I remind the hon. Member for Harrow, East (Mr. Dykes) that big issues can arise from the expenditure of small amounts of money. I refer him to the 1630s and the case of ship money, which eventually involved the country in a civil war. The principle is what is important, rather than the amounts at stake.
The right hon. Member for Worthing (Mr. Higgins) made an interesting speech. Tonight we are dealing with a House of Commons matter, to which there are two aspects. The right hon. Member spoke about one aspect, that of Supply procedures and so on. The PAC, of which I have the honour to be a member, may need to take a look at procedures again. Apparently it has not done so since 1932.
The PAC should say, in the light of the interim judgment given by the court, whether we should seek to make some other recommendations, if the court were to refuse the interim judgment for which the Government have asked and we were therefore obliged to make these ex gratia payments until the court had reached a substantive judgment later in the year. In those circumstances, we would have to make sure that the Government provided time in the next financial year for us to consider these things properly as this Supplementary Estimate takes us only to the end of the financial year.
Some substantive issues have been raised. This is a House of Commons matter, and I am concerned about the aspects of the relationship between the Assembly and the Council of Ministers. In a sense, the Council of Ministers is a euphemism for national Governments and Parliaments, because that is what it represents. The issues that we have raised are at least as important as those raised when we discussed the intergovernmental agreement which was outwith the treaties and possibly the most important aspect of our relationship with the EEC institutions since we joined in 1972–73.
I have been pointing out for several years that the Assembly is constantly seeking to increase its powers. I see at least four federalists here today, on both sides of the House, and they will naturally welcome that move. In its attempts to increase its powers, the Assembly is constantly aided and abetted by the Commission and, where appropriate, by the European Court. I am not as sanguine as the Government that we shall necessarily win the dispute when the Court makes its substantive judgment.
The Assembly has passed an illegal budget and the Commission is backing that against the Council. This is part of the process of creeping federalism, whereby Community institutions are always working to increase their power, not always but often, at the expense of national Parliaments, and there is a ratchet effect because power once conceded to the EEC is never regained. Therefore, the Assembly, the Commission, the Council and the Court are constantly receiving accretions of power, gained in various ways and through various procedures within the Community. That strengthens their power as against national Governments and Parliaments.
Control of finance is the key to power, as we know from the history of this country, and the Assembly recognises that. In its budget resolution, the first of two last year, on 14 November 1985 it said, in paragraph 9:
the Commission should submit to the budgetary authority a proposal for a minimum-term course of action taking account of the need for the gradual transfer of certain funding operations from the national to the Community framework".
Funding operations are a means of raising money — forms of taxation. That shows the way that the mind of the Assembly is always working. We should always have that in the back of our minds.
The battle between the Assembly and the Council over funding is a battle between the Assembly and national Parliaments. The House could teach many in Europe a great deal about these things. We also have an important right. Federalists will support the Assembly, and we have already heard one or two expressions of support. However, non-federalists, and even those in favour of the Community, such as the right hon. Member for Worthing, will have to take careful note of what the Assembly is trying to do. Even the Government, in the Treasury minute to the Select Committee on the Treasury and Civil Service, made clear their view that this would be a major change in the balance of power between Community institutions, and therefore between Community institutions and this national sovereign Parliament.
As is well known, the history of our Parliament started with disputes between Parliament and the Crown over the power to tax people. It was only later that Parliament sought to gain control of expenditure. In the case of the Assembly, the process has begun in reverse, partly because of the powers given to it in the Community treaties. It is starting with the power to spend money. In paragraph 16 of the budget resolution it says that the Assembly
Takes the view that the Community cannot ignore or curtail, via the budget for 1986, the financial commitments it has entered into: is therefore resolved to ensure compliance with this principle throughout the budgetary procedure".
In other words, it is saying that spending must take priority over raising money to finance the expenditure. Eventually that will lead to the Assembly demanding the power to tax as well. We have already heard something about this from the federalists tonight.
The annual report of the Assembly is entitled "Progress towards Integration" and it shows, in the report of the budgetary committee, that it is working towards this. At long last, the Government have finally woken up to this creeping federalism. It was remarkable that the Prime Minister, in her statement to the House on the Luxembourg summit, consistently throughout both statement and answers—I bet that there were many anguished faces in the Foreign Office — used the words " European Assembly" to describe what she had previously called the European Parliament.
The Assembly has been encouraged in this spendthrift approach by the big increase in own resources that this House and other Parliaments have granted. Its debates show that the Assembly is looking forward to the 1·6 per cent. VAT rate being introduced at a much earlier date than the Council and the Government would wish.
But that is not the only thing that has encouraged the Assembly in its spending spree. It has now proved possible, through the intergovernmental agreement, to raise money outside the framework of the treaties. Those two facts combined have convinced the Assembly that it an do what it likes on spending—we shall see more of this in the future—because national Governments will pay in any case, whether the spending is legal or illegal and whether or not it exceeds the budget. That is a cavalier attitude to expenditure and a threat to budget discipline.
The House must accept that the Assembly does not consider itself bound by budget discipline. Paragraph 12 of the budget resolution of 14 November states that the Assembly
expresses its support for measures to contain expenditure as part of a coherent reform of the common agricultural policy, but demands that the nature of such containment be jointly defined by the budgetary authority and the Commission"—
that is, the Assembly and the Commission—
and repudiates any unilateral decision by the Council in the matter.
That means that the Assembly will not go along with budgetary discipline until its powers are substantially increased by agreement with the Council and, no doubt, with national Governments.
The Assembly is now an enemy of national Parliaments in the EEC. It is competing for a share of the real power currently exercised by national Parliaments. It is encouraged by more powers than were given to it at the Luxembourg summit. It has an insatiable appetite for power and it must be stopped. The question is whether the action that the Government are taking will stop it.
I hope that the Minister can reply later to two semi-legal points. First, the Council is taking action under article 173 of the Treaty of Rome which states:
The Court of Justice shall review the legality of acts of the Council and the Commission other than recommendations or opinions.
Nothing in that article states that the court shall review the actions of the European Assembly. Therefore, it makes it all the more astonishing that, with all their substantial legal advice, the national Governments represented at the last Council meeting did not seek to couple the Commission with the Assembly in the substantive court case. If they had coupled the two, they might have lost on the Assembly—because it is not mentioned in the article—but they would almost certainly have won on the Commission. I do not understand why the Government weakened their case on the substantive issue by not using the words in article 173 and taking parallel action against the Commission.
If the Minister cannot reply to my second point tonight, I hope that he will none the less consider it carefully, because it is in the interests not only of the House but of the Government. Later this year, we are threatened with a supplementary budget—everyone agrees that that is likely—and my hon. Friend the Member for Hamilton (Mr. Robertson) made clear what the components of that budget would be and what its causes would be. If there is a supplementary budget, in addition to the budget that the European Assembly increased, will that not weaken our case before the court? We shall be asking national Parliaments for money additional to the budget that was originally approved by the Council and rejected by the Parliament. If I were not parti pris in the matter. it would suggest to me that the European Assembly was right in its attitude to Community expenditure in 1986. If and when the Government are faced with a supplementary budget, I ask them to think carefully about whether it might prejudice their position and that of the Council on the main issue.
If the United Kingdom loses, the Council and national Parliaments will have serious problems. More power will be granted to the European Assembly and it will mean an end to any semblance of budget discipline. An adverse verdict would lead to a crisis in the relationship between Britain and the rest of the EEC. I look forward to that very much.