Foreign Affairs

Part of Orders of the Day — Debate on the Address – in the House of Commons at 9:37 am on 26 June 1987.

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Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey 9:37, 26 June 1987

My hon. Friend need feel no anxiety on that score. The policy and position remain unchanged. The preparation of the Queen's Speech cannot be confined by the obligation to repeat policy in carbon-copy terms from one year to the next. It was because of that type of anxiety that I took the opportunity in my speech of spelling out the need for fundamental change in South Africa.

Next week, European Heads of Government will meet in Brussels for the European Council. On the following day, the Single European Act, which the House debated at some length last year, will enter into force. Obviously, financing will be high on the Brussels agenda. This year's budget is the most immediate problem. The Heads of Government will not, of course, be drawn deeply into its detail, but they should insist on the need for an early agreement in the Budget Council. In our view, the short-term problems are far from insuperable. The key should be to make full use of the Commission's proposal to switch payments for agricultural support from advances to reimbursements. That will not only save money this year, but improve long-term financial control. It is our view that the European Council should agree also on the need for an early decision on this year's agricultural price fixing. Beyond that lies the more fundamental question of the Community's long-term financing.

It is gradually becoming more widely understood that farm surpluses are not just a European problem; they are a worldwide consequence of explosive scientific success in boosting agricultural yields. Venice, like previous economic summits, urged Japan, the United States and others to root out agricultural protectionism. That does not relieve Europe of the need to do exactly the same. We have to find new ways of sustaining the vitality and prosperity of our rural communities which do not involve the production of wasteful food surpluses. So CAP reform is fundamental to the Community's longer-term finances. It must be made plain that we have made a start. This is the fifth year of successive price cuts. We have in place measures to curb over-production of milk and beef. This year's price package includes tough measures—action, for example, on cereals equivalent to a price cut of 11 per cent.

But the Community needs to step up the pace of change. It needs to be ready to take even more radical decisions. They will not be easy. We must set up stabilising mechanisms to prevent surplus production of individual commodities. We must reject non-solutions, such as the proposed oils and fats tax. We must dismantle the system of monetary compensatory amounts. We must develop fresh and imaginative ways of helping rural communities within the framework of common policies. All those changes have to be achieved within a firmer framework of budgetary discipline. Only when such advances have been set in hand would it make sense to consider the Community's overall revenue needs on the basis foreshadowed in the Fontainebleau agreement.