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I apologise to my right hon. Friend the Minister of State for keeping her here at the end of a busy week. However, I welcome the opportunity to draw the House's attention to what I regard as a serious matter—the erosion of parliamentary sovereignty, stemming from recent actions of the institutions of the European Economic Community. Much of it has gone largely unnoticed, but the time has come to look at what has been lost and at what is at risk and to consider whether there is any action that we can take to curb the process, if that is in the national interest.
Much of the recent loss of sovereignty has obliged the Government to take steps against their will and judgment. Quite frankly, some have made the Government look silly and break pledges that they have given to Parliament. Our sovereign Parliament seems to be on the road to achieving county council status.
I shall give a few examples. In December 1984 the Prime Minister came to this House of Commons, about six months after agreeing to a massive increase in the Common Market's cash — an increase of about 25 per cent. in real terms—to announce that agreement had been reached on strict budgetary controls which would ensure that the Common Market's agricultural spending would not increase by more than the increase in the own resources base. That was not just a statement of intent. In the Prime Minister's own words, it was an agreement that was binding on the Council—the supreme authority of the Common Market. My right hon. Friend further explained that although the VAT base had been increased from 1 per cent. to 1·4 per cent., that was the legal limit of expenditure and could be increased to a maximum of 1·6 per cent. only by unanimous agreement in 1988.
While expressing doubts about the advisability of handing over more cash, the House welcomed the clear and unambiguous assurance from the Prime Minister. Nobody doubted her sincerity. However, since then those binding controls have proved to be a sick joke. Spending has rocketed well beyond the ceiling of 1·4 per cent. In fact, it has gone beyond the 1·6 per cent. ceiling which had never been agreed to by anybody.
That has been done by a series of devices operated by the Commission. For example, there has been the introduction of the metric year of 10 months, which was achieved by requiring payment into the Common Market a month early and paying out bills a month late. It has been achieved also by transferring the responsibility for costs, such as that of butter dumping, from the Common Market lo member states, although the Court of Auditors has stated that the device was wholly contrary to Common Market law.
Parliament's representatives have lost — it seems completely — their power to control expenditure to a non-elected body, the Common Market Commission, which is simply a group of European civil servants.
Does my hon. Friend appreciate that all the measures that he has enumerated were agreed to by the Council of Ministers on a proposal by the Commission? Certainly, the Commission is the Executive in carrying out those measures, but the Commission did not invent or implement without the authority of the Council of Ministers, which is responsible to this House.
I respect my hon. Friend's knowledge of European matters, but I should point out that a Common Market body, the Court of Auditors, has said that the transfer of responsibility for butter dumping was unlawful. That clear statement was put in a report to the Council of Ministers. However, it was never discussed by the Council of Ministers which, therefore, did not come to any conclusion on it. In effect, something that has been condemned as illegal was done without any authority from anybody. My hon. Friend the Member for Skipton and Ripon (Mr. Curry) is shaking his head. I wonder whether he would deny the fact that the Court of Auditors has said that it was unlawful and deny the fact that it was not considered or decided upon by the Council of Ministers. I suggest that he should check that. I think that he might get an unpleasant surprise. If British civil servants had. acted in that way, they would no doubt be behind bars by now.
We see the same loss of sovereignity over the iniquitous. common agricultural policy. When we consider the present debates about the financing of the Health Service and whether £1 billion might be provided to solve its problems, it is sickening to realise that the EEC is currently spending over £11 billion per year solely on dumping, destroying and storing food surpluses, with the Soviet Union and Eastern Europe being the main beneficiaries. That spending is now wholly beyond the control of any democratic body. It has breached wildly the solemn and binding undertakings of the European Council. Our British intervention boards are forced to pay out massive subsidies to enable the Soviets to obtain butter at 6p a pound and beef at 11 p a pound. Our Prime Minister protests, rightly, about that direct subsidy of the Soviet war machine, but it seems there is nothing that the Government or Parliament can do about it.
Previously we considered that we had the ultimate power to use the veto on increases in own resources—a limited fall-back power. However, the devices of the Commission have made that worthless.
The one power that Parliament fought to secure and that is still regarded as the base of sovereignty is the right to determine our own taxes. It is true that in the Single European Act we agreed to work towards harmonisation of indirect taxation in so far as it was necessary to secure the internal market. However, the Prime Minister has pointed out that that section in the Act requires unanimity. In short, we can veto any change we do not like.
During the election the Prime Minister rightly stated that we would resist any plan to levy VAT on essentials such as food, children's clothing and fuel, including gas and electricity. Sadly, the European Court of Justice at this very moment is considering a complaint from the Commission which could force the Chancellor of the Exchequer to impose VAT on gas, electricity, water and sewerage provided to large and small businesses in Britain and to impose VAT on the construction of factories, shops and offices. At our current rate of 15 per cent., that alone would add £350 million to industrial costs apart from what could be raised by VAT on gas, electricity and water.
The Commission has neatly side-stepped the Council of Ministers and the veto in the Single European Act. If we lost that case, which seems almost inevitable after the initial opinion of the Advocate General, our Government and Parliament will, for the first time in their long history, be obliged to levy taxes on the instructions of a non-elected body—the European Court of Justice.
I am sure that my hon. Friend is aware that the court cases to which he referred flow from the 1977 sixth VAT directive signed by the British Government of the day. If the Government of the day signed that international treaty, they are obliged to observe the consequences that flow from it. Those consequences have not been imposed by a body acting other than under the authority given by the international directive to which the Government of the day agreed.
My hon. Friend is very informed about European issues. However, I think that he will find that he is wrong about Parliament having agreed to the measures that have now been taken. In fact, he is saying that our Prime Minister is an ignoramus and does not know what she is doing. My hon. Friend is aware that during the election campaign the Prime Minister made a specific pledge about not allowing VAT on electricity. My hon. Friend is saying that the Prime Minister was hoodwinking the people because she knew that there was a court case taking place that would oblige Britain, against its wishes, to levy VAT on electricity.
Indeed, I did. It was a measure taken by the British Parliament on levying our taxes. At that time I favoured a transfer from direct to indirect taxation. There is nothing strange about that. We were deciding. If I and other hon. Members had voted against that, it would not have happened. The crucial issue is that in this case we will not decide. The decision is made by the European Court of Justice and the result will have to be implemented by the British Parliament and Government, whether we like it or not. After 1992 I fear that, if tax harmonisation has not been agreed, the Commission could use the powers of the Single European Act to take the United Kingdom and other countries to court for not levying VAT on essentials. Time will tell.
Sovereignty has also slipped away on issues that affect the people more directly. Today I saw on the tapes—no doubt my hon. Friend the Member for Skipton and Ripon also noted it—that the Minister of Agriculture, Fisheries and Food has made an appeal to the food industry to label its foods correctly and informatively so that consumers know what they are buying. Ever since 1972 we have had a British law on origin marking under which goods covered by the Trade Descriptions Act 1972 have been required to display a mark stating where they were made. The law, which is the basis on which goods are marked "Made in France … Japan … Germany … Italy" and so on, was unanimously agreed by Parliament as a means of giving more information to the consumer. It has helped me and millions of consumers in our purchasing choices.
Some time ago the Commission sent the Government a letter stating that it considered the law to be contrary to the treaty of Rome because it enabled British consumers to commit the crime of discriminating against goods produced in other parts of the EEC. The Government's legal advisers said that we could not win the case, so the Consumer Protection Act 1987 was passed providing for an order to be made in 1988 that will repeal the 1972 Act. The Government made it clear that they did not want to make that change and that it was against their policies to throw away a consumer safeguard. However, they were forced to do so simply because of a letter from a nonelected body.
The other day the Parliamentary Under-Secretary of State for Corporate and Consumer Affairs stated that there would be a ban on the use of certain foams in furniture because they were a threat to children's lives. That statement received acclaim from all sides. However, the Minister then announced that the ban could not be implemented permanently without the approval of the Common Market Commission. So much for the sovereignty of a free Parliament. No doubt my hon. Friend the Member for Skipton and Ripon will stand up again and say that we agreed to this.
I am afraid that my hon. Friend is again completely wrong. I have a copy of the Commission's press statement, and that said that there was nothing to prevent us making an interim emergency measure, but to make it permanent would require the permission of the European Commission. Once again my hon. Friend has taken up time in my Adjournment debate and, for the third time, my hon. Friend has said something that is not true. Given his long experience of Common Market matters, he knows that it is untrue, and I am surprised at him, bearing in mind that he is my European Member of Parliament.
In case my right hon. Friend should seek to argue that such losses of sovereignty were agreed by Parliament. I would ask her to tell me when regulation 83/189, which requires us to seek prior approval for the foam in furniture ban, was discussed, debated or approved by Parliament. I believe that she will find that this massive and far-reaching power was never debated. That is the advice that I have received from our excellent Library researchers who explained that it was one of a whole pile of directives considered by the Select Committee on European Legislation and for which it could not recommend discussion in the House because there were so many other vital EEC measures to debate.
Once again we are faced with a power that can stop us doing something that we believe is in the interests of saving children's lives, and that power was not debated in the House.
My hon. Friend the Member for Harrow, East (Mr. Dykes) knows that, once again, he is seeking to mislead us. Yesterday, for example, we had an agreement on a frigate, a common frigate. Britain made it abundantly clear that if it did not like the way things were going it still had the power not to accept that frigate. There is no compulsory power under NATO rules, and the new frigate is a perfect example of that. My hon. Friend, in common with my hon. Friend for Skipton and Ripon, should look at the facts.
The huge losses in our power to decide cannot be justified, but it could be argued that there was a case for surrender if there were compensating benefits. Where are they? Before we joined the Common Market, Britain had always enjoyed a favourable balance of trade in manufactures with that group of European countries. Indeed, that had been the case every year since the time of Napoleon. Ever since we joined the Common Market we have had a deficit, and last year it was £11,000 million. In a nutshell, for every £2 of goods we sent to the Common Market we imported £3 of goods and the net effect was the loss of a million jobs. The basic reason for that is our loss of competitiveness. We have lost our traditional advantage of access to cheap food that a previous Conservative Prime Minister, Sir Robert Peel, fought so hard to achieve.
According to the Common Market's consumer unit, the average British family spends an extra £13 a week on food as a direct result of the CAP. That figure is increasing as the gap between Common Market and world food prices grows.
We have heard much about rebates and refunds, but our contributions are at an all-time high. When the Government completed their first full year in office, our net contribution was £117 million. This year, after all refunds and rebates, the estimate in the public expenditure White Paper that has just been published is £1,400 million, and that all-time record may be an underestimate.
As Conservative Members walked into the Chamber they may have been handed a letter from a Minister giving details of the public expenditure White Paper. There are pages and pages about increases in public spending since 1979—up to 73 per cent. for employment and training—but, sadly, not a word about EEC contributions, in which the increase has been infinitely greater.
Looking to the future, we see a further erosion of sovereignty with the Single European Act, which will provide for laws to be imposed on the United Kingdom by majority vote. Yesterday, we discussed a tightening of the law on firearms. I found that rather sad and funny, as the Common Market is currently considering a directive, which will he decided by a majority vote, that will require Britain to allow Europeans to carry and possess any weapons they choose, as long as they have a certificate from their own countries, whether they be the Republic of Ireland, Greece or Sicily.
What worries me most is the Government's policy, particularly the Foreign Office's policy, of looking at Europe through rose-coloured spectacles. It produces figures to show a massive rise in exports without mentioning that most of it stems from the increase in the size of the Community and ignoring the fact that our share in the Original Six's market for manufactured goods has scarcely changed since we joined the Community; it was 6 per cent., but it is now 7 per cent.
I have given my hon. Friend the figures that were given by my right hon. and noble Friend the Secretary of State for Trade and Industry. Sadly, our share of the market for manufactured goods of the original Six, including Germany, was 6 per cent. when we joined the EEC, but it is now 7 per cent. As my hon. Friend is interested in our trade figures with Germany, our deficit with it is greater than any other country and is more than twice our deficit with Japan. When some of my hon. Friends bray their Common Market slogans, I wish they would consider some of the facts.
When the Government talk about contributions, they refer only to our huge rebates. They do not accept that, after rebates, according to the Chancellor's statement, our contributions are at an all-time high.
When we mention the waste, scandals and frauds of the CAP, the Government say that reform is round the corner. In reality, pledges of reform, which never happens. are simply an excuse to give more money to the Common Market to waste. When stuck for an argument, they say that the Common Market has brought peace to Europe, without mentioning the fact that defence is the job of NATO or that the one sector in which the EEC has no authority is defence.
There is a rising tide of concern in the United Kingdom about the activities of the EEC, its bungling, waste, bureaucracy and transfer of power from elected to nonelected bodies. We can do something about it. The time to do so is 10 February, when the European Council will ask for another gigantic cash injection. Will we stand firm and demand reform instead? Or will we simply pour in the cash by means of the so-called fourth resource in exchange for a package of worthless promises and silly ideas such as the so-called set-aside, which has been tried in America with disastrous effect and at a huge cost?
On 10 February we shall know whether the Government are facing reality or whether we shall simply hear more slogans, hopes and tragedies.
The issues raised by my hon. Friend the Member for Southend, East (Mr. Taylor) are important. But we have seen in his speech that underlying his arguments is another issue which is the issue that dominated our discussions before we joined the Community. It is the question of sovereignty and the extent to which our national freedom of action is curtailed or enhanced by membership of the Community. We joined the Community and are a part of it for several reasons.
Our initial instinct in the 1950s was to stay out—to share and admire the goals of the Community and to wish it well, but to believe that we could achieve the same goals on our own. We were a world power. We looked not just to Europe, but across the Atlantic to the United States and across the world to the Commonwealth.
We changed that early 1950s view for several good reasons. We saw the economic and political success of the Six while our standard of living relative to theirs dropped and our world role changed. We saw the importance of the Community as a vehicle for promoting peace and democracy in Europe. I agree with my hon. Friend that NATO has responsibility for the defence of Europe, but to get on with other nations is part of the peace process.
We saw the United States looking to the Pacific, as well as to Europe, in pursuit of her interests, and that within Europe the United States' interests, lay in a relationship with the whole of Europe, not just with Britain in particular. We saw, too, the power of the Community to negotiate collectively trade agreements which none of the members could have achieved on their own. We also saw the extent to which the Community was establishing patterns of political, trade, and economic behaviour to which we inevitably had to conform, but in the determination of which we would play no part so long as we remained outside the EC. Those are the reasons why we joined and why we shall continue as a most active member of the EC as it develops further.
Now we can see new technology and less regulation of trade opening up new opportunities for British firms, so helping to bring greater prosperity. But they also make the world even more interdependent. For such a complex world to work peacefully, not everything can still be done at a national level. For individual nations to prosper, we must agree certain rules and standards in common. That is why we joined the General Agreement on Tariffs and Trade. For individual citizens to prosper, the goods they buy must be made and distributed in the most economic way, and the companies which employ them must work on the most economic scale.
We must be able to work at the supranational level if we are to promote our national interests within Europe and defend them outside, and we need democratic institutions within which to do so. That is what the Community is for.
Why is there such a large trading deficit with EEC countries and a trading surplus with the rest of the world? Is there any particular figure at which my right hon. Friend would start to be worried about the trading pattern with EEC countries? If not £11 billion, would it be £15 billion, £20 billion or £30 billion?
I was just coming to that point. We have not been able to take up the full opportunities of trading in Europe; that is one area that we have been opening up through our great proposals for the 1992 single European market. Naturally, we do not want a trade deficit with the EC. This morning, I returned from Dusseldorf where I was talking to business men. They are pleading for more opportunities for British interests and companies to be active in Germany, particularly in the financial sector—
—and British buses. Indeed, I have tried to help my hon. Friend the Member for Southend, East to get British buses going across Germany, and I shall continue to do so.
What marks the Community apart from every other international organisation to which we belong is the significance of everything that is agreed within the Community for our national economic life. Where measures are proposed which affect our national life, the British Government and Members of Parliament should always scrutinise them vigorously. When we disagree, we say so loudly and we lobby effectively against those measures—and shall continue to do so. We must also examine where the overall balance of advantage lies.
My hon. Friend mentioned the recent example of a ban introduced by the Government on polyurethane foam. He mentioned the requirement of Commission approval. The directive that requires us to notify the Commission of any new measures that constitute a technical barrier to trade is one that is useful to us. It prevents member states from indulging in disguised protectionism, and there is a great deal of work to be done on that score. It is explicitly not designed to prevent genuine safety measures, such as the ban that the Government have announced. Similar bans have already been introduced in some other member states.
The EC treaty provides for the possibility of restricting imports on grounds of public security, as the Commission has acknowledged. Under the Community consumer legislation, the Commission has the ability to alert other member states to the existence of a dangerous substance on the basis of evidence produced by member states such as ourselves. That means that if evidence comes to light in, for example, France of the existence of a dangerous material, there is a good prospect of preventive action being taken in the United Kingdom or Community-wide before further avoidable tragedy occurs.
I understand my hon. Friend's anxieties, which he has mentioned frequently before. As my hon. Friend the Member for Warwickshire, North (Mr. Maude) made clear to the House, the United Kingdom is required by directive EC 83/189 to notify the Commission of any new measures that might constitute a technical barrier to trade. The purpose of that directive, as I said, is to prevent member states from indulging in disguised protectionism, which is why I said it was useful. I believe that the Commission wants that law to be a protective piece of legislation in the best sense of the word.
I genuinely appreciate the courtesy of my right hon. Friend's reply. However, does she not consider it significant and worrying that directive 83/189, which may be good or bad, was never even discussed in this House?
I understand my hon. Friend's complaint, but other things go through the House, after passing through special Committees, which I might very much like to have debated, but we do not have the time to debate every issue. If we have another way to solve the problem, as we do here, we should perhaps take it.
As regards budgetary discipline, I agree with my hon. Friend that spending must be under control—but it is not beyond control. I have spent all this week talking about measures to bring it under control. I agree with my hon. Friend that the budgetary discipline arrangements that are now in place have not worked as well as we wanted. That is why we are insisting on legally binding control before there can be any increase in Community resources.
I have little time, and I want to answer my hon. Friend's points.
There can be no increase unless all member Governments and national Parliaments agree. so the decisive role of the House in this issue, as in others, is fully safeguarded.
My hon. Friend's concern about the metric year has often been expressed before. I am well aware that the Council adopted last October the proposal for a temporary switch from the normal system of advances to member states for expected FEOGA expenditure to reimbursements of up to two months, but that is helpful in improving budgetary control. We support a switch to reimbursement as a permanent feature of Community finance. It makes much more sense to reimburse member states for what they have spent than to pay them advances for what they think they will be likely to spend. I hope that my hon. Friend will re-examine that issue.
The butter stock disposal grieves us all, but the important thing is to ensure that the food mountains, once disposed of, are not allowed to grow again. We shall work on that as well.
I shall respond to my hon. Friend's other points in a letter, because it is important to set down clearly what is going on.
Community action is opening many opportunities in air services, financial trading services and capital liberalisation, and we want them to continue. They are massive opportunities for Britain.
I applaud my hon. Friend's tireless scrutiny of Community legislation. All of it matters far too much to be allowed to go through on the nod. I applaud his campaign for financial and agricultural reforms, which I am convinced that we shall win. I applaud his vigilance, but I must remind him that the sovereignty of Parliament is, above all, the power to act in the best interests of the nation.
That power would be constrained if we were not members of the Community in today's world. Our power to act is strengthened by our ability to take action, in common with other like-minded democracies, in ways that may be unheroic, mundane or even boring, but are none the less essential for the secure future of Britain. My hon. Friend has some things just a little out of proportion.
Question put and agreed to.
Adjourned accordingly at fifteen minutes past Three o'clock.