We took the opportunity on Second Reading of this important measure to examine properly, as we should, the principles of the accession of Spain and Portugal to the Community. I believe that this is now our opportunity to examine with my hon. and learned Friend the Minister of State the detailed implications of Spain and Portugal joining the Community, if we approve the Bill in all its stages.
I should like to draw an analogy, in the most European of senses, with something called the environmental impact assessment, with which I am sure Members on both sides of the House who take an interest in European affairs will be familiar. I should like to ask for an EIA of a different kind —an enlargement impact assessment.
On Second Reading, we were concerned with principles and not details. I hope that tonight we shall receive from the Government and my hon. and learned Friend a detailed examination of the impact on the United Kingdom and the Community and some facts and figures about what is proposed by the Government.
To help the Committee, I should like to suggest to my hon. and learned Friend some headings under which he might give us details. I can see that he is already warming to this theme in anticipation of giving the Committee the details so that we can mull them over before deciding whether to approve clause 1.
Would it not have been fairer to ask the Community to make some environmental impact assessment of our entry and that of the Irish and the Danes? Will my hon. Friend speculate as to the assessment that the Community made in 1973 of the impact of our arrival, and whether it was right?
My hon. Friend makes an interesting and valid point. During my modest contribution on Second Reading, I tried to point that out in the context of Greek entry into the Community, which I think is a more recent and, in a sense, a more valid example. During the arguments about Greek entry into the Community we were told many matters of principle, but we were short on detail. In the four years since Greek entry, it has emerged that that has been an unmitigated disaster not just for the Greeks but for the EEC.
It has been for the Greeks. If my hon. Friend wishes to argue that point I shall be delighted to go into detail on it.
Let us not be diverted from our main purpose, which is to consider in detail the impact of the proposed entry to the Community of Spain and Portugal under a number of important heads. The first must be agriculture. We must be told what is Her Majesty's Government's estimate of the effect Spanish and Portuguese entry into the Community will have on the common agricultural policy. That can be considered under a number of different heads. There are the estimated costs in terms of wine, olive oil and tomato production. They should be fairly predictable and I hope that we shall have some figures from my hon. and learned Friend.
It is more difficult to estimate —I hope that the Government will make an attempt —the draining away of resources from the traditional northern type of products —dairy produce, cereals, beef and lamb —which must inevitably take place when the voting power of the new southern states gets itself together and starts to deny resources to the farmers of the northern states.
With respect, I think that the hon. Gentleman's argument is a little misleading. It is not a case of draining resources away from temperate zone products to Mediterranean products but rather of continuing with the present vast level of resources devoted to temperate zone products and increasing the amount going to Mediterranean products. There will be an increase in the total size of the CAP not just a change in the distribution of resources within it.
I am grateful to the hon. Gentleman, because I am sure that that is as likely a possibility within the context of the CAP. I am sure that my hon. and learned Friend will want to help the Committee and will give us his view of which of those alternatives he thinks will be the more likely. Either way, we must be allowed to make the assessment. It is vital to us as a country with consumers and agricultural producers to know which way matters will go.
Is it my hon. Friend's view that those resources should remain to be squandered on over-production of the various temperate products that he mentioned without being reformed, or should they be diversified in equal misallocation among the new applicant states?
My hon. Friend is tempting me greatly, but I shall resist the temptation. In agreeing with him, I must say that we must be told whether the Government believe that the accession of two new members to the Community is likely to cause a realistic reform of the CAP or whether it will simply make the CAP problems worse? I have long been in favour of radical reform of the CAP, and reform must be on the basis of an assessment of the needs of the people of the Community year by year, and a preparedness to fund production to that level, but not beyond. That is a relatively simple and effective way of beginning to control agricultural expenditure. I expect that my hon. and learned Friend the Minister will tell us how far he believes that that will take place in the context of the enlargement of the Community.
My second question concerns our horticultural sector. We shall be told that there is a built-in protection for horticulturists for a period of years. I am much more interested in hearing the Government's view on what will happen to our horticulturists after the transition period has ended. One thing is sure—we cannot wish away the inherent climatic advantage of Spain and Portugal over our horticulturists. It is less than honest—
Indeed. It is less than honest for anyone to pretend that the effects on horticulture in the long-term can be less than disastrous. I hope that we shall hear the Government's view of what will happen after the transition period.
The third heading that I would suggest for the detail is the impact on our claims on the regional and social funds when two less well-off countries become claimants on them, if they may join the Community after 1 January 1986. Again, either the funds will be enlarged so that we may retain the same absolute claim on them or, if they remain at roughly the same level, our claim on them must be less. Logic and, indeed, political fairness would say that. We have yet to hear from my hon. and learned Friend what the impact on the United Kingdom would be of a lessening of our claims on the social and regional funds. Many Opposition Members will be interested in that as they come from areas which for a long time have benefited from both funds.
Fourthly, at present Spanish industry achieves productivity of about 60 per cent. of that of the Community as a whole. Presumably, it is hoped that both Spanish agriculture and industry will be enormously improved in their effectiveness and productivity. Can we have some estimate of the impact of Spanish industry, improved perhaps with technology from the existing member states, financial aid and in many other ways, on our industrial sector? Those of us who represent west midlands' constituencies are extremely interested in the effect on the automobile sector, drop forgings and many other areas in which the Spaniards have shown great potential. Why should we assume that we shall benefit from an ability to export to Spain in competition with other member states, but somehow be immune to the increasing productivity, efficiency and effectiveness of Spanish industry with its advantages of lower unit costs and so on?
I am not suggesting that we should be immune. I am asking the Government to give some assessment of the impact of the entry of Spain and Portugal to the Community on our country, industry and consumers. If we are to make a balanced judgment of the claimed benefits of the entry of Spain and Portugal to the Community —benefits which I would dispute —we must be given much more detail of the likely cost to us in terms of the budget, agriculture and so on.
What assessment has been made of the cost of the measure in terms of the bureaucratic elements of the Community? Two more languages will be added, and we know the enormous costs of language interpretation and translation within the Community's institutions. The European Parliament's membership will be increased and much extra travel will be involved by members of the Commission, Council and Parliament to Madrid and Lisbon. In many respects I envy those who will be involved in that, but I hope that we shall be told the likely cost in institutional terms and the burden on the Community.
I shall bring to the attention of the Committee some aspects of the Bill that were not adequately dealt with on Second Reading; the hon. Member for Mid-Worcestershire (Mr. Forth) referred to some of them. I shall refer to three areas —the nature of the clause, the terms of accession and the implications for the democracies of Portugal and Spain of becoming members of the Community.
First, the nature of the clause. Clause 1 is the effective provision of the measure because, by two paragraphs, it adds two treaties to the European Communities Act 1972. They attach the whole of the accession treaty in each case to the terms of that basic Act.
This mechanism means, in effect, that we are attaching a train to the engine of the 1972 Act. In other words, this measure couples the whole train to that locomotive. But it is outwith the choice of the House that we add the whole train. Everything in the accession treaties is added to the legislation by virtue of the Bill.
That might not be of note but for the fact that the House has not had much, if any, participation in the terms of those accession treaties. We are being asked to endorse all or nothing; there has been no deliberation by the House, other than by way of written questions and answers —I am not sure that there have been any of those —about the nature of the treaties.
I recall an incident, Mr. Armstrong, when one of your predecessors in the Chair, Mr. Grant-Ferris, heard points of order from 4 o'clock one afternoon to 7 o'clock the following morning, when we were in Committee on what was then the European Communities Bill. The points of order that were then raised arose because the Chair ruled out all amendments to the treaty on the grounds that they were contrary to the treaty of accession to which that measure gave effect.
The similar situation that arises tonight with this Bill may not be of great consequence, although, as the hon. Member for Mid-Worcestershire reminded the Committee, it remains to be seen what the consequences are.
Will my hon. Friend agree that by clause 1 we are not being asked to approve the treaty of accession either with Portugal or Spain? If we were, they would be listed separately, and the Chair has ruled out any amendments that would separate the two. We are not being asked to approve either treaty or both treaties. We are merely being asked to agree to those two treaties being added to the list of treaties in the European Communities Act 1972. We are not even being given an opportunity to discuss the content of those treaties. On Second Reading and Third Reading we can vote only on the general principle of the admission of Spain and Portugal. We cannot vote on the details of the arrangements by which they are admitted to membership of the EEC.
I am grateful to my hon. Friend for putting into better words what I was trying to explain. He was referring to
the treaty relating to the accession of the Kingdom of Spain and the Portuguese Republic",
yet there is no reference at all to the name of the treaty which does not even have a capital letter. My hon. Friend is quite right, and is adding to the point that I have already made. Time will tell whether or not it would have been advisable for the House to be more aware of the negotiations that led to the creation of this treaty.
It is possible that future treaties will come before us in the same way, with wagons and carriages whose contents we do not know. They may not be concerned with any future accession, but no doubt any future treaty could well relate to the internal constitutional nature of the Community itself.
When those treaties arrive —there is talk about them —we will probably be confronted with a similar one-clause Bill containing additional subsections and a description of the treaty. A Bill in that form is now almost inevitable because it flows from the nature of the European Communities Act. On this occasion I shall not venture into the advantages and disadvantages of this procedure, because I would be ruled out of order, but I am drawing attention to the nature of the coupling, to the fact that it is all or nothing, and to the fact that up to now the House has been unable to enter into negotiations on the nature of the carriages or wagons, still less what they carry as cargo. We would therefore be wise to keep an eye on those who will be deciding those matters.
It seems that the hon. Gentleman is making some points of principle. If so, will he explain why he and others did not seek to divide the House on Second Reading? From now on, will it always be the Conservative side of the House that will have to carry the internationalist banner into Europe and beyond?
The reasons why there was no Division were made very clear by those who spoke on Second Reading, and it is all in Hansard. As to the banner of international feeling, I am not sure whether the hon. Gentleman is a full student of international constitutions, but if he looks at the European Communities Act 1972, he might come to a different conclusion, if only because the word "federalism"—which is often used inaccurately —is better termed "unitarism". If he looks at the 1972 Act, on which this Bill is based, I think that he will come to the same conclusion.
The terms of accession have been highlighted by the hon. Member for Mid-Worcestershire. Industrial tariffs will be dismantled at a substantial speed —certainly at a much greater rate than the agricultural changes that will come.
The hon. Gentleman is right in saying that there is a great concentration of Spanish industry, particularly around the Barcelona area, and we do not know whether there will be investment from various parts of the Community into that area or whether the reverse will happen and the rapid reduction in tariff barriers will mean that that area becomes less active industrially. I do not know whether it is possible to predict which way it will go or whether there will be a mixture of trades and skills, but any such change will have an impact in Spain and some areas outside it.
I, and I believe other hon. Members, have learnt that the Spaniards are expecting to be net recipients as a result of joining the EEC. That was part of the bargain from their point of view. They may not expect to be net recipients to a great extent in the first year because of the period over which accession takes place, but they will expect to receive more and more. If that does not happen, or if resources are not available or if their calculations of net receipts are disappointed, I suspect that our colleagues —I want to be very international in this respect —in Spain might not think so much of the EEC as they do at present. I understand that there were no abstentions in the Cortes and that every member voted in favour of accession. Perhaps they will not take that view if Spain is not a net recipient as is expected.
Mention has been made of Mediterranean products and the fact that there will now be a much greater emphasis on the Mediterranean. I believe that not all the Mediterranean countries need to vote to produce a blocking minority when the qualified majority rule applies.
I should like to concentrate on the impact of accession on Spain and Portugal's newly fledged and welcome democratic procedures. The matter has been mentioned often and it has been assumed, certainly in Spain, that joining the EEC will assist those welcome institutions. We must be careful about that. There is a difference of opinion in this House about the impact on our democratic institutions of accession to the treaty. Some hon. Members feel strongly that there has been an impact. If there has been an impact in the United Kingdom, can there not also be an impact on Spain and Portugal? The answer must be yes. The impact could be strengthening, but it could be weakening. We all know that Spain's stability depends on a delicate balance of central and peripheral forces in the nation and in each political grouping.
I must be careful, but I have been told on good authority that local taxes, which are a great feature of Spanish local democracy, will be changed by accession to the EEC because VAT will mean that Madrid, by virtue of being the central recipient of the tax to hand over the 10 or 11 per cent. to the EEC, will have a much stronger financial position. That might be confirmed or denied, but if it is true I do not need to emphasise how much a change in the powers of collecting money from the highly patriotic regions to the centre might have on internal Spanish politics. That is not necessarily to the benefit of the growth and strengthening of Spanish democracy.
Portugal, unlike Spain, entered the Community without unanimity. There was already internal dissent, as there was here when this country joined. Portugal is a much poorer country. It will be the least prosperous member in terms of GNP per head — about 25 per cent. of the average in the Community of 12, the figure being about 100 per cent. for the United Kingdom and 130 per cent. for some of the smaller countries. If that is so, there will be enormous implications not just for the EEC but for Portugal.
A very high proportion of the Portuguese population is engaged in agriculture and a significant proportion in semi-subsistence agriculture. For many years the Portuguese Government have seen to it that they look after the interests of people on the land, especially in the northern part of the country.
I do not think that the hon. Gentleman fully understands these matters. As we are in Committee, I will explain the fallacy in his assumption. Socialists in this House are very international. One cannot be a Socialist for one's own country alone. One must have a world view.
No, I am replying to the hon. Gentleman's hon. Friend.
The hon. Member for Banbury (Mr. Baldry) is quite right. I wish to see a strong Socialist party and a strong Socialist Government in Madrid and in Lisbon doing for their populations the things that the Government of the United Kingdom ought to be but are not doing. I am not convinced, however, that accession to the EEC will assist or enable a Socialist Government in either of those countries to achieve that aim. I shall not go into the matter any further, as it would not be appropriate in this debate to go into why we and some Conservative Members take that view.
Portuguese agriculture is in almost every respect dissimilar to the type of agriculture practised and encouraged by the common agricultural policy around the coast of northern France and the wide open fields of East Anglia and I do not believe that the CAP will necessarily be suitable to keep people of Portugal on the land. I understand that one of the policies of my Socialist colleagues in Portugal is to ensure that unemployment is limited, that people are secure in their holdings, that they have reasonable markets for their products and that they can live a reasonably balanced life in reasonably balanced communities. I believe that those are the aspirations of Portugal, but I am not convinced that it will be possible to do all those things under the Procrustean imposition of a common agricultural policy decided in Brussels and not in Lisbon.
The hon. Gentleman cannot have listened very carefully, or perhaps I did not speak at sufficient length. When I gave the central taxation example and referred to the ability of any Government in Madrid to determine their own policy, I said that it was subject to confirmation. I received that information on good authority. That is the answer to the question of the hon. Member for Darlington (Mr. Fallon).
If the extent to which a regional Government can raise their own revenues and determine their own priorities is weakened it will reduce in strength the kind of democracy that we hope will develop in Spain. If the hon. Member for Darlington does not understand this, he should have a word with his hon. Friends the Members for Southend, East (Mr. Taylor) and for Wolverhampton, South-West (Mr. Budgen), who I am quite sure will tell him what it is all about.
One of the interesting features of the speeches of the hon. Member for Newham, South (Mr. Spearing) is that he always adopts the most gloomy line on the relationship between this country and the existing members or new members of the European Community. Conservative Members extend a very warm welcome to Spam and Portugal. I wish to make just a few remarks about Spain, partly because the Select Committee, of which the hon. Member for Newham, South is its distinguished Chairman, recently visited that country.
Why do Opposition Members not express their misgivings honestly and straightforwardly? We know that Members of the Labour party believe that foreigners cannot work these things out in the way that the British can; that they do not have the rounded constitutional experience and the centuries of distinguished history that enable this country to reach wise and statesmanlike judgments. They are foreigners. If the people in Transport House know this, why does the hon. Member for Newham, South not say so, rather than wrapping it all up in Spanish anxieties about the effect of membership on its agriculture and industry?
One of my colleagues —I shall not say who it was because it would be embarrassing if I mentioned his name —was guilty of the same mistake. That is partly the cause of the relative decline of Britain, and that is why I want this country to be an enthusiastic and fullhearted member of the European Community.
A few months ago at a private meeting —I shall deliberately not reveal the name —one of my colleagues said something similar: that we in the United Kingdom are very practical, rational and sensible, whereas all the member states of the European Community indulge in theories, political and philosophical fantasies and ideological nostrums. I intervened and said, "Do you mean like the Germans, who, philosophically and impractically, are producing 3·8 million motor cars a year, albeit during a recession, while the British, practically and rationally, are producing 1 million motor cars a year?" He said, "That has nothing to do with it. We won the war."
I hope that those who are particularly interested in Portugal will forgive me if I do not say anything about that country, partly for reasons of time. It will be an economic challenge to this fascinating and interesting new member of the European Community, Spain, to see what happens. Nobody can quantify that and provide a sensible assessment. By definition the future cannot be ascertained. —[Interruption]. That is bound to be so. Before entry, Britain had only a rough idea that it would make a Significant net contribution. The original estimates were not exceeded. Far from it. The outturn understated by a very significant margin the figures in the original pre-entry White Paper on the cost of British entry.
We can never be sure about these aspects. It is atmosphere, philosophy and attitude that are important in developing the Community. Our first modest step was taken in the Luxembourg agreement and at the intergovernmental conference. At long last, there is a tiny role at the margin for the European Parliament. How daring. How rash and reckless. But at least it is a first small step in the right direction.
Along comes an interesting new member, Spain. That country produces 1·4 million cars. The Spanish "Carmada" is about to begin. Spanish cars are starting to arrive in Britain. Admittedly Spain has a protected market, but we shall soon see the effects as that protection is removed. What will be the opportunities and advantages for us?
Why can we not approach this matter enthusiastically, and not just see it as a challenge? It is a chance to develop the Community for the good of this country. I want that above all else. Our exports to the Community have increased from 45 per cent. to 60 per cent. Opportunities have already been created, but our economy is still too weak in many significant manufacturing sectors, partly because of the recession and monetarist policy. I am not an enthusiastic exponent of aspects of the monetarist policy.
The enlargement of the Community is a opportunity for us as well as a danger for the new member states. They are behind in some economic terms, and they know it. However, they do not show the pessimism and dread that characterise the British Labour party in our relationship with the EEC.
The Chairman of the European Legislation Committee the hon. Member for Newham, South, will know about our discussions with our Spanish counterparts in the Cortes Generales. Of course that is not a real Parliament like the House of Commons. It is just a pretend Parliament. It does not have that democratic feel that we have. We should pay tribute to the remarkable achievement in Spain in recent years. We should remember the difficulties caused for democracy in the days of the Franco regime and the chaos that was predicted in British and other newspapers after Franco went. Of course, that did not take place, and the Spanish have impressed everyone by the way in which they have handled matters through their constitutional mechanisms and the Cortes Generales.
They have contended impressively with those problems. Spain is welcome in the Community for that reason as well.
During the discussions in the Spanish Parliament, one of my colleagues —again I shall not name the hon. Member, but it is a different one this time —said that the mechanism for scrutiny had been established in Britain to keep the Community at bay and to ensure that it did not have too great an effect on the British body politic. He said that because the Labour party had had an especially hostile attitude, we had had to establish that machinery in the House of Commons. It was a political device as well as a controlling mechanism.
The Spaniards seemed rather bemused by my colleague's comments. They said, "That is interesting. We shall not comment on that, because it is a matter for you. We are still considering whether to have an elaborate scrutiny system. It may not be necessary. We are happy to have the creation of this additional political layer —the Community layer — of endeavour and decision making over and above the national layer." The Minister of State for EEC Affairs said, "The scrutiny system will be designed to ensure that Spanish laws, rules and regulations will be harmonised as quickly as possible in line with Community laws, rules and regulations."
I shall resist the strong temptation to give way. My hon. Friend made an interesting speech in introducing his non-amendment. If he will forgive me I shall not give way, because I wish to conclude soon.
Spain is not yet in the Community. There is a danger that the Spanish will be disillusioned later after their experiences on the economic rather than the political front. However, I doubt that they will be, because I think that their attitude will be similar to that of the Italians. Incidentally, according to the latest statistics, Italy's GDP has overtaken that of the United Kingdom. The Opposition will say, "We cannot believe these statistics. They must be made up, or they must be inflated." These warning signs for the United Kingdom cannot be ignored by those of us who wish to engineer —in the legitimate sense of that verb —the recrudescence of the original enthusiasm for our membership of the community.
The Italian attitudes to the EEC are so different from that. I know that hon. Members will say that they get away with certain things, but we also get away with certain things. The budget rebate system is a spectacular sign of how the British succeed in getting away with something, and we should express gratitude to our Community colleagues for that system, which is almost unique, and in its size has a unique effect.
I think that the Spanish attitude will be similar to that of Italy. France is a halfway house, and Germany is a traditional enthusiast for the Community, partly because of its esoteric and bitter historical experiences. We need such enthusiasm, because all the time we are losing. Inevitably, I have made a speech rather like a Second Reading speech, and I hope, Mr. Armstrong, that you will forgive me for saying that. This is an opportunity once again to welcome Spain to the Community, as I think most hon. Members do, even Labour Members, who did not divide against the Bill on Second Reading. This enlargement will increase majority voting, which is the only way to keep the Community going forward. Britain will benefit far more from the incidence and usage of majority voting than from the exercise of the unanimous voting system or, in the reverse arrangement, the Luxembourg arrangement on national vetoes.
These factors should be seen in perspective. If we ever succeed in making the Labour party truly internationalist again, the Conservative party will be content.
I simply want to ask about tomatoes. The Minister knows well, as he represents parts of the lowland, that there is the problem of the glasshouse owners. I have rather more owners in my constituency than he does, and my hon. Friend the Member for Clydesdale and Milngavie (Mr. McCartney) has even more. The Minister will be familiar with the problem of the Dutch tomatoes. Given the entry of Portugal, what advice would he give to those of our constituents who want to continue investments in glasshouses, given the costs of electricity and oil, and the likelihood of the influx of even cheaper Portugese tomatoes? This is a Committee point, but it matters to quite a number of the people whom the Minister and I represent.
I had said earlier, Mr. Armstrong, that I would like to catch your eye on Third Reading, but, as my hon. Friend the Member for Mid-Worcestershire (Mr. Forth) has already posed some questions to my hon. and learned Friend the Minister, it might be useful if I put my points to him now.
I do not apologise for detaining the Committee at this late hour. This is important business, and it is not my decision that it is being held now, but that of the Whips. Any hon. Members who do not wish to be detained by me should be aware that there is very little doubt that the Government will get their business through.
Debates such as these sort out the men from the boys —the statesmen, like my hon. Friend the Member for Harrow, East (Mr. Dykes), and I suspect my hon. Friend the Member for Banbury (Mr. Baldry), who have advanced knowledge of where the currents of world history are about to flow, and those such as myself, the non-statesmen whose knowledge of history lies only in the past. I am afraid that my views are those of a humble Back Bencher, concerned not with the momentous inevitability of future European history but merely, and I suppose that the statesmen around would say pettily, with the interests of my country and the concern for the well-being of my constituents. An example of the narrowness of my vision is that I am not really concerned as to what entry into the European Community will do to the durability of the democracy in Spain and Portugal. I do not know what will happen, but I do know that the entry of Greece has not made its democracy any more advanced than it was before.
Perhaps we should ask why Spain and Portugal are seeking to join the community. As the saying goes, one wonders. Surely they must have heard of the madness of the common agricultural policy, of which the central flaw is that he who spends is not he who pays, a policy of profligacy rewarded. We have been told that this problem has been gripped, but I dare say that the Spanish and the Portuguese can see through the issue as well as we can, and know that the financial mechanism about which we have heard so much will not effectively apply and will dissolve in a shower of rain.
Could it be that those countries are, instead, seeking to join the EEC because they see a massive opportunity for their irrigated and sunblessed acres to be urged into unrestricted expansion, financed by unstaunchable largesse from the remainder of the Community? One wonders why they seek membership and why they wish to subject their industries to the rigours of European competition. Do they not believe what we have said in this House a thousand times? Are they not terrified at the prospect of their home markets being laid bare by the thrusting, rampant reborn British manufacturing industry?
Quite. Could it just be that those countries believe that their supply of cheap, skilled labour will be a magnet for capital from inside Spain, inside the Community and outside the Community, and that that investment, together with their existing favourable tariff barriers and the artful exploitation of non-tariff barriers —which is always allowed within the Community to those who are perceived to be the underdogs —will enable their industries to wipe the floor with our industries?
Like other hon. Members, I have been asked questions about the entry of Spain and Portugal to the Community —questions that should be answered. If that entry takes place, how will it affect the United Kingdom, both bilaterally and through the EEC itself? How will it affect the CAP —that bloated, financially incontinent, substantially unreformed CAP? Spain, alone, will add 30 per cent. to the acreage of the Community, and all those acres will have a massive potential for irrigation and improvement and hence a massive potential for increased production.
How will the CAP be affected by the fact that Spain alone will add 25 per cent. to the agricultural work force, balanced by a mere 14 per cent. increase in the consumers of the Community? The surpluses will not simply increase, they will accelerate. There will be a vociferous, dubloon-demanding lobby, a massive reinforcement for the most powerful vested interest in western Europe, to plunder the European coffers. As European budget succeeds European budget, the cost of agricultural support will explode. Financial mechanism or no financial mechanism, it will be impossible to resist. Some people do not seem to worry about that —it will not be for the temperate products; it will not be for the north European products; it will be for the Mediterranean products, as Spain, Italy, Portugal, France and Greece gain the balance of power in the European Councils.
I am glad that I have no farmers in my constituency. I feel sorry for my colleagues who, if this measure is passed, will soon feel the cold chill of their farmers' wrath breathing down their necks — [Interruption.] What is wrong —it is quite poetic.
What will be the effect on our industries? When we joined the EEC, we were told that the mass markets of Continental Europe would be lying there, waiting to be taken by the virile and dominant British manufacturing industry. The reality is that from a position of balance we now have a massive deficit in manufacture with the European Community —£7 billion, £8 billion, £9 billion, it has all gone wrong.
Why should this new accession be any different? Many colleagues feel that it will increase jobs, but how can we be confident that, this time, our jobs will increase? How can we be confident that, this, time, we are not kidding our constituents and ourselves as we did 15 years ago? Northampton is renowned for the footwear that it manufactures. Probably many hon. Members wear footwear that was made in Northampton. We import from Italy twice as much footwear as we export to the entire world. In part, that is because of the quality of Italian footwear, but in part it is because of the structure of business. Some Italian businesses pay no taxes and are not subject to the overheads that are borne by British firms. We import a quarter of the amount of footwear from Spain than we import from Italy, and that importation has doubled between 1982 and 1984. What impact will Spanish footwear have on the footwear industry in the United Kingdom?
Britain is the major recipient of regional fund moneys. Will the regional fund increase? Will our share of its moneys increase, or will the sustained and uncontrollable pressure of agriculture support reduce it? Will the pleas of poverty from Iberia reduce our share of the fund's moneys?
I hope that I intervene in a natural break in the hon. Gentleman's script. I ask him to take on board the fact that one of the reasons why Britain will lose out on moneys from the regional development fund is the redrawn regional boundaries, which stemmed from a decision of the Government whom the hon. Gentleman supports. Did he vote against the proposals to redraw the boundaries, which in one stroke reduced the amount of aid from the regional development fund that Britain received?
The hon. Gentleman is making a point which is contentious, which is not agreed and which is wrong. What will the cost of the accession of Spain and Portugal to the United Kingdom? There are many who think that it is undignified to talk about money in these circumstances when we are discussing such a great statesmanlike issue. There is the view that we should not concern ourselves with the cost. As my hon. and learned Friend the Minister of State, Foreign and Commonwealth Office has said on previous occasions, when Spain finally comes into the Community it is estimated that there will be a 0·1 per cent. in the VAT take, which will cost the United Kingdom about £75 million a year. I doubt whether that is an overestimate. We shall lose money that is paid out from the regional fund. There will be additional complexities with the CAP that will cost us money. There will be additional policies.
We have been told on many occasions that, whatever happens in Europe, the cost to Britain will not be more than 7 per cent. That means that if there are new policies, additional policies or additional expenditure in Europe, which take effect in countries entirely outside the United Kingdom, we shall have to pay only 7 per cent. of the bill. If the cost of the existing policies are spread equally throughout the Community, we shall be liable to pay our full share, which is 21 per cent.
If we pass the Bill, we shall trigger the 1·4 per cent. VAT ceiling. That will be a signal of our preparedness to meet other cost increases later. There will be an increase in the cost of funding Europe of 25 per cent. for no additional European policies and no additional European responsibilities. There will be nothing extra. At a stroke, there will be inflation of one quarter for the same product, and an opportunity for radical reform will be discarded.
I have a vision of Europe and the European Community which, I dare say, is shared by a number of my hon. Friends. I have a vision of a Europe that is united and free, a Europe with different cultures and different traditions combining increasingly on defence and foreign policy where we have common interests. I see an area of free trade without frontiers and an area which has a common agricultural policy where the interests of consumers are more highly thought of than at present. I do not believe in a unified Europe that is bullied into petty harmonisation by the centralising bureaucrats of Brussels with their powers of policy initiation. We can and should expand Europe at some time, but how can we expand it before we have reformed it? If hon. Members want to destroy the Community, they should vote for the Bill. The costs, the complexities of agricultural policy, and the predominance of Socialist centralising bureaucratic policies will increase if Socialist Spain and Portugal, with their previous history of centralised Government, join the Community. The sensible management of European policies and the method of decision making will deteriorate as responsibilities are illogically redivided to satisfy the needs of an expanded Community. As my hon. Friend the Member for Mid-Worcestershire says, two more languages will be added to the cacophonous babble that already exists.
If the Bill succeeds, Europe will drown in a rising tide of its own problems. Perhaps the cynics are right when they say that the difference between a statesman and a politician is that statesmen make big mistakes. If as a politician, I make a small one as I vote against the Bill, it is nothing compared with the potentially monumental error that the statesman will make if he supports it.
The hon. Member for Northampton, North (Mr. Marlow) has missed his calling. He should write a melodrama that could perhaps be put on widely around the Community. Indeed, he delivered a wonderful melodrama of a Community run by foreigners, even more foreign than the French, German and Italians who he thinks are running it now, from countries that are even more alien. If the foreigners get control, they will pursue their own interests. That is something that the British people would never contemplate within the Community. If that happened the Community would be brought into total chaos, so I am surprised that the hon. Gentleman is not supporting the proposal with enthusiasm. If his amazing picture were to be realised, such disaster would overtake the Community that the very thing that he wishes —that the Community would fall apart and Britain would no longer be a member of it —would come about more quickly.
As the hon. Member for Mid-Worcestershire (Mr. Forth) said, all those foreigners insist on speaking their own languages instead of English. Of course, if we spoke to them loudly enough they would be able to understand.
Please allow me to develop my argument a little further.
The hon. Member for Mid-Worcestershire assumes that, because people choose to speak their own languages, that is a further reason why we should not associate with them or make any provision to translate the various languages of the Community. That displays an extraordinary flight from the internationalism in various parts of the House.
I am sure that the hon. Gentleman is not seeking deliberately to mislead the Committee. Perhaps he can help me if my hon. and learned Friend the Minister cannot. Has the Liberal party made an estimate of the cost of the necessary translation and interpretation that will be caused by the two additional languages? I did not say at any stage that it was undesirable for two new countries to join. I did say that I should like to hear an estimate of the cost so that we can make an assessment of it.
I am happy to let the Minister give an estimate of the cost. If every one of the questions asked by the hon. Member for Mid-Worcestershire was answered to his satisfaction, he would still not be in favour of the entry of Spain and Portugal to the Community. If every question was answered to his dissatisfaction he would also oppose their entry. His view would not be changed one iota by the answer to the questions. I do not challenge his right to raise them. It is perfectly reasonable.
That applies with even greater force to the hon. Member for Northampton, North, whose views will not be changed by anything that the Minister will say tonight because, for some reason, which seems to be slightly illogical in view of the picture that he paints of the consequences of Spain and Portugal's entry, he does not want the extension of the Community. That places him, as so often before, in the company of the hon. Member for Newham, South (Mr. Spearing) and other hon. Members on the Labour Benches who lecture the Socialists of Europe on how damaging it will be to their countries and their principles if they allow themselves to be drawn into the Community.
Of course, it is unreasonable and unfair to expect the hon, Gentleman to listen to me or any other hon. Member. However, as he is listening to me now, I shall make my point again. I am against the Bill because I believe that it will be damaging to the Community.
The hon. Gentleman must pull the other one. I listened with much enjoyment to his remarks. Nothing in them at any stage convinced me for a moment that he wanted to further the interests of the European Community. He has distinguished himself by his opposition to the European Community —its existence, its activities and everything about it. He must not pretend otherwise. He would do a disservice to his reputation for pugnacious awkwardness if he did so.
The hon. Member for Newham, South lectures the Socialists of Europe on the great damage that they are doing to their principles and countries. The trouble is that he is getting more and more lonely. He is feeling increasingly that there is nobody left in Europe to oppose the existence or extension of the European Community. If all the Socialists in other countries are misled into supporting it, he will find himself absolutely on his own. It is even becoming a lonely cause in the Labour party, not because of a change of principle, but because of general departures since the general election from the Labour party's traditional hostility to British membership of the Community. A whiff of old battles drifts over the debate from time to time.
Those of us who believe that the Community is a great and immensely valuable institution and who wish to maintain and continue it welcome the accession of Spain and Portugal to it from both the Community's and their own point of view. It is striking how strong the support for membership of the Community has been in those countries, particularly by statesmen —I will not have the term thrown into disrepute by the hon. Member for Northampton, North —whose claim to that title is distinguished by the fact that they have advocated democracy in adverse circumstances.
In Spain, great predictions were made that chaos would result at the end of the Franco regime. Many of those who now so strongly advocate Spain's membership suffered under that regime, and have struggled to establish democracy in Spain in its aftermath. Several of them had a spectacle that none of us had to face, of the guns pointing at them in the legislature of their country. Anyone who saw the television pictures or talked to any of the people involved will realise what a dramatic demonstration it was of the initial dangers to democracy in Spain, as well as of the resilience that it showed, when that extremely unpleasant episode passed quickly into Spanish history.
Portugal has been through great trials and difficulties with the arrival of democracy. The Portuguese Government have not consistently advanced the interests of their own agriculture. Some of the early agricultural measures of Portuguese Governments were disastrous. Portuguese agriculture is struggling to recover from the ludicrous neo-Marxist policies that were attempted in the early stages of the Portuguese revolution. Many of those who are now earnestly advocating Portuguese membership of the Community fought to maintain democracy and pluralism at times when there seemed to be a real threat to those concepts from some of those who initially came to power in the aftermath of the Portuguese revolution.
It is not for us to dismiss the value of democracy in Spain and Portugal when those who are most concerned with the establishment of democracy, and most seeking to enhance it from within those countries, attach such great importance to it. If they believe that the economic interests of their countries will be advanced by accession, who are we to criticise them for taking that view? Who are we to challenge them for making that a political priority?
Hon. Members who have been so critical of the clause and the Bill in general have neglected the opportunities in those two countries, poorer as they are than the European average —particularly Portugal —for future expanding trade with this country. There is potentially a much larger market if wage levels in Spain, and particularly Portugal, increase, and the spending power of the people in those countries increases. I wish to see that, and I hope that it will lead to a great deal more trade in the Community, much of it to the benefit of Britain.
Essentially the clause and the Bill are about a political question —the future of the Community and the future of democracy in Spain and Portugal. I believe that the vast majority of hon. Members believe that the passing of the Bill will greatly enhance those things.
When listening to debates on the Community, it has always struck me how dated is the approach of the House to the Community. Hon. Members seem to continue a debate from the early 1970s, arid to start at a point far before that, when the House was the centre of the world or the Community. That simply is not so.
I have great respect for my hon. Friend the Member for Mid-Worcestershire (Mr. Forth), who has drawn attention on numerous occasions in idle House and, I understand, in the European Parliament, to the various issues involved in the accession of Spain and Portugal to the EC, and he is right to do so. However, I also believe that he is fundamentally mistaken in his analysis of that impact. First, he suggests that the impact on the Community will be damaging. The hon. Member for Berwick-upon-Tweed (Mr. Beith) has effectively demolished that argument, because those who oppose the accession have no real interest in the future survival, expansion or enlargement of the Community.
Secondly, my hon. Friend suggests that accession will have an adverse impact on Britain. I simply cannot understand that argument. It amazes me that there are such enclaves of Spanish and Portuguese interests in Northampton, Newham or Worcestershire who are better judges of Iberia's imports and exports than are those countries themselves.
What are the magnificent benefits that our constituents and Britain will get from the accession of Spain and Portugal to the Community? Perhaps my hon. Friend could quantify them for us. We have been waiting for such a quantification for a long time.
My hon. Friend has already drawn attention to the considerable benefits to the shoe industry in his constituency from the increased competition from Iberia and from the force of comparative advantage that should be improving his shoe industry and the prospects of those of his constituents who happen to work in that industry.
There is a wholly beneficial impact on Britain. There are enormous opportunities for the west and south-west of Britain in increased links and trade with the Iberian peninsula. There are enormous other opportunities for our industries generally in exploring such an increased market.
Thirdly, there is the impact on Spain and Portugal. That is why I am all the more puzzled why the hon. Member for Newham, South (Mr. Spearing) should seek to speak for the Spanish or Portuguese Socialist parties in opposing this accession.
I am grateful to the hon. Gentleman for giving way. I had hoped that I would not need to intervene in his speech. May I assure him that I was wishing to do no such thing? I was commenting only on the possible impact of the EC's policies and institutions on those countries. That is rather different.
It is not all that different from the assessment of the Spanish and Portuguese Parliaments, and of the Spanish and Portuguese Socialist parties, of the impact of accession on their countries, which they completely support and which they regard as likely to be beneficial. I still do not understand why the hon. Gentleman happens to have a much better understanding of that impact on Spanish industry and agriculture than do the Socialists in those countries. He might like to brood on that and return to the point.
I should like to try to help my hon. Friend. I invite him to consider the example of Greece, which was enthusiastic to enter the Community, but which some four year on has found itself obliged to introduce import and currency controls and to defer yet again the introduction of VAT, which had been agreed as part of entering the Community. If my hon. Friend accepts Greece as a reasonable precedent to observe as a relatively poor and undeveloped country joining the Community, the example is not encouraging. It is on the basis of such an example that those of us who make a pessimistic analysis rest our case. I would be interested in his observations on that.
My observation is simply that my hon. Friend is making my point and not his, because the impact on Greece has been substantial in the form of special funds and emergency aid. When he says on behalf of the Spanish community of Worcestershire that the impact on Spain and Portugal will not be as the Spanish Government and Portuguese Government believe that it will, I am dubious.
Let us take the three areas that my hon. Friends think will be so harmful to Spain and Portugal. First, let us consider agriculture. It has been argued tonight that the extension of the agricultural policy to Spain and Portugal will merely divert resources from the enormous subsidy of northern states' surpluses of temperate products. Anything that diverts resources away from constant oversubsidy of products in surplus in northern countries and increases the need to reform and adjust that policy is to be welcomed and not criticised.
It was further suggested that the Community, as it is, should insulate itself from further market forces or resist the force of comparative advantage from Spanish and Portguese industries. My hon. Friend the Member for Northampton, North (Mr. Marlow) implied that his domestic shoe industry should be completely protected from any qualitative and quantitative advantages that the Spanish and Portuguese shoe industries happen to obtain.
The point that I was making —I am sorry if I was labouring it when I was making it —is that there are benefits to be found in Italian footwear. It has style and people like to buy it. The Italians have unfair trading advantages which they should not have if the Community is working properly. I am concerned that the Spaniards will have the same unfair trading advantages. We are all in favour of fair and free trade, but we do not want unfair competition.
I am afraid that my hon. Friend disappoints me again. Of course those unfair trading practices exist in Spain and Portugal, but if Spain and Portugal are not admitted into the Community they will continue. There will be no mechanism for tackling them. My hon. Friend will have to go to GATT and the OECD and beg in vain for those practices to be tackled. Only by having those two countries in the Community, those two Ministers around the table at the Council of Ministers, those two commissioners in the Commission, and representatives of those two countries in the European Parliament, will my hon. Friend be able to prosecute that unfair trading. He will never be able to extend the various policies of DG4 and the supervision and the policing of the competition policy to Spain and Portugal unless he has those countries inside the Community.
My hon. Friend for Mid-Worcestershire said that if we admit Spain and Portugal there will be added linguistic disadvantages. Two more languages will need to be added to the Community's official languages. It is to some extent a reflection on my hon. Friend and his former colleagues in the European Parliament that they have not resolved that problem. If the addition of two languages to the existing seven makes the Community's linguistic costs intolerable, I welcome it. We shall then proceed to a more rational community, such as the United Nations, where only two languages are translated.
To oppose the accession of Portugal and Spain to the Community merely on the ground that it adds two more languages when our accession and that of Ireland and Denmark added a linguistic burden is a thin argument.
We did not invite Spain and Portugal to join the Community. They applied to join it. I regard that as a compliment to the Community, and I regard the accession as a strengthening of the Community and as a step towards a wider and freer European market.
This is the Committee stage and we are discussing clause 1. I have three questions to put to the Minister about costs. They were not dealt with by his right hon. and learned Friend the Foreign Secretary on Second Reading. In his speech, only two paragraphs of a fairly long speech were devoted to costs. We have already heard what the figures are. Will the Minister confirm that the net figure of £75 million, given by the Foreign Secretary as our additional net contribution at the end of the transition period, takes account of any possible change in our receipts from the regional and social funds? I am not sure that I understand the new financial mechanism that was agreed in the past year, but I assume that if there is any variation in our receipts from those funds, they are taken into account in the financial calculations. Therefore, the £75 million should be a true figure, even if, for example, our receipts were halved as a result of the admission of Spain and Portugal.
Secondly, will the Minister confirm that the Commission's estimate of 0·1 per cent. of the Community VAT base as being its best estimate of the total cost of the entry of Spain and Portugal at the end of the transition period takes account of all the other additional costs, such as that of translation? I assume that the Commission's estimate makes provision for those additional costs. If not, it would be helpful to know what other costs there might be in addition to the 0·1 per cent.
Finally, would it not be helpful in future if the House of Commons —even if the Community is not bothered about this —were given an economic assessment of the entry of new members, and not merely a financial assessment? Obviously, that cannot be done now because the Bill will presumably get its Third Reading tonight, but, if this occurs again, I hope that when Ministers negotiate these matters in Brussels or elsewhere, they will ask whether the Commission can prepare an economic assessment on the impact of new members for the benefit of existing member states.
Before the House sanctions clause 1, it should reconsider the relationship of Gibraltar with both the United Kingdom and Spain because on 1 January all three will be partners in the same enterprise, albeit with the dependent territory having to take the junior desk. Therefore, it is surely essential that Gibraltar's particular circumstances should be recognised and safeguarded.
Gibraltar, having suffered the trials and tribulations, through no fault of its own, of a closed border with Spain, is hoping now to return to some semblance of normality. However, it would certainly be wrong to assume that an open border will solve all problems. Some will remain and, indeed, more may be created now that the siege economy must change. Many questions need to be asked about Gibraltar in the light of Spain's accession to the European Community. They relate to the pension rights of former Spanish workers and the necessary funding, the potential use of the airport facilities by Spanish aircraft, the impact of Spanish tourists on the resources available, the planned development of the ship repair yard and Spanish competition. Other matters which also pose questions, such as the continuation of NATO's use of the rock and the determination of Britain to protect its sovereignty, may be outside the scope of the clause. Nevertheless, all the topics are vital to Gibraltarians who will stand fast in their loyalty to the Crown and who look to Parliament for support on occasions such as this.
Membership of the European Community can be seen in many lights, as this debate has illustrated. But Gibraltar's status of being effectively both in and out is somewhat double edged. The advantages of not having to conform on taxation such as VAT are clear, but the disadvantages of the application of company and financial directives are equally obvious.
A gold key has long been symbolic of Gibraltar, hanging, as it does, from the gateway to its castle on the armorial bearings. With such a key, a great future for this small but vibrant dependent territory can be unlocked, but only so long as we remain, in its interests, as firm as the rock of Gibraltar itself.
I give a lukewarm welcome to the accession of Spain to the European Community, partly because when people want to join a club I suggest that they abide by the existing rules of the club. When another country seeks to join the Community, all too often the existing members bend over backwards to accommodate the new member.
I have no doubt that in the long-term Spain and Portugal will bring much benefit to the Community, and I hold dear the concept of a Europe that is united on trade. But we who come from the centre of the country, from the west midlands —still the workshop of the nation —tend to look at the bottom line of any arrangements such as those we are considering tonight to see what is in it for us, arid I make no apology for saying that I cannot see much in it in the short term.
I refer of course to the car industry, and I shall delay the Committee briefly to have a whinge about what is happening to that industry. I have had a regular whinge about it since coming to this place, though not much has happened as a result. Even at this late hour another whinge may move the Government a few degrees further along the road that the motor industry would like to travel.
We have heard how Spain's industry has developed and continues to develop. However, it has the advantage of sheltering behind artificial tariffs. They were put up not necessarily by Spain but by the Community, which agreed a special arrangement with Spain in 1970.
Is my hon. Friend aware that that agreement was specifically negotiated because it was then thought by the Community that Spain would quickly be entering? The fact that the Community has taken so long to agree to Spanish accession has accentuated the unfairness to which my hon. Friend refers. The sooner we get Spain into the Community the sooner we can deal with the unfair comparative advantage of which he speaks.
That may have been the case and the Community's idea may have been that eventually Spain would come in. On the other hand, in 1970 Spain was vastly different. It was a peasant economy and I suggest that the EEC looked benevolently on that country with a view to improving its people's living standards, and applied concessionary tariff rates.
In the interim, the Spanish car industry has developed substantially, until it is now bigger than ours, and those in the motor industry and in many of Britain's industrial areas find it hard to accept the present position. About 100,000 Spanish-derived cars come into this country at a low, 4 per cent., import tariff. About 3,500 cars go in the opposite direction. That 100,000 total is expanding dramatically, and some are forecasting a figure in the next year or so of well over 120,000, if not 130,000 cars a year.
Only one British company exports to the Iberian peninsula —Austin Rover —because Ford imports cars from its plant in Spain, as does General Motors. I accept that we shall never get parity of trade in the car industry. We are not likely to send 100,000 of our cars over there and to import 100,000 Spanish-derived cars. But I do not accept that when we negotiate for a country to come into the Community, we should give it concessionary terms that allows it seven years to reduce its tariff barrier for our products so that it is not until the early 1990s that we start trading fairly in this one commodity.
That is grossly unfair to the British car worker, who in my constituency has indulged in the luxury of two weeks of lay-offs at a time when the Spanish factories are busy churning out ever greater quantities of cars for sale in this country. That was recently reinforced with the addition of Seat cars, which forecasts 20,000 sales in Britain within the next two years.
When we negotiated the arrangements with Spain we should have stood up for the right of the British car industry to have a larger quota into the Spanish market. Currently, that quota is about 3,800 cars a year, yet we could sell between 8,000 and 10,000 cars if we were given the opportunity. Next year's quota is now being arranged, and there is some some hope that it will go up to 7,000 or 8,000 units. Austin Rover certainly hopes so. But the Spanish Government have given indications that it may be only 5,000.
If we want Britain's wholehearted support for Spain's accession to the Community, we should not have to wait seven years before gaining parity with her. Our industry cannot afford to wait that long while we are bamboozled by an ever-rising torrent of Spanish cars into this country. There must be a fair and equitable status with that country, and, if we cannot have the equivalent in tariff rates, let our Government seek to endorse the British car industry's determination to up its quota into the Spanish market by much more than the Spanish Government will seemingly allow.
When we get parity to trade and fair and suitable treatment for our own industry, we shall get the wholehearted support of the Community generally for Spain to come into the EEC.
I entirely endorse the remarks of my hon. Friend the Member for Darlington (Mr. Fallon). What shall we tell our children and the children of Spain and Portugal —[Horn. MEMBERS: "Don't talk to strangers."] We shall tell them that the overwhelming majority of the British Conservative party wanted to write history whereas the overwhelming majority of the British Labour party was content only to read history. We shall tell them that we on the Conservative Benches saw democracy emerging in Spain and Portugal and gripped it and hugged it, while the Labour party, like a load of old housewives, balanced the price of one pound of tomatoes as against another.
The Conservative party in this decade, as in the last, has been the truly internationalist party in this House, whereas the Labour party has constantly carped at the small print, while pretending that it was in favour of greater internationalism and of showing solidarity with Socialists in Spain and Portugal.
I hope that tonight we will give a resounding endorsement to the Bill and its clauses. We should show that the Conservative and Liberal parties are determined to build a stronger and more democratic Europe, and that at no stage will we be distracted by the small print carping of the petty bourgeois Poujadists who seek continually to look back when we in this country, more than anyone else, should look forward.
This has been a fascinating debate. It has confounded all the pessimists —and the Whips —with its length and breadth. Several fascinating speeches have been made, including a remarkable one prepared by who knows who for the hon. Member for Northampton, North (Mr. Marlow) —a farmer who has that same ritualistic and obsessive interest in the common agricultural policy and, no doubt, its benefits as many others on the continent.
The hon. Gentleman's speech was reminiscent of some crackling Pathé newsreel. It was a political version of Gilbert and Sullivan which kept us better amused than most of his previous speeches, although it did not take us much further than most of them. Some of the arguments advanced on both sides of this great Conservative argument are interesting. I am sure that, as the groans that must have greeted each new name on the annunciator went up from the deep leather armchairs of the Library, they thought how elevated the debate must be.
The elegant and lonely speech of the hon. Member for Harrow, East (Mr. Dykes) and the speeches laden with irony will look remarkable in the cold print of Hansard tomorrow morning. The hon. Member for Harrow, East directed his remarks, as he must, against those behind him where he finds most of his opposition. He said that Italy's gross national product has only recently overtaken that of Great Britain. Italy is led by a Socialist Prime Minister and, for the past six years, a Conservative Government have presided over the decline of the British economy, ensuring that our GNP would fall behind that of Italy. Pretty soon we shall be behind everyone else as well.
I am grateful to the hon. Gentleman for giving way. He is putting forward the same misinformation as the Social Democratic party —[Horn. MEMBERS: "Where are they?"] —whoever they may be. He is saying that the Italian GNP is greater than that of the United Kingdom. Why do the Italians then pay only two thirds as much VAT as us?
Perhaps there are even more accountants in the Italian Parliament than here. I was simply reflecting on the encyclopaedic statistical knowledge of the hon. Member for Harrow, East and giving the most reasonable and obvious explanation of the phenomenon that he described.
The hon. Member for Darlington (Mr. Fallon) now finds that his main vocation is speaking on behalf of the Spanish and Portuguese Socialist parties —remarkable for the hon. Gentleman, bearing in mind his background. I assure him that if they could choose any hon. Member to speak for them in the House, he, with his peculiar views on economic policy, would not be their chosen champion.
The Labour party has never disguised the fact that we support and welcome Spain and Portugal's accession. That view was made crystal clear on Second Reading and again tonight.
Great progress has been made in Spain and Portugal. In a few years they have come from the depths of dictatorship into the mainstream of Europe. As the hon. Member for Berwick-upon-Tweed (Mr. Beith) has said, great courage and resource have been shown by those who have led those countries through that difficult period. All were motivated by the wish to join the main stream of Europe. The fulfilment of part of that vision comes with accession to the European Community on 1 January.
Those long and difficult negotiations were accomplished under the supervision in Spain of Socialist Prime Minister Felipe Gonzalez and in Portugal mainly by Socialist Prime Minister Mario Suarez. Those two statesmen took Spain and Portugal from dictatorship to accession to the European Community and they should be congratulated on that achievement. I am glad that Conservative Members recognise that.
The hon. Gentleman welcomes the struggle of those two countries to join the Community during the period since 1975 and 1979 but at exactly the same time the Labour party in Britain was trying to leave the Community. How does the hon. Gentleman explain that?
The policy of the Labour party has been quite clear. The Conservative party allies itself with some pretty peculiar people on the continent and especially in the European Parliament, so why should Conservative Members imagine that there must be a monolithic view among the Socialist and social democratic parties in the European Community? The fact is that we are in the Community, we remain in the Community for the present moment and we welcome Spain and Portugal to it.
No, I should like to make some progress.
We believe that those long and difficult negotiations will strengthen democracy and its institutions in both Spain and Portugal and make the European Community more complete. That achievement lies principally at the door of the two individuals who led the Socialist parties in those two countries.
There is, however, no contradiction in Labour Members pointing out the problems and challenges that will come with the accession of Spain and Portugal when the Community faces major struggles to overcome the financing problems that it already has. Hon. Members on both sides have asked awkward questions about the present financial crisis and the greater crisis that is likely to befall the Community. The erudite Minister who is to answer the debate always speaks without notes and will doubtless provide the information and detail to be expected from that practice, so we shall be no wiser at the end of a speech of characteristic elegance than we were at the beginning of the debate, however long the debate may continue.
The European Community faces problems that will not go away and some of them will be exacerbated by the accession of two new nations, because the characteristics of those nations' economies and especially their agriculture will in many ways make the Community's financial crisis worse. As my hon. Friends the Members for Walthamstow (Mr. Deakins) and for Newham, South (Mr. Spearing) have pointed out so admirably, the financial crisis with which we live will not be easily resolved.
It could be resolved in two ways. First, it could be resolved by increasing European Community funds. That would be the simple solution for a number of right hon. and hon. Members and for a number of people in European Community countries. An increase in the value added tax level from 1·4 per cent. to 1·6 per cent. would result immediately in a tranche of money that might solve the problem. However, that solution would be unacceptable to this Parliament and to nearly every other Parliament in the European Community. We remember the difficulty that the Minister of State, the hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind), experienced in pushing through, against vigorous opposition from his own supporters, the increase in the VAT contribution.
On a point of order, Mr. Armstrong. I apologise for interrupting the hon. Member for Hamilton (Mr. Robertson), but is it in order for the hon. Member for Linlithgow (Mr. Dalyell) to be reading a newspaper.
The fact is that the European Community's immediate financial crisis could be resolved by an increase in the funds, but that option is not available either to the European Community or to the British Government.
Secondly, the crisis could be resolved through the reform, reorganisation and revamping of the European Community's existing expenditure. All hon. Members know that reform of the Community's financial institutions is essential if the crisis is not entirely to threaten the basis of the European Community. The European Parliament is considering this week the European Community's budget and it has substantial views about it, only some of which are connected with the outcome of the Luxembourg summit.
The statement of fact that is contained in the explanatory memorandum—
that Spain's contribution to, and receipts from the European Communities Budget should roughly balance and that Portugal should be a modest net beneficiary"—
is threatened by the fact that the Community's draft budget makes inadequate provision for discharging the promise that was made to Spain and Portugal during the negotiations. That is the tip of the very large iceberg of financial irresponsibility that faces the European Community this year. I do not undermine the general belief that Community membership should expand from 10 to 12 if I point out the contradictions in the way in which the European Community finances itself.
At the bottom of the crisis lies the common agricultural policy. It takes up between 70 and 74 per cent. of the European Community's budget and threatens to devour even more of it in future years. The crisis will inevitably be made worse by the accession of Spain and Portugal, on account of the agricultural surpluses.
The European Community is under threat. If the budget does not balance, Ministers will be forced to adopt short-term expedients. In the long term this country's status as a net beneficiary of the regional and social fund will be threatened by the accession of Spain and Portugal, which will have a share of the existing cake. The shift in the European Community's balance from the industrial to the agricultural countries —that is, from the north to the south of Europe —will ultimately threaten the coherence and credibility of European Community policies.
I represent a section of the Parliament in the same way as the hon. Gentleman does. He is in a beleaguered, although vocal, minority in his party. I have already identified the benefits to the United Kingdom of an enlarged European Community. It makes Europe a more complete entity. It gives us opportunities, but it also challenges, and that fact must be taken on board. The majority of hon. Members believe that a wider Community is in the interests of all members of the European Community, but that does not make us shy away from the challenges, problems and crises that face the Community.
We welcome the accession of Spain and Portugal. It is the right move for the Community and for Spain and Portugal. We welcome it because we recognise the merits of those two new democracies joining the rest of Europe and facing Europe's problems with us. The Opposition do not welcome accession blindly, ignorantly or oblivious of the difficulties and anxieties. It is up to all 12 member states to ensure that the heady historic atmosphere of Spanish and Portuguese accession is accompanied by cold brutal action to make it all worth while.
Like the hon. Member for Hamilton (Mr. Robertson) and most of my colleagues, I welcome the accession of Spain and Portugal to the Community. The hon. Member for Hamilton reminded the Committee that the Labour party has supported the membership of Spain and Portugal during the long seven years of negotiations, but he did not respond to the fair point put by my hon. Friend the Member for Darlington (Mr. Fallon) that it is curious that, for the first five of those seven years, the Labour party was calling for the United Kingdom to leave the same Community that it wanted Spain and Portugal to join. At the very least, the Spanish and Portuguese Socialists found it difficult to understand why the Labour party felt that their membership of the Community was desirable but Britain's membership was not. Perhaps the hon. Member for Hamilton will enlighten hon. Members and his fraternal comrades in Spain and Portugal as to what their proper interests might dictate if, having joined the Community, some future Labour Government decided to take us out again.
These are not purely theoretical problems. The hon. Member for Hamilton will be aware that the Spanish and Portuguese Socialist parties listen carefully to what the British Labour party says. There seems to be an enormous identity of interest in these matters. Clearly, any views that the hon. Gentleman and his colleagues wish to put forward would be helpful.
I can understand the hon. Gentleman being more interested in the debate turning to the subject of tomatoes rather than Labour party's policy, and I would happily turn to that matter.
My hon. Friends the Members for Banbury (Mr. Baldry), for Darlington and for Harrow, East (Mr. Dykes) enthusiastically welcomed Spanish and Portuguese accession. The hon. Member for Berwick-upon-Tweed (Mr. Beith) correctly emphasised the political importance of Spanish and Portuguese membership. I do not believe that it is necessary for anyone to give a particular reason why Spain and Portugal should join the Community. There are a multitude of reasons, but they boil down to a simple proposition —Spain and Portugal are now democratic societies; they are European countries; they wish to join the Community; and under the terms of the Treaty of Rome, they are entitled to make such an application. As long as the terms of that application are properly negotiated with the existing member states, it would be unthinkable for such an application to be refused.
The fact that the negotiations have taken seven years shows that there was on both sides a realisation, as the hon. Member for Hamilton said, that difficulties would accrue, not just to existing members of the community, but to Spain and Portugal. Those two countries perceive that, as countries that are not nearly as industrialised as most of western Europe, their competitiveness can by no means be properly assumed. Existing member states will have substantial opportunities to increase industrial exports.
My hon. and learned Friend says that it would be unthinkable for an application to be refused. Is he suggesting that there are no grounds whatsoever on which existing member states could decide that the joining of a new member was damaging to the interests either of that new member, of the Community as a whole, or of a particular country? Many people who have followed this case all the way through think that if there is a proven disadvantage to the United Kingdom or to the Community as a whole, it would be legitimate to say, "We are not yet convinced that it would be a benefit for you to join."
If a democratic European country applies to join, it must in principle be given an opportunity for the negotiations to succeed. There must be a desire on both sides to see that accession negotiations reach a successful conclusion, but at the end of the day there is no guarantee either on the part of the Community or on the part of the applicant state. For example, when the terms of the proposed accession of Norway were put to the Norwegian people through a referendum, they declined to accept them. Equally, the Community must have such a right, if the negotiations do not prove successful. However, when a democratic European country applies, there is a desire to give a favourable response if at all possible and realistic.
My hon. Friend the Member for Mid-Worcestershire (Mr. Forth) referred to the implications for the common agricultural policy and asked for a whole series of statistics to show the precise figures of the costs that would be involved in the accession of Spain and Portugal. My hon. Friend knows that it is simply not possible to respond with such details. He may be expressing surprise, but I do not think that his shock is likely to alarm the House. One must be conscious of the fact that Spanish and Portuguese membership, particularly with regard to Mediterranean products, will increase the availability of these products in the Community. It has implications not only for the existing members of the Community, but for Mediterranean countries, and that is why negotiations are going on with these countries as to how the access of their products to the Community can be safeguarded once Spanish and Portuguese membership takes place.
My hon. Friend will also be aware that one of the reasons why the negotiations took so long was that strict terms were put to the Spanish and Portuguese, and one of the sectors about which the Community was most concerned was the cost implications. For example, olive oil is likely to be in substantial surplus in years to come, and the Spanish have had to accept the fact that their entitlement to full intervention prices will not be available even after they have joined the Community. Only when a system of guaranteed thresholds has been introduced, and the Community is in surplus, or likely to be in surplus, will Spain be able to participate in that crucial sector.
This also applies to wine, where again there is a likelihood of Spanish produce adding to existing surpluses. Severe constrictions on Spain have had to be accepted, including compulsory distillation of a substantial proportion of its produce. These matters have been taken into account. They do not give an assurance that there will be no problems, and my hon. Friend was right to say that the accent within the Community will increasingly change from the years when the Community first came into operation.
A significant number of Mediterranean countries, with a common interest in that area's agricultural produce, will be in the Community at the same time as Germany and the United Kingdom are joined by France as a significant net contributor to the costs of the Community. These countries, as well as other northern countries, will have a significant interest in ensuring that the mistakes that were made at first, —which are still being experienced with regard to northern agriculture, through the operation of some aspects of the CAP —will not be repeated with equally extravagant consequences in the southern states. That is why the negotiations on fruit and vegetables, olive oil and wine were some of the most difficult and complicated and on which it took years to reach an acceptable conclusion.
My hon. and learned Friend said that the accession of Spain and Portugal to the Community would allow extra new markets to our exporters.
When we joined the Community we were told that Europe was there waiting for our exports. It did not happen that way, but the other way round. The European exports came here. What makes my hon. and learned Friend so confident that the accession will be of benefit to Britain rather than the other way round and the Iberians will have our market?
I shall answer that point in a moment, because I want to deal with the industrial side, which is extremely relevant to my hon. Friend's point. If he would allow me to reach it in my own time, I should be grateful.
My hon. Friend the Member for Mid-Worcestershire and the hon. Member for Linlithgow (Mr. Dalyell) raised the subject of horticulture and the problems of tomatoes, on which the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) has expressed an interest. Here, too, there was a realisation that it was a sensitive area, which is why an exceptionally long transitional period of 10 years has been provided. That is a significantly longer transition period than that provided for other areas in the treaty.
However, there will be problems after that period. Special rates of assistance under capital grant schemes will be available to growers in the United Kingdom wanting to change to more efficient forms of glasshouse that will make them more competitive in the longer term. The Canary Islands will be entitled to export some of its tomato produce to the United Kingdom when Spain joins the Community, but under protocol 2 of the treaty that will remain subject to the reference price system, even after the end of the transitional period. That will protect the interests of United Kingdom tomato growers. That part of the protocol was negotiated at the instigation of the United Kingdom because of the realisation that there was a legitimate United Kingdom interest.
The hon. Member for Hamilton referred to the regional and social fund. Over the past few years the United Kingdom has been a net beneficiary of the regional fund. There is no question but that we will continue to receive major payments. The hon. Gentleman was wrong to imply that our entitlement to funds is affected by the designation of which areas of the United Kingdom come under regional funds status. He entirely misunderstands the way in which the system operates. Each country in the Community has a quota range that determines its entitlement, and it is for the country concerned to determine which parts of its national territory will benefit. Whether it is 10 per cent. or 90 per cent. of the United Kingdom does not affect that. The hon. Gentleman clearly does not understand that point, although he should, given his interest in these matters.
We must clarify this point. It may not affect the totality of the resources that can be received by this country, but it deliberately excludes a large number of areas from obtaining assistance under the fund. Significant areas were cut off from such assistance as a direct consequence of the changes in boundaries.
The hon. Gentleman knows, first, that that has nothing to do with the Community; secondly, that it has nothing to do with the enlargement negotiations; and, thirdly, that it was not the point that he made earlier in the debate. That is sufficient comment on that matter.
Spain and Portugal, whose gross domestic produce per capita is lower than the Community average, will be significant beneficiaries of the regional fund. Because they are likely to have generous quota arrangements; by definition that means that the entitlement of other member states must be reduced. That is unavoidable.
The European Council stated that the regional fund should grow in real terms. While it is not possible to calculate the implications for the United Kingdom, the ultimate effect will depend on whether the increase will be lesser or greater than the reduced quotas which the United Kingdom and other member states will have in the fund.
There are no quotas for the social fund. The enlargement will not affect the designation of priority areas within the United Kingdom. However, it is not possible to predict with any certainty what the effect will be.
My hon. and learned Friend will recall that some time ago the Government placed great stress on the effectiveness of the budgetary discipline introduced after Fontainebleau. He now says, with some pride, that he expects the regional fund to grow in real terms. He conceded that the accession of Spain and Portugal would add to the agricultural commitments, although he said that there would be an element of restraint on olive oil. How does he square those apparently contradictory elements where individual parts of the budget will grow with the fact that the budget itself will be discipline contrained?
My hon. Friend will be the first to accept that if Spain and Portugal join the Community, it is not unreasonable that the total expenditure of the Community should increase without that having any implications for whether budgetary discipline is working or is not. A Community of 12 can properly contemplate higher spending than one of 10.
My hon. Friend must appreciate also that Spain and Portugal will be contributing to the Community as well as receiving from it. A substantial proportion of any additional gross expenditure by the Community will be covered by Spanish and Portuguese contributions. It is proposed that during the transitional period Spain should be in the position of broad financial neutrality. In other words, its contributions to the Community should not be less than the benefits that it receives from it. It is proposed that Portugal should be a modest net beneficiary. My hon. Friend should accept that any increase in the total spending of the Community will be covered properly and to a substantial extent by the contributions through the VAT system and customs and levies by Spain and Portugal over the years to come.
Does my hon. and learned Friend agree that there is something rather curious about Socialists on the Opposition Benches opposing increased spending on disadvantaged areas in Portugal and Spain, while supporting Community expenditure on about 30 per cent. of the United Kingdom, to which the regional fund currently applies?
It has always been a phenomenon of the Socialist world that Socialists are so in love with the concept of internationalism that they have no time left for any individual international Socialists. That is a phenomenon which we have observed in the House and elsewhere.
My hon. Friends the Members for Mid-Worcestershire and for Northampton, North (Mr. Marlow) spoke about industrial matters. My latter hon. Friend asked what the prospects were for the United Kingdom, given the disappointments that have been experienced over previous years. As my hon. Friend the Member for Darlington rightly said, there is no guarantee that the United Kingdom will use the opportunity that enlargement will present.
One of the problems over the past 10 years is that the tariffs that British exporters have had to face in selling their goods in Spain have been far higher than those that Spanish exporters have had to face in Britain and elsewhere in the Community. Where tariffs are to be removed completely, there will be far more potential problems for Spain than for the United Kingdom. Spanish exports which come to Britain attract relatively modest tariffs, while British exports to Spain face high ones. If British industry cannot take advantage of the improved market, it will have only itself to blame. I cannot guarantee that it will be able to take advantage of the opportunity, but I hope that it will. The artificial barrier that has inhibited British trade in Spain will be removed in the way that I have described.
In the course of the negotiations we have achieved substantial and quick reductions in the tariffs that are applied by Spain. It is proposed that in the first three years some of the high tariffs will be reduced by no less than 52·5 per cent., and removed completely a few years thereafter. That will provide attractive opportunities for British exports as well as those from elsewhere in the Community.
My hon. Friend the Member for Northampton, North asked about the footwear industry, and I understand his concern for it. Her Majesty's Government are concerned about the recently introduced restrictions on British footwear exports to Spain. We have already made representations to the Spanish Government and the Commission. It is our view that after accession these restrictions will constitute quantitative restrictions on trade and will be in clear breach of the Treaty of Rome. The Commission has undertaken to examine the matter. It is a legal matter that will be pursued, for the reasons to which my hon. Friend properly drew attention.
The hon. Member for Walthamstow (Mr. Deakins) asked whether the £75 million that has been estimated as being the ultimate British net contribution will take into account the effect on the regional and social fund. The figures are based on Commission estimates. The Commission has not explained in detail the basis on which it reached the figures, but we understand that it takes into account what are believed to be the likely implications for the regional and social fund, but does not take into account any administrative costs for the Community as a whole. That was the second question asked by the hon. Gentleman. He suggested that in future there might be an economic assessment for new members. I think he will appreciate that such an assessment, although it might be of some academic interest, would be unlikely to be more than speculative.
My hon. Friend the Member for Welwyn Hatfield (Mr. Murphy) referred to Gibraltar. I appreciate his concern. We are currently engaged in discussions with the Government of Gibraltar about pensions. However, Spanish entitlements to pensions from the Government of Gibraltar will arise only where Spanish workers have made contributions to the social fund of the Gibraltarian Government. Where they have made such contributions, their entitlement will be the same as that of Gibraltarians who have made identical contributions to that fund.
Finally, my hon. Friend the Member for Birmingham, Northfield (Mr. King) was concerned because he believed that if people want to join a club they should adhere to its rules, irrespective of the implications for them. I am hesitant about agreeing with him on that. He will appreciate that the United Kingdom spent the first part of its membership of the European Community with the task and objective of seeking to change some of the original criteria where we believed that they were basically unsound and unfair. I believe that it was to the satisfaction of the United Kingdom and in the interests of the Community as a whole that the matter was properly resolved. It is always difficult to join any organisation where the rules were formed at a time when one was not a member. I recall that during the accession negotiations the remarks of King Alfonso of Castille in the middle ages were quoted. He apparently said that if he had been present at the creation he would have had some useful hints for the better ordering of the universe. Many of the 20th century advocates of the Community could also have identified with that view.
I believe that the debate has been valuable in dealing with some of the detailed points in which my hon. Friends and other hon. Members are interested. It is clear that there is wide and enthusiastic support for Spanish and Portuguese membership of the Community, on both sides of the House. I believe that that represents the whole spectrum of political thought in the House, and shows the good will of the people of the United Kingdom towards Spain and Portugal. Their membership is a prospect that we can all endorse with enthusiasm and pleasure.
|Division No. 23]||[12.50 am|
|Amess, David||Lennox-Boyd, Hon Mark|
|Baldry, Tony||Lester, Jim|
|Beith, A. J.||Lilley, Peter|
|Benyon, William||Maclean, David John|
|Best, Keith||Mather, Carol|
|Boscawen, Hon Robert||Maude, Hon Francis|
|Brooke. Hon Peter||Merchant, Piers|
|Cash, William||Meyer, Sir Anthony|
|Chope, Christopher||Miller, Hal (B'grove)|
|Coombs, Simon||Moynihan, Hon C.|
|Cope, John||Murphy, Christopher|
|Currie, Mrs Edwina||Neubert, Michael|
|Dorrell, Stephen||Nicholls, Patrick|
|Douglas-Hamilton, Lord J.||Norris, Steven|
|Dover, Den||Osborn, Sir John|
|Durant, Tony||Powley, John|
|Dykes, Hugh||Raffan, Keith|
|Fallon, Michael||Rifkind, Malcolm|
|Fenner, Mrs Peggy||Sainsbury, Hon Timothy|
|Forsyth, Michael (Stirling)||Stevens, Martin (Fulham)|
|Fox, Marcus||Sumberg, David|
|Garel-Jones, Tristan||Thompson, Donald (Calder V)|
|Gregory, Conal||Thompson, Patrick (N'ich N)|
|Ground, Patrick||Thurnham, Peter|
|Hamilton, Hon A. (Epsom)||Wallace, James|
|Harris, David||Wardle, C. (Bexhill)|
|Hirst, Michael||Watson, John|
|Hughes, Simon (Southwark)||Wilkinson, John|
|Hunt, David (Wirral)|
|King, Roger (B'ham N'field)||Tellers for the Ayes:|
|Knight, Greg (Derby N)||Mr. Ian Lang and|
|Leigh, Edward (Gainsbor'gh)||Mr. Peter Lloyd.|
|Tellers for the Noes:|
|Mr. Tony Marlow and|
|Mr. Eric Forth|