this decision and its important part in the argument.
Inevitably, the emphasis has been on controlling agricultural spending which now accounts for about 65 per cent. of Community expenditure. That expenditure has risen this year by 30 per cent. The problem has long been recognised, and numerous attempts have been made to deal with it. The House may remember that in 1979 the then Labour Foreign Secretary—now the leader of the Social Democratic party — said that reform of the common agricultural policy was one of the successes of the Labour Government. That was a false dawn, because nothing could have been further from the truth. That is why we are insisting on the need to design and apply a binding financial framework for the CAP. It is, of course, not only in agriculture that expenditure needs controlling. Our proposal for a financial guideline for agriculture has stimulated thought elsewhere in the Community on the overall control of Community spending. That is the importance of the French Government's suggestion, spelt out this week, that each year, before detailed discussion of the budget begins, overall spending limits should be agreed. We find this idea interesting. So long as it is combined with effective action to contain agricultural expenditure—that must be stressed—we should like to see it developed further.
On our second condition—budgetary reform—there has been a sea change in thinking in the Community. This becomes apparent if one looks back to the starting point. The United Kingdom has been a below-average recipient of Community expenditure. We have been called upon to contribute to Community spending at a rate above our proportion of the Community's wealth.
The Labour Government tried to deal with the problem in 1975 by negotiating a financial mechanism. The conditions they accepted were totally useless, because that financial mechanism failed to bring us one penny piece by way of compensation.
We made it clear from the start that we were determined to remove the unfair burden on Britain. We reached agreement in 1980 on refunds covering three years, and we subsequently negotiated further refunds covering 1983. The total refunds secured over the four years amount to two thirds of our unadjusted net contribution.
The process of negotiating these refunds was not agreeable, but it was necessary in those circumstances. The negotiations at Stuttgart and in the Special Councils have now moved the debate on to firmer ground. We are very close to agreement on four major issues.
The first is that the serious problem of budgetary imbalance in the Community must be solved on a lasting basis, without the need for the annual haggling which has taken so much time and energy over the last few years. For that purpose we need an arrangement which will work as well for the enlarged Community as for the present one.
The second issue on which agreement is close is that the arrangements for limiting the burdens on a member state should reflect ability to pay. Per capita GDP is probably the best measure of this, and a number of proposals—as well as our own—have now adopted this approach.
The third point is that the solution should be implemented on the revenue side of the budget, so that what is overpaid one year can simply be deducted from contributions the next. That leaves the expenditure side of the budget free to be considered, as it should be, on the merits of individual community policies.
The fourth point is that the new system should apply in respect of 1984 as well as subsequent years so that there will be no need to negotiate separate special budget arrangements.
The main point that remains to be decided is the measure of the burden to be corrected and how much of that burden should be corrected. The argument is a mixture of what can only be described as Community theology and hard calculation on numbers. Our argument has been and remains that the problem can be measured only as the gap between our contribution to the Community's finances and the Community's actual expenditure in the United Kingdom. That is the true size of the burden. It is in that context that our safety net proposal has been put forward as the most appropriate solution. Others have put forward a wide spectrum of alternatives, many of which commend themselves to their authors and supporters, principally because they purport to reduce the scale of the problem.
That need not, of course, be true of all alternatives which may be proposed. We have made it clear that we shall look at other approaches so long as they fairly address the problem as a whole and do not try to treat it as though with one of those shrinking mirrors that one finds at Madame Tussaud's. As to the level of correction, we have made it clear throughout that we are prepared to remain a modest net contributor, but only on a scale in keeping with our relative prosperity in the Community.
If agreement can be reached on the two points on which I have laid such stress, we shall have to think very carefully about the Community's future financial requirements, as we agreed to do at Stuttgart. We shall need to weigh up carefully, first, the justifiable claims on the Community of two relatively poor contries, Spain and Portugal; secondly, the possiblity of some expansion of Community spending where action at Community level can be clearly shown to be more effective than action at national level; and, thirdly, the cost of putting right our own and any other country's excessive budget burden, which may require funding from the total budget.
My right hon. and learned Friend referred to various expenditure reforms, especially in agriculture, which he believes are necessary and will take place. Surely, if those reforms are implemented, it will not be necessary to increase the size of the Community budget. The reforms are being contemplated only because the Community is now running out of money. Therefore, if we agree to an increase in own resources, we shall relieve the pressure and expenditure will rise to the new higher level.
What is so different about European Community expenditure? Why should it be exempt from the disciplines of which my right and learned Friend was so effective a proponent when he was Chancellor of the Exchequer?
I am grateful to my hon. Friend for drawing attention to the last point. One of the arguments at the heart of our case in the Community is based on a remark that I made in my 1979 Budget speech, when I said:
Finance must determine expenditure, not expenditure finance."—[Official Report, 12 June 1979; Vol. 968, c. 246.]
The extent to which the case has advanced is illustrated by the fact that that was reproduced verbatim in the French proposals of Monday night.
I accept that it is because of the constraints imposed by the fact that the Community is running out of money that the argument has been coming through. That is one of the factors that enables and obliges not just the British Government but all Community Governments to take steps to secure more effective control.
The crisis is the opportunity. That is why we are seeking to control the rate of growth of agricultural expenditure. Those of my hon. Friends who are critical should remember that Community agricultural expenditure is not solely to the advantage of other countries and of no interest to our farmers. The task of controlling and regulating agricultural support policies is one of profound difficulty throughout the world. It is crucial that we take this opportunity to improve the Community's mechanism. However, even when that has been done, and even if we manage to check the growing subsidies on both sides of the Atlantic, it is highly optimistic to believe that we shall be able to finance programmes which could be more effectively pursued at Community than at national level and to provide the resources to correct our own and many other member states' excessive budget burdens.
The House must understand that, even if there is an increase in the level of own resources provided for by the Community as a whole, if that is accompanied by an effective financial mechanism, the effect will be substantially and reliably to reduce the net cost to the people of this country, and enable us to secure that which my hon. Friends seem to want—effective control of the net contribution made by this country. If that key objective is achieved, we must consider whether the case for an increase in own resources has been made. We shall weigh up all that in good faith to determine whether it justifies an increase in the present ceiling and, if so, how much, but we shall maintain, as we have always done, that the burden of proof is on those who argue that the present ceiling must be raised.
In this connection I welcome the amendment in the name of my hon. Friend the Member for Hampstead and Highgate (Mr. Finsberg), and I am pleased to see that it has received the support of many other Conservative Members. My hon. Friend is right to insist on the conditions that the Government have laid down, and I am delighted that such a rapid accession of good sense has followed. It is in no way a conversion but a recognition of the important validity of the conditions that we laid down from the outset to ensure that, even in the event of an increase in own resources, the net cost to the United Kingdom would be reliably reduced.
Although it will not be possible to vote on my hon. Friend's amendment, it is on that basis that I ask the House to vote against the negative amendment tabled by the Opposition and for the motion in the names of my right hon. Friend the Prime Minister, myself and others of my right hon. Friends.
I beg to move, at the end of the Question to add
`and believes that the own resources of the European Community should not be increased.'
The amendment gives the House an unusual, pleasing and all-too-rare opportunity to debate an early-day motion. An early-day motion in identical terms was tabled yesterday and signed by 121 Conservative Members. It
appeared to us to be an important expression of opinion by a substantial body of Members. It should not be left to languish in the back pages of the Order Paper, but should be ventilated in the Chamber where those hon. Members who put their signatures to the document yesterday will have the opportunity to put their voices to it today.
However, if yesterday's Order Paper was fascinating, today's is rivetting. The hon. Member for Hampstead and Highgate (Mr. Finsberg) was one of six hon. Members who sponsored yesterday's early-day motion. Hereafter I shall refer to him as the hon. Member for Damascus, because yesterday, he had a revelation. On the way to the House a shaft of light descended on him and he perceived that his early-day motion was in grave error. Today, the hon. Member for Damascus heads an amendment to the motion which yesterday he sponsored. Even more remarkable is that the personal revelation that was vouchsafed to the hon. Member for Damascus spontaneously occurred to no fewer than 68 of his hon. Friends. It has been the most extraordinary case of mass conversion since St. Augustine came ashore at Kent. There was not even a general election between yesterday and today to explain why those hon. Members should have changed their minds.
The technical answer is that the hon. Member for Hampstead and Highgate withdrew his name from the motion. That does not answer the question how he came to be facing in both directions in such a short time. The House would not be expected to believe that such a mass conversion was the product of individual contemplation by each of those 68 hon. Members. When yesterday's Order Paper reached the highest authority in the land an explosion occurred, the shock-waves of which were felt yesterday everywhere throughout the building when the hon. Member for Watford (Mr. Garel-Jones) and his confederates were trying to lay their hands on one of their Back Benchers.
It was impossible at one stage yesterday for hon. Members to enter the Library and go about their business because the hon. Member for Watford was conducting impromptu seminars on the correct Government line on own resources. I was not privileged to be present at such seminars, but the story as reported to me was that those hon. Members who had signed the early-day motion had been misled as to the Government's current position on own resources. I shall not comment on whether the diligent Conservative Members who assembled the early-day motion would have misled their colleagues.
I draw the attention of the House to the fact that the Government's position on own resources is so opaque that nearly half of the Conservative Back Benchers cannot figure out what it is without the aid of a Whip. One can forgive them their confusion. The Government's position on own resources has undergone a rapid change in the past year. We may not have discovered the dynamic effects on our economy since entering the EEC, but we have discovered a dynamic effect on the Government's position as to own resources.
The Foreign Secretary said, if I heard him correctly, that at no time has he ruled out an increase in own
resources. The right hon. and learned Gentleman may reflect that when he was Chancellor of the Exchequer, and I was one of his shadows, a debate took place in February on the 1983 European Community budget. During the opening of the debate the then Financial Secretary to the Treasury, the present Secretary of State for Transport, said:
No one has yet demonstrated that an increase in own resources is necessary.
The hon. Member for Wells (Mr. Heathcoat-Amory) will be interested to hear the words of the then Financial Secretary, when he said:
If agricultural expenditure is properly controlled, the Community's existing revenues should provide the necessary financial resources for the development of the Community policies and, indeed, for enlargement.
If the House was left in any doubt about the Government's position, the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) said:
The Government have not changed their view.
As the hon. Gentleman was speaking a full five hours, he was wise to make that statement later.
No argument can be put forward with any conviction that it is necessary or desirable to increase the own resources of the Community."—[Official Report, 21 February 1983; Vol. 31, c. 670–744.]
I understand why the 121 Conservative hon. Members thought that they were positively supporting that position of the Government. I can understand their being aggrieved at being taken aside by the hon. Member for Watford and cuffed about the ears for lending support to such a positon. The truth is that the Government's position has changed.
I understand from his speech today that the Foreign Secretary believes that there may possibly be a case for increasing own resurces. I shall not go so far as to say that the right hon. Gentleman advanced the belief "with any conviction", to quote the words of the hon. Member for Edinburgh, Pentlands, but he appeared to be advancing a case for an increase in own resources.
The Government have dug a trap for themselves. At Stuttgart, in the summer, they allowed themselves to be backed into a position in which an equivalence was established between the increase in own resources and a solution to the budgetary and agricultural expenditure problems. From then on we were expected by our partners to make a concession on own resources in return for a decent deal on the budget and a sensible approach to agricultural expenditure.
Nothing has happened since February to change the merits of the case or to alter the argument advanced with such vigour by the hon. Member for Edinburgh, Pentlands and by the then Financial Secretary to the Treasury. The documents before the House confirm the case against any increase in own resources.
Commission document No. 6863, which refers to the future financing of the Community, sets out the own resources which the Commission has it in mind to impose. That should be a matter of grave concern to all hon. Members. Paragraph 15 of the document proposes a tax on the domestic consumption of energy. Such a tax would be designed to penalise northern countries to the advantage of southern countries. As Britain is almost the most northerly country in the European Community, the tax would bear disproportionately heavily on us.
I understand that the proposal is unacceptable to the Government. I assure the Foreign Secretary that in rejecting the proposal he will have the full support of the Opposition. One of the reasons why we will give him our full support in rejecting a European tax on domestic energy is that it would be imposed on top of an already iniquitous British tax on domestic energy which leaves gas more expensive than is necessary for every consumer from ICI to every state pensioner. We applaud the recognition that apparently exists in the Foreign Office that such a tax could not in addition withstand a European tax placed upon it, but we hope that it will make available the negotiating brief to the Chancellor so that he can reconsider the domestic as well as the European tax on energy.
The main burden of an own resources increase will come from an increase in VAT from 1 to 1·4 per cent. I wish to dispel a common delusion. I am grateful to the Scrutiny Committee for setting out the figures so clearly. At present Britian does not merely contribute 1 percentage point of VAT to the Community, but the 1 percentage point is levied on a notional harmonised VAT base. As the EC assumes that VAT is applied to goods to which not even this Government have dared apply it, there is a tax take from Britain well in excess of 1 percentage point of VAT. It currently stands at 1·7 percentage points. If a notional increase to 1·4 per cent. occurred, we would be handling to the EC a full 2 percentage points of the VAT, which is equivalent to more than one seventh of our total VAT take.
The document makes a further suggestion, which I regard as bordering on impertinence. On top of the first increase to 1·4 per cent. of VAT, further tranches should be made of 0·4 per cent. VAT, which could be levied without reference to the national Parliaments of the EC by a three quarters majority of the European Assembly. There can be no question—the Foreign Secretary must be in no doubt about this matter—of this Chamber giving up its sole right to approve taxation levied in Britain. The right to control supply was a right fought for by our predecessors, a struggle in which not a few of them died. Such a right is the precious heritage of each and every hon. Member. It is not for inclusion in a package of bargaining measures in Brussels, and is not to be bargained away in return for a super levy on dairy products.
Nothing in the Commission's document tackles the fundamental problem of the structural defects in the system that leave Britain trapped as a persistent net contributor to the budget. It proposes a modulation of VAT, but it would be in such a low key that it would still leave Britain the second largest net contributor, although the seventh poorest member state. Even more remarkable, if enlargement takes place it would still leave Portugal, one of the poorest nations in Europe, as a net contributor to the EC budget. That is a grotesque outcome.
I am pleased to see the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) in his place, as I understand that we are to be treated to a speech from him later. On 14 November, during the report by the Foreign Secretary on the Foreign Council meeting, the hon. Member for Inverness, Nairn and Lochaber raised doubts that the Government's position on budgetary contributions might impede the objective of the EC in obtaining the economic convergence of the economies of the member states. I find it a remarkable tribute to the blindness of alliance Members in their infatuation with Europe — [HON. MEMBERS: "Where are they?"] The hon. Member for Inverness, Nairn and Lochaber is a fair representative of them all. We can quite happily settle for him. They are so blinded by their infatuation for Europe that during the whole 10 years of debate on the British budgetary contribution they have missed the entire point, which is that the budgetary system, far from promoting convergence of the economies of the EC, actually promotes their divergence by obliging the poor to subsidise the rich.
If alliance Members turn up in greater numbers we shall be interested to see what they do at the conclusion of the debate. Will their infatuation lead them to vote in favour of an increase in the ceiling of own resources so that the poor nations may subsidise the rich nations to an even greater extent?
Nothing in the documents that relate to revenue justifies a change in the Government's position on own resources. Does anything relating to expenditure justify such a change? The documents, far from justifying a change, confirm the correctness of the Government's position last February.
The very next document is a report by the Court of Auditors. Its preface contains the strongest possible case against an increase in own resources. It states:
It was only when the risk of reaching the limit of 1 per cent. VAT own resources became a reality that public attention was focused on the possibilities of making Community expenditure more effective.
If the limit has obliged the EC to have regard to the effectiveness of its expenditure, what possible incentive could there he for us now to raise and remove that limit?
I do not wish to trench on the issues of the next debate, but it is impossible to have regard to expenditure without making some mention of the CAP, which swallows two thirds of expenditure—10 times the sum going to the regional or social funds, and the sole source of this year's budget crisis because of the staggering 30 per cent. increase in agricultural expenditure this year.
The picture that emerges from the Court of Auditors report is of an incoherent, self-contradictory, inefficient agricultural system, in which the subsidies vary arbitrarily product by product, farmer by farmer and country by country. Britain now has the entirely unforseen development of a cauliflower mountain, as well as our other mountains. Last year the Minister purchased under intervention 8,200 tonnes of cauliflower. I am advised that at Sainsburys today an average cauliflower weighs 700 grams. The statistics department has worked out that that means that last year the Minister consumed and bought under intervention 12 million British cauliflower. It would require Salvador Dali to do justice to the mound of 12 million cauliflower being bought and destroyed under intervention. Cauliflower which the British public either did not want or could not afford were brought into existence simply by the bizarre workings of the agriculture system.
A year ago there was brave talk of the reform of the CAP, but "reform" now appears to be a word that has disappeared from the vocabulary of the debate. I did not hear it used once by the Foreign Secretary during his address. It is not used in the Community document before us. Document No. 8823 refers not to the reform of the CAP, but to its adaptation. The Damascus amendment refers not to the reform of the CAP, but to
arrangements satisfactory to Her Majesty's Government".
Nobody is talking about a change in the structure of the CAP to carry out a root and branch reform of the structural
surpluses. The Government are proposing to settle for a limit on the increase in annual costs of the CAP. There is ample evidence that Ministers do not expect to achieve that. They may be influenced by what The Economist indelicately referred to as "the barn-full of farmers" in the Cabinet.
A fortnight ago the Chancellor came before the House with his autumn statement. It provided for an increase in expenditure under the Ministry of Agriculture, Fisheries and Food. I have before me the statement made by the Minister of Agriculture, Fisheries and Food about next year's expenditure. He said:
This is £437 million higher than previously planned. Of this sum, £422 million provides for additional expenditure by the Intervention Board for Agricultural Produce, mainly in respect of an expected increase in the level of intervention for butter and skimmed milk powder; the remaining £15 million is a net increase in planned expenditure" — [Official Report, 17 November 1983; Vol. 48, c. 557.]
In other words, of the £437 million increase in agricultural expenditure next year, £15 million is for planned expenditure and £422 million—a 50 per cent. increase — is for increased intervention under the CAP. It is plain that neither the Chancellor nor the Minister of Agriculture, Fisheries and Food expects the Foreign Secretary to succeed in obtaining tight controls on the CAP. Possibly, and more sinisterly, the Cabinet does not expect the Foreign Secretary and the Prime Minister seriously to try to succeed if it damages the interests of the farmers.
Whether we look at the documents that deal with revenue or those that deal with expenditure, there are no grounds for the Government shifting from the position that they took on own resources last February. Nor is Athens the time to abandon that position. Athens finds the Community in crisis and obliged by the ceiling on its expenditure to confront the contradictions in its policy. It provides a window of opportunity for Britain. It is the best moment to oblige the Community to face the changes that it needs to make. It is the very last moment to raise the ceiling to enable the Community to escape from facing the changes; to enable it to continue to squander expenditure on its absurd agricultural policy and to extort more revenue from the British to pay for it.
This is the last opportunity for the House to voice its opinion before Athens. I urge the House not to let this opportunity slip from its grasp, but to sieze it and use this debate to make an unequivocal declaration that neither in present circumstances nor in immediately forseeable circumstances will this House accept an increase in the own resources of the EC.
I can but congratulate the hon. Member for Livingston (Mr. Cook), who has spoken almost to my motion. Mine is the voice of Jacob while he has the hairy hand of Esau which is trying to destroy the Government.
What I propose is intended to support the Government and strengthen their hand. They are entering difficult negotiations. On the trip to Athens, I regard my right hon. Friend the Prime Minister as a maid of Athens who is accompanied by that Byronic figure the Foreign Secretary. They need ammunition if they are to engage in another battle of Navarino to force changes. By not accepting my motion they have thrown away nearly all the ammunition that they could have had. That is a great error by the Foreign Secretary. He and the Prime Minister are walking naked on to the lido in Athens. It would be much better if they went prepared to fight theirs and Britain's corner.
I promise not to detain the House long, but there are a few points which stand out. There is the question of the 66 missing Members. Those hon. Members have been led astray by one whom I would not call the hon. Member for Damascus. He is like one of those whom we see in a south American frigenficos or meat plant—a Judas sheep who leads the flock up the ramp and jumps aside to watch them fall to their deaths in a hideous tangle of massacring machinery.
There is a missing chain or link in the Government's policy. Why is there now a difference between their policy and the bold statement made in February by my right hon. Friend the Secretary of State for Transport, then the Financial Secretary to the Treasury, that there would be no more release of resources? I believe that the answer is that, by now, the Government have seen the figures and recognised that they were running into extra expenditure for this year of about £1·4 billion. Seeing that in the supplementary budget, they panicked. We should project the results of that bad budgeting into next year. We should consider the growth in America. The whole of Kansas has now been released for grain growing this winter.
We should examine what is happening in the European farming community. There are now 25 million European cattle that need £2 billion of farm support. Many are the cattle of peasants. Those who have been to Europe will have seen what happens to some of those cows. They are stuffed with food rather like geese being prepared for pate de foie gras. The milk yield is increasing, but those cows scarcely ever see green grass. They are part of a cow factory that produces 3,000 gallons of milk per lactation as opposed to the 1,600 gallons produced by the cattle that live on our good green British fields. Since February the Government have seen a budget running hopelessly out of control.
The Government should take an infinitely tougher line at these negotiations. It is now too late to fiddle about with the nuts and bolts. We have heard of the need to relaunch the EC. Let it be relaunched, but let it also be a ship that is seaworthy and able to meet some of the troubles that lie ahead. That involves a more profound examination of what my right hon. and learned Friend has proposed today.
The hon. Member for Livingston pointed to the profound economic, political and historic costs involved if the House permits future budgeting to be controlled not by the House but by a group of Euro-MPs and a Council that meets in Brussels. I assure my right hon. and hon. Friends that there will be strong opposition from both sides of the House to such a development.
Tinkering with the budget is no longer any use. I want the EC to be a success, but it cannot be successful if it continues to waste money at its present rate. The problem is not so much what was identified in the Court of Auditors' report as what is seen by anyone who has anything to do with that organisation. In one of the many policy papers before us, it is stated that such are the difficulties and confusions, it is proposed that the olive oil regime be removed from EC control and returned to national Governments, albeit under EC supervision. We have a model there for effective change. The worst element in the agricultural problem at the moment is the tide of milk which is no longer being consumed. Europe now produces 20 per cent. more milk than is needed. All that has been advanced so far by officials in Brussels would not staunch that flow. Indeed, it would have an immensely bad effect on British farming. Super-levies, taxation on margarine and taxation of feed for livestock would simply hit our farmers although they are innocent of contributing to the gigantic problem of the colossal surplus.
Under some form of federal control, dairy produce and the dairy regimes should become national responsibilities. My right hon. and learned Friend will find British farmers are so nervous that they might accept that proposal. Indeed, some European farmers and Governments might also accept it. If such a decision were taken, £2 billion would immediately be taken out of the deficit. People in Athens would be given time to think. Now is the time to advance such a policy.
The EC is effectively bankrupt. The Government should come forward with a positive policy for fundamental change. Over the next six months £2·5 million of EC funds will be spent on advertising the importance of the Common Market to the electorate. Let us have a policy that makes that sale worth while.
The Foreign Secretary, who seems to have gone home early, associated himself with those who recently, and particularly since the general election, have gone about declaring that Britain's membership of the EC is an issue that is finished, settled and buried. He is mistaken, despite the fact that, on the morrow of their defeat, the then occupants of the Opposition Front Bench, like defeated legions, threw away their eagles in the precipitancy of their flight. He is mistaken even though some 60 or 70 Conservative Members changed their minds on a proposition to which they had put their signatures in an act of personal infamy which they will remember as long as they are Members of Parliament. He is still mistaken for a simple and unquenchable reason. There is an irreconcilable gulf and opposition between membership of the Community and the expansion and development of the Community on the one hand and the sovereignty of the House of Commons on the other.
That is a question that neither the House nor those who create the House, and for whom it exists, will ever allow to be buried until it has been settled again in their favour. The sovereignty of this House is indissolubly bound up with the control of this House over expenditure and taxation. Without that control, we should have been nothing and we shall be nothing. Control over expenditure and taxation is alike removed from this House by the operations of the EC.
I notice that the Scrutiny Committee quoted with approval the alleged intended rejection by Her Majesty's Government of a mechanism that would influence national contribution by extra expenditure. However, even if that mechanism is not adopted, even if the matter were dealt with by the principle of the juste retour about paying in no more than we get back—a principle incompatible with the notions, philosophy and intent of a developing European Community—we should have lost our control over that block of our national revenue and resources. That would be money that was spent not according to the decisions of the House, but according to the decisions of another body. So, by the nature of its very principles and purposes, the Community exists and depends upon removing the control of this House over an increasing volume of expenditure for which we provide the means.
We come then to revenue. It is overt and flagrant that not only in own resources but in all the other resources of the EC that are withdrawn from the House we have taxation without the will of Parliament. We already have taxation, which consists in a power of taxation once and for all handed over in 1972, but only in the case of own resources up to 1 per cent. That existing limit is to be challenged, and anyone who observes the behaviour of Government knows that they are preparing to give way to that challenge and increase that limit. That limit will be increased and that once and for all cession of an additional block of revenue raised from the British people will be raised by legislation that will not be made by a Bill presented to the House and examined by our normal procedures before it is allowed to find its way to the statute book. It will be as a result of treaty. Taxation by treaty—that is what we have as part of the EC. It is the making of the treaty, a prerogative act, that determines the obligation of the Government and the necessity for this House to levy taxation upon British people.
As a high Tory, I am very protective of the Royal prerogative, but taxation by prerogative is something to which I would never have imagined this Parliament and this House of Commons would submit. It is taxation by prerogative, and another slice of taxation by prerogative, to which we are to be subjected. The Community has given us a glimpse into its thinking by its further proposal. After we have handed over that grant it will be made easier for it after that.
"Good," says the hon. Member. We should tell his constituents and the people of this country that he is satisfied for this House not to control the taxation that they have to pay, because that is what we are talking about.
After we have made the further grand renunciation of the 1·4 per cent., and the hon. Member for Livingstone (Mr. Cook) has exposed the deceptive nature of that figure, taxation is to be easier for the Community because it is to be done by unanimity in the Council and a three fifths majority of votes in the European Parliament.
It is not without its salutary uses to look back sometimes to see what we were told at each successive stage in our decisions that have brought us here. The fears that were voiced at each stage, the ridicule and the dismissal that greeted them, the reference in that context to the European so-called Parliament, the European assembly, are not without significance, for the Government would not have been in the straits in which they now find themselves, of contemplating surrender upon the own resources limit, but for the fact that the directly elected assembly started, in the past year or two, to use its powers.
Someone said when we debated the direct election of that assembly in 1977:
We should not flatter ourselves that these powers are circumscribed or limited, and that they will remain exactly as they are at present unless and until we and eight other Parliaments decide otherwise. It will not be so. The moment that the right to reject the budget or to dismiss the Commission is in the hands of those who sit in the assembly by the same right as we sit here, it will be found that those are very far-reaching powers indeed. It will be found that the Assembly has become a body which the
Commission will have to obey … and it will be a body which the Council of Ministers will be unable to defy."—[Official Report, 24 November 1977; Vol. 939, c. 1790.]
That was said in 1977, and it was a description of a course of events over the past 18 months that have led the Government into the ignominious position in which they sit today.
This question will not rest, and this conflict will not cease until it has been decided. The Prime Minister returned today from a futile exercise in India and goes shortly to serious business, at which the rights and powers of the House will be at stake, in Athens. The Prime Minister, I believe, knows, and knows by a kind of instinct, the determination of the British people, sometimes hidden, sometimes overridden, and their sense that it is in this House and in the rights of this House and the sovereignty of this House that their ultimate protection and ultimate future lies.
When the right hon. Lady goes to Athens she will have to measure against that knowledge—a knowledge that goes beyond the week, the month or the year—the tactics that she applies to extricate the House, the Government, and her party into the bargain, from a commitment that is inconsistent with that which the British people will never consent to give up. At each stage, as they realise of what they have been deprived, they will more clearly see that they have to withdraw the consent, which was given in their names but not with their will or understanding, to surrender what this House stands for. She will have that in mind when she goes to Athens.
Mr. Deputy Speaker, I rise for the first time in this House aware of the conventions and anxious to observe them, and aware of the fact that this is a short debate and therefore mean to keep my remarks to a minimum.
It would be wrong of me to start without paying a proper tribute to my predecessor as Member of Parliament for Solihull, Mr. Percy Grieve, QC. He represented Solihull with great distinction for 19 years, was highly thought of in Solihull and is now fondly remembered. I have spoken to Percy Grieve within the past week. I found him in very good form. He was very busy and very well. Hon. Members on both sides of the House will be pleased to hear that good report and will no doubt join me in wishing him well.
It is a privilege for me to represent Solihull, which is my home town. It is one of the most elegant towns in England and is a very pleasant suburb. In recent years the pace of change has caused some of us some anxiety. Being on the very edge of the west midlands conurbation, Solihull is a town where anxieties about green belt policies are keenly felt. The people of Solihull are enlightened, hard-working, diligent and tolerant, and as a native and resident I aspire to be typical of them in serving them in this House.
We are discussing the European Community budget and the crisis associated with it. The President of the European Commission has been quoted as saying:
It is no longer possible to put off the day of reckoning. The exhaustion of our own resources has put our backs against the wall.
My right hon. and learned Friend the Foreign Secretary rightly said that in every crisis there is an opportunity. Those who have the good of the European Community at heart, care about its well-being and want to see it do well,
realise that this crisis must be exploited to the full in the interests of our country. Caring about the interests of one's country is not incompatible with being a good European. Abandoning the interests of one's country at the first call, however, is inconsistent with being a good European.
Like other hon. Members, I believe that we must put the European Community budget right and that this is the crucial chance to do so. We have attempted to force the pressure in the past at the annual farm price review, but in the end that ambush proved too predictable and was passed through. This is a critical opportunity, and we should take it. There should be no fudge and no compromise. We should hold firmly to our bargaining advantage. If we do, the budget argument will be taken out of the political institutions of the European Community. The Commission, the Council and the Parliament spend far too much time arguing about the budget.
If we could put this matter right we should render a great service to our country, where public perception of the Community may improve very considerably if the rowing stopped. It would be like taking a thorn out of the paw of British public opinion. We should also do much good in Europe and enable people to start discussing progressive developments in the Community and to get on with the job of strengthening Europe and the member states. I wish the Government well in Athens. I wish them success.
I believe that the hon. Member for Solihull (Mr. Taylor) speaks from experience as a present or former Member of the European Parliament. We look forward to hearing from him again in future debates on European matters. I wondered at one time whether he would be as bold as the hon. Member for Watford (Mr. Garel-Jones), who in his maiden speech made it clear that he disagreed with the then Government. The House will appreciate the hon. Gentleman's comments about his precedessor, Mr. Percy Grieve, whose legal erudition was well known here and whose contributions are well remembered.
Like the hon. Gentleman, I do not wish to be too controversial, and I too wish to recall a predecessor, a past Chairman of the Select Committee on European Legislation, Julius Silverman, who served in that office with great patience, skill, impartiality and accuracy. In its deliberations, the Committee to which my hon. Friend the Member for Livingston (Mr. Cook) has already referred is not concerned with merits. It assesses the legal or political impact of EC legislation on the United Kingdom. It reports on matters of principle, and recommends how the House should proceed on more controversial issues. It issues weekly reports which would be an invaluable guide to hon. Members and to their constituents on the way in which EC legislation could affect their interests. When major issues arise, such as the one before us this evening, it issues full reports. Having considered EC document 6863/83 on the future finances of the Community, the Committee issued a report, H.C. 78-vi, and a report of the Committee's proceedings, H.C. 126-i.
The Committee decided, at its first meeting after the summer recess on 26 October, to request the Chancellor of the Exchequer to report to us. Unfortunately, he was not able to suggest a date before 21 November, and when that
date arrived he wrote to me apologising for his absence and the Economic Secretary to the Treasury stood in for him. We are glad to see the Economic Secretary here. The hon. Gentleman conveyed the Chancellor's
sincere apologies for not being present to give evidence to the Committee. I know he did warn you some time ago that the pressure of events at this exceptionally busy time of the year after the Autumn Statement might force him to stand down.
However, the Economic Secretary was with us and we used the information that he gave us, then and later, in our report.
The first part of our report links the taxation measures of the EC with those of the United Kingdom. Last year, no less than £2,863 million went in contributions to the EC:£1,154 million in VAT and £1,269 million in customs and levies. In return, we received £1,238 million, of which £791 million was in the form of agricultural receipts. We discussed the question of a fairer system. In answer to question 51, the Economic Secretary made it clear that the imbalance of agricultural expenditure would make it difficult to achieve any greater balance in EC receipts in this country by increasing expenditure in other ways. Regional and social funds and the guidance part of the agriculture funds are referred to in EC jargon as structural funds. The use of those funds is often advocated in this House as one way of balancing our contributions. The Government would agree that that is not possible, and members of the Government said so during Committee hearings.
One other feature that the Committee found — we were surprised by it—is illustrated in table 3. It was the extent to which West Germany was continuing to pay a major contribution to Community funds. Well before the refunds which, after the Dublin mandate, are now negotiated annually, the German contribution was very much higher than our own. It will continue to be so as long as the contributions last. To some extent, the Germans have at least as good a case on refunds as the United Kingdom.
My hon. Friend the Member for Livingston has already commented on some misconceptions about VAT. In The Times on 1 December there was a story entitled "Tory MPs threaten rebellion". Ignoring that controversial suggestion, I shall quote from it:
At present the Community's funds are limited to the yield of 1 per cent. of the value-added tax levied in each member-state.
My hon. Friend made it clear that it is not so. Unfortunately, that idea has obtained wide currency both in newspaper articles and in people's minds. He explained that it is at a rate of 1·7 per cent. of VAT. In doing the arithmetic, which was confirmed subsequently by the Treasury, we found that no less than 11·2 per cent. of the 1982 VAT yield was passed to Brussels by means of the own resources mechanism. If the 1·4 per cent. limit is raised, that percentage would increase.
Another factor is that we pay in sterling, and if the ECU-sterling exchange rate changes, it will change the amount that we have to pay. Annually the Chancellor of the Exchequer does not just have this considerable sum as a first call on his payment out: he does not always know just how much it will be because if sterling declines the sum that he has to allocate from VAT and the Consolidated Fund will increase.
We hope that our report will be helpful to the House in reaching a conclusion now and in future debates after Athens. It has been pointed out already that the power over the levying of taxation and of its spending was the means whereby the House gained its power and the centrality of that power will not be lost on hon. Members, nor was it lost on the Select Committee which may in future invite the Chancellor of the Exchequer to give further evidence if further reports are deemed necessary.
I am prompted to make a brief intervention in the debate because of the attack on my right hon. and learned Friend the Foreign Secretary by my right hon. Friend the Member for Stafford (Sir H. Fraser). I believe that the Foreign Secretary is absolutely right in the negotiating attitude that he has adopted and put before the House today.
I congratulate my hon. Friend the Member for Solihull (Mr. Taylor) most warmly on his maiden speech. I hope that he will forgive me if I say that it was in many ways a model of a maiden speech, with its happy reference to his predecessor, to his constituents, and then to the subject of the debate, all in the space of some six or seven minutes. I congratulate him warmly upon the substance and the manner of the delivery of his speech.
I agree with my hon. Friend when he says that once the budget is settled we can move forward in the Community in many ways which will be of enormous benefit to the country and our people. I shall add to his sentence that it might also be for the good of the Community. It is that sense of working for the good of the Community that has, alas, been so often lacking from this country's activities and those of its Governments over the past seven or eight years. I wholeheartedly agree with what he said in that respect.
I have never commented on the speech that the right hon. Member for Down, South (Mr. Powell) made on this matter on an earlier occasion, and I do not particularly want to comment upon it today, except to say that history has passed him by. Of that history—of which he is so proud—his knowledge has always been scanty and is now non-existent. The matter has been settled, and perhaps one day the time will come—I hope that it will—when he will recognise that fact and perhaps become a happier man.
One of the greatest battles of the 1930s was over the Government of India Bill. It was fought vociferously, particularly on this side of the House, by a large group who opposed it, of whom Churchill was the foremost. When the Government of India Act was passed, it was settled and accepted. Churchill was big and gracious enough to say that it was settled and that he accepted it. It is a pity that the opponents of the European Movement and our membership of the European Community cannot take the same attitude.
The Opposition's views are changing. I am not criticising them in this respect, although I shall shortly criticise them in another respect. The Foreign Secretary's attitude is right because, first, he is saying that there must be proper control of budgetary expenditure, and, secondly, that there must be proper control of agricultural policy. I am firmly in agreement with those two matters and always have been.
What is difficult about today's debates is that they are entirely artificial. The first debate about the budget and the second is about the common agricultural policy. I understand that that is because the Opposition wish to vote on the budget issue because they still believe that there is something to be got out of it, but do not want to on the issue of common agricultural policy.
I understand that view, because there was a time, when I first came into the House, when the Labour party prided itself on the fact that it was the party of the farmer and the farm worker. It had a great Minister of Agriculture and Fisheries in Tom Williams, who achieved a great deal for agriculture in the post-war world. The Labour party has now abandoned all that. It no longer cares in the least about the farmer or the agricultural worker. As a result, it has lost both its industrial and its agricultural base, which is why it is in the lamentable position in which it now finds itself.
The right hon. Gentleman referred to Tom Williams. He will be pleased to know that the Labour party stands by the farming system which he introduced, because it was a system of deficiency payments which was fair and decent not just to the farmer and farm worker, but to the consumer as well. It did not, as the present system does, oblige the consumer to assist the farmer and pay twice as much as the farmer receives in benefit from the CAP.
I shall come to that point. The other interesting fact is that since these debates began the Opposition have never put forward a constructive proposal for changing the CAP. They have talked constantly in the way in which the hon. Gentleman talked this evening. Agricultural problems exist everywhere. The hon. Gentleman referred to milk surpluses. I sat in Cabinet for many years, under the old system as well as the new and we debated the price review every February. There was constantly argument about milk. In those days it was whether the farmer was to receive an extra three farthings or three halfpence. We knew full well that there would be milk surpluses. If we cut back on the price, the farmer only produced more milk to maintain his standard of living.
That is a characteristic of agriculture. People who talk in general terms only about reforming the policy, without making a single constructive suggestion, are kidding themselves about how to deal with what is a permanent agricultural problem in every part of the world except the developing countries, where there is insufficient production and to which no effective solution has been found.
British farmers have done extraordinarily well under the CAP. If the Conservative party wishes to maintain the confidence of farming, I suggest that it should take that fact into consideration when it talks glibly about cutting here and there and doing away with the benefits that the farmers and farm workers have had. What will be the consequences for the Chancellor of the Exchequer of taking milk out of the CAP and returning it to our budget? Those are basic matters which no one has taken into account when talking glibly about reform.
I want to come to the subject of negotiations and why the Foreign Secretary is right. It is vital to gain control of monetary expenditure and the CAP. We shall not achieve that by saying to the rest of the Community, "and we will not accept anything else." Linking those two matters was the fatal mistake that was made last year during the price review negotiations. The Community knew that we wanted the price review and had accepted it. It knew that our farmers wanted it. We said, "No, we will not have it, because we want the budget." The Community is not prepared to stand for that, and neither would we in its position. Those nine countries have a far greater proportion of their population involved in agriculture than we have. They knew that we wanted the price review for our farmers, but that we would not agree because we demanded something else on the budget.
They will not stand for that, and that is why the Foreign Secretary is right this time. He is not making the same mistake. He is saying that we should go for control of budgetary expenditure and control of the common agricultural policy, and that if we get that we shall be prepared to consider, in the development of the Community, the whole question of the other resources. That is a fair, reasonable and justifiable positon to take, and it is one that the Community will appreciate.
We want more development of the Community. We shall benefit from that in the Common Market, but let us not try to kid the Community that we are doing it for the good of the Community as a whole.
Let us consider the question of insurance. We badly need a common market in insurance, but who will benefit most from it? It will be Lloyd's and the City of London. The Community knows that, so let us not try to kid the Community that we are doing it for a motive that is beyond discussion. We are, of course, doing it for our own interests.
Then let us accept that other countries in the Community also have interests and that they may involve the question of the extra resources. Therefore, the Foreign Secretary is right to say that this matter can be considered and that a considered judgment can be made on it.
My right hon. Friend the Member for Stafford says that he tabled his motion to help the Foreign Secretary. That may have been his intention.
My right hon. Friend says that he did things to help me as well. I accept that, but from the point of view of negotiations in Athens, the Foreign Secretary and the Prime Minister are right. From the point of view of the Community as the Prime Minister said repeatedly at the election—and has repeated since—it is essential that we remain a member of the Community for political reasons, to strengthen NATO, and to help our economy. If those three statements are true, the Community expects us to take an attitude that will help the Community in its development. It cannot believe that we are genuine if we take any other attitude.
No doubt my right hon. Friend the Minister of Agriculture, Fisheries and Food will have to outline his attitude to the suggestions about prices for commodities. It has not escaped notice in the Community that the commodities that are being crossed off are the ones that do not affect us, and the ones to be left are those from which we shall benefit. That is too simple an approach, and the Community can see that, so the Minister of Agriculture will have to adjust that.
When the control is settled, it should be in a form that is flexible. The Community is not static. No member state will remain in the same position financially or from the point of view of total production in relation to the other members. When we went into the Community negotiations we were the second richest country in the Community—second to the Germans. Then we were overtaken by the French, and now others have overtaken us. We are now seventh or eighth. The Community is not static, so any arrangements that are negotiated must be flexible to deal with the changing positions of the countries in the Community.
Perhaps I might say a word about Spain and Portugal. They should come into the Community because they are now both democratic countries, and our democracy can be strengthened by their coming in. I lived through the period when Spain went from being a constitutional monarchy into being a republic, into a civil war and into a totalitarian dictatorship. Now it is a democracy, and a worthy democracy. No tribute to the King of Spain could be too high for the part that he has played in bringing about that democracy. He has a British background and a large knowledge of British history and British parliamentary tradition. So Spain and Portugal should come into the Community to strengthen their own democracies and prevent the recurrence of a dictatorship. I should have thought that Opposition Members would agreed with that.
Those are my few thoughts. Above all, I repeat that the Foreign Secretary and the Prime Minister are absolutely right in the negotiating position that they have established.
I wish to associate myself warmly with the congratulations that have already been offered to the hon. Member for Solihull (Mr. Taylor) on his maiden speech, which was well informed and pleasingly succinct.
I am in no doubt whatever that the own resources of the Community must be increased. [HON. MEMBERS: "We knew that."' That would be so, even were we not politically committed to its enlargement by the inclusion of Spain and Portugal. When they join, they will simply fortify what I believe is an unanswerable case, which has already been exceedingly well put by the right hon. Member for Old Bexley and Sidcup (Mr. Heath).
The unconditional rejection of that course, which has been spelt out in identical words in the Labour party's amendment and in the early-day motion signed by about 60 Conservative Members, is not a policy. It is a Luddite abdication of leadership. I dare say that the so-called official Opposition think that it is an astute and clever move to table an amendment for which more than 60 Conservative Members have already declared their support. In fact, it is rather sad and symptomatic of their narrow approach to political dialogue that, at what everyone, of whatever opinion, agrees is a watershed in Community affairs, they should give priority to extracting the maximum domestic political advantage, and be evidently more interested in embarrassing the Government than in facing the issues. With respect to the hon. Member for Livingston (Mr. Cook), it also makes a mockery of the Leader of the Opposition's much publicised reappraisal of the Labour party's election commitment to withdraw from the Community, which the votes of the public at the last election roundly rejected—even if that is not reflected in the House because of our warped electoral system.
As the hon. Gentleman's party normally attacks the Conservative and Labour parties for their failure to seek common ground and for perpetually calling each other names, I find it a little hard that we should be attacked when we try to find common ground with Conservative Members. In his very first sentence, the hon. Gentleman ran up the flag of surrender and said that own resources should be increased. Are we to take it from the fact that he has not since referred to any conditions on that increase in own resources that he is now prepared to surrender and grant an increase in own resources without even the conditions that at least the Government are requesting?
If the hon. Gentleman will be patient, I shall come to that matter.
I shall briefly refer to the nature of this debate. Certainly neither Liberals nor Social Democrats had any say in its structure. I see no point in the division between the budget on the one hand and the common agricultural policy on the other. It would have been much more sensible to have a full day's debate on future financing, rather than an artificial division which, in my opinion, inhibits the proper conduct of an integrated debate. In fact, I do not know why the Government agreed to it. Frankly, it is stupid. I hope that next time there will be much more general consultation on these matters.
I come now to the matter that the hon. Member for Livingston raised. I said that both the Labour amendment and the Conservative early-day motion were unconditional. In seeking to resolve the complex of interests within the Community and simultaneously give it a forward dynamic, Liberals and Social Democrats, in accepting and arguing for the need for a larger budget, do not do so unconditionally.
We reject entirely the juste retour—the "it is our own money" approach—as blocking the aims of economic convergence and equivalence of social standards, which are at the heart of the ideals that motivated those who, like ourselves, have long made the Community case—one would think that the Socialists, too, would do so—and accept that the Government are right in seeking a system of contribution that takes account of GNP and in insisting that a mechanism be found to put a stop to the open-ended subsidisation of agriculture production, irrespective of demand.
It is foolish, as the right hon. Member for Old Bexley and Sidcup pointed out, to be simplistic about this. For example, there are 1,600,000 dairy producers in the Community but 70 per cent. of production stems from only 250,000 of them. If one tries a price solution to the problem, it has to be reduced by 20 per cent. at least which would cut a swathe across European agriculture, put people on the unemployment queues everywhere and wreck the rural economy. That is not a sensible approach. I therefore favour the quota approach that is being worked out in the Council of Ministers. The hon. Member for Livingston is therefore wrong to suggest that in the alliance we advocate an increase in funds without condition. What we say, and have repeatedly said, is that the Community is about economic convergence.
I was in Portugal last week with the bureau of the Liberal group of the European Parliament. In discussions with members of the Socialist-Social Democrat coalition Government about the Portuguese application we found that everyone at all levels up to Prime Minister Soares and President Eanes was anxious to process the application as quickly as possible, while simultaneously being profoundly concerned at the lack of budgetary reform since as agricultural importers, to an even greater extent than the United Kingdom, under the present system they could, as pointed out by the hon. Member for Livingston, end up as net contributors. The hon. Gentleman is right in saying that that would be palpably absurd.
A consideration relevant to the British position is that in the absence of budgetary reform or an increase in own resources both Spain and Portugal inevitably will seek budgetary benefit primarily through the common agricultural policy, with consequent demands for greater support for Mediterranean products, and a continuing warping of the system.
Therefore, we are not in fundamental dispute with the key objectives of the Government within the budget and for the common agricultural policy, but we are definitely at variance with them in the limited Gaullist way they have approached these issues and the effect that this has had on our ability to be seen as seeking general reform as opposed simply to national advantage. After all, the Conservative Government negotiated entry and a Labour Government renegotiated our continuing membership. Neither of those Administrations, even after the conclusion of the negotiations to their declared satisfaction, attempted to take any lead in the development of Community policies.
The consequence has been to develop a now regrettably well-entrenched view among other Community Governments and within the Commission that we are only half-committed to the success of the Community and that further concessions to the British position would be unlikely to lead to a more positive general British approach.
In short, our supposedly very clever Foreign Office, in over-reacting, in my view, to the attitudes expressed in the Labour amendment and in the Conservative early-day motion, which in essence allege that the other nine countries of the Community are regularly in concert against us, has placed us in a weak and foolishly exposed negotiating position.
The reality, as the right hon. Member for Old Bexley and Sidcup said, is that British economic, political and security interests are inextricably bound up with the maintenance and further development of the European Community. British industry, in a number of sectors, is integrated into European production. Our most modern industries trade heavily with the Community.
The hon. Member for Livingston will know that in Scotland our so-called Silicon Valley exports well over 60 per cent., sometimes up to 90 per cent., of its products within the Community. Withdrawal would be cataclysmic. But what has been insufficiently stressed is that to stand still would simply be a policy of progressive disadvantage.
A joint report this year from the British, French, German, Italian and Dutch institutes of international affairs concluded:
It is not enough to hold on to those common policies that the Community so far has; in order to maintain the benefits which European integration has given to the Community's member states, we have to move ahead with new policies.
The memorandum presented by the Socialist French Government in September, which I have no time to speak about but which I assure hon. Members they would benefit much from studying, in setting out a series of proposals for progress in industry and technology against the
background of a widening gap between the EC and America and Japan, seems to provide an exciting agenda for advance which would also serve British interests well, given our strong existing research base. To make this politically acceptable and to initiate a genuine assault on the widening economic discrepancies within the Community would require also a significant strengthening of the present largely cosmetic regional and social funds. That would mean an acceptance by the Government of a positive view on public expenditure because the regional and social funds mean public expenditure.
In my part of the world an agricultural development programme for the Highlands was needed, but the Government were unprepared to meet their side of the proposal.
The alternative to this strategy, which I fear the Government may well pursue, is a minimal increase in European Community funding which would leave agriculture still the dominant area of expenditure and thus leave the United Kingdom at a continued structural disadvantage.
I cannot see the United Kingdom budgetary problems being resolved except through a marked increase in Community funding. It is the necessary foundation on which to build a foreign policy which will give all countries in Europe the possibility to contribute effectively to the issues of peace and stability in the world, which at present the United States and the Union of Soviet Socialist Republics decide between themselves.
The hon. Member for Livingston (Mr. Cook) ascribed a somewhat unusual constituency to me. In one sense I should rather like to be the Member there. It would show that Syria was a democracy instead of being a vile military dictatorship falling more and more under the spell of the Soviet Union.
If I had to ascribe the speech of the hon. Member to anything, it would be to those who scavenge round the rubbish tip looking for something that may titillate their attitude and their appetite. The hon. Gentleman, in his light style, goes tripping from defence to economics and now to foreign affairs as the reward for having helped to elect the new leader of the Opposition. I give him credit for it. He fills the place remarkably well and may he long remain making the sort of speech that cuts no ice.
I turn to the subject of the debate, to the early-day motion and to the amendment that stands in my name. Let me make two things crystal clear. First, I was asked to sign the early-day motion and at no time was I done the courtesy of being told I was to be one of the six sponsors—[Interruption.] It is perfectly true. Three sets of paper were thrust in front of me and I tried to find space. No one asked me to be a sponsor.
Secondly, my view upon the budget and the contribution that this country makes has always been very clear: that unless and until we got the assurances we wanted I was not prepared to support any increase. The intention behind the way this proposal was put to me seemed to strengthen the hand of the Government. On the following day, long before I came to the House, I saw on the Order Paper something rather strange in the large number of signatures. Then I read comments in the press that showed clearly that there was more to the early-day motion than met the eye. I came to the House in order to serve upon the video nasties Bill Committee. I decided I would draft an amendment to represent my point of view, which I did. The amendment in my handwriting with my scribbles which I took to the Table Office bore no other signatures. It went in with my name only.
I resent the words used by my right hon. Friend the Member for Stafford (Sir H. Fraser) and those of the right hon. Member for Down, South (Mr. Powell) in referring to those who signed the amendment as being steeped in some kind of infamy. I leave him to judge whether he is a better judge of infamy than anyone else.
My hon. Friend may be fortunate enough to catch the eye of the Chair, and if he does so, he will be able to make his own contribution. I am not prepared to be told by any hon. Member that my actions are infamous. I take my own actions and I am prepared to be answerable for them. I am not prepared to have adjectives such as "infamous" used about my actions.
I was glad that other right hon. and hon. Members and hon. Friends decided, for whatever reason, that they would not permit their names to remain upon the original early-day motion but were prepared to sign the proposal that I had tabled. I emphasise that I asked no one to sign my amendment.
I wish occasionally that my hon. Friend would not keep talking from a sedentary position. He should not take that as an invitation to make an intervention. I ask him not to imagine that I shall allow him to intervene in my speech. I shall continue in the hope that he will not try to do so. I acquit him of any attempt to mislead me. I have known him for too long and he is too old a friend for me even to begin to think that he would do so.
Having clarified the position of the first name on the amendment, I shall explain why I believe that my right hon. Friend the Prime Minister should know that she has, with my right hon. and learned Friend the Foreign Secretary, the opportunity of proceeding with the support of Parliament. That is why I inserted in my amendment the words "and Parliament" in the context of any alterations that my right hon. Friends are able to obtain as a result of their negotiations.
I have never been as enthusiastic a European as my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). However, I have always voted in favour of membership of the EC because I believe that to be in Britain's basic interests. I agree very much with my right hon. Friend that, whatever the right hon. Member for Down, South may say, the issue is dead. On more than two occasions the public have been faced with general elections at which that was the issue. They decisively repudiated the Luddite attitude that the right hon. Gentleman puts to us. The referendum equally decisively repudiated his view. Those who wish to continue to believe it may delude themselves if they wish, but they delude no one else.
I hope that my right hon. Friend the Prime Minister will go forward in the knowledge that Conservative Members, at any rate, will not be prepared to accept the sort of negotiation and the sort of result that the hon. Member for Livingston suggested would be the outcome. I do not believe that my right hon. Friends would try to suggest that they wanted us to accept that sort of plan. I believe that they will negotiate properly first, by trying, to ensure that our own interests are paramount and, secondly, in order to achieve our own interests, by ascertaining what other interests can be incorporated and used in our support.
That may not be the way in which trade unions negotiate. I am a member of Clive Jenkins's union and it seems that he does not often negotiate in what I consider to be a sensible way. I have described the way in which I have negotiated with trade unions for 20 years, and it is also the way in which I have negotiated in commerce for 20 years. One does not start negotiations by saying, "We shall not accept anything that is put to us because we do not believe that it will be in our interests to do so."
I do not accept the thesis of the hon. Member for Livingston. Any protestations on his part that he is trying to help the Government ring pretty hollow in the light of his record and the record of his party. I am much more concerned to assure my right hon. Friend the Prime Minister that if the Government negotiate genuinely, as I think they will, and toughly, as they have, they will receive the backing of the Conservative party and that of the House. They know that in so doing they will retain the backing of the British public.
There is not much time left for debate if we are shortly to proceed to a vote. That being so, my contribution will have to be much shorter than I intended.
I am sorry that the right hon. Member for Old Bexley and Sidcup (Mr. Heath) has left the Chamber. The basis of his disgraceful attack on the right hon. Member for Down, South (Mr. Powell) was fragile and spurious to say the least.
Those who wish Britain to continue its membership of the European Community always bring up issues such as foreign affairs and defence as justification for their position. They sometimes forget that we are members of the North Atlantic Treaty Organisation and that we participate in foreign affairs and defence agreements with other countries.
I am not surprised by the stand of the Liberal-SDP alliance on this issue. The alliance is the pro-European party that wants to take us headlong down the path of European unity. When it has finished the discussions and arrangements with Dr. Bangemann and the European Liberals, who are to fund its election campaign next year, it will have further discussions with von Bismarck, von Hapsburg and Altiero Spinelli, in whose company I have been during the past three days in a European Parliament Committee discussing the preliminary draft treaty for establishing European union.
The right hon. Member for Old Bexley and Sidcup, in his attack upon the right hon. Member for Down, South, was wrong to suggest that we had reached a static position in the evolution of and relations between the countries of Europe. The position is not static. I recommend the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) to read the draft report establishing European union. That report, produced by Mr. Spinelli, has already passed through the European Parliament and is now being prepared by legal experts for submission to national Parliaments for ratification or otherwise. Hon. Members and others outside the House will be appalled when they realise what supporters of the alliance have in store for us as we rush headlong down the path to European union. I recommend hon. Members to read the Spinelli document. We are dealing with an evolving structure, and we should be aware of the consequences that will result from happenings outside this Chamber.
As a Labour Member of the European Parliament, I am used to seeing the Conservative party looking both ways at the same time, but it is strange that Conservative Members of the European Parliament should support the move towards European union. Sir Henry Plumb, a well chosen leader of the European democratic group in the European Parliament, suggested that he would gel his backside smacked by the Prime Minister when he returned for coming out with a statement supporting European union.
The Conservative party should examine and consider what some of its supporters and members are doing on the other side of the water. An example was given in the maiden speech of the hon. Member for Solihull (Mr. Taylor), whom I have come to know very well over the past four years. I congratulate him most warmly on his maiden speech.
We have now reached the last stage of the agreement that was made between the member states when they joined the Community. The Community is now going bust. It is as simple as that. We have seen today another demonstration of the Government's ineptness which has been developing over the past year. We have witnessed their capitulation.
The Government have ratted on their own people to serve the vested interests of their financial backers and supporters—the banks, big business, and, above all, the farmers. The right hon. Member for Old Bexley and Sidcup was wrong when he attacked our farming policy. He does not realise that the farming industry has moved on. We are talking not about the farmers whom Tom Williams looked after, but about the huge profits made by the City of London in its investments in areas such as East Anglia.
I accept that there are considerable difficulties for small farmers in the constituency of the hon. Member for Inverness, Nairn and Lochaber. Small farmers say that they get little help from the common agricultural policy. The Foreign Secretary is suggesting not a reformation, bur an adjustment of the common agricultural policy. The adjustments are, of course, on the basis of a sell-out.
In July, the Minister of Agriculture, Fisheries and Food told the House that he had managed to perambulate over to Brussels and had come back with a marvellous deal. That deal virtually sounded the death knell of fishermen' in the constituency of the hon. Member for Inverness. Nairn and Lochaber. The hon. Gentleman should ask those fishermen whether they get a good deal out of Europe.
Again in July, the right hon. Gentleman told the House that he had been over to Brussels and had agreed yet another farm price increase — an increase which was completely against the interests of the consumer and of this country.
We have seen a softening up process during the summer to prepare the country for the Prime Minister's return from Stuttgart with a rebate half the size of the one to which we are entitled. Ministers at the Dispatch Box tell us that they have had great victories in Europe. The Conservative media have built up these treacheries into famous victories — such is the Government's power and control over them. Ministers were cheered on by Conservative Members who were grateful to their backers who had funded their election victory.
The result is that our fishing industry is dying. The ordinary people of this country, especially pensioners and those on fixed incomes, will pay even more for their food than at the beginning of the year. They were sold down the river and sacrificed for a so-called rebate of our own money. One would think that this rebate from Europe was a handout. That is how it is presented, but it is the recovery of our own money. The Foreign Secretary should note that and not use the misleading phrase "own resources". He should say what it really is — extra taxation on the British people to fund the present ridiculous policies in Europe.
What the right hon. and learned Gentleman does not tell us is that he has not yet got this rebate. As a result of what the European Parliament has decided, we can have the money back only on its conditions. That is not the first time such a thing has happened. Under the present Government, it is becoming a regular occurrence.
I accept that time is moving on, Mr. Speaker. Perhaps it would have been better if we had not had pathetic excuses for hon. Members' attitudes towards early-day motions and amendments and had got down to the business before us. I shall try to be brief.
The Prime Minister will be going to Athens. The right hon. Lady will wing off at the beginning of next week to take on the Mafia of Europe. She will return with an unacceptable deal. That deal has been outlined by my hon. Friend the Member for Livingston (Mr. Cook). The right hon. Lady will once more ride off on a white horse against the black knights of Europe for a shoot-out at the Acropolis. She will once more sell us down the river. The deal has already been decided. We shall have to pay extra taxation and hand over to the European Parliament and the Council of Ministers the right to call for further tranches of taxation. Effective powers and the legitimate right to tax the people of this country will be taken from this Parliament.
I am sorry that my speech has become a little disjointed, but I have had to throw away half of what I wanted to say.
I say to the Government, and especially to the Foreign Secretary who opened the debate but who has been absent for most of it—it is nice to see him back—that we on the Opposition Benches and half the Members on the Conservative Benches are not prepared to accept the blackmail of the other European countries. The right hon. and learned Gentleman should advise the Prime Minister to come back from Athens with something, because we are not going to accept these hypocrisies any more.
First, may I say to my hon. Friend the Member for Hampstead and Highgate (Mr. Finsberg) that it was my understanding that he was quite agreeable to being a sponsor of the early-day motion for which his name was put down. Apparently there was some misunderstanding, but I can assure him—I believe that he will accept this — that I would not have put his name in that position had that not been my understanding.
I am the author of the Opposition amendment which doubles as early-day motion 312. May I say how flattered I am that they have adopted it? Whether I actually dirty my shoes with them in the Lobby this evening does not mean to say that I do not support it and will not continue to support it wholeheartedly. I am flattered that 130 more of my hon. Friends signed that early-day motion and that the bulk of them still fundamentally believe in, and agree with, what it says. I am flattered that my hon. Friends in the Gest—[Interruption.]—in the Government Whip's office were so impressed by the motion that they mounted the strongest operation that I have seen in my four and a half years in the House, using every weapon at their disposal inside and outside the Geneva convention. I am at a loss to understand why they became so worked up and why they over-reacted. I have heard that the operation got under way before my right hon. Friend the Prime Minister had got off the aeroplane and that she finds early-day motion 312 quite helpful.
There is no great difference in substance between the two motions. Neither would allow an increase in own resources under the present circumstances. But there is a massive psychological difference. By forcing some of my colleagues to sign the amendment to the early-day motion, the Government Whips have opened the door at this stage of the negotiations to an increase in own resources. It is a signal — not just a mild smoke signal but a green searchlight—to say to the other nine in Europe, "One more heave and the vaults are open." It reminds me of the story of the girl who said no and then invited the young gentleman to stay the night in her flat. If she did not mean no, she should not have said no. If she said no, she was naive and deserved all that she got.
The net budget since the Government came to power in 1979 has cost us on average £620 million a year. The figure for this year is not yet known but it seems to be something of an auction. Every time that someone says something about it, it seems to be a higher figure than the time before. It is at least £800 million. We could make good use of that money elsewhere. Never let us forget that our contribution to the budget is not the only bill that we pay to the Community. Our consumers are net importers of European foodstuffs, which they must buy at over and above world market prices. Therefore, we pay for the budget and for expensive foods.
A diminishing number of my hon. Friends will say that it is cheap at the price, and that we should consider the benefits. But what benefits do we in the United Kingdom get which are not freely and equally available to the French, the Italians, the Irish and the Dutch? We provide net markets for high-priced, imported, European foods. We provide a market for over £6,000 million net of European imports of manufactures. We provide the North sea fisheries. We provide North sea oil. We provide an extra political dimension. Why do we also have to provide the cash? It is unjust. Geographically, we are on the edge of the Community. Financially, I am sad to say, we are one of the less wealthy members. Why should we pay? We do not take money from Liverpool and give it to the southeast. [HON. MEMBERS: "Yes, we do.''] Why should the Community act as Robin Hood in reverse and rob the poor to pay the rich?
As I understand it, the Government will talk about the increases in own resources only if two prior conditions are met. The first condition is budget justice. Justice is justice. Why need it be negotiated? Why need it be conditional? Why do we have to bribe the judge with a backhander on own resources?
Secondly, the CAP must be reformed. Many of my hon. Friends are doubtful that it can be reformed; but if it is, as the Foreign Secretary said earlier, there will be no need for additional own resources. What will the resources be spent on? Will they be in the form of rebates from the Community with strings attached, so that we must adopt policies to which we would not normally agree, as my right hon. Friend the Foreign Secretary admitted recently at Question Time? Is it so that we can have further European interventionist industrial policies? Does my right hon. Friend believe that Conservative Members will agree to that?
Is it, as my right hon. Friend the Member for Old Bexley and Sidcup said, so that we can enlarge the Community and admit Spain and Portugal as members? Will they not join unless they get the money? Are there no benefits for them other than cash? Why, when he was negotiating membership for the United Kingdom, did he not negotiate a generous bounty for the United Kingdom? Why should other countries get it when we do not?
That may he, but, as I said earlier, it has cost us on average £620 million a year over the past four years.
How can we talk about an increase in own resources when we in the Conservative party believe in controlling public expenditure and are bending every sinew to make sure that money is not wasted? How can we suggest that Europe should have more public expenditure? How can we suggest that, when we read the auditors' report about the massive waste and the lack of proper control of European money, when £100 million each year goes into the hands of the Mafia in southern Italy in the olive oil swindle? Until they prove that they can control spending adequately, how can we allocate them more money?
Many of my hon. Friends await in fear and trepidation that week in the spring when on the Tuesday we will be required to support the Government in the Lobby on some battle about cuts in the Health Service, in education or in local government finance and on the Wednesday we will have to troop through the Government Lobby in support of increased own resources to the Community. If I am asked to do that, I shall not do it. Many of my hon. Friends are arranging their pairs and their operations in advance so that they, too, will not have to be there in those circumstances.
The two alternatives in trying to achieve the Government's objective, which I believe I share, are either through negotiation or through force majeure—Frenchstyle "adamance". Given the mixture of vested interests and spatchcocked institutions that make up the EC, it is hard to be optimistic about negotiations. We only have to go back to last year to the event that my right hon. Friend mentioned — the negotiations on agricultural support prices—when the Exocet was thrown in and torpedoed the Luxembourg compromise. Against our will, prices were increased. Against our will, the budget was further disturbed. Our housewife had to put her hand deeper in her pocket; their farmers received the booty. They vote, we pay. It is the Ken Livingstone syndrome. We will not take it at County hall; why should we take it from Brussels? At least, in support of Red Ken, may I say that he takes the money from the rich to give it to the poor rather than the other way round.
There is one way and one way only in which we can ensure fundamental reform of the Community. All of us, sceptics and enthusiasts alike, believe that we are in the Community — [Interruption.] Sceptics and enthusiasts alike believe that we are in the Community and will stay in Europe. We want reform for the benefit of the United Kingdom and for the benefit of Europe. There is only one way in which we can do it, and that is to hold the line of own resources. There will be no fundamental reforms as long as there is the slightest chance of a soft option, or the slightest chance of a fudge or a compromise. We have got rid of beer and sandwiches at No. 10; let us do without the bread and olives at Athens.
The debate has been interesting, in that there has been much agreement on both sides of the House. Many hon. Members have insisted that we have reached a crisis because of the amount of money that the European Community is frittering away, especially on the common agricultural policy, and that the crisis presents an opportunity that must be grasped to reform the agricultural policy and control spending once and for all.
We enjoyed listening to the hon. Member for Northampton, North (Mr. Marlow), although I was not sure whether he believed that we were members of the Conservative party attending a Conservative party conference, or whether we were hon. Members listening to a speech in the Chamber.
The maiden speech of the hon. Member for Solihull (Mr. Taylor) was succinct, perhaps mercifully so in view of what followed. He rightly said that we are presented with an opportunity in this crisis and that we should exploit it to the full. However, a jarring note was provided by the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston), who suggested that national interests should be set aside in favour of general reform. Can anyone imagine a French Deputy making a similar speech in the French Parliament?
The crisis in the Community has been caused by spending on agriculture, which is now completely out of control, with at least a 30 per cent. increase forecast for this year. The Community has an open-ended policy of buying up surplus foods in the market place, which means that spending must continue to increase. If the crunch is not reached this year—it has perhaps been avoided by the Commission trying to defer payments — it will certainly be reached in next year's budget, and each of us must seriously face the problems that that poses.
The way in which the agricultural policy has been getting out of hand has been described by the Court of Auditors in its report, which, although it is an official document, expressed the court's shock and horror and painted a devastating picture of waste and weakness in the Community's spending policy. Between 1973 and 1982, spending on agriculture increased by 183 per cent.
The Foreign Secretary mentioned in passing that Britain benefited from that expenditure, but this year the common agricultural policy will cost British consumers about £4 billion and will give back £2 billion to United Kingdom farmers—a net cost of £2 billion on top of any budget contribution. This leads not only to wasteful expenditure but to an ill distribution of the wealth of the Community. Non-farmers together pay £30 billion per year to help farmers, and there is no reason to suppose that that will improve.
The time for temporary solutions to this problem has passed. The Foreign Secretary talks about a permanent solution. On 22 November 1979, when he was Chancellor of the Exchequer, he talked about the need for a permanent solution and about how the Government were determined to reach such a solution. He said:
Neither I nor any succeeding Chancellor will wish to make speeches in this House in a year or two about yet another debate within Europe on this same subject"— [Official Report, 22 November 1979; Vol. 974, c. 593–94.]
That is precisely what we are now doing, because the Government have not pressed for the permanent solution which they said they sought so long ago. Rather than an expression of strength before Athens, it is an expression of weakness.
It appears that the Athens meeting will fail. Those who have carefully read the press on this subject during the past few days will have noted how the press briefings have changed. The expectations for Athens have been toned down and there is talk of a solution by the spring or, perhaps, by June 1984. Athens may lay down the framework for a solution, but it cannot provide one. The failure that is likely to occur at Athens will perpetuate the unfairness in the Community.
Last year, net benefits per head in the United Kingdom were £24, in France £37 — the average for the Community—in Luxembourg £400 and in Ireland £152. We cannot leave this matter in the Commission's hands. We saw what the Commission did just before the last meeting in Athens, when it tried to massage the figures and managed to add £4 per head to the net gain that Britain had received. That action may have reduced the size of the British grievance, but it did not eliminate it. It leaves an unacceptable gap in net benefits between £28 per head and the average of £37 per head.
The fact that the Commission was prepared to massage the figures in that way leaves us with no confidence in its ability to end this unfairness. We cannot rely on the Commission. There must be Government action and firmness at Athens to insist on a permanent solution that will depend not just on controlling agricultural spending but on a radical reform of agricultural spending.
In November, in their pamphlet "Ripe for Reform", the right hon. Member for Stafford (Sir H. Fraser) and 54 of his hon. Friends wrote:
Since the Stuttgart Summit, a number of proposals for reform have been advanced from various sources, including the Commission, but the basic problem is that all these proposals have attracted objections from some member states; and even the most ambitious of the plans offers no hope of resolving the EEC's cash problems unless the resources of the EEC are to be increased. This must be unacceptable to a Conservative Government resolved to reduce Government expenditure.
We look forward to seeing how the right hon. Member for Stafford and his pamphleteers vote tonight. If there is no fundamental reform of the agricultural policy, there is bound to be an increase in the own resources of the Community. It seems that the Government are moving
away from that objective and have lowered their expectations. They are talking only in terms of reform. On 19 November The Economist stated:
Don't sell out on the CAP. The risk is that Mrs. Thatcher will be offered a reasonable deal on Britain's budget, but will accept in return a bad deal on the common agricultural policy, the CAP, the origin of budget inequity and much else. Such a trade-off will be urged on her by the barn-full of farmers in her cabinet. It is also being encouraged by Britain's ministry of agriculture.
If that is the type of deal that the Prime Minister is prepared to accept in Athens, it will lead to an increase in the own resources of the Community, which the Opposition oppose.
If the increase in own resources leaves the common agricultural policy unreformed, we could end up paying more to the EC than we do. We have already been told that we give the European Community 11 per cent. of the VAT take. What will happen if there is an increase in own resources and we end up paying more to the Community? Agricultural spending will get out of hand unless the fundamental structure of the policy is changed.
If we take the Chancellor's words seriously, any increase in public spending must be compensated for by an increase in taxation. The Chancellor might choose to increase those resources by putting up VAT. That could mean increasing VAT by 1 per cent., bringing it to 16 per cent. and adding 0·5 per cent. to the inflation rate, with an increase in costs of 37p per week for the average family.
The Commission has already cast its beady eye on the items that are zero rated in this country. It might encourage the Government to impose VAT on those items as well. That is the danger of the Government's stance, which was described by the hon. Member for Southend, East (Mr. Taylor) as too modest when he asked the Prime Minister about her objectives at the Athens summit. The Foreign Secretary in his opening statement gave no cause for increased confidence.
We feel that the Government will go to Athens, take little away, and refuse to push for the necessary radical restructuring of the common agricultural policy, so that we end up paying more into the Community budget. If that happens, we could all too easily find ourselves having to pay more in taxation or sacrifice other public goods.
That is why we have tabled our amendment to the Government's weak motion. We call on the right hon. Member for Stafford, his pamphleteers and those who last night managed to resist the blandishments of the Government Whips to join us in the Lobby to show that they mean what they say about there being no increase in the Community's resources.
I congratulate my hon. Friend the Member for Solihull (Mr. Taylor) on his important contribution to the debate. He made a most distinguished speech and I hope that we shall hear more from him on this and on many other topics. I also express our appreciation of the work done by the hon. Member for Newham, South (Mr. Spearing) and the Scrutiny Committee to produce the sixth report so rapidly in time for today's debate.
It is most important that the House should have the opportunity to express its views before the summit meeting in Athens in a few days' time. The debate has certainly covered a diversity of views from all parts of the House. I am sure that our fellow members of the European Community are in no doubt about the Government's determination to find a solution to the long-standing problems of the Community which will meet the requirements that we have put forward. Some right hon. and hon. Members who spoke today may have underestimated the effect of our proposals on imbalances and expenditure control. The safety net that we have proposed as a method of dealing with imbalances between one member state and another would cover matters such as relative prosperity which was raised by the hon. Member for Livingston (Mr. Cook) when he opened for the Opposition. That is an important characteristic of the method that we propose.
The whole system would enable us to avoid an annual round of bargaining — a debilitating and destructive process which too often dominates the affairs of the Community. I observe in passing that if the budgetary burden of the Community were more evenly distributed other member states would be encouraged to apply greater discipline in their approach to Community expenditure because they would be contributing more to the cost. It is no accident that many of those who have argued most strongly for an increase in own resources are among the largest net beneficiaries from the system in its present form.
Our proposals for control of expenditure, especially agricultural spending, would undoubtedly lead to measures of reform in the detailed application of the policy. The very fact that in the past agricultural expenditure has been virtually unlimited has meant that the Community has not addressed itself properly to the problems of the regimes, pricing policy and intervention which certainly need reform. As my right hon. and learned Friend the Foreign Secretary has said, income must determine expenditure and not the other way round.
Decisions on these two matters would profoundly affect the future financing of the Community. For that reason, we cannot judge at this stage whether there should be an increase in own resources. We remain to be convinced of that case, but we have said that we should be prepared to consider it.
The hon. Member for Livingston quoted part of a speech by the Minister of State, Foreign and Commonwealth office, my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind). My hon. Friend said:
The Government do not approach this question in a dogmatic of ideological way. We maintain that at present, for pragmatic reasons and for reasons relating to the natural buoyancy of existing arrangements, it is not necessary to contemplate a change of that kind.
That was a pragmatic comment in the conditions of the time. We shall be considering the conditions that apply to the future financing of the Community.
To ensure fullness of the record, I should point out that in his quotation the Minister omitted his hon. Friend's statement that
the Government do not believe that the likely accession of Spain and Portugal to the Community, which we hope will happen in the relatively near future, will materially change own resources."—[Official Report, 21 February 1983; Vol. 37, c.744.]
In other words, when one reads the whole passage without leaving anything out it is clear that in February the Minister of State expressed the view that there was no case for change in own resources before or even after
enlargement of the Community, which is now at least two years away. What has happened since February to change the Government's position?
The essential point that my hon. Friend was making was that the case for an increase in own resources was not then made. Nor is it now. As my right hon. and learned Friend the Foreign Secretary said when he opened today's debate, the burden of proof is on those who call for an increase. In the light of any agreement reached on the proposals that we have put forward, we shall judge whether there is a case for an increase in own resources. We cannot make a judgment until we know the financial basis for the Community in the years ahead.
I think that all hon. Members have recognised the need for major changes in the budgetary system of the Community in the future. All member states, not just the United Kingdom, need a solution to the problem. We wish to play a full, positive and constructive part in the future of the Community. I believe that in bringing these matters forcefully to the attention of our Community colleages we are acting in their best interests both now and in the longer term. This is a crucial chance to find the lasting solution to which the hon. Member for Thurrock (Dr. McDonald) referred. That needs to be done, and we are taking a lead in discussions to try to achieve it.
The Opposition amendment is not a realistic approach to the problem in current circumstances. We cannot make any unconditional commitment for the indefinite future. My right hon. Friend the Prime Minister agreed with colleagues in Stuttgart in the summer that we should be prepared to consider the matter if our other conditions were satisfied. She should not be asked to go back on that undertaking. In this, as in so many other matters, the Government have shown a consistency and a sense of purpose and determination incomprehensible to the Opposition. I urge my right hon. and hon. Friends to reject the amendment.
|Division No. 84]||[7.07 pm|
|Adams, Allen (Paisley N)||Coleman, Donald|
|Aitken, Jonathan||Concannon, Rt Hon J. D.|
|Anderson, Donald||Cook, Robin F. (Livingston)|
|Ashley, Rt Hon Jack||Corbett, Robin|
|Ashton, Joe||Corbyn, Jeremy|
|Atkinson, N. (Tottenham)||Cowans, Harry|
|Bagier, Gordon A. T.||Crowther, Stan|
|Banks, Tony (Newham NW)||Cunningham, Dr John|
|Barron, Kevin||Davies, Rt Hon Denzil (L'lli)|
|Beckett, Mrs Margaret||Davies, Ronald (Caerphilly)|
|Beggs, Roy||Davis, Terry (B'ham, H'ge H'l)|
|Bennett, A. (Dent'n & Red'sh)||Deakins, Eric|
|Bidwell, Sydney||Dewar, Donald|
|Blair, Anthony||Dixon, Donald|
|Body, Richard||Dobson, Frank|
|Boothroyd, Miss Betty||Dormand, Jack|
|Boyes, Roland||Dubs, Alfred|
|Brown, Hugh D. (Provan)||Duffy, A. E. P.|
|Brown, N. (N'c'tle-u-Tyne E)||Dunwoody, Hon Mrs G.|
|Brown, R. (N'c'tle-u-Tyne N)||Eadie, Alex|
|Brown, Ron (E'burgh, Leith)||Eastham, Ken|
|Callaghan, Jim (Heyw'd & M)||Evans, loan (Cynon Valley)|
|Canavan, Dennis||Ewing, Harry|
|Carter-Jones, Lewis||Faulds, Andrew|
|Clark, Dr David (S Shields)||Field, Frank (Birkenhead)|
|Clarke, Thomas||Fisher, Mark|
|Clay, Robert||Flannery, Martin|
|Cocks, Rt Hon M. (Bristol S.)||Foot, Rt Hon Michael|
|Cohen, Harry||Forrester, John|
|Forsythe, Clifford (S Antrim)||Moate, Roger|
|Foster, Derek||Molyneaux, Rt Hon James|
|Foulkes, George||Morris, Rt Hon A. (W'shawe)|
|Fraser, Rt Hon Sir Hugh||Nellist, David|
|Fraser, J. (Norwood)||Nicholson, J.|
|Freeson, Rt Hon Reginald||Oakes, Rt Hon Gordon|
|Garrett, W. E.||O'Brien, William|
|George, Bruce||O'Neill, Martin|
|Gilbert, Rt Hon Dr John||Paisley, Rev Ian|
|Golding, John||Park, George|
|Gould, Bryan||Patchett, Terry|
|Hamilton, W. W. (Central Fife)||Pike, Peter|
|Harman, Ms Harriet||Powell, Rt Hon J. E. (S Down)|
|Harrison, Rt Hon Walter||Powell, Raymond (Ogmore)|
|Hart, Rt Hon Dame Judith||Prescott, John|
|Healey, Rt Hon Denis||Proctor, K. Harvey|
|Heffer, Eric S.||Radice, Giles|
|Hogg, N. (C'nauld & Kilsyth)||Randall, Stuart|
|Holland, Stuart (Vauxhall)||Redmond, M.|
|Home Robertson, John||Rees, Rt Hon M. (Leeds S)|
|Howell, Rt Hon D. (S'heath)||Richardson, Ms Jo|
|Hughes, Mark (Durham)||Roberts, Allan (Bootle)|
|Hughes, Robert (Aberdeen N)||Roberts, Ernest (Hackney N)|
|Hughes, Roy (Newport East)||Rogers, Allan|
|Hughes, Sean (Knowsley S)||Rooker, J. W.|
|Janner, Hon Greville||Ross, Ernest (Dundee W)|
|John, Brynmor||Ross, Wm. (Londonderry)|
|Jones, Barry (Alyn & Deeside)||Rowlands, Ted|
|Kilfedder, James A.||Ryman, John|
|Kilroy-Silk, Robert||Sedgemore, Brian|
|Kinnock, Rt Hon Neil||Sheerman, Barry|
|Lamond, James||Sheldon, Rt Hon R.|
|Leadbitter, Ted||Shepherd, Richard (Aldridge)|
|Leighton, Ronald||Shore, Rt Hon Peter|
|Lewis, Ron (Carlisle)||Short, Mrs R.(W'hampt'n NE)|
|Lewis, Terence (Worsley)||Silkin, Rt Hon J.|
|Litherland, Robert||Skinner, Dennis|
|Lloyd, Tony (Stretford)||Smith, C.(Isl'ton S & F'bury)|
|Lofthouse, Geoffrey||Smith, Rt Hon J. (M'kl'ds E)|
|McCartney, Hugh||Soley, Clive|
|McDonald, Dr Oonagh||Spearing, Nigel|
|McKelvey, William||Stewart, Rt Hon D. (W Isles)|
|Mackenzie, Rt Hon Gregor||Stott, Roger|
|McNamara, Kevin||Taylor, Teddy (S'end E)|
|McTaggart, Robert||Thomas, Dafydd (Merioneth)|
|McWilliam, John||Tinn, James|
|Madden, Max||Torney, Tom|
|Maginnis, Ken||Wardell, Gareth (Gower)|
|Marek, Dr John||Wareing, Robert|
|Marshall, David (Shettleston)||Weetch, Ken|
|Martin, Michael||Williams, Rt Hon A.|
|Maxton, John||Wilson, Gordon|
|Maynard, Miss Joan||Winnick, David|
|Meacher, Michael||Woodall, Alec|
|Mikardo, Ian||Tellers for the Ayes:|
|Millan, Rt Hon Bruce||Mr. Frank Haynes and|
|Mitchell, Austin (G't Grimsby)||Mr. Allen McKay.|
|Adley, Robert||Biggs-Davison, Sir John|
|Alexander, Richard||Blaker, Rt Hon Sir Peter|
|Alison, Rt Hon Michael||Bonsor, Sir Nicholas|
|Alton, David||Bottomley, Peter|
|Amess, David||Bowden, A. (Brighton K'to'n)|
|Ancram, Michael||Bowden, Gerald (Dulwich)|
|Arnold, Tom||Boyson, Dr Rhodes|
|Ashby, David||Braine, Sir Bernard|
|Aspinwall, Jack||Brandon-Bravo, Martin|
|Atkins, Robert (South Ribble)||Bright, Graham|
|Atkinson, David (B'm'th E)||Brinton, Tim|
|Baker, Kenneth (Mole Valley)||Brittan, Rt Hon Leon|
|Baker, Nicholas (N Dorset)||Brooke, Hon Peter|
|Baldry, Anthony||Brown, M. (Brigg & Cl'thpes)|
|Bellingham, Henry||Bruce, Malcolm|
|Bendall, Vivian||Bryan, Sir Paul|
|Benyon, William||Buchanan-Smith, Rt Hon A.|
|Berry, Sir Anthony||Buck, Sir Antony|
|Best, Keith||Bulmer, Esmond|
|Biffen, Rt Hon John||Burt, Alistair|
|Butcher, John||Heseltine, Rt Hon Michael|
|Butterfill, John||Hickmet, Richard|
|Carlile, Alexander (Montg'y)||Hicks, Robert|
|Carlisle, John (N Luton)||Higgins, Rt Hon Terence L.|
|Carlisle, Kenneth (Lincoln)||Hind, Kenneth|
|Carttiss, Michael||Hirst, Michael|
|Cartwright, John||Hogg, Hon Douglas (Gr'th'm)|
|Chalker, Mrs Lynda||Holland, Sir Philip (Gedling)|
|Chapman, Sydney||Holt, Richard|
|Chope, Christopher||Hooson, Tom|
|Churchill, W. S.||Hordern, Peter|
|Clark, Hon A. (Plym'th S'n)||Howard, Michael|
|Clark, Dr Michael (Rochford)||Howarth, Alan (Stratf'd-on-A)|
|Clark, Sir W. (Croydon S)||Howe, Rt Hon Sir Geoffrey|
|Clarke Kenneth (Rushcliffe)||Howell, Rt Hon D. (G'ldford)|
|Clegg, Sir Walter||Hubbard-Miles, Peter|
|Cockeram, Eric||Hunt, David (Wirral)|
|Colvin, Michael||Hunt, John (Ravensbourne)|
|Conway, Derek||Hunter, Andrew|
|Coombs, Simon||Irving, Charles|
|Cope, John||Jackson, Robert|
|Couchman, James||Jenkin, Rt Hon Patrick|
|Crouch, David||Johnson-Smith, Sir Geoffrey|
|Currie, Mrs Edwina||Johnston, Russell|
|Dickens, Geoffrey||Jones, Gwilym (Cardiff N)|
|Dicks, T.||Jones, Robert (W Herts)|
|Dorrell, Stephen||Jopling, Rt Hon Michael|
|du Cann, Rt Hon Edward||Kellett-Bowman, Mrs Elaine|
|Dunn, Robert||Kennedy, Charles|
|Durant, Tony||Kershaw, Sir Anthony|
|Dykes, Hugh||Key, Robert|
|Edwards, Rt Hon N. (P'broke)||King, Roger (B'ham N'field)|
|Evennett, David||King, Rt Hon Tom|
|Eyre, Reginald||Kirkwood, Archibald|
|Fairbairn, Nicholas||Knight, Gregory (Derby N)|
|Fallon, Michael||Knowles, Michael|
|Favell, Anthony||Knox, David|
|Fenner, Mrs Peggy||Lamont, Norman|
|Finsberg, Geoffrey||Lang, Ian|
|Fletcher, Alexander||Latham, Michael|
|Fookes, Miss Janet||Lawler, Geoffrey|
|Forman, Nigel||Lawrence, Ivan|
|Fowler, Rt Hon Norman||Lawson, Rt Hon Nigel|
|Fox, Marcus||Lennox-Boyd, Hon Mark|
|Franks, Cecil||Lester, Jim|
|Freeman, Roger||Lightbown, David|
|Freud, Clement||Lloyd, Ian (Havant)|
|Gale, Roger||Lloyd, Peter, (Fareham)|
|Galley, Roy||Lord, Michael|
|Gardiner, George (Reigate)||Lyell, Nicholas|
|Gardner, Sir Edward (Fylde)||McCrindle, Robert|
|Garel-Jones, Tristan||McCurley, Mrs Anna|
|Gilmour, Rt Hon Sir Ian||Macfarlane, Neil|
|Glyn, Dr Alan||MacGregor, John|
|Goodhart, Sir Philip||MacKay, Andrew (Berkshire)|
|Goodlad, Alastair||MacKay, John (Argyll & Bute)|
|Gow, Ian||Maclean, David John.|
|Gower, Sir Raymond||Maclennan, Robert|
|Greenway, Harry||Macmillan, Rt Hon M.|
|Gregory, Conal||McNair-Wilson, M. (N'bury)|
|Griffiths, Peter (Portsm'th N)||McNair-Wilson, P. (New F'st)|
|Grist, Ian||McQuarrie, Albert|
|Ground, Patrick||Madel, David|
|Grylls, Michael||Major, John|
|Gummer, John Selwyn||Malins, Humfrey|
|Hamilton, Hon A. (Epsom)||Malone, Gerald|
|Hampson, Dr Keith||Maples, John|
|Hanley, Jeremy||Marland, Paul|
|Hannam,John||Marshall, Michael (Arundel)|
|Hargreaves, Kenneth||Mates, Michael|
|Harris, David||Mawhinney, Dr Brian|
|Harvey, Robert||Maxwell-Hyslop, Robin|
|Haselhurst, Alan||Mayhew, Sir Patrick|
|Havers, Rt Hon Sir Michael||Meadowcroft, Michael|
|Hayes, J.||Mellor, David|
|Hayhoe, Barney||Miller, Hal (B'grove)|
|Hayward, Robert||Mills, Iain (Meriden)|
|Heath, Rt Hon Edward||Mills, Sir Peter (West Devon)|
|Heddle, John||Miscampbell, Norman|
|Henderson, Barry||Mitchell, David (NW Hants)|
|Monro, Sir Hector||Speller, Tony|
|Montgomery, Fergus||Spence, John|
|Moore, John||Spencer, D.|
|Morrison, Hon C. (Devizes)||Spicer, Jim (W Dorset)|
|Moynihan, Hon C.||Spicer, Michael (S Worcs)|
|Mudd, David||Squire, Robin|
|Needham, Richard||Stanbrook, Ivor|
|Nelson, Anthony||Steel, Rt Hon David|
|Neubert, Michael||Steen, Anthony|
|Newton, Tony||Stern, Michael|
|Nicholls, Patrick||Stevens, Lewis (Nuneaton)|
|Norris, Steven||Stevens, Martin (Fulham)|
|Ottaway, Richard||Stewart, Allan (Eastwood)|
|Page, John (Harrow W)||Stewart, Andrew (Sherwood)|
|Page, Richard (Herts SW)||Stewart, Ian (N Hertf'dshire)|
|Parkinson, Rt Hon Cecil||Stradling Thomas, J.|
|Parris, Matthew||Sumberg, David|
|Patten, John (Oxford)||Tapsell, Peter|
|Pattie, Geoffrey||Taylor, Rt Hon John David|
|Pawsey, James||Temple-Morris, Peter|
|Peacock, Mrs Elizabeth||Terlezki, Stefan|
|Pink, R. Bonner||Thatcher, Rt Hon Mrs M.|
|Pollock, Alexander||Thomas, Rt Hon Peter|
|Porter, Barry||Thompson, Donald (Calder V)|
|Powell, William (Corby)||Thompson, Patrick (N'ich N)|
|Powley, John||Thorne, Neil (Ilford S)|
|Price, Sir David||Thurnham, Peter|
|Prior, Rt Hon James||Townsend, Cyril D. (B'heath)|
|Pym, Rt Hon Francis||Tracey, Richard|
|Raison, Rt Hon Timothy||Trippier, David|
|Rathbone, Tim||Twinn, Dr Ian|
|Rees, Rt Hon Peter (Dover)||van Straubenzee, Sir W.|
|Renton, Tim||Vaughan, Dr Gerard|
|Rhodes James, Robert||Viggers, Peter|
|Rhys Williams, Sir Brandon||Waddington, David|
|Ridsdale, Sir Julian||Wakeham, Rt Hon John|
|Rifkind, Malcolm||Waldegrave, Hon William|
|Roberts, Wyn (Conwy)||Walden, George|
|Robinson, Mark (N'port W)||Walker, Rt Hon P. (Wcester)|
|Roe, Mrs Marion||Wall, Sir Patrick|
|Rost, Peter||Wallace, James|
|Rowe, Andrew||Waller, Gary|
|Rumbold, Mrs Angela||Walters, Dennis|
|Ryder, Richard||Wardle, C. (Bexhill)|
|Sackville, Hon Thomas||Warren, Kenneth|
|Sainsbury, Hon Timothy||Watson, John|
|St. John-Stevas, Rt Hon N.||Watts, John|
|Sayeed, Jonathan||Wells, Bowen (Hertford)|
|Scott, Nicholas||Wells, John (Maidstone)|
|Shaw, Giles (Pudsey)||Wheeler, John|
|Shaw, Sir Michael (Scarb')||Whitney, Raymond|
|Shelton, William (Streatham)||Wolfson, Mark|
|Shepherd, Colin (Hereford)||Wood, Timothy|
|Shersby, Michael||Woodcock, Michael|
|Silvester, Fred||Wrigglesworth, Ian|
|Sims, Roger||Young, Sir George (Acton)|
|Skeet, T. H. H.|
|Smith, Tim (Beaconsfield)||Tellers for the Noes:|
|Soames, Hon Nicholas||Mr. Carol Mather and|
|Speed, Keith||Mr. Robert Boscawen.|
That this House takes note of European Community documents Nos. 6863/83 on future financing of the Community, 8822/83 on the Community structural funds, 5500/83 and 8552/83 on the supplementary measures scheme, 8385/83 the preliminary draft supplementary and amending budget No. 2 for 1983, the subsequent draft supplementary and amending budget No. 2 for 1983, the letter of amendment to the draft supplementary and amending budget No. 2 for 1983, and the Report by the Court of Auditors on financial management of Community activities (Official Journal C 287).